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

Karpowership, a Turkish company, has received government permission to dock its ship-mounted power plants at three South African harbors as part of its plan to supply electricity to the country. However, a dispute with the port operator, Transnet National Ports Authority (TNPA), threatens to delay or hinder one of the projects. The TNPA intends to use one of the designated mooring sites for a liquid bulk terminal relocation, conflicting with Karpowership’s plans. The company’s initiative to provide emergency power has divided government ministers, with some supporting the use of powerships while others raise environmental concerns. The implementation of Karpowership’s plans has also faced legal challenges and delays.

Karpowership Has Mooring Rights for Three South African Ports

By Antony Sguazzin and S’thembile Cele

Karpowership, the Turkish company seeking to supply electricity to South Africa, secured government permission to moor its ship-mounted power plants at three of the country’s harbors. A dispute with the port operator may delay or thwart one of the projects.

A so-called Section 79 notice granting the consent was issued by the Department of Transport in February, though it wasn’t initially publicly disclosed. The approval surmounted one hurdle the company needs to clear to install its gas-fired plants, after winning three-fifths of a tender for the supply of emergency power in 2021. Transnet National Ports Authority wants to use one of the mooring sites — a location known as A100 at the southern Port of Ngqura — for a liquid bulk terminal it’s relocating from the nearby city of Gqeberha.

The debate around the need for powerships has divided government ministers who are under pressure to ease record power cuts. Mineral Resources and Energy Minister Gwede Mantashe favors using the vessel-mounted plants and has the support of Finance Minister Enoch Godongwana, who told local broadcaster Newzroom Afrika on Thursday that Mantashe should be given carte-blanche to procure new capacity.

“It is a cabinet decision that Mantashe has got to find electricity for the country,” Godongwana said. “On what emergency measures he does, we give him flexibility to do that. If you ask me, I am fully behind that decision.” 

Finding a new site for the ships in Ngqura would necessitate the filing of a new environmental impact assessment. That process could take as long as eight months, according to a person familiar with the situation, who asked not to be identified as the parties haven’t commented publicly on the negotiations. TNPA confirmed by email that it received the Section 79 notice, but didn’t answer a question about whether that gave it permission to host Karpowership’s vessels or compelled it to.

“The port development plan aimed at accommodating additional and much-needed liquid bulk-handling facilities at the Port of Ngqura’s A100 location will continue as planned,” TNPA said. “TNPA will continue to work with port stakeholders to ensure fairness and transparency in finding workable solutions.”

The Department of Transport confirmed that it had granted Karpowership access to the three ports for 20 years on Feb. 26. Karpowership declined to comment. 

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Shorter Contracts

Karpowership is in the process of submitting applications for environmental approvals to the Department of Forestry, Fisheries and the Environment for the operation of a 450-megawatt powership in the northeastern port of Richards Bay and a 320-megawatt plant in the western port of Saldanha. A 450-megawatt plant is slated for the Port of Ngqura.

Karpowership’s plans, which were initially supposed to be implemented by August last year, have also been slowed by lawsuits and challenges from environmentalists.

The terms of the emergency power tender gave Karpowership and other bid winners 20-year supply contracts, attracting the ire of environmentalists who said South Africa would be locked into using a fossil fuel for their duration. 

Godongwana said on Thursday that the contract period would be shorter. Formal talks about reducing the length have not begun, the person said.

Reducing the duration may ease complaints by environmentalists, but would likely boost the cost per unit of electricity produced. The initial cost was worked out a time when gas and other costs were lower and the expenses incurred could also be amortized over a longer period.

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-With assistance from Khuleko Siwele.

© 2023 Bloomberg L.P.