22 July 2024 | 04:05 AM

Powerships: Inside the Karadeniz money-spinning global empire

Key Takeaways

  • The Turkish powership conglomerate makes an astonishing amount of money from its specialist offering to frail and broken states
  • But many of its deals around the world have been criticised as exploitative and irrational.
  • South Africa may become the biggest prize of all. And, little known, we have already helped fund the growth of this corporate empire.

Karadeniz Holdings, the company that hopes to moor powerships in three local ports, commands a rapidly expanding fleet of these seaborne power plants, raking in over $1-billion per year around the world. 

Most of this was built in the past five years alone, bearing testimony to the group’s aggressive strategy of courting governments that are, as chief executive Orhan Karadeniz once told an American diplomat, “desperate” for electricity.

This success has however often relied on what are arguably opaque and ill-conceived deals that favour the company over the client state.

In at least two significant cases credible allegations of corruption have been made, leading to formal investigations, as amaBhungane has previously reported. In other instances, deals seem so patently against the self-interest of the governments signing the contracts that questions of probity are unavoidable.

Other recurring features include insistence on large prepayments and costly government-backed guarantees as well as a willingness to resort to cutting the power off if payments are missed or disputes arise. 

It is also conspicuous how the company tends to sail in the wake of Turkish president Tayyip Erdogan’s diplomatic travels, acting as a national champion with all the political cover that implies. 

One of its latest potential deals, almost as valuable as South Africa, is a bid to supply 

1 000 megawatts to Libya. This was announced in May last year, immediately after Erdogan visited Libya.

Likewise, a contract to supply Haiti was announced late last year in the context of a diplomatic phone call between Erdogan and the Haitian president Jovenel Moïse (since assassinated), followed by a joint media briefing by Haiti’s foreign minister and Karpowership executives.

In 2019 Cambodia briefly contracted a powership and when the deal was announced by Prime minister Hun Sen he pointedly “expressed thanks to Turkish ambassador Ayda Unlu for facilitating the deal”, according to local media.

Over time Karadeniz’s business model has also shifted decisively from being a provider of short-term power supply for urgent temporary shortfalls, to effectively making itself the costly solution to permanent “emergencies”.

And it has all paid off.

How Karadeniz makes its money

AmaBhungane has reviewed the financial statements of Karadeniz’s Dutch subsidiary Karpowership International BV for 2015 through 2019 as well as its Maltese subsidiary which is also called Karadeniz Holdings. These documents are available through the Maltese company register.

While the group has a sprawling and complex corporate structure spanning the countries where it operates as well as several secrecy jurisdictions and tax havens, the Dutch company is where the global powership business is consolidated.

The standout features from the financial statements are the breakneck pace of the company’s growth and the profitability of operations – driven by a handful of “big fish” client states: Ghana, Indonesia and Lebanon.

And even if South Africa does not join this club it has already contributed significantly to Karpowership’s growth by funding its key Ghanaian operation. The Development Bank of Southern Africa (DBSA), owned by our national treasury, gave the company an exceptionally large loan of $100-million to build the powership now moored in Ghanaian waters.

In 2011 Karadeniz had only five operational ships with a combined capacity of 785MW, contracted to Iraq and Pakistan. By the end of 2019 its floating power generation capacity had grown to 3 100MW, including the 450MW vessel partially funded by the DBSA. On its website the company claims this has since expanded to roughly 4 100MW and it intends to add another 4 400MW.

Thanks to this expansion the company’s revenue has rocketed from under $400-million in 2014 to $1.1-billion in 2019.

The powership business is at heart about renting out ships and their generation capacity to create a guaranteed income stream. The revenue figure includes both this rental income and the fuel that Karpowership buys and then sells to the client as a “pass-through”. The rental income shows how much money is made irrespective of how much power is actually sold.

A good intuitive measure of how much money Karpowership is actually making off its frail clientele is the dividend it pays its parent company every year. In 2015 this was barely $30-million. In 2019 it was an astonishing $321-million. 

In 2019 gross profits from its Ghanaian operation alone came to $197-million according to the financial statements for Karadeniz Holdings in Malta. 

The company has invested billions in powerships and continues to do so. Its asset base more than tripled between 2015 and 2019 to over $4.5-billion.

South Africa: the elusive whale

Despite growing success elsewhere in the world it is also clear that South Africa remains the elusive Moby Dick.

Karpowership recently suffered a serious setback when the department of forestry, fisheries and environment shot down its environmental impact assessments, as explained by amaBhungane. This could jeopardize its status as preferred bidder to provide 1 220MW of capacity under the department of mineral resources and energy’s emergency Risk Mitigation Independent Power Producer Procurement programme (RMI4P).

The RMI4P deal would be a game-changer for Karadeniz’s powership business, the largest single contract the group has secured in terms of megawatts and also in terms of length at 20 years.

Thanks to a take-or-pay clause in the contract Eskom would have to sign, Karpowership would have guaranteed income for those two decades whether or not it provides electricity.

It could be immensely profitable for Karpowership SA, the local subsidiary that is 49%-owned by a South African consortium.

AmaBhungane’s calculations show that the local subsidiary would earn a guaranteed minimum of R7.9-billion and a maximum of R11.3-billion per year over the 20-year contract (Read “Karpowership SA: How much again?). 

That’s the cost to Eskom with fuel included. 

For the parent Karpowership International the rental income is the more important thing. Based on the company’s financial statements and documents it submitted for its local RMI4P bid this rental income from its powerships alone will likely be in the region of R95-billion over the 20-year duration of the contract.

That’s 32% of its total enlarged global ship rental revenue. And that excludes the spare parts the parent company will be selling to the local one.

This percentage assumes that revenue from existing contracts have stayed more or less level since the end of 2019, an assumption that is not entirely far-fetched given the Covid-19 pandemic’s impact on economic activity worldwide. 

Under any scenario the RMIPPPP represents a coup for Karadeniz which explains why it has pursued Eskom for a deal since at least 2015. 

In response to detailed questions about its global operations a spokesperson of the local subsidiary Karpowership SA responded with the following paragraph:

“Karpowership is proud to work around the world providing vital electricity in its partner countries to support people and businesses.  Karpowership SA looks forward to getting to work in South Africa, helping to ease load shedding and support the economy.”

How Karadeniz moved into powerships

This snowballing enterprise began modestly – in the middle of a war.

In 2003 in the wake of the American invasion of Iraq, Karadeniz signed a deal with the Coalition Provisional Authority to supply a modest 80MW across the southern Turkish border from the city of Silopi. This later grew to 200MW. The contract was worth $134.2-million by July 2004, according to a report by the Open Society Revenue Watch.

Karadeniz quickly showed a willingness to go where others feared to tread, accepting payments made partly in heavy fuel oil, and facing up to the hazards of trucking fuel across the border in the midst of an insurgency. But even they were unwilling to build anything on the ground in Iraq.

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The answer was the first powership deal, signed late in 2008 alongside a simultaneous one with Pakistan. Karpowership’s first two powerships dropped anchor at the Iraqi port of Basra in 2010.

The company’s venture in Iraq featured in a number of American diplomatic cables from Ankara and Instanbul that were made public by Wikileaks in 2010. According to the cables Karadeniz constantly lobbied both the Turkish government and the occupying power in Iraq to clear the path for larger power exports from Turkey. These were mostly unsuccessful, further driving the company towards the powership solution. 

“Karadeniz was clearly proud of his company’s new innovation and [their] success so far in marketing the powership in Iraq and Pakistan suggests that they have found a niche to fill,” the US consul in Istanbul, Barbara Miles, reported to Washington after meeting chief executive Orhan Karadeniz in 2010.

At that point Karadeniz evidently did not yet see his ships becoming the kind of long-term solution that South Africa and some other clients seem to believe them to be. He did however see how his offering would intersect with the politics of his client states.

“Karadeniz said … the powership is intended as a short- to mid-term solution that would help a country’s leadership mitigate potential social or political unrest stemming from irregular electricity provision. Karadeniz said they pitch the idea to governments as a three- to five- year plan,” wrote consul Miles.

A long-term strategy takes shape

The first contracts in Iraq and Pakistan were three and five years in duration and put on display key features of how Karpowership would conduct its business going forward. 

One feature was the insistence on money upfront.

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In 2009 Iraq paid an advance of $72-million with another advance of $10.5-million when that contract was renewed in 2012. Pakistan paid $80-million upfront – a payment that would later be scrutinized in a major corruption probe into alleged kickbacks for Pakistani politicians.

In Pakistan things quickly turned sour. The contract was rescinded in 2012 alongside a number of other Rental Power Purchase deals born out of an opaque emergency procurement programme. Karpowership had at that point delivered very little power and Pakistan demanded its deposit back. When that was not forthcoming it “arrested” Karpowership’s ships in Karachi.

This triggered a massive legal battle lasting seven years at the World Bank’s International Centre for Settlement of Investment Disputes. In its arguments at ICSID, Pakistan called the powership contract “a considerable net drain on the Pakistani economy”, specifically because it included a monthly $10-million take-or-pay element.

ICSID awarded the company damages that, with interest, amounted to a devastating $1.2-billion. But Pakistan was simultaneously pursuing a corruption case against an alleged politically connected fixer who was accused of channeling bribes into the country on the company’s behalf. Karpowership dropped its claim shortly after Pakistani authorities provided new details of its case.

When the settlement was announced in November 2019 the parties very prominently extended thanks to Turkish president Tayyip Erdogan for his contribution to the truce, demonstrating Karpowership’s political profile. 

After Iraq and Pakistan, Karpowership’s next contract was Lebanon where negotiations had been started as early as 2010, as Karadeniz told Miles. The company’s role as a kind of diplomatic extension of Turkey became clear when Lebanese prime minister Saad Hariri visited the Karpowership shipyard during a state visit to Turkey that year.

The Lebanese deal was ultimately inked in 2012 and seemingly became a major money-spinner. According to the financial statements of Karadeniz Holdings (Malta), Lebanon contributed gross profits of $88.8-million and $67-million in 2018 and 2019 respectively.

After the initial term of six years, the Lebanon deal was extended, making it Karpowership’s longest-running contract. As in Pakistan however, matters have soured with similar allegations of corruption emerging this year and Lebanese prosecutors threatening to impose a $25-million fine. In response Karpowership cut off a quarter of the country’s power, claiming the country was heavily in arrears. Power was restored more than a month later at the end of June as a “goodwill gesture”, according to Lebanese media.

The company’s ability and readiness to flip the switch was also recently on display in Sudan where it has had a small contract since 2018. In November last year it turned off the lights citing non-payment and only resumed power supply in January. The company claims to supply 10% of Sudan’s power.

In Guinea-Bissau the company has a five-year deal. It gave the government an ultimatum to provide an “advance payment” of $4.9-million or face blackouts, according to a World Bank report. The World Bank decided to pay Karpowership directly out of the aid earmarked for the country.

In the Lebanese dispute Karpowership claims it is owed more than $100-million in arrears and that the government has failed to pay for 18 months. If true, this indicates a seriously escalating debt. At the beginning of 2020 the country still had a $26.2-million prepayment credit with Karpowership, according to financial statements for 2019.

The tariffs charged in Iraq, Pakistan and Lebanon also provide insight into Karpowership’s large margins. According to data presented in ICSID’s ruling, the tariff charged to both Iraq and Pakistan was $0.063/kWh with those in Iraq escalating to $0.0817 in 2012. The operating expense was $0.026 excluding once-off setup costs and taxes. 

In Lebanon in 2017, Karpowership charged a capacity charge of $0.071 before the cost of fuel was added, according to a 2020 report sponsored by the World Bank. At the time the full charge to Lebanon was over $0.14/kWh. “With hindsight, it would likely have been cheaper to have invested in permanent capacity, rather than keep paying high take-or-pay charges”, the study concluded. 

This opportunity cost sunk on an asset that will eventually just sail away would become a recurring feature in Karpowership deals.

Ghana, the goldmine 

The West African country was Karpowership’s first African client after an initial focus on the Middle East and has been the company’s most important single client by a wide margin, contributing 24% of its underlying “rental” income and half of its gross profit. 

The deal was initially signed on 5 June 2014 under the auspices of an emergency procurement process which meant there was no tender and the terms of the contract were kept largely secret. 

As with the RMIPPPP in South Africa, there was a jarring mismatch between the ostensible “emergency” nature of the deal and the term of 10 years.

The initial Ghanaian contract between Karpower Ghana and Electricity Company Ghana (ECG) called for two powerships with a capacity of 225MW each. The first one reached the country in December 2015, but the deal soon changed to an arrangement where a single 450MW ship would be used instead of two smaller ones. The new deal formally started in 2017 and will last until 2027.

The Ghanaian contract went through three iterations that raise questions about whose interests were being promoted.

[sidebarContentVideo id=939 url=V0vcP1uJXw8]Watch: We discuss Karpowerships and what it’s like being an investigative reporter at amaBhungane.[/sidebarContentVideo]

The first renegotiation happened in 2016 – an election year that saw the governing National Democratic Congress (NDC) lose to the New Patriotic Party (NPP). Before the handover the NDC seemingly gave Karpower some expensive parting gifts.

There was an apparent push to get the amended deal signed, which resulted in a tax exemption of $225-million being granted in October 2016 without parliamentary approval. In December that year the exemption was approved after the fact in the last days of the NDC term. The NPP, which had been a vocal critic of the deal, took office a few days later in January. 

More importantly, the terms of the deal changed significantly before the election, increasing the cost to Ghana. 

An original fixed operation and maintenance (O&M) charge of $0.0185 was negotiated upwards to $0.03. This increased this portion of the cost from $64.8-million to $107.1-million annually, according to figures published by a regional think tank, the Africa Centre for Energy Policy. After the NPP took office it belatedly renegotiated the agreement again in 2018. While the costs were reduced they were still higher than in the original agreement. The company also got a guaranteed annual increase in O&M payments of 4% irrespective of actual inflation.

According to the Ghanaian Public Utilities Regulatory Commission, a body similar to South Africa’s national energy regulator Nersa, Karpowership charged a total tariff of roughly $0.11/kwh in the 2019/20 financial year.

As part of the 2018 renegotiation there was a plan to extend the Ghana contract by another ten years to 2037, which failed reportedly because the board of Electricity Company Ghana rejected it.

Ghana, the South Africa connection

South Africa’s DBSA provided Karpowership with a $100-million loan to “construct, operate and own” the Osman Khan powership which is servicing Ghana.

It is one of the largest loans on the DBSA’s books outside South Africa. It is exceptional for another reason: it is purely to the benefit of a private company and also meant to fund a movable asset that will eventually leave Africa and be redeployed wherever Karpowership clinches a new deal.

Very nearly all other major loans extended by the DBSA are to state-owned or partially state-owned entities and meant to fund the construction of local fixed infrastructure.

Mohan Vivekanandan, Group Executive: Origination & Coverage at the DBSA told amaBhungane that the funder was “quite comfortable that the project fit our mandate”.

“We don’t necessarily differentiate between a permanent asset versus a movable asset. Because ultimately the question is, is it going to improve the lives of the people?”

“Ghana was going through a power crisis somewhat similar to what’s happening in South Africa now, where there was a shortage of power, and they were looking for short-term, medium-term fixes, while longer term solutions were also coming online.”

Asked about projects of a similar scale owned exclusively by a private entity, the DBSA could provide only directly comparable one, incidentally also in Ghana: Genser Energy, a private power company set up to supply electricity to mines also got a $100-million loan. Unlike Karpowership its infrastructure is fixed.

The other loans of comparable size that the DBSA was willing to disclose were all made to companies that are either wholly or partially state-owned and geared to building fixed infrastructure.

The only one larger than the Karpowership loan was a $120-million loan to an offshore natural gas project in Mozambique led by Total but nonetheless 15%-owned by the government.

An internal DBSA note on the Karpowership loan from July last year gave the powership project a glowing review. “Demand and Supply projections for the Ghana Energy Sector, show that the Powership will remain a critical supplier to the grid for the foreseeable future” reads the note. The cost of repayments are easily met by the tariffs paid by Ghana and the company is in rude financial health, it continued.

“For 2019, US$319 million has been received from the ECG. US$175 was for capacity payments, which covers lenders debt obligations. The remaining US$145 million was for fuel invoices.”

The note said parent Karadeniz Holdings had experienced high but declining margins over the years at the Gross, EBITDA and Operating level: “The average operating margin over the 6 years has been 33%.”

An operating margin is the profit rate based only on normal operating expenses – excluding taxes, interest and capital expenditure on, for instance, ships. A margin of 33% would be considered spectacular in most industries.


Karpowership’s next stop after Ghana was Zambia, where it landed a short two-year contract to provide 100MW which escalated to 200MW. It serviced the landlocked county through neighbouring Mozambique’s grid, reportedly at a high tariff of $0.167/kWh. A report by Africa Confidential however put that figure even higher at $0.23/kWh. Once again there were media allegations of paying politically connected fixers, although these have never been substantively backed up.

Sierra Leone

Another case of dramatic renegotiation, similar to Ghana, came from Sierra Leone where Karpowership struck a deal in 2017 to provide 30MW base load for five years. 

Elections in March the next year saw the Sierra Leone People’s Party replaced by the All People’s Congress. By June the deal had been revised. The five-year term was cut down to two years. The tariff was cut from a high $0.19596/kWh to a still expensive $0.164/kWh. Tax cuts provided by the previous government were also reversed, according to a government announcement.

Liberian dead-end

Karpowership suffered an uncharacteristic failure in Liberia in 2018 where it negotiated a controversial 10-year deal that was quickly condemned by diplomats from Western donor countries and the World Bank. The contract was for a relatively paltry 36MW, but with a guaranteed take-or-pay of 24 hours per day, 365 days per year. 

Ambassadors from the European Union, Germany, Ireland, Norway, Sweden, Britain, the US and the World Bank’s Liberia office co-signed a protest letter dated 17 July 2018 which was leaked to the Liberian media. 

Liberia had an 88MW hydropower plant, the Mount Coffee plant, and thermal generation capacity of 38MW. The donors had been funding Mount Coffee as well as expansion of the grid belonging to the Liberia Electricity Corporation (LEC). In their letter they noted that the country already had more generating capacity than it could use, given peak demand of only 31MW. The only problem was the dry season when Mount Coffee’s generation was low and undependable. The letter suggested power supply could potentially fall short by up to 15MW, hence the powership deal. But, the letter argued, the terms of the deal could not stand up to scrutiny.

“The remedy … cannot be a decade-long, year-round financial commitment to purchase 36MW of power and fuel to keep a power barge running 24/7. The Karpower proposal provides more of what Liberia already has in excess, would inhibit LEC’s ability to focus on connections and distribution, and would incur for LEC unnecessary debt in the millions of dollars that would result in higher prices for consumers,” reads the letter.

Bagging the big fish

Karpowership has done a lot of business with tiny states desperately seeking amounts of power that, in the larger scheme of things, are very small. The terms of these agreements have also often been short.

The company’s financial statements show that its real profits rely on bagging whales: big, long contracts like the one in Ghana. Its next-best deal has been in Indonesia where it was contracted for a collective 1 000MW across a number of the islands that make up that nation. Karpowership was last year reportedly bidding for a 1 000MW contract in Libya as well.

The prospective Haitian deal is meant to last 20 years, according to a government press release although it is unclear how many megawatts are involved – or whether it will be affected by the president’s assassination.

And then of course, there is the biggest whale in its sights: South Africa …

Read more powership reports here:

How Karpowership was torpedoed by substandard environmental studies
Powership company trails corruption claims in its wake
Powerships: Enviro investigation could capsize R225-billion deal
Powerships: Officials confirm they met rival bidder, ‘minister’s associates’ at Kream



Before joining the amaBhungane team in 2017, Micah was the national coordinator for media freedom and diversity at the Right2Know Campaign. He holds a Masters in African Studies from Oxford University and a BA Honours in History from Wits University.

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