Emergency power programme sees accusations of graft

When the South African government announced the eight preferred bidders in the Risk Mitigation Independent Power Producer Procurement (RMIPPP) programme, local experts openly questioned the tender allocation. Eight bidders will provide an additional 1,845 megawatts, generated by various technologies. The project equates to R45bn of private-sector investment. The bidders are; ACWA Power Projects DAO, Oya Energy, Umoyilanga, and two projects for Mulilo Total and three for Karpowership SA. They use technologies including solar, photovoltaic, wind, liquefied natural gas and battery storage. Turkish firm, Karpowership has been allocated two-thirds of the programme’s capacity. The company plans to use liquified natural gas to produce power. Energy expert Chris Yelland questioned the Department of Mineral Resources and Energy and the  IPP Office about tender requirement exemptions granted to Karpowership by the Department of Trade, Industry and Competition (DTIC) in March.  Clyde Mallinson, director at Virtual Energy and Power told MyBroadband that the Karpowership SA deal will lock the country into “dirty and expensive energy for the next 20 years.” DNG Energy, a South African gas company has formalised its objection to the awarded contracts in the form of a lawsuit, claiming that the tender process was tainted by corruption.– Melani Nathan

South Africa power contracts face legal challenge over graft

By Antony Sguazzin

(Bloomberg) – DNG Energy, a South African gas company, sued to halt the government’s award of emergency power supply contracts, alleging that the process was tainted by corruption.

Some of the eight bid winners, especially Turkey’s Karpowership, which operates mobile, vessel-based power plants, were granted unlawful exemptions from the tender requirements, DNG said in court documents. Its lawsuit could hamper attempts to bring new generation capacity on line and address a crisis that’s seen state utility Eskom Holdings. subjecting the nation to intermittent electricity outages.

Aldworth Mbalati, DNG’s executive director, said in an affidavit to the High Court that he was approached by a businessman with “close ties” to Energy Minister Gwede Mantashe and government officials who offered assistance to win a contract. Mbalati said he was told the outcome would be pre-determined, but rejected their proposal, according to the affidavit. He didn’t identify the people who approached him because he intends to file a criminal complaint.

Bloomberg couldn’t immediately reach Karpower’s spokesperson at its headquarters in Turkey, which is under a national coronavirus lockdown. A company representative wasn’t immediately able to comment when contacted on mobile phone. Sechaba Moletsane, one of three directors of Karpower’s local partner Powerships SA, didn’t answer a call to his mobile phone or respond immediately to a text message and an email requesting comment.

Power outages

The tender winners have been contracted to generate 1,845 megawatts of electricity by August next year, projects the government expects to bring in R45bn ($3.2 billion) of investment. The deals have yet to reach financial close.

Karpowership, a unit of the Turkish Karadeniz Energy Group, won the bulk of the contracts, which will run for two decades — a deal worth an estimated R218bn That’s sparked concerns that the country’s may fail to reach carbon emission reduction targets.

“People who go to court are answered in court,” Mantashe said by phone. “Editors are not judges.”

His spokesman, Nathi Shabangu, said the Department of Mineral Resources and Energy, which Mantashe oversees, or the Independent Power Procurement Office will issue a statement on Friday.

The opposition Democratic Alliance party on Thursday had a motion, backed by environmental activists, to have a parliamentary probe of the contract rejected.

Karpowership was granted exemptions with regard to conducting environmental assessments prior to submitting a bid as well as a so-called local content requirement, designed to stimulate South African business.

The power vessels supplied by Karpowership “were originally designed to supply electricity to countries with little to no electrical infrastructure such as war-torn countries, or countries which had suffered natural disasters,” DNG said. “The fact that these ‘short-term emergency ships’ would operate for 20 years in three critical ports further prejudices the development of liquefied natural gas terminals and severely prejudices the development of a gas economy.”

AmaBhungane, a South African investigative news organisation, reported on the court documents earlier on Friday.

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