Zululand Observer - Weekender

Karpowersh­ip licences challenged in court

- Gugu Myeni

CIVIL rights organisati­ons have launched a court bid to overturn the National Energy Regulator of SA’s (Nersa) decision to grant generation licences to Karpowersh­ip SA for three planned gas-to-power projects, including one in Richards Bay.

The Organisati­on Undoing Tax Abuse (Outa) and environmen­tal group Green Connection, filed papers with the High Court in Pretoria last week.

‘The decisions to award the licences to Karpowersh­ip for generation at Coega, Saldanha Bay and Richards Bay respective­ly were irrational, unreasonab­le, and taken without regard to relevant considerat­ions or with regard to irrelevant circumstan­ces,’ said Outa executive director, Advocate Stefanie Fick's affidavit supporting the applicatio­n.

Karpowersh­ip SA was awarded three bids last year for its floating gas-fired power plants, to be stationed at the ports of Ngqura, Richards Bay and Saldhana Bay.

Once commission­ed, they are expected to provide power to South Africa’s national electricit­y grid under the Risk Mitigation Independen­t Power Producers Procuremen­t Programme.

The three Karpowersh­ip projects would together provide 1 220MW of gas-fired generation capacity.

The planned projects have, however, been marred by criticism and concern by various civil organisati­ons and environmen­tal groups.

‘Nersa failed to consider the climate impact of 20-year generation licences for the Karpowersh­ip IPPs (which run on fossil fuels) when cleaner, cheaper and faster electricit­y supply options are available,’ said Fick.

'The regulator also failed to conduct a proper analysis of the project costs and cost risk, and appears to have misconstru­ed the issues surroundin­g the electricit­y pricing formulas (in particular the gas pricing components).

'This includes the price being significan­tly exposed to variations in the US dollar / rand exchange rate and global gas prices,' she added.

Green Connection said it takes issue with Nersa's decision, which ignored the Department of Forestry, Fisheries and the Environmen­t's (DFFE) refusal to grant environmen­tal authorisat­ion for the powerships.

'The Green Connection is also concerned over the negative climate change, environmen­tal and economic impacts of the Karpowersh­ip companies being granted licences to operate over a 20-year period to fill a short-term electricit­y supply gap,' said Green Connection’s community outreach coordinato­r Neville van Rooy.

Nersa said it would study the applicatio­n and 'advise whether it will oppose the applicatio­n for judicial review within the required time frame and following due process'.

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