MPs question powerships deal to generate electricity

Parliament’s portfolio committee on mineral resources and energy has been briefed by officials from the department of mineral resources and energy (DMRE), but without the minister, Gwede Mantashe, about the Karpowership contract to supply power from vessels to South Africa.

The meeting on Tuesday followed calls by various civil society organisations and energy experts questioning the viability of the powerships in South Africa, considering the massive cost to the environment and the operating costs associated with them.

Ahead of Tuesday’s meeting, 15 civil society organisations, including environmental group the Centre for Environmental Rights and shareholder activists JustShare, wrote to committee chair Sahlulele Luzipo, calling for public hearings to be held over the decision to award Karpowership three of the eight winning power bids.

Their letter, which was read out at the start of the meeting, said the public hearings should investigate how a foreign-based company was able to circumvent local content rules and how its application process was not subject to the public participation process.

DMRE deputy director-general Jacob Mbhele said although Karpowership was chosen as one of the government’s preferred energy bidders, no work has begun.

He added that the announced bidders are required to reach financial close by no later than the end of July, and are expected to accept “preferred bidder status” by paying a nonrefundable fee of R25 000 per megawatt and submit a preferred bidder guarantee of R200 000 per megawatt.

Prior to financial close, accepted bidders are also expected to obtain the necessary final environmental authorisations, as well as the required authorisations from the National Ports Authority, the South African Maritime Safety Authority and the National Energy Regulator of SA.

Last year, Karpowership was given an exemption from mandatory environmental impact assessment (EIA) procedures by the department of forestry, fisheries and the environment.

The exemption allows companies to circumvent some EIA requirements in the event of emergency situations, such as the Covid-19 pandemic.

The Section 30A exemption from the National Environment Management Act was, however, revoked by the department following pressure from environmental groups.

Speaking during a separate webinar on Tuesday, Ravin Rajoo, Karpowership SA shareholder and managing partner at law firm Bodasing and Company, said the negative impact on the environment as a result of the powership is a “necessity”. – Moneyweb