Centre for Environmental Rights – Advancing Environmental Rights in South Africa

On 20 September 2021, the Centre for Environmental Rights submitted a Promotion of Access to Information Act request to the Development Back of Southern Africa. The following information listed below was requested.

Apart from the DBSA’s Environmental Appraisal Framework (which is available on its website), the DBSA denied the request under section 42 of PAIA which regulates “Economic interests and financial welfare of Republic and commercial activities of public bodies.”

• CER Cover letter to DBSA (20 September 2021)
• Completed PAIA Form A
• Response from DBSA (1 December 2021)

The following records are requested in relation to the DBSA’s finance and investment policies, frameworks, and due diligence criteria:

Copies of all finance and investment policies, frameworks, and due diligence criteria, applicable to any infrastructure projects or other undertakings that may be funded by the DBSA, including the most current:

• DBSA Climate Change Policy Framework;
• DBSA Environmental Sustainability Strategy;
• DBSA Environmental Appraisal Framework;
• DBSA Social and Institutional Guidelines;

which policies and framework are set out in the DBSA’s Environmental and Social Safeguards Standards (ESSS) dated March 2020.

The following records are requested in relation to the DBSA’s funding or support for Karadeniz Energy Group, Karpowership SA, Powergroup SA, and/or power-generating barges/ships proposed for the ports of Richards Bay, Ngqura, and Saldanha:

Details of the funding considered by the DBSA’s investment committee, and/or which was applied for by Karadeniz Energy Group, Karpowership, and/or Powergroup SA, as referred to by Enoch Godongwana, chairperson of the DBSA, in an interview dated 24 May 2021 and reported in Engineering News on 25 May 2021, including:

• The amount of funding considered by the DBSA’s investment committee;
• The proposed nature and structure of such financing or investment;
• Any conditions applicable to the DBSA’s financial support for the companies or projects;
• The current stage of the application / project within the DBSA’s Project Cycle (as set out on page 17 of the ESSS dated March 2020); and
• Whether the DBSA has committed to funding the companies or projects and, if so, the nature and amount of funding committed and any conditions applicable to such funding arrangement.

Details of the application for funding considered by the investment committee, or any other structure of the DBSA, including:

• Full names and registration numbers of the applicant(s) for funding;
• Full names of all directors and shareholders of the applicant(s), as provided by the applicants to the DBSA;
• Copies of documents supplied to the DBSA in the application for funding including the environmental and social scoping report, comprehensive ESIA, detailed ESMP, Stakeholder Engagement Plan, and grievance and redress mechanisms, which are required to be submitted to the DBSA in terms of the ESSS.
• The full list of criteria with which the applicants are required to comply in order to access DBSA funding, in including those considered in the DBSA’s due diligence process(es) and applicable under the DBSA’s ESSS;
• The record of scores and/or extent of compliance of the applicants against such criteria.

Whether social and environmental impact assessments were (1) conducted by Karadeniz Energy Group, Karpowership SA, or Powergroup SA and (2) considered by the DBSA, specifically in relation to:

• Climate-related impacts;
  Impacts on water and considerations related to water-scarcity
• Impacts on biodiversity;
• Impacts on heritage including world heritage sites;
• Impacts on land rights and the rights of indigenous peoples;
• Impacts on protected areas and wetlands; and
• Impacts on animal species including threatened and endangered species.

The content of the above-mentioned social and environmental impact assessments, including full copies of all social and environmental impact assessments and water resource impact assessment reports provided by Karadeniz Energy Group, Karpowership SA, and/or Powergroup SA to the DBSA.

Whether the DBSA has identified, in the application of the Environmental and Social Safeguards Standards in the investment value chain (as set out on page 18 of ESSS March 2020):

• Key environmental and social issues for project design;
• High level environmental and social risks and impacts in line with the DBSA Environmental and Social Safeguard Standards;
  The volume of greenhouse gas emissions;
• Project environmental and social risks;
• Project affected communities and the level of community organisation and representation; the impact of the project on affected communities and beneficiaries; and the readiness of the community to receive the project.

Where any of the abovementioned elements have been identified in the application of the ESSS, please specify the content identified including (1) the issues identified and extent of greenhouse gas emissions, (2) high level risks identified, and (3) any proposed risk mitigation measures and the risk impacts after mitigation.

Whether the project is classified High/Substantial Risk, Moderate Risk, or Low Risk and the reasons for that determination in line with the factors set out in Standard 1, section 1.3.1 of the ESSS.

If the project is classified as High/Substantial Risk, or is determined to be of high magnitude/impact, then provide copies of the records, advice, or findings of the independent advisory panel of expertise agreed to by the DBSA, as set out in the Procedures and guidelines for Category 1 (High and Substantial Risk) projects.

Copies of any written agreements between Karadeniz Energy Group, Karpowership SA, and/or Powergroup SA and the DBSA.

The following records are requested in relation to the DBSA’s support and funding for Ghana powership project, as referred to by Zeph Nhleko, DBSA Chief Economist, on the DBSA website:

• Full copies of all social and environmental impact assessments and water resource impact assessment reports considered by the DBSA in relation to the Ghana powership project.
• The full record of decision-making relating to the Ghana powership project, including:
• Copies of all documents supplied to the DBSA in the application for funding;
• The list of criteria with which the applicant(s) were required to comply in order to access DBSA funding, including those considered in the DBSA’s due diligence process(es) and applicable under the DBSA’s Environmental and Social Safeguard Standards;
• The record of scores and/or extent of compliance of the applicants against such criteria;
• Any conditions precedent with which the applicants had to comply in order to obtain funding from the DBSA.
• Copies of any written agreements between the DBSA and the owners of the Ghana powerships.

D. The following records are requested concerning DBSA funding related to the development and operation of the Musina-Makhado Special Economic Zone (MMSEZ), as suggested in a meeting in a committee meeting of the NCOP Trade and Industry committee held on 16 March 2021, and in consideration of the presentation by Mr Mohale Rakgate of the DBSA to the Limpopo Investment Conference held on 1 September 2021.

• Details of all applications for funding of infrastructure and/or other projects and undertakings intending to support the development of, or operate within, the Musina-Makhado SEZ, including:
  • The name(s) of the entities and/or persons which have applied for funding from the DBSA;
  • The purpose(s) under which the applicants have applied for such funding;
  • The total amount (in South African Rand) and nature of funding applied for (whether project finance, corporate credits, or any other form of financing).

Details of all infrastructure and/or other projects and undertakings supporting the development of, or operating within, the Musina-Makhado SEZ which the DBSA has committed to fund and/or has funded), which must detail and include:

• Any memorandum of understanding and/or loan, finance, or investment agreement(s);
• The terms and conditions applicable to the funding; and
• How much has been committed to and/or invested in the project.

The due diligence framework and/or list of criteria considered in any due diligence process(es) that may apply in relation to the extension of project finance, corporate credits, or any other form of financing to any project or undertaking supporting the development of, or operating within, the Musina-Makhado SEZ.

The record of decision making including the scores and/or performance of each company or undertaking to which the DBSA has agreed to grant funding measured against such aforementioned due diligence framework and policy criteria.

The following records are requested in relation to the DBSA’s financing of the Mozambique LNG Project, as referred to in a post on the DBSA website dated 20 July 20204:

• Whether environmental and social impact assessments were undertaken for this project.
• Whether the DBSA considered the content of the environmental and social impact assessments in its investment decision and due diligence processes.
• The record of decision making including the scores and/or extent of compliance of the Mozambique LNG project measured against such aforementioned due diligence framework and applicable elements of the DBSA’s Environmental and Social Safeguard Standards.
• Copies of all environmental and social impact assessments provided and considered by the DBSA.