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Karpowership: NERSA Approves Controversial Power Plants Amid Concerns From Environmental Groups

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SOUTH Africa’s energy regulator on Tuesday approved generating licenses for three controversial floating power plants, stoking environmental concerns as Africa’s most industrialized nation grapples with electricity shortages.

Turkey-based Karpowership, one of the world’s largest floating power plant operators, in March won a government tender to supplement South Africa’s fragile electricity supply with gas-to-power projects at three ports.

But the environment ministry subsequently blocked Karpowership’s permit application over concerns about the environmental impact. 

The company appealed the decision and the National Energy Regulator of South Africa signaled its approval on Tuesday in a statement listing seven preferred bidders for the country’s Risk Mitigation Independent Power Producer Procurement Program.

Reasons for the approval have not yet been given. 

Environmental groups have raised concern about the Karpowership plants, which require fuel to convert liquefied natural gas into electricity.

Opponents note the project will generate several million tons of carbon dioxide in a country that was already the world’s 12th-largest greenhouse gas emitter in 2019, according to Global Carbon Atlas.

Greenpeace Africa said it was “disappointed by the inexplicable decision to grant authorization for this destructive and costly project.”

Rolling power cuts have been recurring for over a decade, stifling economic activity and investment.

The court case filed by DNG also threatens to delay the provision of the electricity by months as banks baulk at providing funding because of the risk of an adverse judgment, Bloomberg reported.

Officials at three of the seven preferred bidders selected to provide power by August 2022 said the lenders are refusing to sign off on the projects until the court case is complete. They asked not to be identified because the talks are confidential.

The case filed in South Africa’s High Court by DNG Energy, which alleges corruption by government officials, was earlier this month postponed until 30 November. The deadline for financial close of the projects proposed by the seven preferred bidders has been set at 30 September by the government, already a delay from an initial 31 July requirement.

The delays mean there will be little imminent relief from intermittent power cuts imposed by state utility Eskom. The outages have hindered the performance of the South African economy and damaged investor confidence since 2005.

In addition to Turkey’s Karpowership, which secured about 60% of the contracts to provide 2,000 megawatts of electricity, the winning groups include some of the world’s leading energy companies. TotalEnergies, Electricite de France, Scatec ASA and ACWA Power are all involved.

DNG has, in its court documents, demanded that it replace Karpowership as a preferred bidder and had earlier attempted to have all the other bidders interdicted from reaching financial close. It later dropped the second demand.

  • AFP. With further reporting by Bloomberg.

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