10/05/2021 | News release | Distributed by Public on 10/05/2021 11:51
South Africa has postponed the date for Turkish firm Karpowership and other bidders under its Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) to reach financial close to the end of January.
The Department of Mineral Resources and Energy (DMRE) told Argus that the deadline has been extended to "no later than 27 January 2022". The postponement is a result of delays in the finalisation of state-owned utility Eskom's approval and other regulatory permissions, it said.
The RMIPPPP aims to alleviate South Africa's near-term electricity supply crisis by fast-tracking 2GW of new capacity. It is the third time that the deadline has been postponed.
Originally, the "non-negotiable" deadline was set as 31 July. But the DMRE extended this to 30 September, to allow for the finalisation of regulatory processes, including Eskom board approvals and related approvals under the Public Finance Management Act.
Six of the 11 preferred bidders - including Karpowership and Scatec Solar - requested more time, the DMRE said. Bidders cited delays in the issuing of Eskom budget quotes, generation licences and other permits as some of the reasons why they needed an extension.
But these requests were received after 13 September, when the DMRE had already started the process to extend commercial close owing to the fact that Eskom was not ready. All other preferred bidders also registered concerns around the timing in their monthly status reports, the DMRE said.
Karpowership was selected as one of the preferred bidders to provide 1.22GW - nearly two-thirds of the overall tender - over 20 years using gas-fired power ships berthed at Richards Bay in Kwazulu-Natal, Coega in Eastern Cape and Saldanha in Western Cape.
But the firm's multi-billion-rand contract has been dogged by allegations of corruption and government interference from the start.
The portfolio committee on mineral resources and energy is still examining claims that the DMRE manipulated the procurement process. A lawsuit brought by South African LNG importer and losing bidder DNG Energy, which says that the bid process was rigged in favour of Karpowership, will be heard on 30 November.
Environmental justice group The Green Connection said it was "cynically expecting" the DMRE's announcement of a further extension as it was evident that Karpowership was "nowhere near ready - with all the legal requirements in place - to reach financial closure."
The group has called for the RMIPPPP to be scrapped in its entirety as it has been delayed from its inception. "The initial bid date was extended from August 2020 to 20 December 2020 and although the winning bids were announced in March 2021, the results were immediately questioned by experts," it said.
The Department of Forestry, Fisheries and the Environment (DFFE) is yet to decide on Karpowership's appeal against its refusal to grant the firm environmental permission for its project. "The process is still under way and the appeal will be determined once all responses have been collated," it said.
The Turkish firm was also being investigated by the national prosecution agency over potential criminal conduct, whereby it obtained DFFE authorisation for its project last year allegedly by using Covid-19 emergency provisions to bypass environmental assessment requirements.
Last month the National Energy Regulator of South Africa approved electricity generation licences for Karpowership's projects, a move that was heavily criticised by many observers.
By Elaine Mills