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    Energy regulator fights to keep Karpowership deal details confidential

    March 13, 2023 - Loyiso Sidimba


      Energy regulator Nersa has admitted that it bowed to pressure from Turkish company Karpowership to keep secret parts of its R218 billion deal to provide 1,220 megawatts in additional power generation capacity.

      ENERGY regulator Nersa has admitted that it bowed down to pressure from Turkish company Karpowership to keep secret parts of its R218 billion deal to provide 1,220 megawatts (MW) in additional power generation capacity.

      The National Energy Regulator of SA (Nersa) was responding to the North Gauteng High Court application by the Organisation Undoing Tax Abuse (Outa) to force the regulator to provide details of the 20-year agreement estimated to cost more than R200bn in that period.

      Nersa opposes Outa’s application to access the unredacted record of decision along with power utility Eskom. According to the Department of Mineral Resources and Energy, the Karpowership deal is a significant part of its risk mitigation independent power producer procurement programme (RMIPPPP), which aims to procure 2,000MW in new generation capacity from a range of source technologies to address the country’s rippling electricity capacity supply gap.

      Karpowership was selected as the preferred bidder for the procurement of 450MW each in Ngqura and Richards Bay, in the Eastern Cape and KwaZulu-Natal respectively, and 320MW in Saldanha Bay in the Western Cape for the RMIPPPP through massive floating storage vessels connected to the national power grid.

      In its main application, Outa wants the high court to review and set aside Nersa’s awarding of the three electricity generation licences to Karpowership.

      Nersa is refusing to provide details on the R218bn Karpowership deal, citing confidentiality requested by the Turkish company. According to Nhlanhla Gumede, a full-time member of Nersa, Outa requested a case management meeting, which was later adjourned to enable the parties involved in the matter to find each other, failing which they would revert to Gauteng Deputy Judge President Aubrey Ledwaba.

      ”The institution of these proceedings is illustrative of the fact that the parties have reached a stalemate regarding the filing of the records,” Gumede explained, adding that the issues Outa seeks to ventilate are still under case management and that there is no directive yet from Judge Ledwaba.

      Gumede said Outa is not at liberty to “willy-nilly” depart from the processes to which it earlier voluntarily subjected itself. Nersa maintains that Outa’s application to compel the regulator to produce the unredacted parts of its record of decision to award the license to Karpowership is premature and an abuse of court processes.

      ”In terms of Nersa’s policy and guidelines, Karpowership has submitted a motivation for certain parts of its information to be treated as confidential. The motivation is not out of the norm. It is part of Nersa’s best practices,” insisted Gumede.

      He said the records required by Outa relate to Karpowership’s commercial information and that should it be disclosed, it will likely cause harm to its interests and put the company at a disadvantage in contractual negotiations and potentially prejudice it in commercial competition.

      ”The guidelines and the policy are not designed to accommodate Karpowership but all the parties that apply to Nersa to be issued with a license,” Gumede added.

      Nersa provides oversight and enforcement of the regulation of generation, transmission, distribution, importation, exportation and trading of electricity and issuing licenses for the lawful conduct of such activities.

      Gumede told the high court that Outa was asking Nersa to breach confidentiality on documents it was provided with as a regulator and under confidential circumstances and warned that doing so would set bad precedence as well as cause serious relationship harm.

      ”On this basis alone, this honourable court should not grant the applicant (Outa) its relief as such a court order may be used by other parties claiming to be furnished with documents which are confidential and belong to other parties. In turn, this will cause a regulatory nightmare for Nersa,” he cautioned.


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