Court refuses Karpowership shares battle interdict
Energy CorrespondentPowergroup SA, the local empowerment partner of Karadeniz Holdings, majority shareholder in Karpowership SA, has failed in its bid to get a court interdict stopping the company taking back the shares held in a floating power plant.
The case was heard in the Johannesburg high court on September 22, but before it could be heard Karadeniz Holdings initiated a call option settlement to acquire Powergroup SA’s 49% stake in Karpowership SA. This action by Turkish company Karadeniz Holdings largely rendered moot the request filed by Powergroup SA for an interdict. Judge Shanaaz Mia found that "no harm can be averted with an interdict" as sought by Powergroup SA.
"The harm which the applicant seeks to prevent, namely the transfer of shares, has already occurred. An interdict will not assist in restoring the shares which have been transferred. An interdict can only be called upon to restrict or bar future conduct," said Mia said.
Karpowership SA was awarded three bids for a total contracted capacity of 1,220MW to be provided for 20 years via power ships moored in Coega, Richards Bay and Saldanha as part of the Risk Mitigation Independent Power Producer Procurement Programme (RMIP4) in March 2021.
Since being awarded the bids, Karpowership SA has faced legal challenges and several delays in obtaining the necessary environmental approvals.
The National Energy Regulator of SA granted the company generation licences for the three projects in September 2021, and earlier in 2023 the department of transport approved its application to access the three ports for 20 years. But it has still not been able to get all environmental approvals.
According to lobby group Organisation Undoing Tax Abuse (Outa), which initiated legal action against the energy regulator over licences granted to Karpowership, projected costs of the Karpowership projects over a 20-year period are reported to be more than R200bn, including fuel supply.
The move by Karadeniz Holdings, which owns 51% of Karpowership SA, to take back the shares and initiate talks with prospective new partners relates to the apparent failure of Powergroup SA to deliver on certain financial commitments.
Grievances cited by Powergroup SA in court include Karadeniz Holdings and Karpowership SA "fronting", with various agreements between the parties, such as a memorandum of incorporation (MOI) and a shareholder agreement, allegedly violating the Broad-Based BEE Act. The "agreements constitute contraventions of the law and fronting", Powergroup SA said in court papers.
The empowerment partners also said they were not given access to financial information and operations of the company and Karadeniz Holdings demanded millions of rand for working capital without saying why the funds are needed and how the money will be used.
The Sunday Times, which has reported extensively on the matter, reported that Powergroup SA is also engaged in a private arbitration process with Karadeniz as it tries to have funding notices, now being used as a basis for their removal, set aside. The court application was to interdict the taking back of the shares pending the outcome of an arbitration process, the Sunday Times reported. According to court papers, Powergroup SA also took issue with Karadeniz Holdings allegedly using its 51% shareholding to move to appoint Dr Anna Mokgokong and Community Investment Holdings to replace Powergroup SA as the empowerment partner.
The company denies this. Karadeniz Holdings said "speculative assertations" on a prospective B-BBEE partner "are harmful with the sole purpose of creating controversy and shock rather than to advance the merits of the legal case".
But it said that as required by the RMIP4 and B-BBEE laws, as well as with respect to dialogues for an extended period with Powergroup SA, it had preliminary engagements with prospective partners, including accomplished energy player Community Investment Holdings (CIH), and has not selected or negotiated with any party for the remaining stake". Karpowership SA and Karadeniz Holdings said they have to take steps to transfer Powership SA’s shares to a new partner, only after they get consent from the mineral resources & energy minister. This will be dealt with before an arbitrator, they said in court papers.
Mehmet Katmer, Karpowership commercial director, said: "We fully appreciate and respect the regulatory requirements in SA, as well as the country’s B-BBEE laws. From the outset we have sought a long-term partner who would shoulder the financial, technical and commercial responsibilities alongside us, as reflected in our shareholders agreement. The agreement explicitly requires a reliable and financially robust empowerment partner able to participate fully in our commitment to the three projects …"
A Karpowership vessel. Picture: SUPPLIED