Civil action nonprofit organisation the Organisation Undoing Tax Abuse (Outa) has brought an application against the National Energy Regulator of South Africa's (Nersa's) demanding the full records of decision to award generation licences to gas-to-power company Karpowership.

Nersa has not revealed the financial implications of the deal, estimated to be more than R200-billion for the proposed 20-year contract.

“Transparency is key to accountability in respect of the conferral of long-term state contracts. It is, accordingly, also in the public interest that the full record be made available,” Outa said in its application.

Outa’s application was filed in the Pretoria High Court on January 23 and requests the court to order Nersa to provide Outa with “a complete, unredacted record” of the Nersa decisions to award generation licences to Karpowership companies to operate powerships in the ports of Saldanha Bay, Coega and Richards Bay.

Nersa and Karpowership are opposing the application.

This legal application stems from its April 2022 application that called for the court to review and set aside Nersa’s decisions to award the generation licences.

“In June, Nersa provided a heavily redacted record, without having made any agreement with Outa about this and without having asked the court for condonation to deviate from the rules on the provision of documents,” the nonprofit said.

The April 2022 notice of motion in the main application called for Nersa to provide within 15 days copies of documents relating to the decisions, including the reasons for decisions, which is in line with the rules of court that envisage that a complete record be provided to an applicant in review proceedings.

In December, Outa filed a notice calling for Nersa to produce the full record in terms of the court rules, but the regulator failed to comply, which prompted Outa to bring the latest application to compel.

“The financial information from the Karpowership application is missing from the documents provided. The redacted record does not include information on the impact of the rand/dollar exchange rate, any licence conditions, charge rates or tariffs. There is also no explanation for how providing the information would prejudice Karpowership,” Outa said.

Nersa and Karpowership have unequivocally indicated that they will not provide an unredacted record to Outa, or even identify the information being withheld.

Further, the record provided is voluminous, with neither an index nor a list of the sections that were redacted, Outa highlighted.

“Although Outa has proposed using any restricted documents only for the purposes of the litigation, Karpowership, which is not the party from whom the record is requested, proposed a 'very restrictive confidentiality agreement', which Outa opposes,” the organisation said.

“Outa holds the view that a confidentiality regime, especially a restrictive one such as has been proposed by Karpowership, where Outa’s legal representatives would not even be able to take instructions from their own client on aspects relating to the record, has never been properly motivated by Karpowership,” said law firm Jennings Incorporated attorney and founder Andri Jennings in the founding affidavit of the new application.

“Outa did not and does not agree to the proposed confidentiality regime and to the resultant limitation of these procedural rights. It is, in any event, not warranted in the circumstances where there is every reason to insist on transparency and accountability in the public interest,” she added.

Further, the obligation to make the record available rests with Nersa, not Karpowership, but “Nersa seems to act in accordance with the dictates of Karpowership, instead of acting independently as is required from the regulator”.

“It is submitted that this is a matter of public interest and that both Outa and the South African public at large are entitled to this information in order for Nersa to be held accountable for its decisions to grant the generation licences to Karpowership. Information cannot merely be regarded as confidential because one of the parties says it is,” Jennings stated.

Outa’s main application revolves around the cost implications of the initially proposed 20-year contract, and includes an opinion from an expert on the costs, which disputes Nersa’s public statement that Karpowership power would cost R2.80/kWh, which is already 90% higher than the bid two years prior, instead estimating that it will be closer to R5/kWh, which is roughly two to three times the cost of alternative generation solutions.

“Outa’s application, thus, questions whether and how Nersa assessed the costs in Karpowership’s application,” Outa said.

Further, Outa’s demand for the redacted information comes while government is pushing to make a deal with Karpowership, despite the costs and the company's failure to meet bid requirements, which raises questions about Nersa’s involvement in cooperating with Karpowership to hide information on the licences.

“South Africa is undergoing its worst electricity crisis ever experienced, while government is ignoring advice from energy experts in favour of promoting Karpowership,” the organisation stated.

The costs, the length of the contracts proposed, the manipulation of the tender deadlines to the apparent benefit of Karpowership, the authorities’ prioritisation of fossil-fuel gas in preference to cheaper, faster and environmentally safer renewables, and the secrecy around the deal could indicate corruption, Outa averred.

Both of the large, coal-fired Medupi and Kusile power stations have been mired in allegations of corruption.

“Karpowership was initially refused environmental authorisations and its resubmitted applications have softened the environmental risks.

“Meanwhile, the Department of Mineral Resources and Energy has refused [State-owned power utility] Eskom a diesel wholesale licence to enable discounted diesel purchases, thus blocking emergency diesel generation. Further, 23 wind generation projects were refused bidder status in the recent bungled renewable energy bid process,” Outa added.