South Africa: Govt Discusses 'Emergency' Shortening of Karpowership Contracts

The Karadeniz powership Osman Khan, which supplies electricity in Ghana (file photo).
31 May 2023

Cape Town — According to Rudi Dicks, head of the project management office in the Presidency and member of the National Energy Crisis Committee, government is discussing the possibility of reducing the term for Karpowership contracts as an "emergency' measure", Engineering News reports. Dicks called for contracts of potentially five to ten years would be preferable to the initial term of 20 years. This follows a comment by Electricity Minister Kgosientsho Ramokgopa who recently said that contracts with emergency power producers should not last longer than three to five years.

Despite being named as a preferred bidder in government's Risk Mitigation Independent Power Producer Procurement Programme in 2021 to provide over 1 200MW of power at at three of South African ports, Karpowership - which utilises off-shore ships as floating gas power plants - has drawn criticism over the cost of its 20-year contract along with its refusal of environmental authorisation for its three vessels at the selected docking sites of Richards Bay, Ngqura and Saldanha Bay.

Dicks said: "Of course, the initial term has been 20 years, we have taken the view as Necom [the National Energy Crisis Committee] that a shorter-term period would have to be looked at, potentially between five and ten years.

"It's really because this is an emergency intervention . . . [and] this, of course, goes to the heart of whether one has to sign a 20-year power purchase agreement. This is the conversation we are having, and Minister Ramokgopa is already having engagements with Karpowership with regard to these sorts of interventions."

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