The Pretoria High Court on Thursday set aside the three Karpowership electricity generation licences issued by the National Energy Regulator of South Africa (Nersa) in 2021.
The settlement agreement between the Organisation Undoing Tax Abuse (Outa) and Nersa was made an order of the court on Thursday after Nersa withdrew its opposition to an application that had been launched by Outa to review and set aside the contracts.
The generation licences in question were issued as part of the Risk Mitigation Independent Power Producer Procurement Programme, which aimed to urgently address South Africa’s electricity shortfall.
The licences issued by Nersa were a crucial step in the government’s plan to sign 20-year deals with the floating power stations as “emergency” electricity. The deals were expected to have cost about R200bn over 20 years, an amount that would have been added to the price of electricity.
Outa filed its court application in April 2022 to review Nersa’s decisions to grant the licences. It cited multiple legal and procedural concerns, including absence of required environmental authorisations and port approvals and criminal investigations pending against the Karpowership entities.
“It resulted in a three-year fight, including a long dispute over access to documents. Outa believes this case contributed significantly to the collapse of the Karpowership deals, as Eskom eventually cancelled the grid access,” Outa said in a statement.
The court order noted that Nersa, Karpowership SA Coega, Karpowership SA Saldanha Bay and Karpowership SA Richards Bay had initially opposed Outa's application.
The order noted that in September 2024, the minister of mineral resources and energy had informed the Karpowership entities in writing that the extended date for commercial close had come and passed without the project agreements being concluded or their projects reaching commercial close. The minister then terminated their status as preferred bidders by operation of law.
The order stated that in addition, South Africa no longer experienced load-shedding and Eskom had improved its electricity generation capacity.
The parties agreed in the court order that Outa's application had become academic.
However, the court order noted that parties agreed that Nersa withdraw its opposition to the review application. The parties agreed that the decisions of Nersa to award the three licences are set aside.
Nersa was ordered to pay the costs of Outa's application on a party-and-party scale on an unopposed basis, which include the costs of two counsel where applicable, on Scale C (the highest scale). Outa said the costs order reflected the seriousness of the matter and the substantial public interest involved.
Outa said the removal of the generation licences represented the end of this deal and regarded this as a significant legal victory and a huge victory for the public.
“The Karpowership deals are now absolutely dead. It will never be loaded onto your electricity bill,” said Adv Stefanie Fick, executive director of Outa.
“This ruling is a powerful affirmation that decisions involving billions in public funds must comply with the law. We challenged this process because the public deserves transparency, proper oversight and value for money, none of which were present in this licensing saga,” she said.
Fick said this case was not just a legal win but a win for public interest litigation.
“This case reinforces the principle that even when government acts urgently, the law and due process cannot be ignored. This judgment protects the public from being locked into a flawed and costly energy deal, and it strengthens the principle that administrative decisions must be lawful, rational and in the public interest.”
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