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)
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.
Powergroup SA owns 49% of electricity company Karpowership SA, while Karadeniz Energy has a 51% stake. Powergroup SA is accusing Karadeniz Energy of trying to transfer Powergroup SA’s 49% shares to another black economic empowerment company without following proper procedure.
In court papers filed last Friday, Powergroup SA asked the court to stop the Turkish company from transferring its shares before an arbitration process takes place. It said since last November, Karadeniz had tried to force some shareholders into selling their stakes in the project, estimated to be worth R228 billion.
The papers claim that despite engagement with Karadeniz, the company has ignored the provisions of the shareholders’ agreement which compels it to suspend any transfer before the arbitration takes place.
In an affidavit attached to the court papers, Powergroup shareholder Sureshan Moodley said the actions by Karadeniz were prejudicial to the company.
“This stratagem of pushing out minority BEE [black economic empowerment] shareholders once a tender has been won is regrettably not new in corporate South Africa. [Karadeniz] is precisely doing that. It is attempting to sell the applicant’s shares to the highest, politically-connected bidder, to the detriment and prejudice of the applicant,” he said.
Chief among Powergroup SA’s concerns is that even though the agreements refer to 49% shareholding for Powergroup, the company’s beneficial interest is limited to 24%. Powergroup SA added that it has no access to financial information and operations from the partnership.
Responding to questions, Karadeniz said it would co-operate with the court.
“Our BEE partnership is being dealt with according to South African laws and our legal undertakings. No judgement was handed down on Friday and we will continue to fully co-operate with the courts,” the company said.
The legal challenges add to the many problems Karpowership SA has faced since it was named in 2021 as a preferred bidder under the risk mitigation independent power producers procurement programme to ease electricity shortages in the country.
The company has been unable to proceed with power generation because of litigation from environmental groups who have argued that the ships would disrupt marine life. The Green Connection and Natural Justice last month said that the ships would also cause noise, affecting sea life and local communities.
“Concerns remain that the operation of the powerships could harm the marine environment and juvenile fish nurseries in particular, which may in turn negatively impact small-scale fishers based in or near these areas who depend on fishing for their livelihoods,” they said in a statement.
Karpowership SA was awarded three bids for a total contracted capacity of 1 220 megawatts to be provided from powerships moored in Coega, Richards Bay and Saldanha under the risk mitigation independent power producers procurement programme. But its first application for environmental authorisation was refused as was its appeal against this decision.
On Friday, Liz McDaid, the strategic lead at The Green Connection, said the environmental group would be heading to the court to call for a response on its case against both Karpowership SA and the National Energy Regulator of South Africa initiated in April 2022.
The Green Connection wants Karpowership SA and the regulator to provide a reason why Karpowership and its ships are the best source of energy for the country and disclose how much the project will cost.
“South Africans do not have access to the information about the actual costs that will come with Karpowerships. There are still too many questions about its suitability and sustainability as a measure to fill the country’s short-term electricity generation gap. The public needs transparency about these projects,” McDaid said.
She added that the information was important for South Africans to fully “understand the consequences of any decision that could affect our lives and our livelihoods and we should have the right to say “no” when we believe that a project will do more harm than good”.
Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa