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Tank pipework onboard the Karmol LNGT Powership Asia floating storage and regasification unit , operated by Karpowership, viewed from the ship's bridge whilst docked at Cape Town port in Cape Town, South Africa. Photographer: Dwayne Senior/Bloomberg via Getty Imagesn November 2022, with its R218 billion deal hanging by a thread, Turkish powership company Karadeniz decided to ditch its black empowerment partners Powergroup SA — a risky move that put the entire deal in jeopardy.
Powergroup lost the urgent application — after Judge Shanaaz Mia ruled that the horse had bolted — but succeeded in exposing a secret agreement between Karadeniz and Mokgokong’s BHI Energy, which Powergroup’s advocate, Tembeka Ngcukaitobi, described as “state capture on steroids”. Mokgokong blasted Ngcukaitobi’s description of the deal as “state capture on steroids”, calling it “false, defamatory and … calculated to cause embarrassment to BHI, myself and the companies that I represent”.
Yet the draft MOU shows that as far back as November last year, Karadeniz and Mokgokong were working “to explore the legal, commercial and financial structures in order for BHI to hold 49% of the shares of Karpowership SA”. Although the “competent authorities” clause was cut from the final MOU signed in February, she added: “There is also nothing wrong with assisting [Karpowership] by means of referring [them] to the suitable qualified experts to assist them with obtaining regulatory approvals.”
“The granting of the ministerial direction was based on the application lodged by Karpowership and Mulilo Total Coega … The evaluation conducted on the applications was solely based on what is provided for in law and no third-party interests had any bearing on the decision,” he said over WhatsApp. There is debate about the extent of the minister’s powers under Section 79. One interpretation is that he can only instruct Transnet National Ports Authority to run a competitive bidding process. The other is that he can instruct TNPA to issue port access rights to a specific company if it is deemed to be in the national interest — a situation fraught with potential for abuse.
“All these exchanges and quid pro quo concerning state assets were done without the knowledge, nevermind the consent, of the state,” Powergroup alleged in its heads of argument.“Tamasa was required to apply for a Section 79 directive” — in order to realise its long-held dream of building an onshore regasification terminal,” she said.
One problem with this — and there are many — is that Mbalula had handed Tamasa, a private company, coveted port access rights and, with it, the right to develop an LNG terminal without any competitive tender process. The request for proposals called for a private company to “develop, finance, construct, operate and maintain LNG and gas midstream infrastructure to enable the importation of LNG into the Port of Ngqura” for 15 to 20 years before finally transferring ownership to the Central Energy Fund.
The problem with building a R13.6 billion LNG terminal in the relative backwaters of the Eastern Cape is someone needs to be willing to buy the gas. If Karpowership gets the go-ahead, its 450 megawatts floating powerplant in the Port of Ngqura will need gas for the next 20 years. Mbalula reiterated that “due process was followed” in issuing the two Section 79 directives, while Mokgokong downplayed the benefit Tamasa would receive: “It would appear that Karpowership’s involvement in South Africa is likely to be shorter than the [20-year] term … If that transpires, then there will be almost no benefit from the Section 79 directive as the SFF terminal will only be completed in four to five years’ time.
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