Plans by Turkish-owned Karpowership to reach financial close for its emergency power projects by the end of March could be delayed should the energy company not receive the required regulatory approvals.
The projects are part of the government’s plan to add additional emergency generation capacity to end load-shedding.
According to the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), the 11 projects, including three gas-to-power Karpowership projects, are expected to start providing emergency power to SA’s grid 12 months after financial close.
Karpowership’s plans to mount its gas-powered floating ships at three SA ports — Coega, Richards Bay and Saldhana Bay — in line with the RMIPPPP schedule are in jeopardy as it still requires the energy regulator to grant it approval to operate and store gas facilities at the three ports.
The National Energy Regulator of SA (Nersa) has already approved Karpowership’s electricity generation licences but is yet to grant the energy firm licences for its gas storage facilities.
Karpowership SA has no alternatives should the regulator not grant it the outstanding licences, said Karpowership SA director Mehmet Katmer. This will delay the firm’s plans to reach the deadline for financial close by the end of this month. Financial close means Karpowership is required to provide the department of minerals & energy with evidence to prove it has the financial and regulatory capabilities to execute the projects by March next year.
“There is a list of licences that we need to get. Without changing the project formation there will not be any Plan B so we need to get these licences in order to reach financial close,” Katmer said during the Nersa public hearings on Friday on Karpowership’s application for a licence to construct and operate a gas storage facility.
The preferred bidders for the government’s emergency power procurement programme are expected to provide Eskom with 2,000MW of power with Karpowership expected to provide the bulk of this. The initial deadline for financial closure was July 31 2021 and the projects were initially scheduled to plug into the grid by August this year.
The deadline for the financial close has been extended by the department twice, meaning the power projects will only be plugged into the national grid by March 2023.
The latest extension followed the high court in Pretoria judgment which upheld the department of minerals & energy’s decision to award Karpowership SA the energy tender after one of the losing bidders, DNG Energy, claimed that the process was marred by corruption.
Apart from the Nersa licence approvals, Karpowership is also awaiting a judgment on DNG’s application to appeal the court’s previous ruling, as well as approval from Transnet National Ports Authority (TNPA) to dock its floating power ships at three of SA’s ports.
TNPA previously told Business Day that it has made inputs to transport minister Fikile Mbalula, who has the executive authority to approve Karpowership’s application to dock its ships in line with section 79 of the National Ports Act.
“In the past one year since we have been awarded [the tender], we have been in active engagements with TNPA in different work streams ... We are actively engaging with the relevant ministries to get the Section 79 and we are hoping to get it in time before we reach financial close,” Katmer said.
“All aspects of the project will be conducted with TNPA and this is what we have been doing for other projects as well, which will hopefully prove to the authorities that we have a very good standard in terms of health, safety environment and quality.”
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