Karpowership receives investor rights for South African motor ships Ship’s crew

By Antony Sguazzin and S’thembile Cele (Bloomberg) —

Karpowership, the Turkish company that aims to supply South Africa with electricity, has received government approval to locate its ship-mounted power plants in three of the country’s ports. A dispute with the port operator can delay or thwart one of the projects.

In February, the Department of Transportation issued what it called a Section 79 notice granting consent, but it was not initially publicly disclosed. The approval cleared a hurdle the company faces to install its gas-fired power plants after winning three-fifths of a bid to supply emergency power in 2021. The Transnet National Ports Authority wants to use one of the berths – a site known as A100 in the southern port of Ngqura – as a liquid bulk terminal, it will be relocated from the nearby town of Gqeberha.

Debate over the need for power plants has divided government ministers, who are under pressure to ease record-breaking blackouts. Natural Resources and Energy Minister Gwede Mantashe is in favor of using the ship-mounted equipment and has the backing of Finance Minister Enoch Godongwana, who told local broadcaster Newzroom Africa on Thursday that Mantashe should be given carte blanche to source new capacity.

“It is a cabinet decision that Mantashe must procure electricity for the country,” Godongwana said. “We’re giving him the flexibility he needs in the emergency actions he takes. If you ask me, I fully support this decision.”

The search for a new location for the ships in Ngqura would require the filing of a new environmental impact assessment. That process could take up to eight months, said a person familiar with the situation, who asked to remain anonymous because the parties have not commented publicly on the negotiations. TNPA confirmed by email that it had received the Section 79 Notice, but did not answer a question as to whether this allowed it to accommodate Karpowership’s vessels or was compelled to do so.

“The port development plan, which aims to accommodate additional and much-needed bulk liquid handling facilities at the Port of Ngqura’s A100 site, is proceeding as planned,” TNPA said. “TNPA will continue to work with port stakeholders to ensure fairness and transparency in seeking viable solutions.”

The Department of Transportation confirmed on February 26 that it had granted Karpowership access to the three ports for 20 years. Karpowership declined to comment.

Shorter contracts

Karpowership is in the process of submitting applications to the Department of Forestry, Fisheries and Environment for environmental permits to operate a 450-megawatt powership in the northeast port of Richards Bay and a 320-megawatt power station in the west port of Saldanha. A 450-megawatt system is planned for the port of Ngqura.

Karpowership’s plans, originally due to be implemented by August last year, have also been slowed by lawsuits and challenges from environmentalists.

The terms of the emergency power tender included 20-year supply contracts for Karpowership and other winners of the tender, drawing the ire of environmentalists who said South Africa was tied to one fossil fuel use for the duration of the tender.

Godongwana said Thursday the contract term will be shorter. Formal talks about reducing the length have not yet started, the person said.

Reducing the duration could alleviate complaints from environmentalists, but would likely increase the cost per unit of electricity produced. The initial costs were calculated at a time when gas and other costs were lower and the costs incurred could also be amortized over a longer period of time.

-With the support of Khuleko Siwele.

© 2023 Bloomberg LP

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