DA will contest any plan to tie South Africa to a R200 billion, 20 year Karpowerships contract

15 May 2023

Three days after President Cyril Ramaphosa suggested to Parliament that "power ships" were an immediate priority to alleviate the energy shortage, it now appears that he may have known that plans were already under way to force through the 20 year Karpowership contracts at all costs and to shield the details thereof from public scrutiny.

It has now emerged that a Section 79 directive was clandestinely issued from the Ministry of Transport, either by Fikile Mbalula before he left or by the new Minister, Sindiswe Chikunga, to force the Transnet National Ports Authority to find harbour space for three Turkish gas-to-power ships for the next 20 years. This is in addition to the media blackout that the Minister of Environment, Barbara Creecy, has placed on the Karpowership environmental clearance applications that are currently under consideration in her office.

Of particular concern is that the Karpowership company failed to reach financial close within the specified deadline but this was now being deliberately overlooked to ensure that their 3 power ships are moored in South Africa's harbours at any cost. Their failure to reach financial close on time raises questions about how the rules have been bent to accommodate Karpowerships - to the detriment of any other potential bidders who were excluded initially.

The ANC government appears to have made up its mind to use the electricity crisis as an excuse to impose an outrageously expensive 20 year Karpowerships contract on the South African people. The DA rejects this outright and we remain clear any decision to burden the fiscus with such a contract will be contested immediately.

Any power contract that spans two decades cannot be classified under emergency procurement but is rather a scam to rip off billions of rands from South Africans, regardless of whether the Karpowerships are still needed or not. Independent estimates have shown that a 20 year Karpowership contract will cost South Africa in excess of R200 billion. This is enough to build two new Medupi and Kusile power stations, based on their initial budget of R79 billion and R81 billion respectively.

At best, the Karpowerships contracts should only be 5 years and only renewed depending on need. The DA has put the ANC government on notice that we are ready and prepared to take action if any decision is taken to sign a 20 year contract with Karpowership.

Issued by Kevin Mileham, DA Shadow Minister of Mineral Resources and Energy, 15 May 2023