Mineral Resources and Energy Minister, Gwede Mantashe, has come to the defence of Karpowership and its floating power stations after their appeals against adverse environmental rulings were rejected.
A Turkish company, Karpowership, won a tender in March 2021 to supply 1,200MW of electricity through its floating power ships. However, it has since been mired in lawsuits and environmental challenges.
Environmental activists lodged complaints with the Department of Forestry, Fisheries, and the Environment (DFFE) about the power ships’ impact on fishing, local ecosystems, and greenhouse gas emissions.
The DFFE subsequently rejected Karpowership’s bid for approval to dock their power ships at multiple South African ports owing to the potential environmental impact.
Karpowership’s bids to appeal and overturn these adverse rulings have been rejected and dismissed by the DFFE.
The company has also been accused of misrepresenting small-scale fisheries in their environmental applications. These allegations are being investigated by the DFFE.
Mantashe defends Karpowership
Mantashe has repeatedly said that Karpowership should be allowed to proceed with its plans to dock floating power stations at South African ports. He attempted to push the agreement through by reducing the length of the contracts.
During a post-budget event with Absa, the minister offered up his latest defence of Karpowership.
Mantashe said that, based on the evidence of Karpowership’s operations in Ghana, Gabon, Ivory Coast, and Brazil, the company is best placed to help South Africa alleviate its energy crisis in the short term.
Thus, “our department did give a permit to Karpowership to operate,” but unfortunately, the DFFE did not give its consent to the company.
Mantashe blames Karpowership’s inability to operate in South Africa on a “very strong movement that is anti-development”.
This movement, according to the minister, “challenges anything that is not renewable” and has subsequently prevented Karpowership from docking its stations in South African ports.
Aside from environmental hurdles, the Karpowership deal has also faced criticism due to its potentially high costs.
However, according to Mantashe, power ships are “not expensive if you compare it to the cost of load-shedding”.
The 20-year contract between Karpowership and the government states that the government will pay R1.17 per unit of electricity over the two decades.
Karpowership deal could be corrupt
Mantashe’s argument for using power ships has been most notably opposed by former Eskom CEO Andre de Ruyter, who inferred that the Karpowership deal was corrupt.
In an interview with eNCA, De Ruyter said that a background search on Karpowership would reveal that “there is an extensive legacy of alleged corruption, breaches of contract and abuse” when it comes to their dealings with other countries.
Bloomberg reported that Karpowership demanded De Ruyter retract his statement as it insinuates that the company is corrupt.
The company said it “rejects and dismisses the insinuations of corruption” and “unequivocally and unconditionally denies any allegations of impropriety on its part”.
De Ruyter added that there is “no justification for concluding a 20-year agreement with a company that can raise the anchor, literally, and sail away with the asset the country has paid for”.
Karpowership responded to this by saying that the government pays for the power produced and not the assets being used to produce the power.
State of Disaster regulations may facilitate corrupt deals
Experts, such as UCT School of Economics professor Harald Winkler, fear that the state of disaster (SOD) regulations remove checks and balances, resulting in corrupt deals.
The regulations, according to Winkler, “leave much unclear”, and there is a “significant risk that the broad powers bestowed by the SOD could be used poorly”.
Ruse Moleshe of RUBK concurs that there is nothing in the regulations to prevent procurement fraud.
The Auditor-General can only investigate transactions after the fact. Thus, while increasing oversight, it cannot prevent corrupt deals from happening.
Mantashe has repeatedly raised the option of securing electricity from Karpowership’s floating plants if the legal obstacles are removed.
The SOD allows such obstacles to be summarily dismissed as environmental considerations and regular procurement processes can be skirted around in the name of urgency.