Some hurdles await Karpowership plan despite the green light given by Nersa
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THE GREEN light by the National Energy Regulator of South Africa (Nersa) to controversial Turkish floating power generator Karpowership for licences in Coega, Richards Bay and Saldanha Bay faces hurdles including environmental approval, power producer agreements with Eskom, fuel agreements and legal challenges, energy experts said yesterday.
This comes as Nersa has this far reserved its reasons for granting the long overdue licences, which at some point were rejected by South Africa’s environmental authorities who needed to clear the impact of the project on South Africa’s marine life.
Karpowership has faced numerous challenges since the South African government in March granted it the biggest share of a 2 000 megawatt emergency power tender to provide the cheapest and quickest option for electricity.
Its plan to generate power on its floating gas ships and plug it into the South African grid has been stridently opposed by environment activists and local fishing communities.
Earlier this month, a South African high court agreed to postpone an appeal against the emergency tender brought by DNG Energy, a local company, which was not chosen from 11 preferred bidders and wants the decision overturned.
“There are so many risks yet, the fuel price is quoted and tagged in US dollars, subject to vagaries of the market, when the price of fuel goes up, the price of the tariffs from the project will go up as well, there are a lot of variations to the fuel price and then there is the carbon price as well which presents an upside risk,” Energy Expert Chris Yelland said.
Opponents of the projects are wondering at the reasoning to hire an emergency measure over a 20-year period, when the country could procure its own sources within that time and cost. “There is still a lot of water to flow under that bridge, there is the legal challenge by DNG, which is yet to be finalised in the courts, like some IPP coal projects several years ago, this project might yet be abandoned,” Yelland said.
Liz Macdade of Green Connection said Nersa’s approval of the licences for the Karpowership project was ominous and there are several legal challenges to the project.
“At this point it is difficult how they could have addressed the concerns that we put in our submission and we definitely are consulting our legal team and once we get the Nersa decision we will decide on our next steps, but this is really for us not in the public interest. Remember it will have an impact on electricity prices in the future,” she said.
Eskom spokesperson Sikonathi Matshantsha said the utility awaited regulatory approval of the deal from the Department of Mineral Resources on different levels.
“Eskom will have to satisfy itself that the contracts meet regulatory approval on price and environmental concerns.
“The board will have to satisfy itself that everything fulfils fiduciary duties. The department of mineral resources is responsible for dealing with all regulatory issues.
“There are the grid access code issues, the public funds management issues and various laws applicable to such a project,” he said.