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South Africa’s Emergency LNG-To-Power Deals Land In Hot Water

The plan of South Africa’s government to lease LNG-to-power ships to solve its electricity crisis has drawn a lot of criticism because of alleged irregularities in the bidding process and the multi-billion cost for emergency supply for 20 years.

Earlier this year, Karpowership, a company from Turkey, was announced as the Preferred Bidder for projects for the so-called powerships to be docked at the ports of Coega, Saldanha, and Richards Bay that will provide power to South Africa’s electricity grid under the Risk Mitigation Independent Power Producers Procurement Programme (RMIPPPP).

Competitors of Karpowership, as well as environmentalists and the opposition in South Africa, say the bidding was rigged and would cost a lot to the nation for fossil fuel-powered electricity.

Karpowership’s bid “offers low-cost electricity generation, supported by a clean thermal energy solution using LNG,” the company said in a statement in March.

But South African gas company DNG Energy sued to block the award to Karpowership because of alleged corruption during the tender process. According to court documents, DNG Energy has filed and Bloomberg has seen, some of the eight bidders—including Karpowership—were exempted from some of the requirements in the tender.

DNG Energy’s executive director, Aldworth Mbalati, told a court he was approached by a businessman who boasted “close ties” to the South African energy minister and other government officials and offered to help with the tender. Mbalati rejected the proposal, he said in an affidavit.

Karpowership has strongly denied the allegations.

South Africa is trying to solve its electricity shortage crisis which has prompted the worst rolling outages in the country.

Meanwhile, last month, South Africa-based Public Affairs Research Institute (PARI) published a report that found that in the 2019/2020 financial year alone, around US$641 million (9 billion South African rand) that was budgeted and disbursed by South Africa’s National Treasury to local governments to provide free basic electricity to the poorest-of-the-poor has been misappropriated by municipalities.

By Tsvetana Paraskova for Oilprice.com

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