‘It’s buried’: Ramokgopa says Karpowership deal ‘dead in the water’

The controversial Karpowership deal with South Africa is no longer proceeding, Electricity Minister Kgosientsho Ramokgopa confirmed on Monday.

During a media briefing, Ramokgopa announced that the Karpowership projects would not move forward.

 “The Karpowership projects are dead in the water. I think a statement was released some time last year or so to say it hasn’t met the deadline.

“It’s something that is buried; it’s behind us,” Ramokgopa said in his response to a question posed by energy expert Chris Yelland.

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Earlier this year, Eskom pulled the plug on Karpowership, announcing that it would no longer reserve the transmission capacity initially set aside for the Turkish company.

This decision followed Karpowership’s failure to meet the December 31 deadline to finalise its financial arrangements.

The projects were initially given a financial close deadline of 31 July 2021.

Eskom made it clear that no further extensions would be granted, resulting in the company losing its grid access.

Karpowership deal

Karpowership operates floating power plants, known as “powerships,” which are equipped with gas-fired turbines capable of generating electricity.

South Africa entered into a 20-year agreement with the company after Karpowership was selected as a preferred bidder by the Department of Mineral Resources and Energy.

Karpowerships were first announced by Mineral Resources Minister Gwede Mantashe in February 2020.

In September 2021, the National Energy Regulator of South Africa (Nersa) granted Karpowership three independent power producer (IPP) licences to generate electricity from floating gas ships stationed at the ports of Coega, Richards Bay, and Saldanha.

READ MORE: Still some way to go for R6bn Karpowership deal, but must dock by 2025

The 20-year contract with Karpowership was part of the government’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), aimed at securing 2 000 megawatts (MW) of new energy capacity to alleviate South Africa’s electricity crisis.

The deal, worth more than R200 billion, would have seen Karpowership supplying 1 220 MW of power.

However, this faced strong opposition due to concerns over its cost, environmental impact, and the duration of the controversial contract.

Additionally, the tendering process faced accusations of corruption.

Civil society organisations had argued that the Karpowerships would extend South Africa’s dependence on fossil fuels, hindering the country’s transition to a low-carbon economy.

Karpowership legal battle

The Karpowership projects faced setbacks due to challenges in securing environmental approvals and were further delayed by a legal challenge from The Green Connection and the Organisation Undoing Tax Abuse (Outa).

Both groups sought a court order compelling Nersa to provide a complete, unredacted record of its decision to grant Karpowership generation licenses.

Although Karpowership withdrew from the litigation, Nersa opted to settle before the case could be heard by the Gauteng High Court in Pretoria in June 2024.

NOW READ: Nersa settles with Outa in court battle about Karpowership