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The National Energy Regulator of South Africa (Nersa) has hosted public hearings into an application by the National Transmission Company South Africa (NTC) for the three licences it requires to begin operating as an independent subsidiary of Eskom Holdings, in line with the unbundling “journey” first outlined by the Department of Public Enterprises (DPE) in 2019.

The vertical separation of the grid company from Eskom is seen as a crucial step for levelling the playing field between Eskom Generation and independent power producers (IPPs), as well as for ensuring that sufficient transmission assets are funded and built to facilitate new generation investment.

A lack of grid capacity in the high-potential renewables regions of the Northern, Eastern and Western Cape provinces has emerged as a key constraint, with not a single wind project selected as a preferred bidder during the most recent public procurement round. This, owing to transmission limitations, as well as growing competition for grid allocations following recent market reforms allowing for private grid-connected distributed generation projects to proceed without a licence.

The regulator’s approval of the licences is one of two outstanding suspensive conditions for the legal separation of NTC, with the other being that of lender consent.

Eskom group executive for Transmission Segomoco Scheppers told Nersa on April 11 that such lender consent could flow only once the national transmission, trading, as well as import and export licences had been secured.

If granted by Nersa in the coming weeks, lender consent could follow by the end of April or early May, opening the way for the NTC to become effective by the end of June.

Scheepers reported that the transmission entity had already been functionally separated with its own management and board and had been registered as a State-owned company with the Companies and Intellectual Property Commission.

However, the DPE was still pursuing the appointment of additional independent directors to serve on the board, which would direct the NTC in line with the Companies Act and the Public Finance Management Act.

Several commentators have questioned the slow pace of board appointments, particularly given high level promises in this regard, including by President Cyril Ramaphosa who in his State of the Nation Address on February 9 said that the “National Transmission Company will soon be operational with an independent board”.

Scheppers also confirmed that a merger agreement had been concluded between Eskom Holdings and the NTC in line with the Companies Act, in terms of which the transmission business of Eskom Holdings, including assets comprising 170 substations and about 33 000 km of transmission lines, would be transferred to NTC once the suspensive conditions were met.

While the assets would be transferred, the debt attributed to NTC would continue to reside with Eskom Holdings, but reflected in the form of an equivalent inter-company loan with NTC.

The unbundled entity would assume responsibilities of system operator, transmission service provider, system planner, electricity trader, as well as exporter and importer.

The NTC would also assume responsibility for those power purchase agreements (PPAs) that had been concluded with Eskom as the designated single buyer.

Processes were, thus, under way to assign NTC as the buyer of electricity arising from PPAs in place with IPPs, as well as to amend the Government Support Framework Agreement to reflect the new position and to confirm the cost recovery mechanism.

Questioned on the rationale for the unbundling of NTC from distribution and generation, Scheppers said that such separation was seen as necessary to improve transparency regarding costs and to ensure that resources were appropriately allocated in a context of the need to connect much-needed new generation, most of which would arise from IPPs.

“We have a dire need for new generation capacity investments, and preferably this...

Engineering News editor Terence Creamer discusses Electricity Minister Dr Kgosientsho Ramokgopa's tour of 14 coal-fired power stations, which have led to questions about the importance being placed on the utility's unbundling, on tackling corruption, as well as whether the life of coal stations might be extended.

The government has terminated, with immediate effect, the National State of Disaster for electricity declared by the Minister of Cooperative Governance and Traditional Affairs on February 9.

In a statement, the Department of Cooperative Government and Traditional Affairs (Cogta) said the State of Disaster was a necessary response to the impact of critical levels of loadshedding on the economy and vulnerable sectors such as health and small businesses.

Following the declaration of the State of Disaster in February, the government adopted wide-ranging regulations which set out the responsibilities of the different organs of the State to mitigate the impact of severe loadshedding, prevent the escalation of electricity supply constraints and avert a national emergency, the department averred.

It noted that these regulations and the underlying actions were put in place in support of the Energy Action Plan (EAP).

This was to support an effective and integrated response across all spheres of government, Cogta added.

Cogta also posited that the State of Disaster enabled government to enhance interventions by the National Energy Crisis Committee (Necom) in terms of the EAP.

“A significant enabler of the improvement in the supply of electricity has been the appointment by President Cyril Ramaphosa of Dr Kgosientsho Ramokgopa as Minister of Electricity.

“The Minister has, in recent weeks, undertaken oversight visits to power stations and consultations within government, including with Eskom, to identify and resolve electricity supply constraints,” Cogta highlights.

As a structure that integrates areas of responsibility and resources within government, the Necom provides support to the Minister in the identification and resolution of bottlenecks.

In view of these developments, Cooperative Governance and Traditional Affairs Minister Thembisile Nkadimeng has decided to terminate the State of Disaster.

Government would, through Necom, continue to engage, cooperate and coordinate its actions to reduce and eradicate loadshedding using existing legislation and contingency arrangements, Cogta said.

These included measures already taken to protect critical infrastructure, facilitate emergency energy generation and protect consumers in terms of relevant competition law.

A range of interventions and support measures introduced by departments as an accelerated response at the time the State of Disaster was declared would be sustained in terms of existing legislation, Cogta pointed out.

Speaking at a briefing in Pretoria on Wednesday, Ramokgopa stressed that the termination of the State of Disaster did not mean that there was no longer any provision for emergency procurement by Eskom, which had been given as a key reason for declaring the disaster in February.

He said such provision already existed under the Public Finance Management Act and would be drawn on should the need arise.

"The removal of the State of Disaster - is it going to undermine the agility, pace and responsiveness of procurement? The anwser is an emphatic, no."

The Minister also said that any interventions undertaken in line with the State of Disaster, such as the establishment of a one-stop shop at the Department of Trade, Industry and Competition for the processing of approvals for private generation projects, remained intact and would not be dissolved with the termination of the State of Disaster.

Ramokgopa also noted that the exemption provided to Kusile for the use of temporary stacks that by-passed the flue-gas desulphurisation system had been provided without reference to the State of Disaster and would, thus, be unaffected by the termination.

"As a result of that exemption, we should be able to return those three [Kusile] units . . . and the last one should come online by December 24, just on Christmas eve.

"That's when we are going to get the full benefit of the 2 100 MW [which is currently unavailable and is adding two loadshedding stages]."

RESPONSE

The news was welcom...

The South African fiscus is losing billions of rand in potential income in the form of taxes and levies, owing to the illegal importation of vehicles, says the National Automobile Dealers’ Association (Nada).

A total of 540 000 vehicles with foreign registration plates have been sighted on South African roads during the past five years using the Vehicle Intelligence Data System (VIDS).

This is a sizeable number considering the fact that the official vehicle parc in South Africa is made up of about 13-million vehicles.

“There are further shocking statistics related to the illegal importation of these illegal vehicle imports, such as the fact that 220 000 vehicles brought in through South African ports have never been exported to the neighbouring countries they were intended for, while a further 214 000 entered South Africa across a border more than 12 months ago and have not returned to their country of registration,” says NADA national director Gary McCraw.

“It is also calculated that the problem continues unabated, with more than an estimated 50 000 vehicles joining the illegal vehicle parc each year.

“These illegal imports are vehicles imported from another country through channels other than those of the manufacturer or official distributor. Generally, these are used vehicles,” adds McCraw.

Used vehicles may not be brought into South Africa for sale, but may be imported via a South African port with the intention of exporting them to a neighbouring country, creating potential loopholes.

There are regulations in place regarding the importation of pre-owned vehicles or used parts, but little control over illegal imports that come into the country through a multitude of border posts, says NADA.

Strict control measures in South Africa should ensure that only a limited number of legal import permits for used vehicles are issued every year.

These are for immigrants, residents and nationals returning to South Africa, specially adapted vehicles for those with physical disabilities, vehicles inherited by South African citizens and nationals, as well as vintage and collector cars and racing cars.

Except for special cases, left-hand-drive cars are not permitted to enter the country.

The VIDS is a Web-based platform that receives vehicle sightings from hundreds of Automatic Number Plate Recognition (ANPR) cameras countrywide.

The main use of this data is to track vehicles that have been stolen, not paid for, or used for criminal activities.

Each vehicle sighting is stored with the GPS coordinates, date-time stamp, and an image of the actual vehicle.

The VIDS system can, therefore, identify vehicles with cloned or duplicated licence plates, either because they are stolen or illegal.

Vehicles can also be confirmed as being ‘live’ on the system before action is taken to discover their whereabouts, or before tracing and collection efforts get underway.

“Finding ways of tightening up border controls to fight this illegal practice is not only in the interests of the local automotive industry, but also a legitimate way of increasing income for the fiscus, which is in the national interest,” says McCraw.

Transnet Freight Rail (TFR) has extended, to the end of May, the deadline for responses to a request for qualification (RFQ) regarding the proposed 20-year operating lease that the State-owned rail utility is offering for its underperforming and crime-ridden container corridor between Durban and Johannesburg.

When the RFQ was initially issued on January 27, a closing date of March 31 was provided.

TFR chief commercial officer Bonginkosi Mabaso tells Engineering News that the deadline was extended in response to requests from potential participants, including those who attended a non-compulsory briefing session on the RFQ on February 17.

The new timeframe being pursued by TFR is as follows:

RFQ closure by the end of May;

Governance approvals for the launch of the request for proposals (RFP) phase on July 2;

RFP submission deadline of October 31;

Governance approvals and award of RFP by December;

Transaction approval under the Public Finance Management Act on January 15, 2024; and

Handover to Lessee on February 28, 2024.

Transnet is proposing to lease the corridor, as well as the terminals at City Deep, Kascon and Bayhead, for 20 years, with the proviso that the lessee invests R5.5-billion to rehabilitate the corridor and retains the current employees on the corridor.

Mabaso explains that the contracts of employees will remain with Transnet, but employees will form part of the lease through a personnel service agreement that will be concluded between Transnet and the lessee.

He acknowledges that both TFR’s recognised trade unions have expressed anxiety over the proposed development, with their major concern relating to job security.

“Transnet has assured employees and unions that given the fact that the contracts of employment of employees would remain with Transnet, job security will not be impacted,” he tells Engineering News.

The corridor’s network and rolling stock will be part of the lease, but Mabaso says it is premature to state for certain whether the yet-to-be-created TFR Infrastructure Manager (IM) will be responsible for the network once the operational lease is awarded.

“These details are being determined within the RFP and cannot be disclosed as it is a procurement process,” he says, adding that the IM is expected to be operational by October.

By entering an operating lease, TFR is hoping to not only staunch losses on the corridor, but also to recover volumes lost to road over the last number of years and to tackle ongoing crime.

TFR told lawmakers earlier this year that it had accumulated losses of R19.6-billion between 2011 and 2022 on the corridor, with R3.4-billion of that loss arising in 2022 alone.

In addition, 44% of all cable theft and vandalism incidents within TFR for the 2021/22 financial year occurred on the corridor, a trend that Mabaso says remained consistent during the 2022/23 financial year.

“On average there are between four and five incidents per day and for the period from April 2022 to February 2023, a total of 445 km of cable was stolen on the corridor.”

Obviating the cable theft problem by replacing electric locomotives with diesel is complicated by a lack of ventilation in certain tunnels on the corridor. But Mabaso says this issue could be addressed by the awarded lessee if they wish to run diesel locomotives or a combination of diesel and electric traction.

Likewise, no limitation will be placed on the use or development of inland ports, as the lessee will be responsible for the corridor for the period.

Volumes have declined in tandem with rising costs and crime, falling from 437 000 twenty-foot equivalent units (TEUs) in 2018 to only 300 000 TEUs in 2021, a year that was also disrupted by Covid and the July riots in KwaZulu-Natal and Gauteng.

“The lessee is expected, as per the RFQ, to commit to a minimum additional volume of 500 000 TEUs per annum,” Mabaso tells Engineering News.

Increased commodity demand, post-Covid-19 stimulus packages, as well as expanded infrastructure spending in several markets, have all combined to drive up demand for Bell’s articulated dump trucks (ADTs), says Bell CEO Leon Goosen.

The JSE-listed Bell Equipment is a global manufacturer, distributor and exporter of a range of heavy equipment for the construction, mining, quarrying, sugar and forestry industries. The company released its financial results for the year ended December 31 late last week.

“The conflict between Russia and Ukraine [has] caused ongoing supply-chain constraints following the lingering effects of Covid-19, resulting in us having to cut back on production,” notes Goosen.

“While we mitigated these challenges by closely managing high-risk suppliers and putting supply continuity interventions in place, it did prevent us from fully capitalising on market conditions.”

Goosen adds that an improvement in the supply chain in the last quarter of the financial year meant that Bell was able to catch up on production, and that sales could be invoiced and delivered to customers by the end of the year.

“This ensured that we closed the second half of the year much stronger than we did the first half.”

In addition to supply-chain constraints, 2022 was marred by soaring fuel prices, unprecedented high inflation and interest rates, as well as floods in KwaZulu-Natal that caused numerous logistical challenges.

Reduced vessel frequency at the ports also increased the need to use air freight, which is significantly more expensive.

Eskom’s long-term implementation of extended loadshedding during 2022 also had far-reaching effects on Bell’s plant in KwaZulu-Natal, its local suppliers and customers.

“Besides the disruptive impact on business, the mitigation action of running generators significantly increases the cost of doing business in South Africa, while it also erodes international competitiveness,” says Goosen.

“Power interruptions and changeovers also increase the risk of equipment being damaged, especially electrical switching and electronic equipment.”

In order to further mitigate loadshedding, Bell is increasing production at its factory in Germany, says Goosen.

The group is also investigating the feasibility of sourcing fabrications from outside of South Africa, as well as installing a grid-tied solar system for the Richards Bay factory.

The group has already installed generators at its Richards Bay plant and at its branches throughout the country.

“The cumulative effect of the challenges that local businesses must grapple with needs to be weighed up when considering strategies for long-term sustainability,” says Goosen.

“These include exchange rate volatility, fuel prices, rising inflation and interest rates, escalating electricity tariffs, a severely encumbered national electricity provider, growing structural challenges around water and sanitation, and road infrastructure and port inefficiencies that frustrate logistics.”

Autonomous Trucks; New Motor Grader

Four years after the start of extensive testing, Bell’s autonomous technology has reached the adoption stage, with customers in the UK, South America and Australia set to introduce autonomous Bell ADTs on their worksites during 2023.

“We currently have two approved service providers, xtonomy, based in Europe, and Pronto AI in the US, both of which can work with Bell customers from anywhere in the world. A third supplier has also recently been engaged, says Goosen.

“The autonomous trucks are best suited to markets where operator costs are typically high,” he adds.

Goosen also notes that Bell has ventured into the global motorised grader market.

Final testing and refinement on its first generation of motor graders are underway, with production set to begin in the fourth quarter, next year.

Twenty units are currently being tested worldwide.

“Motor graders complement the group’s flagship ADT product as a core earthmoving product,” says Goosen.

“The global motor g...

South Africa’s Transnet Freight Rail (TFR) is preparing to materially increase the number of weekly trains operating on that component of its North East Corridor that transports export commodities through Mozambique’s Maputo port.

Once commercial agreements for a so-called ‘borderless’ train service have been finalised with Caminhos de Ferro de Moçambique (CFM), TFR expects to increase the number of weekly trains carrying chrome from 12 to 21, and those carrying magnetite from 17 to 28.

The rail operator is also preparing to increase the number of trains moving rock phosphate and coal through Maputo.

The two rail operators signed an in-principle agreement in February to enable the uninterrupted passage of freight trains between the two countries, following joint pilots of the run-through model over a period of more than nine months.

“Through this pilot phase, the two rail operator companies clearly demonstrated that the run-through model was a more efficient operating proposition, with great potential to make rail a more competitive option on this channel,” TFR chief commercial officer Bonginkosi Mabaso tells Engineering News.

The North East Corridor, which also includes a service to Richards Bay, has hitherto involved pre-inspection events at multiple points on the network to Maputo, while crew and traction changes (from electric to diesel and vice versa) have also resulted in significant delays and extended turnaround times.

“The borderless service will see two inspections – at point of origin and destination, one traction model throughout the roundtrip and no locomotive changes in Komati.

“This will significantly reduce transit and cycle times,” Mabaso says, while refraining to offer specific volume and cost guidance.

He reports that no final date is available for the start of the service “as commercial agreements are under discussion currently”.

The corridor’s performance has also been affected by a limited availability of locomotives, owing to the absence of maintenance contracts with suppliers and a protracted impasse over the supply of spares for locomotives supplied by CRRC of China.

In February, TFR reported that there were 356 so-called long-standing locomotives, including 164 CRRC locomotives.

TFR has reached settlement agreements with its other locomotive suppliers with which it is also entering into maintenance contracts.

However, Public Enterprises Minister Pravin Gordhan will travel to China in April in an effort to “fast-track the delivery of locomotives and spare parts by Chinese State-owned CRRC e-Loco Supply to Transnet”.

If Gordhan fails, TFR will need to find an alternate source of spares supply for the CRRC locomotives.

Under such a process, which will involve another original-equipment manufacturer stepping in to provide spares and maintenance, it is expected that it will take about 24 months before the first CRRC locomotive can be reinstated.

A deal with CRRC should see the first long-standing locomotives returned to service within about six months.

Discussions are under way between the German and South African governments regarding the disbursement of the next tranche of the European country’s concessional funding under the $8.5-billion Just Energy Transition Partnership (JETP), initially unveiled in 2021.

Germany has committed to provide $1.4-billion under the JETP, which is also being supported by the other International Partnership Group participants of France, the UK, the US and the European Union.

In November, German development bank KfW concluded a €300-million sovereign loan agreement with the National Treasury following the publication, by South Africa, of the Just Energy Transition Investment Plan (JET-IP) ahead of COP27, which took place in Sharm El Sheikh, Egypt.

The German funding, together with a similar €300-million loan concluded simultaneously between the National Treasury and French development bank AfD, represented the first flow of funds under the JETP.

Sovereign loans are one of several instruments that Germany will deploy under the partnership arrangement, along with support for capacity and policy development, project finance, and grants – grants make up 25% of the German government’s commitment under the JETP.

Known in Germany as ‘policy based loans’, such debt instruments are extended to foreign governments where certain policy conditions are met voluntarily and, in the case of South Africa, are used by the National Treasury to displace other more expensive debt that would have been raised from other sources.

In the case of the 2022 disbursement, the publication of the JET-IP, as well as the South African government’s reform enabling embedded generation projects to proceed without a licence and it commitment to unbundling Eskom, were catalysts for implementation of the loans.

German embassy officials explain that the concessionality arises from the fact that KfW’s credit rating enables it to raise funding at a lower cost than the National Treasury and this lower cost is passed on to the South African government.

Once received, there is no specific earmarking of the funding, as the lender has been satisfied that the policies being pursued by government, and which were a prerequisite for approval, will have a greater impact even than direct project financing.

The embassy officials told Engineering News that various instruments, including another sovereign loan, would be assessed ahead of the second tranche payment, but they were unable to offer specifics on the value or the timing.

Specific project financing opportunities were also being assessed, especially those that would support the expansion or strengthening of South Africa’s transmission grid, with capacity constraints in the Eastern, Western and Northern Cape provinces having emerged as a significant impediment to adding new generation.

The Eskom debt-relief package unveiled by Finance Minister Enoch Godongwana in the February Budget could have implications for funding grid projects, however, as it includes a condition barring the State-owned utility from securing any new loans. That said, the Minister also indicated that Eskom was allowed to approach the National Treasury should it wish to take on additional debt.

The nature of the next large-scale disbursement could also be influenced by the contents of the JET-IP implementation plan, which is currently being drafted by the project management unit in the Presidency.

In the meantime, the German government is moving ahead with various other projects aimed at supporting South Africa’s energy transition and addressing loadshedding.

In mid-March, German Ambassador to South Africa, Lesotho and Eswatini, Andreas Peschke, officially launched a €15-million initiative to provide research and technical support for “catalytic” just transition projects in South Africa’s Mpumalanga province.

Known as Just SA, the project is being funded by the German government’s International Climate Initiative and will be implemented over a five-year period.

While t...

Mini South Africa (SA) has teamed up with Red Bull energy drinks to launch its first Mini-branded solar-powered electric-vehicle (EV) charging station in the country.

The charging station is at Cape Town’s V&A Waterfront, and partners Mini with the V&A Waterfront, the City of Cape Town and Red Bull South Africa.

The goal is to roll out more of these charging stations where appropriate.

In pursuit of its sustainability goals, Mini announced in 2021 that it would be an electric-only marque by the early 2030s.

A total of three new electric models, including the new Mini Cooper Electric, will be coming onto the market as part of the new Mini family.

“Mini and Red Bull have a long-standing relationship, forged 17 years ago in California when the first Minis were converted into the iconic Red Bull Mini,” says Mini SA head Shaun Willis.

Mini regards the launch of the first solar-powered charging station as a token of its pledge to protect the planet as part of its overarching ‘Big Love’ brand statement.

“True to Mini’s optimistic attitude to life, we are driven by the potential of creative ways to play our part to protect the planet,” says Willis.

“With the first standalone public solar charging unit in Cape Town, together with Red Bull, we are showing our commitment to sustainable energy solutions.”

Engineering News editor Terence Creamer discusses the outcome of President Cyril Ramaphosa's meeting with the Transnet leadership this week to discuss the freight logistics crisis being experienced on some corridors; the background of Transnet's impasse with CRRC of China; the prospects of this logjam being cleared; and the President's support for opening the rail network to third party operators.