NATIONAL OFFICE

61 Katherine Street, Sandton, 2196

P.O. Box 652807, Benmore, 2010
www.busa.org.za
+27 11 784 8000

19 May 2021
Adv. Thabo Mokoena
Director General of Mineral Resources and Energy
Republic of South Africa
Private Bag X96
PRETORIA
0001
Email: thabo.mokoena@dmr.gov.za; mamabefu.modipa@dmr.gov.za (PA)
cc: Thabang Audat; Thabang.Audat@dmre.gov.za

Dear Adv. Mokoena

CONCERS REGARDING THE FINALISATION OF THE 1200MW NATURAL GAS PROJECTS

UNDER THE RISK MITIGATION INDEPENDENT POWER PRODUCER PROGRAMME
(RMIPPP)

It is common cause that the energy supply gap is around 5000MW and that this situation is likely to persist
until at least 2025. Load shedding was estimated to cost the economy between R80-R160Bn in 2020 and
continues to impede economic recovery. Security of supply to enable economic recovery is paramount
and every and all avenues to secure additional supply in the short-to-medium term should be explored
and leveraged. In BUSA’s view, next to the vaccine rollout, investment, and growth, are the most critical
imperatives to address our socioeconomic and fiscal crises.

It is in this context that BUSA would like to place on record some concerns in respect to the RMIPPP gas
related projects:

1. BUSA notes the recent high court challenge from an unsuccessful bidder as well as additional
media reports in respect of the process followed to select the preferred bidders. These allegations
are specifically centred around the 3 Karpowership SA projects. While BUSA has no opinion on
the veracity of these allegations - a court challenge, even if unsuccessful is likely to delay the
finalisation of these projects preventing a significant 1200MW of power from coming online.

2. BUSA is given to understand that there is legal risk in the approach of the Transnet National Ports
Authority (TNPA) to allow infrastructure for liquid natural gas (LNG) in its ports under the RMIPPP.
BUSA understands that the process being adopted by TNPA to enter into agreements in terms
of the National Ports Act with developers could be deemed unlawful with the risk of being legally
challenged. BUSA is in the process of soliciting formal legal opinion in this regard which will be
shared with the Department as soon as possible.

BUSA acknowledges that intergovernmental engagements are underway to clarify this process and
resolve any challenges. However, BUSA remains concerned that this will again cause a delay in finalising
these contracts and prevent this much needed power from coming online.

In addition, if such a challenge does materialise and if Government and/or TNPA are not seen to be acting
in accordance with a procedure that is fair, equitable, transparent, competitive, and cost-effective – this
will have dire consequences on the confidence levels of international investors and foreign direct
investment (FDI) with the concomitant impacts on South Africa’s already strained economy and
development.

REGISTRATION NUMBER: 2014/042417/08

PRESIDENT: Sipho M Pityana VICE PRESIDENT: Martin Kingston CEO: Cas Coovadia NEDLAC CONVENOR: Kaizer Moyane
DIRECTORS: Angela Russell, Bongi Kunene, Busisiwe Mavuso, Christopher Campbell, Deidre Penfold, John Dludlu, John Purchase,
Roger Baxter, Stavros Nicolaou, Zoleka Lisa
BUSA requests clarity from the Department on what mitigation actions are being put in place to
address these risks, not only in respect of these 3 projects, but more decisive action to procure
additional power in the event that these projects do not reach finalisation in the timeframe
required. In BUSA’s view, it is critical that the supply gap is not exacerbated and that all efforts
are made to procure additional supply expeditiously.

BUSA remains committed to working with Government to ensure secure, reliable, and affordable energy
supply to underpin economic growth and development. We thank the Department for its consideration of
this letter and will gladly avail ourselves to engage on any of these matters as required.

Yours sincerely,

Cas Coovadia
BUSA CEO

c/o jarredine.morris@busa.org.za
Jarredine Morris
BUSA Energy and Environment Policy Manager