Karpowership running out of time

Karpowership’s plan to have floating gas powerships at three South African ports will face further delays following a damning judgment regarding its BEE agreement and challenges to its environmental approvals.

This threatens the company’s grid access rights in South Africa, which have already been extended to the end of the year. 

Turkey’s Karpowership aims to be fully operational in South Africa before the end of 2024 after receiving environmental approval for its project in Richards Bay and Saldanha Bay. 

Karpowership’s chief commercial officer, Zeynep Harezi Yilmaz, said the company expects the Richards Bay project to reach financial close before the end of the year. 

The company initially won a tender to provide electricity to South Africa by docking its powerships at three of the country’s ports in 2021 to produce 1,200 MW of electricity. 

However, the projects have been beset by legal challenges, resulting in multiple delays despite strong support from Energy Minister Gwede Mantashe. 

Earlier this month, Karpowership obtained environmental approval for its project in Richards Bay after donating a game farm to a provincial wildlife authority to ease environmental approval. 

Yilmaz said that after being granted environmental approval, the company would reach financial close before the end of 2023 and sign its power purchase agreement with the IPP office. 

Once the project has reached financial close, “before the end of next year, we will be fully commercially operational to start with in Richards Bay”. 

Yilmaz also said there is no more opposition to its projects, with all legal cases being closed in Karpowership’s favour and all issues resolved. 

However, despite this progress, there will likely be further delays as environmental groups have challenged the environmental approvals for Richards Bay and Saldanha Bay. 

Furthermore, former chief justice Sandile Ngcobo has delivered a damning arbitration ruling in the fight over Karpowership’s BEE shareholding.

Energy analyst Chris Yelland said the ruling showed that “Karpowership’s treatment of its BEE partner was outrageous, and the manner in which the agreement was implemented was extremely one-sided.”

“This is an ongoing signal that things are far from right with this Karpowership arrangement,” he told Newzroom Afrika. 

There are multiple outstanding issues regarding the company’s plans to dock powerships at South African ports, including legal challenges. 

More importantly, the company has yet to sign power purchasing agreements with Eskom. 

“These sorts of arrangements should have been made ready at the time of bidding,” Yelland said. 

The projects should have been ready to go as soon as Karpowership won the tender to produce power for South Africa. 

However, they are still mired in all kinds of complications, and the financial close of the projects will be delayed. 

This is despite extraordinary support from the Department of Mineral Resources and Energy (DMRE). 

“Karpowership appears to be in a very privileged position. The DMRE are falling over backwards to accommodate them in a way that is outrageous,” Yelland said. 

Eskom has already extended Karpowership’s grid access rights to the end of the year. It is unclear whether the company will reach financial close before then, potentially risking losing access to the grid.