·         NERSA’s decision-making was procedurally unfair. The process was premature and lacking in transparency, with significant portions of the licence applications redacted.

·         The law requires that NERSA acts in the best interests of the country, but OUTA believes that NERSA has failed to do so. The Electricity Regulation Act, which empowers NERSA to issue the licences, requires a fair balance between the interests of customers and end-users, licensees, investors and the public. The National Energy Regulator Act requires that every decision by NERSA be “in the public interest” and “based on reason, facts and evidence”. This Act also provides for the judicial review of NERSA decisions in terms of the Promotion of Administrative Justice Act.

·         NERSA granted the generation licences for the Karpowership IPPs prematurely, without the relevant facts before it, and conducted the public participation process without providing the public with the necessary facts on which to comment, including pricing aspects. “The lack of transparency points to a decision that was procedurally unfair as the public was not informed of and able to comment on and submit relevant facts and evidence to NERSA on the costs involved over the next 20 years,” says Fick.

·         In its reasons for the decisions, NERSA failed to provide a meaningful response to the public concerns and objections, effectively undermining the public participation process. Instead, NERSA “simply brushed aside” the public objections, says Fick.

·         In August 2021, OUTA made a formal submission to NERSA objecting to the granting of generation licences to the Karpowerships. Many of these objections still stand and have not been addressed.

·         At the time when the applications for generation licences by the Karpowership IPPs were considered by NERSA, the regulator did not take into account that the Karpowership IPPs failed to meet certain legal and regulatory requirements, including NERSA’s own prescribed requirements for generation licence applications to be considered. These include failure to obtain environmental authorisations, port authorisations, water licences, emissions licences, waste management licences, various gas infrastructure construction, operating and trading licences, fuel supply agreements and power purchase agreements.

·         NERSA’s lack of transparency on the financial information raises concern about the effect on the public. “It failed to deal with the issue of price variation in circumstances where prices over the next 20 years will be dependent on the US dollar price. This causes uncertainty and may come at tremendous costs for the South African public,” says Fick.

·         NERSA appeared to prioritise the interests of the Karpowership IPPs over the public. Fick says that “it is of great concern that NERSA, a South Africa public body using public funding, expresses concern about the financial affairs of a private Turkish majority-owned company, thereby creating the distinct impression that the financial well-being of Karpowership should enjoy preference above that of the South African public.”

·         Eskom has not signed power purchase agreements with the Karpowership IPPs and there is no certainty that it will do so, which is an important factor when considering the granting of generation licences.

·         Despite the DMRE having repeatedly extended the deadline for RMIPPPP preferred bidders to obtain the requisite regulatory approvals and authorisations necessary for financial closure, the Karpowership IPPs have still failed to provide these.

·         NERSA accepted the “plans” by the Karpowership IPPs to comply with environmental legislation as actual compliance.

·         NERSA failed to take value-for-money considerations into account, including consideration of more cost-effective options.