Karpowership deal could cost South Africa R200 billion and do little to solve loadshedding – Kevin Mileham

The National Transport Department’s decision to grant Karpowership, a Turkish power ship operator, 20-year access to three South African ports has been met with criticism from environmental groups and opposition parties. Kevin Mileham, the DA’s shadow minister of Energy, has warned that the deal could cost South African taxpayers a staggering R200 billion, while only generating 1200 MW of power, equivalent to a single stage of load shedding. Mileham told BizNews that he was concerned about what appeared to be the bending of rules to favour Karpowership and that it presented another opportunity for corruption. – Linda van Tilburg

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In 20 years you could build two new Medupi and Kusile power plants

Twenty years is a ridiculous term. It’s not emergency procurement if it’s 20 years. They’re talking something like 200 billion rand over 20 years. In that time you could build two new Medupi and Kusile power plants based on the original budget costs and that’s just crazy. So, we have said that we would be willing to look at a short-term contract, a two-year to a five-year contract, a maximum of five years, where we focus on building new infrastructure and building new generation capacity and then releasing the power ships. Obviously, there are concerns around the environmental issues and the noise pollution and the like but given the state of the South African economy, you have to say, well, electricity is our number one priority. 

If a 20-year contract is what is being agreed to, then we would be looking at legal remedies and how we can stop a 20-year contract because the one thing about a 20-year contract is you have no guarantees about pricing. You’re essentially just a price taker based on the gas prices in the market at the time. 

Read more: Karpowership granted mooring rights for SA Ports, electricity project faces disputes and delays

Karpowership would reduce load shedding by only one stage 

These three power ships essentially generate about 400 megawatts of electricity each. So, you’re talking 1.2 gigawatts if they were all to come online simultaneously and were to run consistently. 24/7 365. That would reduce load shedding by effectively one stage. So, at the moment we’re averaging stage five, stage six load shedding. We would drop down to stage four or five load shedding, but we’d still have load shedding. The only solution to fixing our load-shedding crisis is to build more generation capacity in South Africa and reduce our electricity demand, to use electricity more sparingly. 

Read more: SA government prepares for legal fight over Karpowership power plants

Electricity generated by power ships cost three to four times more 

 We’re looking at a significant price jump in electricity from Karpowership because of the gas price. If we look at a short-term contract, we’re probably looking at somewhere in the region of R5.00 per kilowatt hour for electricity, which is maybe 3 to 4 times the price that we currently pay from Eskom. So, it would significantly add to the overall cost of electricity. As I’m sure you’re aware, inflation is rampant in South Africa, and the cost of living is spiralling out of control as it is in other places around the world, but this would be an inflationary driver of the economy. 

Read more: Political analyst Eugene Brink: The toxic break up between de Ruyter and the ANC over Eskom

Another ‘funding mechanism’ for the ANC 

One of the things that is of major concern is the corruption levels in the South African economy, in any government contract, in any major infrastructure build or the like. And we are very, very concerned that this is just another funding mechanism for the ANC. We saw that with the builds of Medupi and Kusile, where the ANC had a direct stake in Hitachi Power Systems, which was a major contractor. So, we are concerned that this is just another way for the ANC to loot South Africa’s economy. So, we would be absolutely against any long-term contract. 

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