Gas

Govt now has eight weeks to decide on powership project after it clears environmental hurdle

by Jan Cronje

29 April 2021

 

Karpowership

Karpowership SA, the company bidding to moor five powerships in South African harbours for 20 years, cleared another hurdle when its environmental assessors found that the projects at the ports of Saldanha Bay, Richards Bay and Ngqura could go ahead.

Balito-based Triplo4, which carried out the assessments on behalf of Karpowership SA, submitted the final environmental impact assessments for the three ports earlier in the week, following a period of public comment. It found that the projects should go ahead, subject to a number of mitigations measures.

Green groups have slammed the project, arguing the powerships will be bad for the environment, expensive and risk becoming obsolete.

It will now be up to the Department of Forestry, Fisheries and the Environment to grant or refuse authorisation. The department has 57 days to study the reports and come to a decision. After the department makes its decision, there will be an opportunity to appeal.

Karpowership SA has been named a preferred bidder in the department of energy’s Risk Mitigation IPP Procurement Programme (RMIPPPP) to fast-track about 2 000 MW of new power production from independent producers to cut down on load shedding.

The group has bid to moor

  • one powership producing 415 MW of electricity from natural gas, and one additional ship used for LNG, known as a floating storage regasification unit (FSRU) at the port of Saldanha Bay;
  •  two powerships producing 540 MW of electricity and one FSRU at the port of Richards Bay; and
  •  two powerships producing 540 MW of electricity and one FSRU at the port of Port of Ngqura within the Coega Special Economic Zone.

All the ships will produce electricity from natural gas.

20-year agreements 

If Karpowership SA is successful in obtaining environmental authorisation from the DFFE and other outstanding approvals, the department of energy intends to sign 20-year  power purchase agreements with it.

According to an estimate prepared by the Council for Scientific and Industrial Research, the powerships could cost SA between R160 billion and R218 billion over their 20-year lifespan.

But some energy analysts have questioned the need for SA to conclude 20-year agreements, as that the international norm for using “emergency” powerships was around three to five years.

“No-one has ever signed a 20-year contract for powerships. They offer a short-term emergency power option when there are no alternatives,” UCT Professor Anton Eberhard previously told Fin24.

Officials from the Department of Mineral Resources and Energy, which oversaw the RMIPPPP, have defended the 20-year agreements, saying they are necessary to keep costs down.

“The [20-year agreements] enable projects to recover deployed capital as well as operating costs at a rate and pace that does not make it unaffordable to buyer and therefore the end user,” the department’s Deputy Director General, Jacob Mbele, told Parliament last week.

The explanation did little to reassure some MPs on Parliament’s oversight committee on mineral resources and energy, who want the committee to probe how the RMIPPPP bids were awarded.

However the committee on Wednesday blocked a proposed probe into the bids tabled by DA MP Kevin Mileham. Mileham received no cross-party support and a vote to launch a probe failed. ANC MPs on the committee critcised Mileham’s proposal, with Sibusiso Kula questioning why he was “casting aspersions” on the bid process without evidence.

“I don’t think we are at a point in time where we ought be entertaining things such as investigations,” said Kula, adding that department of energy had cleared up any “doubts, concerns and misconceptions”.

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