Turkish company bids to supply Africa with reliable energy

While Turkey’s diplomatic efforts in Africa continue to expand Ankara’s political influence, ambitious Turkish companies in a range of sectors are targeting new markets on the continent. Karpowership, a Turkish operator of floating power ships, is in talks with several African countries to help overcome electricity shortages by supplying pay-as-you-go energy solutions. 

The Istanbul-based company is currently providing “plug and play” power to nine African markets while running a fleet of 25 mobile power plants worldwide. 

Managing director Zeynep Harezi tells African Business that Africa is the “most important continent” for the business with ongoing conversations for power deals in a host of countries ranging from Cameroon to Mauritius. 

“Africa as a continent is very important for us moving forward because many of the countries have access to the ocean, electricity prices are high and there is a growing population,” she says.

The firm, a subsidiary of Turkey’s Karadeniz Energy Group, has been building power ships since 2010 and it has a total installed capacity exceeding 4,100 MW with 1,400 MW in Africa.

The floating plants generate power from heavy fuel oil or liquefied natural gas (LNG) and feed power directly into national grids. The company supplies 100% of Guinea Bissau’s electricity needs and 10% of Mozambique’s – other markets include Guinea, Ghana, Gambia, Sierra Leone, Sudan, Senegal and Zambia. 

Plugging gaps 

With grid capacity often exceeded by rapidly increasing demand in Africa, Karpowership offers reliable energy without African governments having to invest millions of dollars in huge energy projects, says Harezi. 

The independent power producer (IPP) can provide electricity within 30 days and says it will reduce the average cost of power for most countries. 

“It is a pay-as-you-go agreement, so customers will pay for electricity at the end of each month without any advance payment or without needing to lock in capital, project finance or anything like that,” Harezi explains.

LNG vessels produce power at $0.12 per kWh, which is significantly lower than the average electricity cost in many parts of Africa. For example, the price of electricity in Kenya in June 2020 was $0.202 per kWh for households and $0.161 for businesses. The low cost means that many national utilities are able to buy electricity from Karpowership and then sell it on for a profit, she says.  

The firm is also launching the first LNG-to-power projects in Africa through specialised floating storage regasification (FSRU) units that were built Singapore, Harezi says. The FSRUs are the latest in technology to convert LNG to gas while at sea and then transfer the energy ashore. 

Karpowership entered into a joint venture with Japanese shipping giant MOL in 2020 to build the FSRUs. The ships will be sent in March from Singapore to Senegal and Mozambique. 

“This will change the energy perception in Africa because we will show everyone that is possible to fast-track LNG-to-power, even in Africa,” says Harezi. 

Coast to coast

Karpowership says its flexible model has been boosted over the Covid-19 period. Large energy projects across much of Africa and throughout the rest of the world have stalled, increasing the demand for “plug and play” power.

“With Covid-19, people are unsure of the payments, performances, currency risks, completion and execution risk – it’s impossible for personnel to start construction, even for engineering, procurement and construction [EPC] type projects,” Harezi says.

“Whereas our project is already complete. Our ships eliminate all these types of risk, zero construction risk, zero execution risk. Our ships have been in even higher demand.” 

Although Karpowership’s fleet primarily feeds into grids in coastal countries, the company also works with landlocked nations. In 2016, Karpowership signed a contract with national utilities in Mozambique and Zambia to deploy 115 MW of power to Zambia via Mozambique. The power was transferred into Mozambique’s grid and then on to Zambia. 

Karpowership is also looking to supply power to South Africa as it attempts to wean itself off coal and find solutions to frequent power blackouts. Harezi says that Karpowership has been in conversation with the state-owned utility Eskom with regards to a 3,000 MW electricity generation tender known as the Risk Mitigation Independent Producer Procurement Programme.

The tender in December drew bids from 28 clients including solar and gas companies. South Africa had previously revoked an environmental exemption granted to Karpowership because the supplier did not disclose reasons for the exemption. 

Red tape and the shifting priorities of policymakers due to election cycles are the most common bottlenecks to expanding the business in Africa, Harezi says. 

Companies follow diplomatic offensive 

Karpowerhip’s rise in Africa comes at a time when Turkey is reengaging with the continent. In countries like Libya and Somalia, Turkey has stepped up its military engagement by selling weaponry and training troops.

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Elsewhere, development assistance and the financing of mosques is carried out by the Turkish Cooperation and Coordination Agency (TIKA). The development agency has 21 offices in Africa in countries ranging from South Africa to South Sudan.

A common perception of Turkish companies in Africa is that they offer European quality but at Chinese prices, says Harezi. In addition to power, Turkish companies have a strong reputation in the construction sector, having built airports, business complexes, hotels, convention centres, sports stadiums, shopping malls and hospitals across the continent. 

Harezi says that Karpowership is independent of the Turkish government: “We try to stay completely above all politics. Our biggest value driver is cost advantage and the power we bring to the local people by bringing them low-cost and reliable electricity, vocational training, know-how transfer and employment opportunities.”

Karpowership had been heading for an IPO in London but the listing has been delayed by Covid-19. Harezi says that staying private has given the firm “more flexibility during the growth stage”, and says that the IPO is not completely off the table.