Mantashe: Shorter contracts should get Karpowerships past the finish line

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A Karpowership floating power plant.
A Karpowership floating power plant.
  • Halving the contract duration for controversial Karpowerships may help to bring them online.
  • A shorter contract would be costlier, however, said Mineral Resources and Energy Minister Gwede Mantashe. 
  • Pravin Gordhan, Public Enterprises Minister, says there is a clear plan to ensure collaboration to solve the energy crisis as soon as possible. 
  • For more financial news, go to the News24 Business front page.

Mineral Resources and Energy Minister Gwede Mantashe says cutting the proposed contract periods with Karpowership from 20 years to 10 years could help government realise its ambitions to procure energy urgently from the floating power stations.

Mantashe was speaking at an ANC Energy Dialogue held in Johannesburg on Tuesday, during which Eskom announced that Stages 4 and 5 load shedding would be implemented until Sunday.

Karpowership - a Turkish company that provides ship-mounted gas power plants - was awarded three projects under government's 2021 emergency power procurement programme to award around 2 000MW, but these projects have been unable to reach financial close as the projects are faced with a raft of lawsuits and administrative challenges by detractors.

A key concern has been the 20-year duration of the emergency power contracts.

Mantashe said the Karpowerships remain an emergency power option to help alleviate South Africa's energy crisis.

"People are saying '20 years is too long, reduce it'," Mantashe said. "I think if we can get to 10 years, it will be okay. It will cost us a little bit more per unit … it will be a little bit expensive, but cheaper than the cost of load shedding on the economy," the minister said to a round of applause from the audience.

Mantashe reiterated previous comments that a concerted effort could end load shedding within six to 12 months.

Along with procuring emergency power, he suggested other interventions would help tackle the energy crisis.

These include deploying the requisite skills and other resources to fix and maintain the ageing coal fleet and importing available power from neighbouring countries.

While Mantashe believes that fixing Eskom is entirely possible, "not everyone wants us to do that", he said. "Some people want us to do nothing. Because this issue is agitating society, and they think it is an entry point to take us out of power."

Pravin Gordhan, Minister of Public Enterprises, Eskom's shareholder, said a great deal of work is being done, and there is a clear plan to ensure collaboration to solve the energy crisis as soon as possible.

"The sense of urgency is certainly there. And we will see results sooner or later in relation to bringing some of the megawatts back online," he said. "And that's a combination of fixing the plants at Eskom, buying extra megawatts, seeing some of the IPPs [independent power producers] come online, continuing with the restructuring of Eskom itself, and moving on where possible with the just energy transition.

Gordhan, however, noted there were enormous challenges to deal with at Eskom itself as the new board – which was appointed little more than 100 days ago – found a raft of system issues at the utility.

"There is a serious lack of accountability. There's a dysfunctional culture. The engineering discipline has been badly diluted. There's a lack of routine and proper planned maintenance of the right quality," he said.

"There is a skills exodus that has to be dealt with …There's [inadequate] funding available for outages and maintenance. There's criminality around, and in Eskom itself, the level of corruption is huge around the power stations."

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