We want to see NERSA's reasons for approving the Karpowership licences

The Organisation Undoing Tax Abuse (OUTA) wants to see the National Energy Regulator (NERSA) reasons for approving the Karpowership generation licences.

On 21 September 2021, NERSA approved the generation licence applications for seven projects under the Risk Mitigation Independent Power Producer Procurement Programme (RMI4P), including the applications for the three floating Karpowership projects, along with the charge rates for all seven.

OUTA finds it unacceptable that the NERSA approves generation licences but fails to provide the public with reasons immediately. How are these projects approved if the reasons for decisions are not carefully considered and written up?

The public has a right to know why these decisions are made. These reasons are also required if the decisions are to be challenged in court.

This lack of transparency has been an ongoing problem in this process.

OUTA finds it inexplicable that NERSA granted the Karpowership licences while there are so many questions over the process and the Karpowership projects.

These include:

• Environmental authorisation has been refused by the Department of Forestry, Fisheries and the Environment (DFFE);

• An internal appeal process by Karpowership is still underway challenging the decision by DFFE;

• Absence of a fuel supply agreement;

• Absence of a fuel pipeline licence;

• Absence of port authorisation;

  
  

• Eskom has not agreed to enter into a power purchase agreement;

  
  

• A legal challenge is underway alleging failure of due process, corruption and nepotism that will only be heard by the court in early December 2021.

The Karpowerships are to be anchored in Richards Bay, Saldanha Bay and Coega, and will between them provide 1 220 MW through floating storage and regasification power plants. A 20-year deal could cost up to R218 billion.

During the recent public comment period, OUTA had submitted a formal submission to NERSA opposing the Karpowership licences. More information on this is here.

There are also questions around the fairness of the bidding process after the Department of Mineral Resources and Energy (DMRE) moving the “immovable” deadlines for financial closure of the projects after the bidding process closed. While government has claimed this is due to its own delays, OUTA has previously pointed out that the Karpowership projects are far from ready to achieve financial closure.

Soundclip

A soundclip with comment by Brendan Slade, OUTA Legal Project Manager, is here.