Page 23 - Energize August 2021

NEWS

Very significant portions of the three Karpowership licence applications, particularly those • Legal challenge by DNG Energy
portions disclosing details and make-up of the business case, tariff rates and price adjustment disputing award of preferred bidder
formulae described above, have been redacted and are not visible to the public or affected status to Karpowership: It has also
stakeholders. However, it is absolutely clear that the Karpowership project bid tariff rates, been widely reported and is in the
which are quite close to those of the non-Karpowership projects at the date of bid, will be public domain that DNG Energy is
significantly higher than those of the non-Karpowership projects over the course of the 20- conducting a legal action against the
year contract period. OUTA says that in these circumstances and the lack of transparency, it award of preferred bidder status
is impossible and irrational for Nersa to expect the public and affected stakeholders to make to the three Karpowership projects
any meaningful comment and input on the business case and its evaluation by the IPP Office under the RMIPPP progamme. DNG
through the public participation process. Energy alleges in its court papers that
procedural irregularities, conflicts of
• Environmental authorisation for the three Karpowership projects has been denied: It is interest and corrupt activities resulted
well known that applications for environmental authorisation for the Karpowership projects in the improper awarding of preferred
have been rejected and denied by the Department of Forestry, Fisheries and the Environment bidder status to the three Karpowership
(DFFE). While internal appeals have been lodged, there is no indication of when they will be projects. DNG Energy is seeking to
heard, or when the final decision by DFFE will be announced. Furthermore, whatever the final have itself substituted as the preferred
ruling, it is inevitable that the matter will be taken on review in the courts, and it is thus clear bidder for the three projects in place of
that environmental authorisation of the Karpowership projects will drag on for many months, Karpowership, its subsidiaries and/or
or even years. associate companies. The court
hearing was to take place in the
• Evidence of port authority permits is not included in Karpowership licence applications: middle of July 2021 but has since been
The Karpowership project generation licence applications do not include evidence that the delayed and set down for 9, 10 and
relevant port authorities have agreed, or will agree, to provide permits for the mooring of 13 September 2021.
floating powerships and FSRUs in the harbours of Richards Bay, Coega and Saldanha Bay for
the next 20 years. Furthermore, there are significant differing legal opinions in the public • Investigation by Parliamentary Portfolio
domain by major legal companies, i.e., Bowman Gilfillan and Pinsent Masons, as to the Committee on Minerals and Energy: It
powers of the Transnet National Ports Authority (TNPA), as a subsidiary of Transnet, to grant has been widely reported and is in the
such permits or authorisations. It is clear that any such port authorisations will face a barrage public domain that the Parliamentary
of legal challenges, and it is likely that this matter will only be finally clarified in the courts. Portfolio Committee on Minerals and
Energy has taken legal opinion on its
• Proof of gas pipeline authorisation is not included in Karpowership licence applications: The right to initiate a parliamentary inquiry
Karpowership project generation licence applications do not include evidence that Nersa, as into the awarding of preferred bidder
the gas pipeline regulator, has agreed or will agree to provide licences or permits for pipelines status to the three Karpowership
to transport liquified natural gas (LNG) from shipping tankers to the FSRUs, and to transport projects under the RMIPPP progamme,
gas from the FSRUs to the floating powerships in South African waters. Nersa’s own generation and other issues arising. It has also
licensing procedures require that evidence of such gas pipeline permits and authorisations been widely reported that Parliament’s
should be included with such applications for generation licences. legal advisors have indicated that the
Parliamentary Portfolio Committee on
• Evidence that Eskom’s board will agree to PPAs is not included in Karpowership licence Minerals and Energy does indeed have
applications: The Karpowership project generation licence applications do not include this right, and intends to conduct such
evidence that the Eskom board has agreed or will agree to enter into power purchase an investigation.
agreements (PPAs) between the Karpowership IPPs as generators, and Eskom as off-taker
for the electricity generated, for 20 years. On the contrary, reports indicate that Eskom is The Karpowership project generation licence
expressing deep reservations about entering into PPAs with the Karpowership IPPs for the applications are clearly far from complete,
next 20 years. Nersa’s own generation licensing procedures require that evidence of PPAs, with a number of serious and far-reaching
or at least agreement by the Eskom board that Eskom as off-taker will enter into such PPAs, investigations and processes still underway.
should be included with such applications for generation licences. As such, OUTA contends that holding
public hearings by Nersa is premature and
• Criminal investigation by DFFE of Karpowership’s environmental authorisation inconsistent with Nersa’s own processes
application: It has been widely reported and is in the public domain that the Green and past practices, where only complete
Scorpions at the DFFE are currently investigating potentially criminal conduct relating to licence applications are considered. OUTA
the extraordinary environmental authorisation granted to Karpowership in June 2020. This argues that any one of the many issues
authorisation, just before the RMIPPP tender was announced, exempted Karpowership detailed above would stand to disqualify
under an emergency provision of the National Environmental Management Act (Nema) consideration by Nersa of the generation
from having to undertake environmental impact assessments (EIAs) for its projects, licence applications for the Karpowership
supposedly because it would provide emergency power to combat the Covid-19 pandemic. projects. Considering the totality of all the
DFFE later revoked the exemption on the basis that the Department had been misled. objections detailed above collectively, OUTA
This forced Karpowership to reapply, this time with complete EIAs for all three of its says it is indeed astounding that Nersa is
RMIPPP projects. But, as detailed above, DFFE has since refused to grant environmental seen to be entertaining the Karpowership
authorisation in respect of these applications. project generation licence applications.

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