Big stink about South African powerships – but energy committee votes against probe

Parliament’s Portfolio Committee on Mineral Resources and Energy has voted against an investigation into the Department of Energy’s Risk Mitigation IPP Procurement Programme (RMIPPPP).

This vote came after the DA’s shadow minister of mineral resources and energy, Kevin Mileham proposed the probe.

Mileham also called on Minister Gwede Mantashe to come clean about the real basis of the Karpowership SA bid, and why the RMIPPPP was set up to favour this solution.

Two-thirds of the new emergency risk mitigation power programme – 1,220MW of the 1,845MW – went to Karpowership SA.

This decision is facing severe criticism from energy experts for its high cost, the lack of local gas resources, and the negative impact on the environment.

The CSIR estimated that Karpowership SA can get as much as R218 billion from the 20-year deal.

Energy expert Chris Yelland added that the liquid gas for the powerships will need to be imported and paid for in US Dollars.

Currency fluctuations and the price for liquefied natural gas can therefore significantly influence the future cost of the project.

Another problem with the Karpowership SA bid is that South Africa will never own the powerships as they are rented from Karpowership SA.

“It is not a South African asset, and all the money goes abroad to the Turkish Karadeniz Energy Group,” Yelland said.

Kevin Mileham
Kevin Mileham

Mileham added that George Mokoena, former special advisor to ex-State Security Ministers David Mahlobo and Bongani Bongo, is involved in the Karpowership SA deal.

This, Mileham argued, calls into question the legitimacy of the powerships as a solution to South Africa’s electricity crisis.

The Daily Maverick reported that Mokoena is a 20% shareholder in Powergroup SA, the BEE partner to the Karadeniz which is behind Karpowership SA.

Mileham said the BEE shareholding is highly questionable because there is little local benefit to leasing these powerships for a 20 year period.

“It appears to be little more than fronting to line the pockets of the connected few. In comparison, other RMIPPPP projects are investing significantly in infrastructure and local manufacturing,” he said.

Mileham said the DA demanded that the records of the bid adjudication be made public, as well as the minutes of any deliberations in which the various bidders were evaluated.

“While we acknowledge the urgent need to secure a consistent and viable electricity supply for our country, this cannot come at the expense of our environment or our values as a country,” he said.

“We have seen the damage that politically connected contracts have done at Medupi and Khusile. South Africa cannot afford to be locked into a long-term deal with Tenderpreneurs.”

Mileham failed to convince most members of the Portfolio Committee on Mineral Resources and Energy, who voted along party lines.

Sechaba Moletsane
Sechaba Moletsane

Karpowership SA director, Sechaba Moletsane said they are currently going through all administrative processes which are required to bring the solution to South Africa.

This includes environmental and related permits needed to operate liquified natural gas (LNG) powerships in the country.

He sidestepped questions about the fact that powerships are not as clean as other solutions like solar and wind power.

Instead, he said gas was included in the International Resource Plan (IRP2019) as a necessity for South Africa’s energy future. Karpowership SA is merely fulfilling that need.

Moletsane previously highlighted that they are working to comply with all environmental legislation and to prevent or mitigate any environmental risk identified as part of the EIA process.

“We are fully compliant and, in many instances, well below the limits set out in both international and SA environmental regulations,” he said.

He added that solar and wind power do not fulfil the requirement of baseload power, which is needed in this round of the risk mitigation programme.

“There must be a lot of power dispatchable throughout the day. LNG as a dispatchable fuel for our power is actually assisting the renewable energy programme because it stabilises the grid,” he said.

He said the project will create 1,000 jobs and they will invest at least R18 billion directly into local economy.

Now read: Dirty powership blunder – solar, wind, and batteries are cheaper and better

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Big stink about South African powerships – but energy committee votes against probe