Quid pro quo — Karpowership offers to buy government a game farm

7 Sep 2023

To clear its final environmental hurdle, Karpowership has offered to donate a game farm to the government — a controversial arrangement that Ezemvelo KZN Wildlife describes as ‘unchartered territory’. The game farm is being offered as ‘ecological compensation’ to make up for temporary damage to the ‘irreplaceable’ and globally significant bird habitat around Richards Bay.

To get its 540MW Richards Bay power plant off the ground, Karpowership will buy the government a game farm.

The private Madaka Game Ranch is a popular hunting destination for North American tourists. It is on the border with Ithala Game Reserve, a provincial park that is home to rhinos and elephants.

The details of the proposed deal were outlined in the environmental impact assessment (EIA), which was published in May but came up again in Karpowership’s recent interview with eTV journalist Annika Larsen.

Asked if Karpowership was happy with some of the offsets that had been “directed towards you”, chief commercial officer Zeynep Harezi said: “I think I know what you’re talking about — the offset for the Richards Bay black heron bird livelihood — we need to buy and donate a game reserve to DFFE [the Department of Forestry, Fisheries and the Environment] or…”

At which point she faltered: “Can I take that back? Because I actually am not super informed about it.”

Larsen: “You don’t know whether you were directed to buy a game reserve from a certain person or anything like that?”

Harezi: “No, we did whatever the DFFE requirement was.”

But, as improbable as it sounds — promising a game farm to secure an environmental permit — that is effectively what the deal entails.

Ezemvelo KZN Wildlife, which manages both Ithala and the Richards Bay Estuary — where Karpowership’s floating power plants will be anchored — described the proposal as “unchartered territory” in a letter sent to DFFE last month, but said it would support it.

Read more in Daily Maverick: Karpowership offers to chop 20-year energy deal to five years — but there’s a new price

The game ranch

The 1,750-hectare Madaka Game Ranch was supposed to go on auction on 23 March, with an opening bid price of R9-million.

Days before the auction, however, the owners withdrew the property without explanation.

“There’s been rumours around that we’re moving,” one of the owners, Izak Kirsten, said in an Instagram post two weeks later. “It’s a long-short story, something that happened very quick.”

AmaBhungane has established that at some point before the auction, Ezemvelo introduced Karpowership to Swiss Safari & Eco Tours, which owns Madaka.

“I have no idea how they ended up with us,” Kirsten said. “Madaka was advertised on auction. Then we got a call out of the blue. Ezemvelo notified us of Karpowership.”

The property, which includes three lodges, is valued at R30-million to R40-million, according to Kirsten, but up to R72-million with the game and all the assets included.

“Negotiations are going on at the moment,” Kirsten said, adding that Karpowership was undertaking its own valuation. “We didn’t get any proposal on [the price].”

But Karpowership will only buy the game farm and donate it to the government if it is granted environmental authorisation for its Richards Bay floating power plant project in the form of permits that it has been trying to secure since 2020, and which it desperately needs to get its R280-billion project off the ground.

No Plan B for waterbirds

If Karpowership’s 540MW project in Richards Bay goes ahead, three ships will arrive next year: two electricity-generating powerships and a floating storage regasification unit.

For the next 20 years, these three ships will be moored alongside one of the world’s most important sites for migratory birds, which will have significant consequences.

“The risks … include habitat loss, collisions, electrocution, light and noise pollution and disturbance by the movement of people, machinery and vessels,” Karpowership’s environmental consultants wrote in its latest EIA.

“Of these, the elevated risk of mortality due to collisions with overhead powerlines are a major concern for larger species, particularly waterbirds … including threatened species such as flamingos and pelicans.”

To limit the damage, Karpowership has proposed a biodiversity offset, a controversial scheme whereby developers are allowed to cause damage to one part of the environment provided they make up for it by restoring another.

Irreplaceable

None of this is strictly by the book.

“Offsets are not appropriate to compensate for impacts on irreplaceable biodiversity,” Ezemvelo’s 2013 guideline on offsets reads. “As a rule, biodiversity offsets should not be considered when … Critical Biodiversity Areas … or ecosystems containing irreplaceable biodiversity … would be negative[ly] affected.”

In these cases, the guidelines say a development should not go ahead.

Dr Andy Blackmore, Ezemvelo’s scientific manager for conservation planning, confirmed that the site of Karpowership’s project “is mapped as a ‘Critical Biodiversity Area — Irreplaceable’”.

“Furthermore, given the [Important Bird Area] status” — meaning the site has global significance for bird conservation — “even if monitoring shows this to no longer be of its former status, the site should still be considered as irreplaceable.”

But in Karpowership’s case, Ezemvelo will make an exception because, the argument goes, this critical bird habitat can be “recreated” by rehabilitating the neighbouring uMhlathuze Estuary.

“We were originally of the opinion that this area was irreplaceable … What has become evident, in the recent specialist studies, is that this habitat has degraded apparently as a consequence of the harbour operations and beyond. We also have been advised that this degradation is on-going [sic]… Thus ‘moving’ this habitat to a more conducive area is probably the best medium to long term [sic] solution. We have also been led to believe that, unlike our complex midlands grasslands, this marine/estuarine habitat can reasonably be recreated,” Blackmore said in an emailed response.

“In summary … if the receiving environment is irreplaceable then the application must be refused. As you can appreciate, if the environment can reasonably be recreated … it will be very difficult to argue that its [sic] truly ‘irreplaceable’.”

However, Blackmore added: “[A]t this point in time, we do not have reasonable defendable grounds to object to the project. If however new information comes to light we will (as we have done in the past) revise our position.”

‘Unchartered territory’

The problem with the proposed offset is timing.

Karpowership needed to resubmit its EIA by May, which did not leave enough time to develop a comprehensive plan for the uMhlathuze Estuary. What rehabilitation work will be done and how much will Karpowership be required to spend? These details are still being negotiated.

This means that if environmental authorisation is granted, the powerships will start operating before the uMhlathuze Estuary has been rehabilitated, ie, before a Plan B for waterbirds is in place.

So, to compensate for the delay and the damage this is likely to cause, Karpowership suggested donating the 1,750-hectare Madaka Game Ranch to the government as a form of “ecological compensation”.

“Ezemvelo pointed out that this organisation was concerned about the potential delay in the marine offsets becoming functional,” Blackmore explained. “In discussion, Karpowership was receptive to making good on the delay ... Ezemvelo wanted to secure Madaka and a few other properties around Ithala Game Reserve for biodiversity and elephant and rhino conservation. We suggested Madaka because we had heard the property might be on the market.”

Ecological compensation is effectively a last resort when the negative impacts of a development cannot be avoided, minimised, restored or mitigated.

These kinds of trade-offs “should be approached with extreme caution”, according to the National Biodiversity Offset Guideline, gazetted in June, because the “rational link” between the habitat that is affected and the compensation that is given is no longer there.

In Karpowership’s case, the acquisition of Madaka will be good for rhinos and elephants but will do nothing to help coastal wading birds as they wait for the uMhlathuze Estuary to be rehabilitated.

In its letter to the DFFE last month, Ezemvelo described Karpowership’s proposal as “unchartered territory”.

Asked if this was a euphemism for “irregular”, Blackmore said: “‘Unchartered territory’ should be read as ‘pioneering’ for the good of biodiversity conservation … I have no idea whether Madaka is sufficient, an overkill, insufficient, etc., to compensate for the delay, as we have not applied our minds to this area of offsetting.”

Was Ezemvelo pressured?

Ultimately, it will be up to Environment Minister Barbara Creecy to decide whether to accept Karpowership’s game farm proposal. The EIA was resubmitted in May for a final decision.

But securing Ezemvelo’s endorsement will go a long way.

When Karpowership’s environmental consultants submitted their original EIA in 2021, Ezemvelo was scathing, calling it “substantially deficient” and “unusable for a source document in decision-making”. (Find out why Karpowership’s Richard Bay project was torpedoed in 2021.)

By contrast, Ezemvelo now says it “would not object to the Department issuing an Environmental Authorisation for the proposed Gas to Power Powership project (the Powership at Richards Bay), should it (the Department) decide to do so”.

But Ezemvelo added a caveat in its letter to the DFFE: “Ezemvelo will not object to the Environmental Authorisation … being conditional to the marine offset set being set in place before the Powership becomes operational.”

Asked what this would mean in practical terms, Blackmore said Karpowership would need to sign agreements with all the relevant landowners, municipalities, departments and specialists; would need to adopt an offset implementation plan; and would need to put up money to fund the project.

“Karpowership may not operate until the offsets are secured,” Blackmore confirmed.

Read more in Daily Maverick: Karpowership SA is heading for choppy financial waters

A source inside Ezemvelo, who described the offsets as “irregular”, said that staff had been put under pressure to find a solution for Karpowership.

Asked to comment on this, Blackmore said: “It is not uncommon to experience some (inappropriate) pressure from an applicant (private, communal, or government) … Having said this, at no stage were we asked in any way to compromise our principles on the [Karpowership] application.

“I do admit that there was substantially more involvement of [Karpowership] senior managers in this application compared to the bulk of the applications we receive. But this approach is no different to a number of key development projects we have commented upon.”

Karpowership and its environmental consultants did not respond to detailed questions sent last week. Instead, it issued a press release saying that the “landmark” biodiversity offset agreement demonstrated its “unwavering commitment to the environmental sustainability of its projects”. DM

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The game ranch

No Plan B for waterbirds

Irreplaceable

‘Unchartered territory’

Was Ezemvelo pressured?