The Organisation Undoing Tax Abuse is gearing up for an application to compel the National Energy Regulator of South Africa (Nersa) to provide OUTA with the full, unredacted record of Nersa’s decision to approve generation licences to Karpowership. This application is set down for hearing on 4 to 6 June 2024.

Karpowership has withdrawn its opposition to both the application to compel production of the record and the main application calling for a review of Nersa’s licence decision. However, Nersa continues to oppose both.

“Interestingly, on 17 May 2024, OUTA received a notice of withdrawal from Karpowership, withdrawing from the application to compel and the main (review) application. This is surprising and begs the question what the sudden change of heart could be?” says OUTA’s Advocate Stefanie Fick, OUTA Executive Director of the Accountability division.

In April 2022, OUTA filed an application for the review and setting aside of the decisions by Nersa to grant the three Karpowership independent power producer (IPP) generation licences. This application was opposed by Nersa and Karpowership.

“We believe that Nersa has displayed a cavalier attitude towards statutory compliance and public concerns throughout its decision-making process to award generation licences to Karpowership. By doing so, it has failed to properly exercise its mandate and fulfil its oversight functions without the necessary independent checks and balances to ensure that the interests of electricity suppliers are balanced with the interests of customers, the public and the South African economy,” says Fick.

OUTA believes that Nersa’s decision-making was procedurally unfair. The process was premature and lacking in transparency. As such, OUTA in the main application (the review application) called for Nersa to provide within 15 days copies of all documents relating to the decisions to grant Karpowership the generation licences, together with the reasons for the decisions.

“The National Energy Regulator Act requires that every decision by Nersa be ‘in the public interest’ and ‘based on reason, facts and evidence’. This act also provides for the judicial review of Nersa decisions in terms of the Promotion of Administrative Justice Act,” says Fick.

Despite OUTA’s quest for transparency, Nersa provided only a redacted record and OUTA was therefore obliged to compel Nersa to produce the full and unredacted record of its decisions to approve generation licences to Karpowership. OUTA’s application to compel was launched on 23 January 2023.

After various efforts by Nersa and Karpowership to delay the compel proceedings, the Pretoria High Court in December 2023 issued a directive setting down OUTA's application to compel for 4 to 6 June 2024.

OUTA filed heads of argument on 31 January 2024 and Nersa filed heads of argument on 28 February.

On 31 December 2023, the Karpowership IPPs failed to meet the Department of Mineral Resources and Energy’s final extended deadline for financial and legal closure for Risk Mitigation IPP Procurement Programme (RMIPPPP) projects. Eskom subsequently said that the grid access for those projects expired on 31 December and no further extensions would be granted, so Karpowership lost its grid access.

More information

A soundclip with comment by Advocate Stefanie Fick, OUTA Executive Director, in English is here and in Afrikaans is here.

More information on OUTA’s case, including the court papers, is here.