Eskom Holdings SOC Ltd. has requested permission from the National Treasury to finalize an electricity purchase agreement with Karpowership, one of the world's largest operators of floating power plants.
- Karpowership is one step closer to fulfilling a contract it secured over two years ago to supply South Africa's national grid.
- The application raises the possibility of boosting the South African grid during periods of frequent power cuts.
- Karpowership's proposal to provide 1,220 megawatts through gas-fired plants mounted on ships has faced strong resistance from environmental groups.
The national power utility said it submitted a Section 54 application to the Treasury, which it has to do to comply with the Public Finance Management Act, Bloomberg reported.
The application raises the possibility of boosting the South African grid during periods of frequent power cuts. The country's power problem has had a severe impact on its economy, taking a huge chunk out of its GDP. The central bank estimated that $51 million is lost every day due to load shedding.
However, the Karpowership contract is generating controversy due to opposition from environmental activists.
Karpowership's proposal to provide 1,220 megawatts through gas-fired plants mounted on ships has faced strong resistance from environmental groups. The company has encountered delays in fulfilling the 20-year power supply agreement, with environmental activists and a competing bidder filing numerous court cases.
Karpowership has received approval from the environment department for two out of its three projects, allowing it to potentially supply 770 megawatts. However, one of these approvals is currently under appeal by environmental activists.
The company also has until Dec. 31 to complete its financial arrangements or it may lose its right to access the national grid. The deadline applies to all bidders who secured supply rights from the government in March 2021 but have not completed their financial arrangements.
Similar to the situation in South Africa, Karpowership has entered into comparable agreements with several African countries grappling with electricity shortages.The Turkish power company presently supplies electricity to eight African countries including Ghana, Senegal, Mozambique, and Côte d'Ivoire. The company has in recent months cut off electricity in the capitals of Sierra Leone and Guinea Bissau after authorities failed to pay bills reportedly totalling $40 million and $15 million respectively.
Last month, Karpowership announced its plans to expand into six more countries on the continent. However, critics argue it only provides a short-term solution to chronic underinvestment.
Source of the article: Business Insider Africa