A bruising battle has broken out over “BEE billions” at stake in the multibillion-rand Karpowership deal, with local empowerment partners accusing the Turkish company of trying to muscle them out of the action in favour of new partners.
Central to the row is influential businesswoman Anna Mokgokong, who is accused by some directors of empowerment partners Powergroup SA of trying to hijack their deal after they had already done the hard work, which would earn them billions through their 49% stake in the estimated R228bn project.
Mokgokong dismissed suggestions she was interested in their stake, saying: “Can the parties at Karpowership deal with their own challenges and leave me alone.” However, she confirmed she has held talks with the Turkish company as part of discussions with stakeholders in the sector.
This is the latest drama to surround the already controversial deal, slated by environmentalists, to dock five floating power stations at three of the country’s ports — Coega, Saldanha and Richards Bay — to generate 1200MW of electricity and help ease load-shedding. A contract worth more than R200bn, awarded in 2021, was set to run for 20 years. But this cost will have risen sharply as the war in Ukraine has affected the availability of liquid natural gas (LNG) worldwide and driven its price up dramatically.
Mokgokong is one of South Africa’s most influential businesswomen and sits on numerous boards, including that of Seriti Coal, Eskom's second largest coal supplier, which she chairs. She is also the co-founder and executive chair of Community Investment Holdings (Pty) Ltd and the first female director of Africa’s largest retailer, Shoprite.
Insiders told the Sunday Times that Karadeniz Holdings Ltd (KHL), the owners of the world’s only fleet of floating offshore power stations and 51% shareholder in Karpowership SA Pty Ltd (KPSSA), was engaging Mokgokong to form part of the consortium because the empowerment partners battled to come up with the $10m (about R190m) they needed to get the deal off the ground.
This led to infighting among the four directors of the Powergroup SA consortium, who include the former adviser to two state security ministers. The four, energy investor and project manager Sechaba Moletsane, attorney Ravin Rajoo, former ministerial adviser George Mokoena and former banker Sureshan Moodley, own a 49% stake in KPSSA.
Two independent sources said the Turkish company grew frustrated with their inability to raise the $10m required for project development working capital, after the Turks fronted their own $10m for this exercise.
In a statement titled “battle over BEE billions in Karpowership”, Rajoo said the KPSSA deal “will see billions [in] profits to its shareholders” and was a “highly sought after transaction for any investor”.
He said his group, with experience in law, energy, banking and finance, had “contributed immensely” to the project’s development and had worked “tirelessly for over five years” to see it realised.
“The Powergroup team are not billionaire black influential capitalists but are aspiring black South Africans that have the requisite skills to have brought this solution and project to its current status,” he said.
“Powergroup will oppose any scheme designed to take over its shareholding in the projects that will deprive it of significant financial benefits that it has jointly created, in particular to perceived influential third parties who have made no contribution to the development of the projects.”
Rajoo said the first they heard of KHL engaging with “third parties” over the KPSSA shareholding was in a virtual meeting with KPSSA director Mehmet Katmer in November last year.
“At this point Powergroup shareholders believed that they were being excluded from all relevant meetings, project progress and financial information that are critical to corporate governance and the financial needs of the project. We now question whether this was by design.”
Rajoo said they became “extremely concerned” in March when KPSSA issued a funding notice “requiring the shareholders to provide funding for working capital”, which they disputed.
But before this, Powergroup was told that “a new shareholder had come on board”.
“On further investigation ... it became apparent that without [our] knowledge [Moletsane] had introduced to KHL Dr Anna Mokgokong who through one of her companies was positioning a takeover of Powergroup’s shares with the apparent consent of KHL and engagements with KHL.”
Powergroup will oppose any scheme designed to take over its shareholding in the projects that will deprive it of significant financial benefits
— Powergroup director Ravin Rajoo
Rajoo said Mokgokong’s participation was actively supported by all the KHL directors on the KPSSA board, including Moletsane, “which in itself was concerning given that Dr Anna had not been involved in the projects or made any contribution to the development of the projects”.
“Given the conduct of Moletsane and the loss of trust in [his] ability to represent the interests of Powergroup on the KPSSA Board, Powergroup resolved on April 16 ... to remove him from the board.”
Moletsane did not respond to requests for comment.
In June, Rajoo said, Katmer met the three aggrieved Powergroup directors and informed them they “were required to meet with Dr Anna and Dr Anna’s adviser and to agree terms on a takeover of the Powergroup shares in KPSSA and to retain a token shareholding in the project”.
Speaking from Brazil, where Karpowership hosted South African media including the Sunday Times, Katmer confirmed they were speaking to Mokgokong but the discussions related to their intention to become involved in the country’s renewable energy sector.
“We have had a very good relationship with Powergroup for the last two years,” he said.
“We want to invest in renewables ... We wanted to understand the lay of the land, and meet with people as part of our business, not necessarily as an equity partner. Dr Anna is a very successful businessperson in South Africa, and she has certain ambitions to go further in the energy space.”
Katmer confirmed the company was concerned with the slow pace of fundraising for the transaction but was confident that it could still reach financial close by the end of the year. He declined to comment further, saying the KPSSA shareholders' agreement forbids him from doing so.
Besides the $10m for the upfront development costs, Katmer said a further R10bn in capital expenditure was needed to set up the infrastructure to connect the ships before a single kilowatt of energy is dispatched.
The fallout between the local empowerment partners comes as Eskom is burning billions of rands a month on diesel to power emergency open cycle gas turbines that are now running continually. Since April, Eskom has spent R3bn a month on diesel to keep load-shedding at a minimum during winter.
In an interview with eNCA this week, KHL chief commercial officer Zeynep Harezi claimed the company’s new proposed five-year term would cost R15bn a year. Katmer said there had been no official discussions with the government on cutting the contract’s duration, but electricity minister Kgosientsho Ramokgopa and Harezi have now spoken publicly about this possibility.
The looming shares bunfight is just one of many issues plaguing the deal, which also survived unsuccessful court action by losing bidder DNG Energy. It has also failed to obtain the necessary environmental approvals from the department of forestry, fisheries & the environment after an initial rejection in 2021. Karpowership SA is currently appealing second rejections of environmental impact assessments for two of the three proposed sites, at Coega, outside Gqeberha, and Saldanha Bay, Western Cape.
Mokgokong said her company, with 12 years’ experience in LNG, was engaging KHL as an industry leader.
“Karpowership is an important stakeholder globally as manufacturers of [floating storage regasification units] FSRU. Everyone in the world recognises their skills,” she said.
“Our project [at Coega] requires such a facility as the construction of infrastructure will take time, and our country is in dire need of power to enable economic upliftment in that area. My active involvement in the sector can never be underplayed even if I am black and female.”
In Brazil this week, KHL showed off the impact it has made in Rio de Janeiro state’s Port of Itaguaí, where power ships have been docked since July last year. There, three ships — one FSRU and two “stations” that together produce 560MW — are moored between a section that houses large power users in steel and metals manufacturing and residents who survive on tourism and fishing.
Karpowership’s Brazil lead, Beyza Ozdemir, said the project resulted in 1,500 direct and indirect jobs and investments in local energy companies.
As part of Brazil’s regulatory requirements, where 50 different licences and approvals had to be obtained from all tiers of government from municipal to national, as well as energy, maritime and environmental regulators, KHL has initiated projects including voluntary reforestation, community training and a 10MW solar farm. KHL has also pledged 1% of revenue from its 44-month contract to research and development projects including decarbonation on the ships, as well as better desalination technologies. It also conducts regular tests, including on water quality, erosion and underwater noise levels to ensure they don’t negatively impact the flora and fauna.
Katmer says the Brazil project represents success for the company because it became the fastest LNG-to-power project of its size in the world, taking nine months.
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