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The government-default component of the government guarantees extended to the independent power producers (IPPs) that will be selected to build new solar and wind projects under the upcoming seventh bid window (BW7) of South Africa's programme for the procurement of renewable energy will be reduced from 100% to 80%.

IPP Office head Bernard Magoro tells Engineering News that the reduction follows a National Treasury review of the Government Support Framework Agreement, as well as consultations with the market over the past year.

He also stresses that the liquidity protection aspect remains intact; a component put in place at the start of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) to guarantee payments to IPPs should Eskom, the single buyer of electricity arising from the scheme, be unable to honour its obligations.

Given Eskom's precarious financial position, the guarantee framework has proved important for attracting bidders to the REIPPPP. However, it has also increased the level of contingent liabilities held by the National Treasury, which indicated in the 2022 Budget Review that it would assess a reduction or elimination of the guarantee, even though IPP contingent liabilities represented a low risk to the fiscus.

Magoro reports that the change is likely to be the main new adjustment to the procurement architecture when BW7 is launched in September but argues that it should not come as a surprise to prospective bidders and should, thus, also not lessen market appetite.

That said, there is no time to issue a request for information to test the market ahead of the launch of the round, as well as to assess whether the pipeline of shovel-ready projects is sufficient.

The Department of Mineral Resources and Energy has indicated that the next two REIPPPP procurement rounds will have allocations of 5 000 MW apiece, with BW8 expected to be launched in March next year.

GRID SCARCITY

Magoro tells Engineering News that the risks around grid access are likely to remain a far larger issue for potential bidders than the reduction of the guarantee but also insists that significant progress has been made over the past few months to seek a solution to some of the grid problems that materialised during BW6.

During that round, none of the 23 wind projects that competed for a 3 200 MW wind allocation advanced to the preferred-bidder stage, partly owing to the grid capacity in the Western, Eastern and Northern Cape provinces on which the projects depended having been absorbed by developers of private projects. At this stage, it remains unclear how many of those private projects have concluded power purchase agreements, but market intelligence suggests it may be below 500 MW and it does not appear that any have entered construction.

At the time, Eskom had no grid queuing rules and REIPPPP bidders were disallowed, under the rules of the programme, from obtaining firm grid connection budget quotes until they were named as preferred bidders. No such restrictions applied to developers of projects seeking to take advantage of a change to the regulations allowing distributed projects of any size to proceed without a licence, including those that planned to wheel electricity through the grid.

Eskom has since announced a shift from a 'first come, first served' model to a 'first ready, first served' approach and Magoro reports that the IPP Office has been having weekly meetings with Eskom since BW6 to ensure that there is no repeat of that disappointment during subsequent rounds.

Nevertheless, grid scarcity is likely to be a key feature for some time yet and Eskom's upcoming Generation Connection Capacity Assessment (GCCA) will be closely analysed, as it will indicate where grid capacity remains available for both the public procurement programme and private projects, where the pipeline has expanded to about 10 000 MW.

Magoro indicates that it is unlikely that the BW7 and BW8 request for proposals (RFP) documentat...

State-owned Transnet has selected International Container Terminal Services Incorporated (ICTSI), of the Philippines, as the preferred bidder for the 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade its flagship Durban Container Terminal (DCT) Pier 2.

DCT Pier 2 is Transnet's biggest container terminal, handling 72% of the Port of Durban's throughput and 46% of South Africa's port traffic.

ICTSI, which beat six other shortlisted Pier 2 bidders, is regarded as the world's largest independent terminal operator, with 34 terminal operations in 20 countries, including four in Africa, across six continents.

Transnet, which initiated a private sector participation process for DCT Pier 2 and the Ngqura Container Terminal (NCT) in 2021 amid ongoing operational difficulties, believes the partnership with ICTSI will help improve the terminal's performance and reposition DCT for growth.

Private sector participation at the two terminals has been identified as a key reform under government's Operation Vulindlela for raising port efficiencies at the terminals, which are both operating well below their nameplate capacities.

DCT Pier 2 has a current container capacity of two-million twenty-foot equivalent units (TEUs) and there is an intention, through the partnership, to increase its capacity to 2.8-million TEUs, including through the berth deepening of the North Quay at Pier 2.

Transnet National Ports Authority (TNPA) has announced that it intends increasing the current container capacity in the Port of Durban from 3.3-million TEUs to an eventual envisaged capacity of 11.4-million TEUs.

Transnet CEO Portia Derby described the partnership as a catalyst for repositioning the Port of Durban as a container hub port and for boosting the operational performance of TPT's ports.

"The partnership in Pier 2 is a major step forward for our programme to bring in global expertise to improve efficiencies at our terminals, and bodes well for our ongoing plans to crowd in the private sector in areas identified for growth," Derby said in a statement.

The announcement of the transaction follows approvals from government in terms of the Public Finance Management Act and includes a condition that all DCT Pier 2 employees be seconded to the new entity, in which Transnet will hold a majority ownership of 50% plus one share.

"There will be no retrenchments, and employees will retain the same terms and conditions before and after the introduction of the private sector partner," Transnet said in a statement.

The new company is also required to achieve a minimum Level 4 broad-based black economic empowerment status.

Transnet also confirmed that the 25-year term will be extended to a maximum of 30 years in the event that berth deepening of the North Quay at Pier 2 is delayed, and the terminal operating licence and lease will be subcontracted to the new company.

Non-current assets will be transferred into the new company, together with customer and supplier contracts.

Transnet said it would now proceed to work with ICTSI to implement the transaction, adding that a way forward on the NCT process would be outlined in due course.

Electricity Minister Dr Kgosientsho Ramokgopa has expressed deep concern that another delay to the return to service of Koeberg Unit 1 could result in both of the nuclear power station's units being out of service simultaneously later this year.

The unit is currently undergoing a long-duration outage that includes the replacement of its three steam generators, which is one of the preconditions for extending the plant's life for 20 years.

Speaking during his weekly update on the implementation of the Energy Action Plan, which followed a recent period of intense Stage 6 loadshedding, the Minister revealed that he was growing increasingly concerned that there could be an outage "overlap", which would result in a period where there would be no production from Koeberg.

"That would represent a net loss of 920 MW from where we are currently [with Unit 1 being out of service]. That's a huge dent on our generating capacity."

Ramokgopa indicated he had planned to meet with the leadership of Koeberg last week for a report on the outage, but he had been unable to do so and that the meeting would take place this week instead.

The Unit 1 outage began on December 10 and was initially scheduled to continue for about 180 days and returned to service in June.

In March, however, the State-owned utility confirmed that the early June return to service date was "no longer achievable", but that it would be reintroduced before Unit 2 was shut in September for a similar outage. This, after a previous attempt to replace the Unit 2 steam generators was postponed when it emerged that Eskom's storage facilities had not been completed in time.

It is understood that Unit 1 may now only be returned in October, but this has not yet been confirmed by Eskom despite several Engineering News enquiries in recent days.

Eskom indicated to Engineering News last week that it was planning to issue a formal statement on developments at Koeberg, but no statement had yet been released by the time Ramokgopa held his briefing.

Eskom did confirm, however, that all three Unit 1 steam generators had been successfully replaced and welding in these generators had commenced.

"We would also like to assure the public that it is our commitment to ensure that we prioritise safe working standards on this project," the utility added in a written response to questions posed.

No answers were provided regarding the effect of the outage slips on Eskom's efforts to secure a Long-Term Operation (LTO) licence.

Unit 1's 40-year licence expires on July 21, 2024, and it is currently uncertain whether Eskom has received confirmation of a separate licence validity date for Unit 2, to reflect the fact that the unit came into operation a year-and-a-half after Unit 1 in November 1985.

Securing the licence change request for Unit 2 has been identified as a key priority and risk for the operation of Koeberg for a further 20 years.

Mercedes-Benz South Africa (MBSA) has unveiled the second of its local dealerships to have adopted the German car maker's new 'luxury' retail brand appearance, launched globally in 2018, and in South Africa in 2019.

This first dealership to carry the identity was in Sandton. However, the domestic roll-out of the new identity was halted by Covid-19, but has now again gained momentum.

The Mercedes-Benz Constantiaberg dealership in Cape Town is owned by Super Group, which has invested R40-million in the facility.

The central theme for the new-look dealerships is the feeling of luxury in every consumer interaction and/or every touch point.

It also merges the physical and online channels to create more convenience, such as through the digitalisation of the entire customer journey when engaging with the dealership.

In addition, the Constantiaberg facility fully caters for the shift towards electric mobility, both in equipment specifications and staff training.

"With the ever-changing consumer landscape, future-proofing our operations to meet the needs of our customers is crucial," says MBSA co-CEO and Mercedes-Benz Cars executive director Mark Raine.

"As a luxury brand, modernising our retail operations is about focusing on our customers' growing needs, with the goal to create a fascinating brand experience at every touch point.

"This dealership serves as a testament to our vision for the future of luxury where convenience, personalised services and unforgettable experience converge."

Construction work of Mercedes-Benz Constantiaberg dealership started in September last year and was completed in June.

The facility occupies an area of around 7 400 m², and forms part of the Blue Route Mall property.

The building structure has been designed to accommodate the future installation of solar energy.

"Our relocation from Claremont to Tokai is a strategic move to further strengthen existing relationships and build new ones," says Super Group Dealerships CEO Graeme Watson.

He says the next step for the group in its relationship with MBSA is to roll out a premium outlet at the V&A Waterfront in the fourth quarter of this year.

Terence Creamer speaks on: Loadshedding worsens, govt mulls concessions at coal-fired power stations

Eskom's generation business is currently weighing various concession models as the utility assesses ways to improve the performance of its breakdown-prone coal-fired power stations in a context of ongoing financial constraints, as well as restrictions on the raising of new debt.

Eskom Generation engineering GM Thomas Conradie confirmed during an EE Business Intelligence webinar on Thursday that the options ranged from the concessioning of entire plants to private operators, to the concessioning of ringfenced functions within power stations.

He revealed that Eskom had, for some time, been weighing a concession model for the Hendrina power station, in Mpumalanga. He indicated, however, that the utility was increasingly leaning towards a model whereby ringfenced plant areas were either concessioned, or long-term partnerships were concluded with private entities for the operation and maintenance of specific plant components or technologies within power stations.

In February, the National Treasury announced that, as part of a R254-billion debt relief package extended to Eskom, a consortium led by vgbe energy had been appointed to assess the condition of the utility's coal fleet and to make recommendations on whether some of the power stations should be concessioned to private operators. The assessment is expected to be concluded in July.

However, special adviser to the Minister of Electricity Silas Zimu expressed scepticism about the value of concessions at Eskom, and indicated a preference for allowing the private sector to participate in the repowering of those stations that are scheduled for decommissioning rather than taking over the operations and maintenance of assets that would remain generating for many more years.

"All these power stations that have been built where Eskom has been a contract manager, original equipment manufacturers (OEMs) have been suppliers and engineering, procurement and construction [service providers] and, in some instances, they would have operated and maintained the plants for some time until the handover.

"So private participation has always been there [and] maybe that's the model we have to go back to," Zimu said during the webinar.

Babcock Ntuthuko Engineering CEO Thava Govender argued that there could be both benefits and potential drawbacks in pursuing a concession solution, but stressed that Eskom definitely needed support from OEMs to improve the performance of a fleet that had become unreliable as a result of insufficient maintenance.

"Eskom needs all the help they can get, and I think we do need to get all the executives of the OEMs together with Eskom, because as a collective I'm sure we can address this crisis of loadshedding and its cascading effect on the economy," Govender said.

Likewise, ACTOM John Thompson engineering manager Ewert Snyman noted that while his company was already operating and maintaining boilers for other clients, such systems remained core to Eskom, which had developed skills and expertise over many years of operation.

"I think the focus should be on improving performance by including more of the boiler auxiliary equipment in contracts with OEMs so that the key performance indicators can be linked to the performance of the plant.

"Because you cannot ask an OEM to guarantee the performance of the boiler if the company is only maintaining the pressure parts and some of the ancillaries are not included in the contract," Snyman argued.

Siemens Energy Southern Africa MD Thabo Molekoa added that there was also a growing opportunity for Eskom to improve plant performance by drawing on the expertise that OEMs had in integrating modern diagnostic and engineering services.

"We are talking about a 24/7 operation that needs agility in response to day-to-day and hour-to-hour problems.

"The minute you start becoming a lot more agile, you then are able to mobilise the right skill sets and expertise and you are able to respond quicker while adhering to quality and best practice...

Petrochemicals and energy company Sasol has advised that it will appeal the National Air Quality Officer's decision to decline its June 2022 application in terms of Clause 12A of the minimum emission standards (MES).

The application related to the regulation of the sulphur dioxide (SO2) emissions from the boilers at Sasol's Secunda Operations' steam plants on alternative emission load basis from April 1, 2025, onwards.

Sasol's emission sources are regulated in accordance with atmospheric emission licences, which are based on the MES of November 2013, which are published as a section of the National Environmental Management: Air Quality Act (Nemaqa).

Sasol confirms it will appeal the decision to the Minister of Forestry, Fisheries and the Environment, to allow the Minister to consider the application afresh.

Clause 12A of the MES permits existing plants to be regulated on an alternative emission load, as opposed to the current concentrated-based limit specified in the MES, which is according to the mass of pollutant per cubic metre of air emitted.

Sasol has been implementing various projects at its Secunda, Sasolburg and Natref operations since 2015 in efforts to reduce emissions to comply with the MES.

The company has spent more than R7-billion over the last five years, in particular, on emission reduction projects.

Sasol explains that it has achieved MES compliance of 98% of its emission sources at these sites; however, the remaining 2% of sources are part of the company's ongoing journey to enable MES compliance by April 1, 2025.

The only remaining challenge relates to achieving the concentration-based limit for SO2 emissions from the boilers at the Secunda Operations' steam plants.

Sasol has determined that an integrated emission reduction roadmap, which intends to deliver emissions reductions in terms of both greenhouse-gas emissions, SO2 and other pollutants, is the optimal approach and best aligned with the objectives of Nemaqa and the purpose of the MES.

This involves the turning down of boilers, reducing coal use and ramping up Sasol's imports of renewable energy to 1 200 MW by 2030.

Sasol has already seen a reduction in emissions through the implementation of energy efficiency projects and is progressing the deployment of more than half of the committed renewable energy target from 2025 onwards.

The company outlines in its Climate Change Report 2022 that among its efforts will also be to undertake boiler turndown, in efforts to reduce some of its emissions at Secunda.

Sasol remains committed to ambient air quality improvement, it says, including reaching net-zero emissions by 2050.

OPPOSING VIEW

Nonprofit organisation Just Share in December last year said Sasol's Secunda facility, as well as the Natref refinery - a joint venture between Sasol and TotalEnergies - are among the most pollutive operations in Mpumalanga and the country.

The area in which the operations are located, the Highveld Priority Area, is one of the worst air pollution hotspots globally. Nema designated the area as such, owing to its dangerous levels of air pollution.

The High Court in March 2022 recognised that the poor air quality in the areas was a breach of residents' constitutional right to an environment that is not harmful to their health, and suggested that the Minister have regard to various considerations, including the need to address the postponement and suspension of compliance with MES in the priority area.

The court also recommended that the atmospheric emission licences of all facilities have not obtained once-off suspension of compliance and cannot meet new plant MES by April 2025 are withdrawn and decommissioning and rehabilitation of those facilitates then needs to be enforced.

Just Share believes Sasol, despite its participation in the process of setting the MES, has fought vigorously to avoid having to comply with these laws, including through an initial application to be completely exempt from the MES and subsequent complian...

US International Development Finance Corporation (DFC) CEO Scott Nathan has reiterated the American government's interest in helping to finance the Lobito rail corridor, linking the copper and cobalt mining regions of the Democratic Republic of Congo (DRC) and Zambia to Angola's Lobito port.

Nathan, who is heading the US Delegation to the US-Africa Business Summit in Botswana this week, made specific reference to the corridor during a virtual media briefing hosted on the sidelines of the summit.

Responding to a question related to what progress had been made since the signing, in December, of a memorandum of understanding (MoU) signalling America's support for the joint development by DRC and Zambia of a battery metals supply chain, Nathan made a direct link between the MoU and the Lobito corridor.

"One notable project announced by President [Joe] Biden at the most recent G7 meeting in Japan is DFC's interest in supporting the development of a railway in the Lobito corridor, which will connect the Copperbelt in DRC and Zambia, through Angola, to global markets."

It was confirmed in May that the DFC was conducting a due diligence for a potential financing package of $250-million for the open-access Lobito Atlantic Railway Corridor, which would be its first investment in rail on the continent.

On July 4, a 30-year concession for the Lobito Corridor - ­ comprising a 1 300-km Angola leg to the DRC border and a further 400-km link to the copper-rich Kolwezi region of the DRC ­- to the private Lobito Atlantic Railway, was announced. The company is a joint venture comprising Trafigura, Mota-Engil and Vecturis.

Overall, the consortium plans to invest $455-million in Angola and up to $100-million in the DRC and is studying an additional investment to extend the line further into Zambia.

Nathan argued that such infrastructure was crucial for the development of critical minerals that "are incredibly important for the development of the 21st Century economy and for the energy transition".

He also expressed support for value addition within the DRC and Zambia, adding that no country should monopolise the processing of these materials.

"It's important to diversify supply chains globally, and adding local value is key to that."

His statement came a day after the publication of the International Energy Agency's inaugural 'Critical Minerals Market Review', which confirms that there has been a significant rise in exploration and mine development investment for critical minerals, including cobalt and copper.

However, the report warned that there had been little progress in diversifying both mine supply and processing, with China dominating the processing of cobalt, lithium, graphite and rare earths.

Atlantis Foundries (AF) has signed a long-term power purchase agreement (PPA) with integrated energy solutions company Energy Partners (EP).

According to the agreement, EP will engineer, finance, construct and operate the ground-mounted solar-energy system at AF’s production plant, comprising more than 20 000 solar panels and boasting a total rated capacity of 13.5 MWp.

It will be the Western Cape’s largest embedded generation solar project.

EP CEO Manie de Waal says the PPA, set to kick off on May 1 next year, will provide AF with “a reliable electricity source at a substantially reduced cost over the next 20 years”.

It will also align AF with growing environmental awareness in the automotive industry.

“Opting for renewable energy is a significant step, and the system that we designed for AF is expected to save more than 22 000 t of carbon dioxide emissions annually - likely the highest reduction achieved in the South African automobile industry,” says De Waal.

“In financial terms, the system will generate electricity worth more than R35-million per year at current average Eskom tariffs.”

The system, which has been engineered to align with AF’s electrical consumption profile, is estimated to replace up to 20% of its yearly electricity consumption.

It will be integrated into AF’s electrical network, which is connected to the City of Cape Town grid.

Excess energy generated by the plant will be fed into the city’s network through the feed-in programme, contributing to Cape Town’s overall renewable energy capacity.

“With this renewable energy generation project, we are setting new standards in the South African automotive industry and alleviating pressure on our constrained national grid,” says AF CEO Pieter du Plessis.

“It is a result of extensive cooperation between the AF and EP teams, in conjunction with the Western Cape government and City of Cape Town.”

The project sets the stage for future embedded generation systems exceeding 1 MW within Cape Town and the rest of the Western Cape.

Atlantis Foundries produces automotive castings for the commercial vehicle industry.

Armed gangs this weekend created havoc on the N3 and N4 highways by settings several trucks alight.

The first attack occurred on Saturday night on the N3 highway at Van Reenen’s Pass, when armed attackers forced six trucks to a halt, setting them alight.

Five trucks were then set alight on Sunday night on the N4 at Emgwenya, in Mpumalanga.

Armed attackers again forced the drivers out of the vehicles before setting them alight.

Both the N3 and N4 are busy freight corridors operated by toll concessionaires.

The South African Police Service says that these types of incidents have, in the past, been associated with attacks on foreign truck drivers. Now, however, it appears as if competition among truck operators may also be a factor.

The Road Freight Association (RFA) says it regards the attacks as a “coordinated attack on the road-freight sector”.

The road freight sector - trucks - carries 80% of the goods that are moved in and around South Africa.

RFA CEO Gavin Kelly says these “ruthless” attacks on the road-freight supply chain will have far-reaching effects.

While immediate short-term losses will run into millions of rands - including the costs of the vehicles, cargo and personal effects, repairing the road damage and deploying first responders, with additional costs in terms of freight delays and shipping penalties - the long-term impact will be seen in increased security costs, insurance premiums and toll fees, as well as a reduction in freight movement through South Africa and, ultimately, the closure of freight companies, which will lead to substantial job losses in the logistics sector.

“Who is behind this attack, and why?” asks Kelly.

“There was no looting of vehicles, and, thankfully, none of the drivers or staff on the vehicles were injured or killed.

“The targeted precision of the attack is worrying. This was well planned and efficiently implemented.

“At this point, no group has acknowledged that they are responsible.”