The International Finance Corporation (IFC), a division of the World Bank Group (WBG) is considering funding winning bidders in South Africa’s emergency electricity supply tender including the controversial “powerships” by Turkish company Karpowership, a Bloomberg report claims.
Karpowership, a division of Karadeniz Energy Group, an Istanbul-based company won most tenders in South Africa’s Risk Mitigation IPP Procurement Programme (RMIPPPP). The company is contracted by South Africa’s Department of Mineral Resources and Energy (DMRE) to supply 1220 MW of electricity for 20 years from its gas fired power plants retrofitted in ships to be moored on the shores of South Africa.
The awarding of tenders to Karpowership faced fierce resistance from environmentalists and energy pundits who cited concerns on environmental impact of the systems as well costs compared to quickly deployable solar and wind energy systems.
The intention by IFC to fund powerships could put it on a collision course with environmental activists. Friends of the Earth US, an environmental group, pressuring investors, including development banks, to stop investing in fossil fuels such as coal, oil and natural gas commented saying; “IFC does not help drive economic development by supporting past harmful fuels and technologies.”
“Supporting gas subjects countries to the risks of increasingly volatile pricing, lock-in of obsolete infrastructure and stranded assets,” added Friends of the Earth US.
The awarding of the majority of bids from South Africa’s “emergency round” to Karpowership has faced fierce resistance with the opposition in South Africa’s parliament questioning the rationale behind awarding much of the tenders to expensive and polluting powerships as opposed to quickly deployable wind and solar.
One of the bidders in South Africa’s RMIPPPP programme, DNG Energy, is suing the government over what it deems an unfair and corrupt ridden tender process. Media reports from last week also suggested that South Africa’s state owned power utility, Eskom, could refuse to purchase power produced from powerships. Eskom is allegedly citing the system’s high costs could have negative implications on its already overburdened balance sheet.
