Name of the Project
Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP).

Location
South Africa.

Project Owner/s
Department of Mineral Resources and Energy (DMRE).

Project Description
The RMIPPPP, which is also known as the ‘emergency’ procurement round, is a response to the short-term electricity supply gap identified in the Integrated Resource Plan 2019.

The objective of the RMIPPPP is not only to alleviate the current electricity supply constraints but also reduce the use of diesel-based peaking electrical generators.

The programme aims to procure 2 000 MW from a range of energy sources and technologies.

The DMRE issued a request for proposal for the RMIPPPP in August 2020.

Mineral Resources and Energy Minister Gwede Mantashe released the names of the eight preferred bidders on March 18, 2021:

• the 150 MW ACWA Power Project DAO – a hybrid facility comprising solar photovoltaic (PV) and a battery energy storage system (BESS);
• a 450 MW Karpowership SA Coega facility – a gas-to-power plant based on imported liquefied natural gas (LNG);
• the 450 MW Karpowership SA Richards Bay facility – a gas-to-power plant based on imported LNG;
• a 320 MW Karpowership SA Saldanha facility – a gas-to-power plant based on imported LNG;
• the 198 MW Mulilo Total Coega facility – a hybrid plant employing solar PV and imported LNG;
• the 75 MW Mulilo Total Hydra Storage project – a hybrid facility comprising solar PV and a BESS;
• the 128 MW Oya Energy Hybrid Facility – a hybrid facility comprising solar PV, wind and a BESS; and
• the 75 MW Umoyilanga Energy – a hybrid facility comprising solar PV, wind and a BESS.

Eligible bids, with a combined capacity of 150 MW, could still be awarded under the RMIPPPP at a later stage, subject to a value-for-money reassessment.

The projects will include average local content of 50% during construction, South African entity participation of 51% and black ownership of 41%.

Potential Job Creation
Not stated.

Capital Expenditure
The combined investment value of the eight projects is estimated at R45-billion.

Planned Start/End Date
The projects are expected to reach financial close by no later than the end of July 2021 and be connected to the grid from August 2022.

Latest Developments
Opposition political party the Democratic Alliance (DA) has requested that Mineral Resources and Energy Minister Gwede Mantashe provide more insight into the real basis of the Karpowership bids and to explain why the RMIPPPP seems to have been set up to “favour” this solution.

The call for action follows revelations about the alleged involvement of former special adviser to former State Security Ministers David Mahlobo,  Bongani Bongo and Thabo George Mokoena, in the Karpowerships bid for the RMIPPPP, which “calls into question once again the legitimacy of this as a solution to South Africa’s electricity crisis”, the DA said in a statement in April.

Mokoena is, according to reports, a 20% shareholder in Powergroup South Africa, which is Karpowership’s black economic-empowerment (BEE) partner, the DA has noted.

The DA has, therefore, requested that the bid adjudication records be made public alongside the minutes of any deliberations in which the various bidders were evaluated.

The political party acknowledges that there is an urgent need to secure a consistent and viable electricity supply for South Africa, but laments that this “cannot come at the expense of our environment or our values as a country”.

It adds that the BEE shareholding is “highly questionable”, owing to the little local benefit, such as jobs or capital investment, in leasing these powerships for a 20-year period and that there “appears to be little more than fronting to line the pockets of the connected few”.

In comparison, other RMIPPPP projects are investing significantly in infrastructure and local manufacturing that will result in economic development and job creation, the DA has said.

The Karpowerships solution has been touted as a “no regret” option by the Department of Mineral Resources and Energy (DMRE). However, according to the DA, the Portfolio Committee meeting has been “at a loss to explain” how importing LNG to fuel these ships, subject to international market pricing and exchange rate fluctuations, will ease the electricity tariff burden on cash-strapped consumers.

The DMRE has suggested that the proposed 20-year contracts are necessary to amortise the capital costs, but have not been able to explain what these costs will be, given that the ships are leased.

Saldanha Coastal Links fisherman Carmelita Mostert has also noted her frustration about the organisation’s pleas “falling on deaf ears”, adding that the presence of these ships “will have a real impact in scaring off the fish in the area, and we fishers will be the ones going hungry”.

Green Connection community outreach coordinator Neville van Rooy has said that the organisation is still studying the report, but notes that a key cause for concern is government’s considering a 20-year deal as a solution to a current emergency situation.

These ships will be anchored off our coastline for 20 years, creating noise pollution constantly. The ships will also have a fatal impact on birdlife in the area, with an estimated 155 birds being killed yearly as a result.

Green Connection founding member  Liz McDaid – who played a key role in stopping the illegal R1-trillion nuclear deal in 2017 – has also called "the people to act”, as “there seems to be an agenda to force the project ahead despite social, environmental and economic concerns. Something is fishy in South Africa’s energy sector”.

She has added that “procurement deals like the nuclear deal were not set up to benefit South Africa and were stopped by legal action”.

Stanger community member Khalid Mather says government’s decision in considering the Karpowerships as preferred bidders smacks of similarities with the previous apartheid regime.

“Ignoring the concerns of our people and especially the coastal communities most affected, speaks to the marginalisation of communities, much like what happened in the past.

"Once again, it is about maintaining the interests of a few at the expense of the masses. Not many of the fishing communities along the KwaZulu-Natal coastline have been consulted about the Karpowerships, while they are the ones who will suffer from the effects of the added pollution and other negative environmental impacts these vessels pose.”

Meanwhile, DNG Energy, a South African company that is aiming to develop LNG facilities, has said that it has taken legal action to have government’s award of emergency power generation contracts halted.

Government awarded the right to develop 1 845 MW of generation capacity to eight companies in April 2021. The award has attracted criticism mainly because Turkey’s Karpowership won the bulk of the contracts and the right to produce electricity for 20 years from power ships moored off the South African coast.

DNG was an unsuccessful bidder in the round, having supported three gas projects itself.

Key Contracts, Suppliers and Consultants
None stated.

Contact Details for Project Information
DMRE, Natie Shabangu, email natie.shabangu@dmre.gov.za; or Thandiwe Maimane, email thandiwe.maimane@dmre.gov.za.