Gwede Mantashe ‘ready for a fight’

Minerals & energy minister Gwede Mantashe says the government is ready for a legal showdown with environmental groups as it forges ahead with a controversial plan to contract power ships to berth at the country’s main ports for 20 years to help end the blackouts wreaking havoc on the economy. 

He told Business Times in Cape Town this week that the country had long allowed environmental groups to stymie development, but he was now determined to prevail.  

“In South Africa we have done something very painful; where we have given environmentalists a veto power over development ... We are realising now there’s something wrong with that,  environmentalists veto every development if they don’t like it. Therefore, gas-to-power is taken to court all the time.

“We are battling with the exploration of gas and oil. We stay in court. But it is one process that we are prepared to engage in. We are going to endure. People can take us to court as many times as they can, we will continue with gas and petroleum exploration,” Mantashe said. 

Two other cabinet ministers whose responsibilities include political management of Eskom have come out in support of the ship-mounted power idea to ward off load-shedding.

Environmentalists veto every development they don’t like ... People can take us to court, we will continue with gas and petroleum exploration 

—  Gwede Mantashe

It emerged this week that Turkish company Karpowership was in February granted permission by the department of transport to moor its ship-mounted power plants at the ports of Durban, Nqura and Saldhana.

Environmental lobby groups have challenged the Karpowership deal for emergency energy procurement of 2,000MW in various courts, warning the ships would cause huge damage to the marine ecology and fishing.  They have also questioned the length of the contract. 

The South African rival bidder DNG Energy lost round one in court when it sought to overturn the deal on the basis that the contract had been won unlawfully and irregularly. It alleged corruption involving government officials had led to it losing the deal to Karpowership, which supplies electricity from gas-fired plants on ships. The Organisation for Undoing Tax Abuse (Outa) has also gone to court seeking to make public records of the deal.

Karpowership has been unable to get environmental approval from the department of forestry, fisheries & the environment for its project. 

The department is reviewing its application for environmental authorisation to set up a 320MW plant at Saldanha. Two other applications have been rejected. On Friday, minister Barbara Creecy said her department would be objective in deciding on environmental authorisation for the ships. 

Speaking on the sidelines of the Enlit Africa Conference, Mantashe said South Africa needed the technology that Karpowership provided to deal with load-shedding. He said the government had seen Karpowership at work in Ivory Coast, Brazil, Gabon, Ghana and Senegal. The department heard “recent noises” indicating that more South Africans were receptive to the idea of ship-mounted energy, he added.

Speaking at the same conference, the minister in the Presidency responsible for electricity, Kgosientsho Ramokgopa, said the option of ship-mounted power was not out of the question as the government sought solutions to load-shedding. 

“It’s inevitable that we are going to the powership programme. So essentially, generation mounted on ships. It takes them on average about three months to get it on stream — we have to get those things on stream as quickly as possible.

“Of course, we will satisfy the environmental issues. I’m talking about power ships. I’m not talking about Karpowership as a company but as a solution. I think it’s important that you know that, so that we are able to reduce load-shedding.” 

Ramokgopa said no self-respecting country would fold its arms and watch its economy collapse when a range of energy technology existed. He said part of the reason for high load-shedding was the cost of diesel being burnt to supplement the coal baseload when power plants break down or are taken offline for repairs. 

Speaking in parliament on Wednesday, minister of public enterprises Pravin Gordhan said the ship-mounted technology ought to be considered if the terms of the procurement were legally and procedurally correct.

But climate change activist Alex Lenferna said more legal challenges were likely to arise, given the latest developments around Karpowership. 

“That approval is going to be a tricky one because it feels like they are going to push it through without due process. There are challenges in the courts and there are consultations that have not happened, so I'm not sure that they have ticked all the boxes,” he said.

Lenferna said while the government was claiming urgency as a justification for considering Karpowership, there was evidence that grid capacity had been set aside for these specific ships, thus preventing more capacity from being channelled towards renewable energy technology such as wind power.

That approval is going to be a tricky one because it feels like they are going to push it through without due process. There are challenges in the courts and there are consultations that have not happened, so I'm not sure that they have ticked all the boxes

—  Climate change activist Alex Lenferna

Outa CEO Wayne Duvenage said the ships take a minimum of a year to set up at the harbour and the cost to the economy was R2bn — and this was before the Russian war in Ukraine and its inflationary pressure. He said the berthing of the ships will have an “unimaginable impact” on South Africa and kill its economy.

“Obviously, there is something happening from a government point of view because in the past Mantashe was the only person speaking about Karpowership. In the past week, we have seen the president, the electricity minister, the public enterprises minister, the transport minister, and everyone talking about it. It’s a concern for us because nobody is telling us on what basis Karpowership makes sense from an economic point of view.” 

Duvenage said the government was making decisions and announcements without a formal plan. For instance, he said, the Karpowership deal was not thoroughly accounted for in the current version of the integrated resource plan. He said Outa would continue to fight the agreement in court.

Independent energy analyst and EE Business Intelligence MD Chris Yelland said while recent reports about state support for Karpowership were disturbing, environmental authorisation has still not been granted and two legal challenges were under way, preventing financial closure.

Yelland said Eskom had not signed any new power purchase agreements and setting up the infrastructure for ship-mounted power was lengthy, meaning it was not necessarily the best way to procure emergency power for the winter.

“They still have to build certain pipelines between the ship with the liquefied natural gas and floating storage and regasification, and transmission lines from the ships to the harbour must be built. Substations must be set up. We must see this as a short-term opportunity.” 

Yelland said the government had already acknowledged that a 20-year power procurement deal for emergency power procurement was out of place and it was considering changing this to a programme of three-five years. However, he said, changing the duration had cost implications.

Eskom acting CEO Calib Cassim told Business Times the power utility was not focused on power purchase agreements as its projects were substantially funded. He said discussions on extending the life of coal plants and introducing new technology lay at a government level.

“As Eskom, we are very supportive of [that], with minimal investment. If we can continue to operate, for example, a Camden power station for another three years, it makes sense in terms of supply and demand. The discussion around life extension needs to be debated and concluded at government level as well, but that’s not in our plans at this point,” said Cassim.