Investor ActivitySouth Africa

Investec Exposed As One of the Funders of Karpowership SA

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Investec Exposed As One of the Funders of Karpowership SA

The Karpowership SA project entails the proposed installation of three floating gas power ships off the coast of South Africa. In 2021, the Department of Forestry, Fisheries and the Environment (DFFE) refused to grant environmental authorisations for all three power ships. Karpowership’s appeal to overturn one of these environmental rulings also recently failed.

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Further, the licenses granted by the National Energy Regulator of South Africa (NERSA) for the Karpowership SA project are currently the subject of a legal challenge brought by a South African civil society organisation on the basis that NERSA failed to act in the interests of South Africa; failed to provide adequate reasons; and failed to consider that the Karpowership SA “emergency” contracts will not resolve the country’s current power crisis, but will instead tie South Africa to an expensive long-term contract.

In light of the controversy surrounding this fossil fuel project, FFCSA looked into the financiers behind Karpowership SA, revealing a syndicate of four banks.

“Given the constellation of financiers, including both South African and Turkish financiers, our conclusion is that the ultimate purpose of the loan to Karpowership is to finance the operations of Karpowership SA, however, the banks could not provide firm confirmation of this,” says Ward Warmerdam of the Netherlands-based research institute, Profundo.

FFCSA has written to all four banks in question, posing questions about these loans and whether financing a project which poses serious environmental and social harms and which has been met with fierce opposition by civil society groups in South Africa, would pose significant and material risks to the banks and how it will affect the banks’ carbon emission status.

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The Green Connection is particularly concerned about the impacts of the project on the marine ecosystem, e.g. fish nurseries, which would in turn negatively impact existing local livelihoods such as those of the local fisherfolk who would be impacted by pollution from these floating gas powerships.

“People’s livelihoods are at stake here and it is surprising that a South African investment bank, Investec, would be associated with Karpowership,” says Neville van Rooy, member of The Green Connection, a civil society organisation working with coastal communities to input into the environmental impact assessment process for the Karpowership project.

Information in relation to projects which have the potential for significant environmental and climate change impacts – and moreover, that could significantly undermine our country’s transition to a low-carbon economy – ought to be easily accessible and available to the public. However, when it comes to gas projects in general, civil society in South Africa is increasingly facing obstacles in accessing information, particularly financial information.

“It remains uncertain as to how the loans to Karpowership SA will affect the banks’ membership of the Net Zero Banking Initiative,” says Zahra Omar, attorney in the Corporate Accountability and Transparency Programme at the Centre for Environmental Rights.

The FFCSA report has concluded that the banks have provided financing for Karpowership SA, but ultimately, the banks have left the questions of FFCSA unanswered. Without access to key financial information, civil society organisations such as FFCSA cannot hold financiers and other role-players accountable for their roles in controversial projects such as the Karpowership SA project.

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Author: Bryan Groenendaal

Source: Centre for Environmental Rights

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