/ 22 September 2021

Nersa approves Karpowership generation licences

Powergroup SA has approached the Johannesburg high court to seek an urgent interdict against Turkish group Karadeniz Energy, accusing it of attempting to remove it from a natural gas deal worth over R200 billion. (Karpowership)

The National Energy Regulator of South Africa (Nersa) approved seven generation licence applications under its Risk Mitigation Independent Power Producer Procurement Programme.

These include three generation licences for the Karpowership SA projects in Richards Bay, Saldanha Bay and Coega, the regulator said on Tuesday. Nersa also approved generating licences for the four other energy producers in its programme.

Turkey-headquartered Karpowership is the owner, operator and builder of the first powership fleet in the world. A powership is a floating power plant that generates electricity. 

However, Karpowership SA will need further approvals before its ships at the three ports can be fully operational and connect to the grid.

Nersa’s decision comes after Karpowership’s applications were refused environmental approval by the department of forestry, fisheries and the environment in June.

The Organisation Undoing Tax Abuse (Outa) said in a statement that it wants to see Nersa’s reasons for approving the controversial Karpowership generation licences.

Nersa said the decision and the reasons for it will be made available in due course. 

The civil-society group said it is unacceptable that Nersa has approved generation licences, but failed to provide the public with reasons immediately. 

According to Outa, the 20-year power-supply deal, which will provide 1 220MW of energy through floating storage and regasification power plants, could cost up to R218-billion.

Outa said it is inexplicable that Nersa granted the Karpowership licences while there are so many questions about the process and the Karpowership projects.

These concerns include:

  • Environmental authorisation has been refused by the department of forestry, fisheries and the environment;
  • An internal appeal process by Karpowership is still underway challenging the decision by department;
  • The absence of a fuel-supply agreement;
  • The absence of a fuel-pipeline licence;
  • The absence of port authorisation;
  • Eskom has not agreed to enter into a power-purchase agreement; and
  • A legal challenge is underway alleging failure of due process, corruption and nepotism that will be heard by the court  only in early December.

“The public has a right to know why these decisions are made. These reasons are also required if the decisions are to be challenged in court. This lack of transparency has been an ongoing problem in this process,” Outa said in its statement. 

Nersa stated that, based on the available information and analysis conducted on the applications for generation licences by the seven preferred bidders, the regulator approved the issuing of generation licences for the following projects: Oya Energy, Umoyilanga, Acwa Power Project DAO, Mulilo Total Hydra Storage, Karpowership SA Coega, Karpowership SA Richards Bay and Karpowership SA Saldanha 

Anathi Madubela is an Adamela Trust business reporter at the M&G.