Environmental groups fired their first salvo at Karpowership SA on Tuesday with a request to parliament that public hearings be held before the deal to supply emergency power from floating barges proceeds.
But the shot fell short of the mark with the department of mineral resources and energy — which is briefing the portfolio committee on mineral resources and energy — assuring MPs that public consultations had been held in prior steps of the process and that environmental groups would get an opportunity to object in the environmental impact assessment process.
The Karpowership SA proposal involves the delivery of 1,200MW of energy via four liquefied natural gas (LNG) powerships moored at ports around the coast of SA to alleviate Eskom’s power supply constraints. It was selected as a preferred bidder in the Risk Mitigation Independent Power Producer Programme (RMIPPP) in March. Karpowership SA is 51% owned by the Turkish Kardeniz group and 49% owned by a BEE group, Powership SA Investments.
The transaction, which must first win all regulatory approvals as well as financial backing to reach financial close, envisages a 20-year power purchasing agreement with Eskom.
Environmental groups object to the powerships on several grounds, most significantly that they run on a polluting fossil fuel, and are noisy and destructive to marine life. The groups that appealed to parliament include 13 regional and local environmental and community fishing groups in the vicinity of Richards Bay, Coega and Saldanha Bay where the ships will be based.
The Southern African Faith Communities’ Environmental Initiative, which was one of the parties that brought a stop to nuclear procurement through a successful court action, also appealed to the committee to exercise caution and do the right thing for the environment.
However, committee chair Zet Luzipho said that as this is a procurement process and not legislation or regulation he does not see the need for public hearings. He said he has been assured by the responses provided by departmental officials that there is “nothing untoward” with the Karpowership SA proposal.
One of the big criticisms of the transaction is that it will extend for 20 years, long after the energy supply emergency is anticipated to be over. As an emergency measure — powerships are likely the quickest option to bring completely new generation onto the grid — the proposal has some support. But over 20 years, apart from the environmental aspects, energy analysts have warned that the cost is expected to amount to R218bn.
Deputy director-general in the department Jacob Mbele said that it is necessary to offer all bids in the RMIPPP the same terms. The 20-year power purchase agreement means that all projects were able to come in at a much lower price as they could recoup the cost of the investment over a longer period.
Mbele and department director-general Thabo Mokoena also said that the procurement fell within the Integrated Resource Plan (IRP) — the country’s long-term energy plan — which provides that gas will be a part of the energy mix. The IRP had been extensively consulted with the public, they said. There had also been an opportunity for public consultation when the National Energy Regulator of SA published the ministerial determination for the procurement under the Electricity Regulation Act.
The next big hurdle for Karpowership SA will be to clear the environmental impact assessments that are under way in each location. The environmental organisations that wrote to parliament are actively involved in the assessment process.
This will be the opportunity for environmental organisations to make their input into the process, Mbele said.
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