Climate activists have mobilised their resistance to the financing of fossil fuels in South Africa by handing over a formal petition to the Development Bank of Southern Africa (DBSA), ABSA and Investec. The hand-over by 350Africa.org took place yesterday, 2 September.
The petition, signed by over 1000 people, calls on these financial institutions to publicly and proactively commit to not funding the controversial deal. Karpowership SA is currently the preferred majority bidder to provide electricity to Eskom from their gas-to-power ships for the next 20-years.
Karpowership builds and rents out floating gas-fired power plants which are proposed to produce electricity that will be fed into the national grid as part of the Department of Mineral Resources and Energy (DMRE)’s Risk Mitigation Independent Power Producer Procurement Programme (RMIPPP).
The bid is for three of these ships to be docked along South Africa’s coastline as part of the government’s plans to address the load shedding crisis on an expedited basis.
This 20-year contract is worth more than R218-billion but will make electricity more expensive for South Africans as the Karpowership tariffs depend predominantly on imported fossil fuels, as well as the volatile US Dollar to Rand exchange rate.
Sherelee Odayar of the South Durban Community Environmental Alliance says:
“Karpowership’s ships are an unnecessary energy expense that will contribute to climate change, destroy marine life and will probably land South Africa in more debt, which will eventually cost the ordinary taxpayer. Investing in renewable energy makes more sense now and for future generations.”
The pollution and greenhouse gas emissions from these ships are also of great concern. Karpowership’s applications for environmental authorisation have been rejected by the Department of Forestry, Fisheries and the Environment (DFFE).
According to Neville van Rooy, “since the start of Karpowership’s initiative in South Africa, we, as the Green Connection, were never in favour of such dirty energy types – which pose threats both to our ocean environment and to the livelihoods of small-scale fishermen, who have been fishing these waters for decades. Don’t force environmentally-destructive industries like powerships down our throats for 20 years, especially when alternative environmentally-friendly energy options were not considered.”
While the rejection has since been appealed by Karpowership, there is no indication as yet on when the final decision made by DFFE will be announced. The Minister of the DMRE, Gwede Mantashe, has also extended the preferred bidders’ deadline from the 31st of July to the 30th of September, by which time all bidders must reach financial close. Further, court action over alleged corruption is still to be heard and could be postponed.
At the 2021 annual general meetings of both Absa and Investec, in response to questions from non-profit shareholder activism organisation Just Share, neither bank ruled out its involvement in the financing of Karpowership. In addition, Karpowership has been publicly presenting both Absa and DBSA as “project partners”.
Leanne Govindsamy from the Center for Environmental Rights says:
“It is unclear as to why Absa, Investec or the DBSA would ever consider financing such a project. The negative environmental, social and climate implications compounded by allegations of corruption related to the deal are clearly red flags related to their internal due diligence. All three banks claim to be aware of climate change and the need to finance renewable energy projects at scale and with urgency. The financing of the Karpowership project, involving the development of new gas capacity and infrastructure would undermine any climate-related commitments which the banks have made. When additionally considering the fact that the project is an expensive, dirty and long term project aimed at bridging short term electricity supply needs, for which there are limited local benefits, one wonders why any bank would risk even considering the financing of the project.”
“This deal is enriching a few at the expense of many. This is not a deal that will bring sustainable development or jobs, and will likely worsen energy poverty through increased prices” says Alia Kajee of 350Africa.org. “Financing is the tool that enables fossil fuels to be locked into our energy systems, as such transformational financial flows need to be seen for a just transition.
The petition – asking key financial institutions not to fund these contentious projects – was received by Olympus Manthata, Sherine Panton-Ntshona and Sebolelo Matsoso of DBSA, Tanya Dos Santos of Investec and Alan Hartdegen of Absa.