{"id":14251,"date":"2021-06-10T03:47:55","date_gmt":"2021-06-10T03:47:55","guid":{"rendered":"https:\/\/amabhungane.org\/?post_type=stories&p=14251"},"modified":"2024-09-19T13:18:28","modified_gmt":"2024-09-19T13:18:28","slug":"210610powerships-enviro-investigation-could-capsize-r225-billion-deal","status":"publish","type":"post","link":"https:\/\/further.co.za\/amabwp\/210610powerships-enviro-investigation-could-capsize-r225-billion-deal\/","title":{"rendered":"Powerships: Enviro investigation could capsize R225-billion deal"},"content":{"rendered":"\n

The Green Scorpions are investigating whether Karpowership SA or its environmental consultants provided misleading information to secure an emergency exemption from stringent provisions of the National Environmental Management Act (Nema).<\/span><\/p>\n\n\n\n

<\/p>\n\n\n\n

The Environmental Management Inspectorate \u2013 known as the Green Scorpions \u2013 is tasked with investigating environmental crimes.<\/span><\/p>\n\n\n\n

The investigation could result in criminal charges, but could also torpedo Karpowership\u2019s environmental authorisations, which it needs for its mammoth R225-billion deal with Eskom to go ahead.<\/span><\/p>\n\n\n\n

In March, the Turkish-led consortium was selected as a preferred bidder to provide 1 220MW of emergency power under the Risk Mitigation Independent Power Producer Programme (RMI4P). The electricity will come from gas-fired powerships which are intended to be moored in the ports of Richards Bay, Coega and Saldanha.<\/span><\/p>\n\n\n\n

The investigation stems from an extraordinary authorisation in June 2020 \u2013 just before the tender was announced \u2013 by a top official in the department of forestry, fisheries and the environment (DFFE).<\/span><\/p>\n\n\n\n

The official exempted Karpowership under an emergency provision of Nema from doing environmental impact assessments (EIAs), supposedly because it would provide emergency power to combat Covid-19.<\/span><\/p>\n\n\n\n

The department revoked the exemption after an outcry, claiming it had been misled. This forced Karpowership to reapply, this time with complete EIAs for all three sites. But DFFE has confirmed that these new applications could be denied if the investigation confirms that Karpowership and its consultants intentionally misled officials.<\/span><\/p>\n\n\n\n

\u201cThe Department is currently investigating the conduct of the [environmental consultants] and [Karpowership] in relation to the Nema … exemption application,\u201d spokesperson Albi Modise said in a written response.<\/span><\/p>\n\n\n\n

Modise confirmed that the investigation is being led by the \u201cEnvironmental Management Inspectors within the Department\u201d, aka the Green Scorpions, who have been tasked to establish \u201cwhether or not prima facie<\/i> evidence exists of the commissioning of an offence\u201d.<\/span><\/p>\n\n\n\n

\u201cShould prima facie<\/i> evidence exist of an offence, the Department will bring the relevant information to the attention of the South African Police Service for further investigation and\/or the Director of Public Prosecutions to commence a prosecution,\u201d he told us.<\/span><\/p>\n\n\n\n

\u201cIf the outcome of the investigation reveals that there was something untoward about their conduct, then that would have a material effect on the current EIA applications that is under review by the Department.\u201d<\/span><\/p>\n\n\n\n

DFFE has also commissioned an external legal review to establish whether Karpowership\u2019s current EIA applications should have been rejected because the proposed projects lacked consent from Transnet National Ports Authority (TNPA), as the owner of the land.<\/span><\/p>\n\n\n\n

Karpowership is hoping to secure TNPA\u2019s consent as a \u201csole source provider\u201d or through an 11<\/span>th<\/sup><\/span> hour special directive issued by Transport Minister Fikile Mbalula. But a legal opinion<\/span><\/a> delivered to Business Unity South Africa (Busa) last week warned that any permit handed to Karpowership faces a barrage of legal challenges.  <\/span><\/p>\n\n\n\n

The stakes are high: Karpowership desperately needs its environmental permits and landowner consent before the end of July, the deadline for all preferred bidders selected for the RMI4P tender.<\/span><\/p>\n\n\n\n

If the Turkish-led consortium fails to secure these permits it risks losing the R183-million bid bond it has put up as collateral. If found guilty of intentionally misleading government officials, Karpowership and its environmental consultants could receive fines of up to R10-million or 10 years in jail.<\/span><\/p>\n\n\n\n

On the other hand, if government greenlights Karpowership\u2019s projects, five gas-fired powerships could arrive in South African ports next year. This is intended to kickstart a new energy future for South Africa, one fueled by liquified natural gas (LNG) but also fraught with environmental problems.<\/span><\/p>\n\n\n\n

Karpowership declined to respond our 46 questions covering a wide range of environmental issues. Instead, spokesperson Kay Sexwale said: \u201cWe are confident the unfounded claims about the environmental assessments of our projects will be dealt with swiftly. We are continuing to work to the deadlines \u2026 and look forward to getting to work helping to alleviate South Africa\u2019s energy challenges and supporting the wider economy.<\/span><\/p>\n\n\n\n

\u201cPowerships fuelled by LNG are the cleanest, most sustainable way of providing reliable power while supporting South Africa\u2019s transition to renewables. Our projects were awarded preferred bidder status because we provided the best combined package of affordability, cleaner energy, proven technology and economic development initiatives.\u201d<\/span><\/p>\n\n\n\n

But to understand how we got to the brink of this multi-billion-rand deal, we need to go back to 2015, when Karpowership sidled up to Eskom with a tantalising solution to end loadshedding. What our research suggests is that the company has a history of trying to leverage emergencies to get its way.<\/span><\/p>\n\n\n\n

2015: Dear Mr Tsotsi<\/span><\/h5>\n\n\n\n

In February 2015, Eskom was facing the uncomfortable prospect of severe loadshedding in summer.<\/span><\/p>\n\n\n\n

Eskom board chair Zola Tsotsi had a plan though. On 10 February 2015, he wrote to then energy minister Tina Joemat-Pettersson<\/a>, requesting the go-ahead for three power-generation solutions \u2013 \u201cmeasures which we believe need to be taken immediately in our quest to [relieve] the constraint in the electricity supply system\u201d. <\/span><\/p>\n\n\n\n

One of the solutions came from Karadeniz, the parent company of Karpowership: \u201cTheir proposal includes the berthing of 500MW ship-plants at our ports. Once a decision to implement the proposal is reached they can dispatch the first 500MW unit onto the grid within six months and then a successive 500MW unit every four months thereafter,\u201d he wrote.<\/span><\/p>\n\n\n\n

Tsotsi did not specify how many ships Eskom would hire, but made it clear that this would not be done through a standard procurement process: \u201c[W]e request the Honourable Minister to authorise Eskom to engage and conclude all required measures to enable speedy implementation of these projects.\u201d<\/span><\/p>\n\n\n\n

The Public Finance Management Act does make provision for emergency procurement, but state-owned entities like Eskom must jump through numerous hoops to justify such contracts. And in this case, Tsotsi had gone straight to the minister despite Eskom management being lukewarm about the powerships solution.<\/span><\/p>\n\n\n\n

Tsotsi resigned soon after, and Eskom told Karadeniz to apply to the independent power producer programme, which now falls under the department of mineral resources and energy.<\/span><\/p>\n\n\n\n

\u201cAs there are a number of potential suppliers of power ship … it is necessary to ensure a fair and transparent engagement,\u201d Eskom told City Press at the time.<\/span><\/p>\n\n\n\n

Tsotsi said this week he did not remember the circumstances of the offer. As far as he could recall, he did not receive an answer from the minister before he stepped down as chair at the end of March 2015.  <\/span><\/p>\n\n\n\n

2018: For the sake of the elections<\/span><\/h5>\n\n\n\n

Three years later, Karpowership was ready to have another go at the South African market. <\/span><\/p>\n\n\n\n

According to Karpowership\u2019s local partner Sechaba Moletsane, the country was once again facing loadshedding and with elections coming up in 2019, he implored the Karadeniz family to intervene.  <\/span><\/p>\n\n\n\n

\u201cWe went up to Turkey in [February] 2018 … because the elections were coming up and there was major, major loadshedding,\u201d he recalled during a recent Mail & Guardian webinar sponsored by Karpowership. <\/span><\/p>\n\n\n\n

As much as this was an electricity supply problem, it was also a political one for the ANC, which has historically been reluctant to implement loadshedding ahead of the elections, fearing it would cost the party votes.<\/span><\/p>\n\n\n\n

Moletsane said they approached Eskom, the department of energy and the department of public enterprises, but all declined Karpowership\u2019s unsolicited bid. <\/span><\/p>\n\n\n\n

\u201c[T]hey didn\u2019t uptake our proposal, the elections went on and successfully, so they ended up using more of the peaker plants,\u201d he said, referring to the diesel-fired peaker plants that are Eskom\u2019s last resort to avoid loadshedding.<\/span><\/p>\n\n\n\n

2020: Dr Mabunda\u2019s plan to tackle Covid-19<\/b><\/span><\/h5>\n\n\n\n

By 25 June last year, 118 000 South Africans had tested positive for Covid-19 and 2 335 had lost their lives. <\/span><\/p>\n\n\n\n

Armed with this and other information about the rapidly escalating infection rate, Dr David Mabunda contacted the DFFE with a plan to tackle the pandemic.<\/span><\/p>\n\n\n\n

Mabunda was not a medical doctor, but a doctor of tourism management. He had served (not without controversy) as the chief executive of SANParks and Ezemvelo KZN Wildlife. But he was now representing Karpowership.<\/span><\/p>\n\n\n\n

Mabunda resigned from SANParks in 2014. At the time, there were questions about R81-million he received from the controversial MalaMala land claim deal. An internal investigation described this as \u201ca serious conflict of interest\u201d, environmental journalism outfit Oxpeckers reported.<\/p>\n\n\n\n

Mabunda denied wrongdoing at the time, saying he had declared his interest in the deal and received permission to participate.<\/p>\n\n\n\n

What the country needed, Mabunda told DFFE chief director of compliance Sonnyboy Bapela during a 25 June discussion, was a secure supply of electricity to ensure that hospitals did not go dark and ventilators kept pumping life-saving oxygen to patients. <\/span><\/p>\n\n\n\n

What Karpowership needed in return was an emergency permit \u2013 issued in terms of section 30A of Nema \u2013 allowing it to bypass the costly and highly technical EIA process that normally takes months to complete.<\/span><\/p>\n\n\n\n

Section 30A was designed for emergencies when quick action can save lives and prevent environmental disaster. A single independent power producer, hoping to supply Eskom with electricity, generally would not qualify. <\/span><\/p>\n\n\n\n

But when a national state of disaster was declared in March 2020, in response to the Covid-19 pandemic, Karpowership had its emergency.<\/span><\/p>\n\n\n\n

The day after his conversation with Mabunda, Bapela gave Karpowership the go-ahead to bring in as many ships as it wanted into the ports of Coega, Richards Bay, Saldanha and Durban \u2013 no environmental permits required.<\/span><\/p>\n\n\n\n

Powerships are more like power plants than cargo ships: critics have warned that the potential harm to fish, birds and red-list species could be severe. These environmental costs may be unavoidable in an emergency. But in July 2020, Karpowership was far from persuading Eskom to buy its electricity.<\/span><\/p>\n\n\n\n

Under section 30A of Nema, a national state of disaster counts as an emergency situation and gives the environmental minister the power to override ordinary provisions of the Act. \u201cIn terms of section 30A, the Minister … and Provincial Authorities may … issue a verbal or written directive to carry out activities without obtaining an environmental authorisation,\u201d lawyers from Webber Wentzel wrote in a March 2020 newsletter.<\/p>\n\n\n\n

This included building \u201cemergency infrastructure projects to help curb the effects of COVID-19\u201d such as temporary hospitals or cemeteries. But would powerships count?[\/sidebarContentStory]<\/p>\n\n\n\n

When Daily Maverick\u2019s Tony Carnie<\/span><\/a> raised the alarm that Karpowership may be abusing its 30A exemption, sales director Patrick O\u2019Driscoll responded: \u201cAlthough the energy crisis is not new, the need for a reliable and sustainable power supply is required to safeguard critical infrastructure and maintain industry such as the manufacturers and industries that support the medical fields.\u201d <\/span><\/p>\n\n\n\n

If Karpowership was asked, he said, it could start supplying power within eight to 10 weeks: \u201cThis potential project will assist the government in its efforts to ameliorate the impact of Covid-19 which will have the overall effect of saving lives during the pandemic. It is also vital for post-Covid-19 national recovery strategies.\u201d<\/span><\/p>\n\n\n\n

DFFE\u2019s Modise told us that of the 12 applications for section 30A exemptions received since the start of the national disaster, only two cited the Covid-19 pandemic as the cause of the emergency. One came from the department of public works, which asked for permission to build \u201cmilitary-type bailey bridges\u201d so that ambulances could access rural areas; the other from Karpowership. <\/span><\/p>\n\n\n\n

\u201cWe were misled\u201d<\/span><\/h5>\n\n\n\n

On 24 August 2020, the department of mineral resources and energy released the RMI4P tender, the multi-billion rand procurement to supply Eskom with power for the next 20 years.<\/span><\/p>\n\n\n\n

The next day, DFFE sent out a press release<\/span><\/a> saying that it had withdrawn Karpowership\u2019s 30A exemption, essentially because the company did not disclose that it wanted the emergency permits for its proposed RMI4P projects, which would likely only start supplying power in 2022.<\/span><\/p>\n\n\n\n

\u201cWhen the company had initially submitted their request it had indicated that the country\u2019s electricity supply was under threat because of the increased pressure on the healthcare system as a result of the Covid-19 outbreak. <\/span><\/p>\n\n\n\n

\u201cIt has subsequently emerged that the company had applied for the verbal directive … in preparation for the possible implementation of the [RMI4P]. This information was not disclosed to the department [and] it has now emerged that there was in fact no emergency situation\u201d, the release said.<\/span><\/p>\n\n\n\n

\u201c[I]t will be fair to say the department was misled,\u201d spokesperson Modise recently told amaBhungane.<\/span><\/p>\n\n\n\n

He explained: \u201cThe Department already concluded that there was a reasonable belief that the circumstances pertaining to the emergency situation were materially different from what was indicated in the oral request\/written confirmation of the oral request. Accordingly, the section 30A directive was revoked.\u201d <\/span><\/p>\n\n\n\n

In other words, what Mabunda told the department in that 25 June meeting allegedly did not match the reality on the ground. That was enough to withdraw the 30A exemption. <\/span><\/p>\n\n\n\n

Degrees of deception<\/h4>\n\n\n\n

In 2015, government gazetted new regulations that apply to verbal requests for section 30A exemptions:<\/p>\n\n\n\n