The fate of the Turkish-owned floating gas power ships deal for the largest share of SA’s emergency power procurement round awarded in 2021 remains uncertain.
At a press conference on Friday, electricity minister Kgosientsho Ramokgopa reiterated his stance that the 20-year power ship agreements had to be cut to a maximum of five years. But they “haven’t had that conversation” yet with Karpowership, said Ramokgopa.
The SA subsidiary of Karpowership was awarded three bids for total contracted capacity of 1,220MW to be provided via power ships moored in Coega, Richards Bay and Saldanha in the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).
So far, the national energy regulator (Nersa) has approved Karpowership SA’s generation licences, and the department of transport has approved its application to access the three ports for 20 years.
Karpowership has been unable to secure environmental authorisation for any of the projects, and has not yet concluded power-purchase agreements with Eskom.
The department of forestry, fisheries & the environment recently condoned a 60-day period for Karpowership to refile its environmental impact assessment report (EIA) for the proposed project at the Port of Richards Bay.
The company was seeking a similar request for the Saldanha project, but this appears to have been denied by the department.
Environmental group The Green Connection said in a statement last week that the department confirmed that it refused Karpowership’s request for condonation and extension for its application for environmental authorisation for the project in Saldanha Bay.
Not involved
It was also revealed last week that Absa, listed as a possible funder for Karpowership’s RMIPPPP projects in an application lodged with Nersa, has decided not to finance the projects.
Absa group chair Sello Moloko said in response to questions posed by the Centre for Environmental Rights at the banking group’s AGM on Friday that Absa would not be involved in funding Karpowership. “That is a simple and straight answer from us,” said Moloko.
Absa CEO Arrie Rautenbach said that as part of the original processes they considered the possibility of funding the projects, “but we’ve made the decision clearly not to get involved. I think that’s the final position on this,” he said.
At the time of publication Karpowership had not responded to questions from Business Day on how the bank’s decision might affect the viability of its projects.
Ministerial powers President Cyril Ramaphosa recently conferred on Ramokgopa give the electricity minister the authority to determine new generation capacity and emergency power procurement.
Ramokgopa has made it clear that emergency power procurement deals should not be for more than three to five years. All winning bids from the RMIPPPP round, including the three Karpowership bids, were for 20-year projects.
Nothing more
However, Ramokgopa said he has not yet engaged with Karpowership to discuss the possibility of reducing the term of these projects.
“My definition of emergency [procurement] is nothing more than five years,” he said on Friday.
While the approval process for Karpowership’s RMIPPPP projects is still under way, they will include negotiations on the term of the contracts as part of the process, said Ramokgopa.
But if these projects failed to reach financial close he will consider launching a new emergency power bidding round, said the minister.
“The current procurement process is still undergoing negotiations and approvals to the extent that part of those negotiations can result in lowering or reducing [the contract] period to five years. That would be a welcome development because then [we] don’t have to run a new bidding process.
“If [we] cannot find each other then we will ... make new determinations on new terms including the maximum five-year duration,” said Ramokgopa.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.