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South Africa has taken emergency measures to address its parallel energy crisis, with a plan to rent mobile power plants or so-called powers to dock at its ports.
But the potential $ 15 billion 20-year deal with Turkey’s Karpowership – one of the longest of its kind – has been ridiculed by critics, as it is expensive and unfriendly to the environment and a rival energy supplier. has filed a lawsuit, arguing that the tender was arranged for the company. please.
The government of President Cyril Ramaphosa announced last month that Karpowership was the preferred bidder for a contract to supply 1,200 megawatts or two-thirds of an emergency contract with LNG powers.
Pretoria launched emergency contracting in late 2019 after Eskom, the troubled state energy monopoly, was forced to impose its most intense power cuts to date, a legacy of bad governance dating back to former President Jacob Zuma and beyond.
“We believe the process followed was flawed, illegal and in some cases contaminated,” said Aldworth Mbalati, executive director of DNG Energy, a gas supplier.
Karpowership, which already supplies Lebanon, Indonesia and eight African countries, including Sudan, Ghana and Mozambique, has strongly rejected the allegation of inadequacy. “As a consortium of local and international investors, we have every confidence that South African courts will handle it properly,” the company said.
South Africa’s department of mineral and energy resources did not respond to a request for comment. Tracey Davies, executive director of Just Share, an advocate for environmentally responsible investments in South Africa, called the deal “depressing.” He added: “The inherent contradiction of an emergency contract for 20 years seems to have passed through the government.”
Karpowership will supply energy through a local company that owns 49% to South African investors. Karpowership vessels and other projects will provide energy on demand at a price of 1.57 rand ($ 0.11) per kilowatt hour, while the country is looking for other long-term solutions. All projects will have energy purchase agreements for 20 years.
Ship energy prices will ultimately be tied to global LNG prices in US dollars, a poor result for South Africans, according to opposition from the Democratic Alliance. “There is little local advantage (such as jobs or capital investment) in leasing these powers for a period of 20 years and [the local shareholding] it seems to be little more than a confrontation to line up the pockets of the few connected, ”the party said.
The Department of Mineral Resources and Energy said 20-year terms were needed to secure the investment. “Without this long-term certainty. . . the prices of these projects could triple, ”he added.
The government’s argument was “nonsense,” said Liziwe McDaid, a member of Green Connection, a nonprofit organization. “If it’s a terrestrial power plant, you can argue 20 years because they have to build it.”
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The ruling African National Congress has a checkered history with large energy acquisition deals. More than a decade ago, it commissioned two giant coal-fired power plants, the third and fourth largest in the world, to solve the impending crisis, but they are not over yet. Zuma later reached a $ 70 billion deal for Russian nuclear power plants that threatened to bankrupt public finances until a court destroyed it in 2017. “We have an electrical emergency in South Africa, but it’s a totally self-created emergency, ”Davies said. .
Environmentalists say the contract turns Africa’s largest pollutant into a fossil-dependent future. Karpowership says it wants to help South Africa move away from fossil fuels over time. LNG was “the cleanest way to supply electricity 24 hours a day, 7 days a week and support the transition to renewable energy sources,” said Zeynep Harezi, the group’s CEO.
But South African officials have noted that they have broader ambitions to start a local gas industry, such as switching ships to run on gas supplied from discoveries on the edge of the country, although not yet they have to explode and global investors are increasingly wary of natural gas financing.
“It’s like saying‘ why don’t we start a horse-drawn carriage industry ’, two years after the first Model T Ford came out of the production line,” said energy expert Clyde Mallinson.
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