Once again SA is at the mercy of an energy minister who wants to play fast and loose with our future.
Bringing new megawatts onto the grid is the economy’s single greatest priority. Without it, growth is constrained and investment dampened. The failure of energy planning over the past decade and a half has been largely political. Instead of doing what makes sense and is cheapest and quickest, energy ministers have toyed with expensive and impractical fantasies, such as the huge building of nuclear plants and now 20-year contracts for gas turbine power ships awarded to a group led by Turkey’s Karpowership SA.
While many, including Business Day, have pointed out the unnecessary expense and damage to the environment that such long contracts would cause, there are now also bombshell allegations about corruption in the awarding of the power ship contracts. An unsuccessful bidder has claimed in court papers that he was asked to pay bribes and provide kickbacks by the department of energy officials and associates of energy minister Gwede Mantashe. After refusing, he was told he would get nothing, and his bids for land-based gas turbines were cancelled.
The power ship contracts are part of a 2,000MW procurement for emergency power, intended to seek out the fastest way to get additional power into the system. Apart from that it took Mantashe’s department a year to put out the “emergency” tender, it was plain to see that the request for proposals was written with specifications ideally suited to the power ship model. The biggest indicator of this is that bids had to be able to dispatch power for 50% of the day. To average a 50% load factor over an entire year, the power stations would need to run and dispatch power for 70% of the time between 5am and 9pm.
So though renewable energy — wind and solar — were the cheapest and quickest way to get new power onto the grid, to qualify for the tender they needed to be coupled with a storage in order to bid, increasing the expense of the projects. It should be noted that this is not an optimal way to build a power system: wind and solar should be built where it is optimal to do so and at the scale suited to the site. Storage is something the system as a whole needs to build in and to be optimal should be able to balance the system as a whole, not only a specific power plant.
Be that as it may several of projects of this type did bid and were accepted. The lion’s share of the 2,000MW, however, went to an SA subsidiary of Turkish company Karpowership.
The allegations by the losing bidder — Aldworth Mbalati, the founder and CEO of DNG Power Holdings — are shocking and alarming and speak of brazen manipulation by officials and Mantashe. Mantashe has, in comment elsewhere, said he was not involved in the tender processes, which was conducted by officials. The department has said that all correct processes were followed and that it will see Mbalati in court.
Mbalati does not name the officials in his affidavit, neither does he name the associate of Mantashe whom he says pressured him but says he can do so if the court requires. This does cast some doubt for now over the veracity of his allegations and whether he can prove them.
If Mbalati succeeds in derailing the procurement, new power capacity will face significant delays. If he does not, we will still be stuck with the bigger problem of an inappropriately designed power solution, which will lock the country into an expensive, polluting and inflexible arrangement for the next 20 years.
The government has argued the long contract is necessary to bring down the price. All that means is that we push the cost of an inappropriate power system into the future.
That is the bigger issue that needs to be challenged.
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