Gwede Mantashe: Beware of ‘scavengers’ in power sector

Mineral Resources and Energy Minister Gwede Mantashe broke from his prepared departmental budget speech to cryptically address issues in the country’s plans to use liquefied natural gas (LNG) as a power source to supplement its energy needs.

The plan to use powerships fuelled by LNG has attracted controversy, as there are accusations that the bidding process for the Risk Mitigation Independent Power Producer Procurement Programme has been repeatedly adjusted to favour the bid of Turkish-based Karpowership.

Beware scavengers

In his speech, Mantashe did not directly address the issue. Instead, he spoke broadly about how, if the LNG programme was not managed right, it would fall victim to those who “just want to make quick money”.

“It must be planned properly. Implemented properly. And not allow scavengers to fill that space.”

He did not elaborate on who these “scavengers” are.

Mantashe has previously denied any wrongdoing in the shortlisting of Karpowership, which has been earmarked to supply 60% of the 1 800 megawatts (MW) of power to be bought through the programme.

Mantashe was indirectly implicated in the manipulation of the bidding process when a losing bidder, DNG Power Holdings founder and CEO Aldworth Mbalati, accused his wife in court papers of being involved in Karpowership SA.

Mantashe has denied any wrongdoing on the part of himself and his wife and said the manner will be dealt with in court.

Big money

Though the allegations made by Mbalati still have to be dealt with, Mantashe outlined the next step in the process following the shortlisting of the bidders in the programme.

“An environmental impact assessment study has been undertaken for three gas-to-power plants of 1 000MW each to enable gas-to-power projects in special economic zones.”

Mantashe added that an estimated total capital investment for 15 LNG projects currently under construction was R8.9 billion.

“From these projects, at least four of them with a value of approximately R6.3 billion are expected to be completed by the end of 2021.”

Carbon neutralish

Aside from LNG, he also addressed the tensions of SA’s commitment to low carbon emissions while still looking to exploit two large offshore gas finds, as well as the prospective gas finds in the Karoo.

Mantashe said though its commitment to a low carbon future is “unwavering”, it should be seen in the context of SA being a developing country that is making a “transition” to reducing its need for carbon.

Self-powered

The government’s relaxing of regulations to allow some business to provide their own electricity has got some traction.

Power regulator Nersa has so far registered 200 projects under 1MW totalling 94MW and licensed five projects above one megawatt.

“We have also noted with delight that the mining industry is also taking steps towards self-generation which is in support of our initiatives, to this extent Gold Fields will soon commence with construction of its licensed 40MW.”

Aside from these power projects, there are several other ones coming online in the next few months; like the remaining 1 000MW coming from bid window four of the Independent Power Producers (IPP) programme by the end of December.

“We have approved eight preferred bidders with three recommended for appointment subject to them meeting specific value for money conditions. This initiative will deliver a total of 1 995MW of power into the grid within the next 12 to 18 months.”

On the mining front, Mantashe said as of March 2021, the department has set a six-month deadline to put in place a “new modern system” to provide “reliable and precise information on [the] location of exploration and mining rights” which will be “transparent and easily accessible to investors and the public”.

This article first appeared on Moneyweb and has been republished with permission.