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State-owned freight logistics group Transnet aims to launch a dedicated infrastructure manager function within Transnet Freight Rail (TFR) by October, effectively separating the infrastructure and operational aspects of the rail business in preparation for a significant expansion of third-party access to the network.

CEO Portia Derby likens the initiative to the one under way at Eskom, where the transmission and system operator function is being separated from generation so as to level the playing field between Eskom power stations and independent power producers.

“TFR will separate out the infrastructure manager from freight operations, and the infrastructure manager will be responsible for the master schedule of the whole system – they will be the ones who control and own the network and freight operations will compete with other players,” Derby tells Engineering News.

The creation of the infrastructure manager is a direct response to the National Rail Policy of 2022, which stipulates that there should be a split between infrastructure and train operations to facilitate third-party access across the network and a revitalisation of rail and rail investment.

However, it is also a response to the reality that TFR currently either has insufficient rolling stock capacity to operate across the entire network or is operating on certain corridors at a significant loss.

Nowhere is this more acute than on the container corridor between Durban and Johannesburg, where TFR accumulated losses of R19.6-billion between 2011 and 2022, with R3.4-billion of that loss arising in 2022 alone.

In response, 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 enters a personnel service agreement with the current employees on the corridor. A request for qualifications was issued on January 27 with a closing date of March 31.

There is also no immediate solution to the shortage of rolling stock, which together with a steep rise in cable theft and vandalism has led to a serious deterioration of services on other corridors, including the crucial coal corridor, which is known as the North Corridor.

The collapse in volumes led to tensions between Transnet and the Minerals Council South Africa last year, which the two sides are now seeking to address through a so-called Recovery Steering Committee, made up of Transnet board members, the Minerals Council CEO and CEO representatives of the bulk commodities affected by the problems on the rail network and at the ports.

The disruptive dispute with CRRC of China is ongoing.

CRRC has supplied TFR with 455 diesel locomotives to date across three acquisition events with the then China South Rail, including the State-captured 10-64 procurement programme that featured so heavily at the Zondo Commission, as well as 22 electric locomotives through the then China North Rail.

As a result of the impasse, there are currently 164 CRRC electric locomotives that cannot be returned to service, owing to the unavailability of spares and a further 15 CRRC diesel locomotives also in the long-standing category, with Transnet having cancelled the balance of the diesel-locomotive contract with CRRC.

A settlement agreement with CRRC, which would have enabled a relatively swift return of the idle locomotives, collapsed in December, reportedly because of CRRC’s outstanding issues with both the South African Reserve Bank and the South African Revenue Service.

Therefore, Transnet has issued a tender for a so-called ‘step-in’ original equipment manufacturer (OEM) to take over maintenance and technical support for the CRRC locomotives. This, despite indications at it would take such an OEM between 24 and 36 months to be in a position to return the locomotives to service.

In addition, Transnet is still finalising maintenance and technical support agreements with the other suppliers, inclu...

The National Energy Crisis Committee (NECOM) reports that the initial market response to Eskom’s moves to purchase electricity that is immediately available from entities that generate their own power has been positive, with some 400 MW of interest in both its Standard Offer Programme and its Emergency Generator Programme.

Rudi Dicks of the NECOM secretariat reported on Friday that there was still an expectation that the two programmes could secure up to 1 000 MW of additional electricity in the short-term and confirmed that funding for the Standard Offer had been secured through the tariff increase announced by the regulator recently.

Through the Standard Offer Programme Eskom is able to buy power from existing producers at a set price, while the Emergency Generator Programme enables it to buy more expensive power at variable rates based on Eskom’s hourly market price.

Dicks could not say immediately whether there was equal market interest in both schemes, or whether one was favoured over the other.

Together with imports, the two schemes provide Eskom with an immediate way of securing additional energy to reduce loadshedding.

Eskom is reportedly already importing 300 MW more from the Southern African Power Pool than was the case before the Energy Action Plan was launched in July last year, and the utility is also in bilateral negotiations with Botswana, Mozambique and Zambia in a bid to bolster imports to about 1 300 MW in the near-term.

BATTERY STORAGE TENDER

Dicks also reported that Eskom had received an exemption from Mineral Resources and Energy Minister Gwede Mantashe to enable it to pursue the procurement of electricity from new emergency generation sources and announced that all the necessary approvals had also been secured to enable the Independent Power Producer Office to proceed with the procurement of battery energy storage.

He indicated that the request for proposals for the battery programme would be issued before the end of February.

Announcements would also be made in the coming week by Finance Minister Enoch Godongwana on how businesses and households would be incentivised to invest in their own solar systems.

Dicks indicated that it was possible that the Covid bounce back loan scheme could be repurposed to support solar investments by businesses, and possibly broadened to enable households to access the scheme.

KUSILE FLUE MANUFACTURING UNDER WAY

The immediate outlook for loadshedding remained bleak, however, with Eskom’s Thomas Conradie confirming that Stage 3 would continue to be implemented during the day over the weekend, with Stage 4 implemented from 16:00 in the afternoon to 5:00 in the morning.

This, despite Eskom having secure funding for diesel for the month of February so as to allow it to continue to operate its open-cycle gas turbines at high levels.

A new diesel shipment had been received during the week and the fuel would be transported from offsite facilities to the Ankerlig and Gourikwa power stations over the weekend.

Conradie also confirmed that progress was being made in its attempts to secure an exemption from the Department of Forestry, Fisheries and the Environment to enable the Kusile power station to install temporary flues that by-passed the flue-gas desulphurisation system.

He reported that Eskom was proceeding with preparations to install the temporary flues on units 1, 2 and 3, which became inoperable in October last year, owing to a build-up of slurry in the Unit 1 flue, leading to its eventual collapse. The flue collapsed in a way that also damaged the unit 2 and 3 flues, which are housed in the same chimney stack as the Unit 1 flue.

“We have also started with the manufacturing processes [for the temporary stacks],” he reported.

Engineering News editor Terence Creamer discusses the European Union's decision to make use of a Carbon Border Adjustment Mechanism (CBAM), with the stated intention of ensuring the decarbonisation of various sectors; the potential risk this holds for South Africa and Africa; what the international response is likely to be to the CBAM; and how South Africa should respond.

President Cyril Ramaphosa has moved to defend the proposed appointment of a new Minister of Electricity in the Presidency, amid concern that the appointee would have overlapping responsibilities with both the energy and public enterprises Ministers that could result in “turf wars”.

In his response to the debate on the State of the Nation Address, during which opposition parties slammed the proposed new ministerial post as both unnecessary and expensive, Ramaphosa said the energy crisis required effective coordination across several departments and public entities, which would be provided by the new Minister.

“It requires the undivided attention of a political principal who does not need to split their time and energies among different important responsibilities,” he argued, adding that the new Minister would be responsible for driving the various actions being coordinated by the National Energy Crisis Committee.

“This appointment will ensure that there is a Minister who is ultimately responsible for resolving loadshedding and who is able to work with all fellow Cabinet Ministers, departments and entities to do so.”

Ramaphosa denied that the appointment would lead to confusion and fragmentation, or turf wars with the other Ministers who dealt with energy and Eskom.

“The Minister of Electricity will be focused day in and day out only on addressing the loadshedding crisis, working together with the management of Eskom and the board.

“The Minister will be leading the National Energy Crisis Committee and interacting with all other departments in the spirit of cooperative governance.”

By contrast, the Mineral Resources and Energy Minister would be dealing with energy policy that went beyond the current energy crisis.

The Public Enterprises Minister, meanwhile, would continue to work on the restructuring of Eskom as well as other State-owned enterprises until a restructuring of government was implemented “to enable entities that fall under various departments to be properly located in those departments”.

While refraining from repeating Mineral Resources and Energy Minister Gwede Mantashe’s characterisation of the new Minster of Electricity as that of a “project manager”, Ramaphosa echoed Mantashe’s call for “urgency of execution and delivery”, which he described as paramount.

“With the focus that the Minister of Electricity will have on loadshedding and the work that is being done by Eskom and the board I do believe that we stand a much better chance to address this overriding challenge and crisis that our country faces.”

Ramaphosa also stood by his controversial decision to declare the long-running electricity crisis a national state of disaster.

The move is being opposed legally by the Democratic Alliance, the country’s official opposition, as well as by the Organisation Undoing Tax Abuse, which announced on February 16 that it had lodged an application in the Pretoria High Court to have the declaration overturned.

Ramaphosa said the state of disaster, which was declared on February 9 in the absence of supporting regulations, would be used to “mitigate the social and economic effects of loadshedding and accelerate the measures necessary to close the shortfall in electricity, and nothing else”.

“As I said in the State of the Nation Address, we will ensure that environmental protections and technical standards are maintained, and that procurement is undertaken with transparency and proper oversight.

“We will use the state of disaster to get rid of unnecessary bureaucratic obstacles that stand in the way of urgently bringing new generation capacity onto the grid.

“We will use it to ensure continuity in the provision of critical services and supply chains, and to address the impact of loadshedding on businesses and households.”

Meanwhile, the President also used his speech to address what he described as “myths” that had been repeated during the debate, including that South Africa was abandoning coal and that the unbundling of Eskom...

Mercedes-Benz Vans South Africa will introduce the new battery electric Sprinter (eSprinter) panel van to the local market in 2024.

“As we embark on a new era of sustainable mobility, we are proud to announce that the eSprinter will arrive in South Africa by 2024,” says Mercedes-Benz Vans South Africa president Nadia Trimmel.

“This vehicle will offer a game-changing solution for businesses and individuals looking for a cost-effective, environmentally friendly mode of transportation.

“This marks a significant milestone in our commitment to creating a more sustainable future for all."

The market launch of the German manufacturer’s new eSprinter will begin in the US and Canada in the second half of this year.

The vehicle is a long panel van with a high roof.

It is equipped with the largest battery available, which has a usable capacity of 113 kWh.

The load capacity is 14 m3, with a permissible gross vehicle weight of up to 4.25 t.

The range will be between 400 km and 500 km, but this is dependent on driving behaviour and conditions.

In Europe, this first variant of the panel van will be launched at the end of 2023, with the cab chassis variant and other battery variants following gradually.

Considering the fact that the current Sprinter panel van is converted into minibus taxis at the Mercedes-Benz plant in East London, will this also be the case with the new eSprinter?

“We will first only be launching the panel van version of the eSprinter,” says Mercedes-Benz Vans South Africa spokesperson Beate Mey.

“However, we do aim to lead in electric drive and digital experience.

“Therefore, introducing an electric minibus is an integral part of this strategy. However, the details around it are not available at this time.”

The Sprinter minibus taxi in its current form is especially popular among long-distance minibus taxi operators.

Concern is growing in South Africa and across Africa about the implications of the European Union’s (EU’s) decision to proceed with the implementation of a carbon border adjustment mechanism (CBAM) as a way of preventing so-called ‘carbon leakage’ by imposing a tariff on imports equivalent to the carbon prices being paid by European companies.

In terms of an agreement reached in December, the CBAM will be implemented later this year and will initially cover the carbon-intensive sectors of iron and steel, cement, fertilisers, aluminium, electricity and hydrogen, as well as some precursors and a limited number of downstream products.

While several details still need to be finalised, the imposition of a CBAM would have significant implications for South Africa, a new working paper produced for the Presidential Climate Commission (PCC) warns.

The paper shows that the EU imported, on average, $1.4-billion a year of products from sectors in South Africa covered by the CBAM, including the iron and steel sector which employs some 28 000 people currently.

The paper’s author, John Ward of Genesis Analytics, confirmed during a PCC webinar hosted to release the paper that the South African iron and steel sector was the most at risk to CBAM. However, the EU’s decision to include embedded and indirect emissions in the regulation held negative implications for chemicals and aluminium exports too.

While the CBAM was likely to face a legal challenge at the Word Trade Organisation (WTO), Ward argued that South African policymakers needed to be more active in finding ways to address the consequences of an instrument that was “now firmly on the agenda” in the EU and was also being considered by other countries, including the US, Japan and Canada.

London School of Economics’ Professor Dave Luke warned during the same webinar that African countries were particularly exposed to the EU’s CBAM, owing to the fact that 26% of Africa’s trade was with the bloc, whereas only 2.2% of the EU’s trade was with Africa.

Quoting from yet to be published research commissioned by the Africa Climate Foundation, Luke warned that, at current carbon prices, the CBAM could have the effect of reducing Africa's exports to the EU by up to 5.7%, which would knock about 0.91% off the continent’s gross domestic product (GDP).

“That's equivalent to an about $16-billion reduction in GDP at 2021 levels,” Luke said.

The exact impact would depend, he stressed, on the price of carbon and the final coverage of the products, as well as the phase-in rate and whether the EU eliminates free allowances for European producers under its emissions trading system, or ETS.

“Africa is likely to be more severely affected because we are more exposed than most other countries or regions, such as China or India.

“This is due to the fact that production in Africa tends to be more carbon intensive – so it will suffer a greater competitiveness shock – and because there is a relatively higher proportion of exports going to the EU,” Luke explained.

University of Cape Town adjunct Professor Faizel Ismail, who previously served as South Africa’s ambassador to the WTO, questioned the legality of the CBAM, arguing that it appeared to violate a number of principles of the WTO, including Article 1, or the Most-Favoured-Nation principle.

Ismail added that the revenues raised would not support low-carbon transitions in developing countries, but “simply add to the arsenal of protective subsidies they are providing to European companies”.

He argued, too, that the CBAM should be viewed within a broader context of moves by blocs and countries, including the US and China, to bolster the competitiveness of their green industries.

Ismail urged developing countries to band together to oppose the CBAM and other protective measures being adopted and predicted that there would be a rise in litigation on green industry issues at the WTO, including between developed countries.

“We should be demanding that the EU, the US...

Mineral Resources and Energy Minister Gwede Mantashe has doubled down on his characterisation of the proposed Minister of Electricity as that of a project manager but has denied that such a portrayal reduces the authority of the appointee.

In a speech made in response to President Cyril Ramaphosa’s State of the Nation Address, in which the President announced that a new Minister of Electricity in The Presidency would be appointed as part of efforts to accelerate the implementation of the Energy Action Plan announced last year to tackle loadshedding, Mantashe argued that a project management approach emphasised “urgency of execution and delivery”.

“Many people have asked what this appointment means. We characterised it as a project management approach in dealing with a crisis,” Mantashe said, adding that “we don’t have the luxury of waiting for 24 months to resolve loadshedding”.

“In project management, one will have clear timeframes, milestones, and a critical path which we must not deviate from,” Mantashe explained, arguing that he was, thus, not being “reductionist” in highlighting the new Minister’s project management role.

Nevertheless, the proposed appointment has been heavily criticised, including by business, which has argued that it could blur lines of responsibility and could result in turf wars.

There have also been media reports that Mantashe himself had been blindsided by the President’s announcement; a point that Economic Freedom Fighter’s leader Julius Malema sought to exploit by suggesting that Ramaphosa had ignored a resolution of his own party, which said that Eskom should be placed under the Energy Minister.

The leader of the official opposition John Steenhuisen described the move as adding yet another Ministry to a “bloated Cabinet”, rather than “removing the incompetent Ministers of Energy and Public Enterprises who block reform”.

“By once again expanding rather than shrinking the role of the State, the President has all but guaranteed that loadshedding and all the other terrible crises we face will only get worse,” the Democratic Alliance (DA) leader asserted.

“Instead of deregulating and unleashing private sector electricity generation, he [Ramaphosa] centralised even more power in his super-presidency.”

Steenhuisen also rejected the declaration of a state of disaster for electricity, saying that the President had given “sweeping powers to the same Minister who abused the people of this country during Covid”, a reference to Cooperative Governance Minister Nkosazana Dlamini-Zuma, whose signed the electricity state of disaster declaration on February 9.

However, Mantashe described Steenhuisen as talking from both sides of his mouth, noting his support for a state of disaster only days ahead of its declaration, which the DA was now opposing in court.

“In January 2023, the DA pronounced that they would support the declaration of the state of disaster on the energy crisis. When the state of disaster was declared on February 9, 2023, by the President, the same DA pronounced that they will take the ANC government to court and oppose the declaration of the state of disaster.”

Steenhuisen had since sought to clarify that the party was never in support of a generalised State of Disaster as has been declared but rather a “ring-fenced” declaration that applied narrowly to Eskom and the electricity sector.

President Cyril Ramaphosa’s announcement that incentives will be introduced to help facilitate solar investments by businesses and households was arguably the high point of a State of the Nation Address where the declaration of a state of disaster and the appointment of an Electricity Minister stole the headlines.

But can such investments really help to reduce loadshedding, which increased by four times last year to about 8.1 TWh and disrupted a total of 3 775 hours across 205 days?

Independent energy analyst Clyde Mallinson says while much will depend on the nature, timing and scale of the investments, the introduction of at least 5 GW of new solar by year-end could make a major contribution to reducing the intensity of loadshedding in 2024.

There would, however, also need to be some recovery of the performance of the coal fleet, with a “modest but achievable target of lifting the coal fleet output back to at least 175 TWh a year, the same as the output achieved in 2022”.

Mallinson’s forecast gels with an analysis conducted recently by Meridian Economics, which showed that had an additional 5 GW of variable renewable energy capacity (both wind and solar) been installed last year, 71%, or 5.8 TWh, of the power cuts implemented in 2022 would have been eliminated.

The figure could have been reduced by over 90% had Eskom had the financial and logistical wherewithal to deploy its diesel-fuelled open-cycle gas turbines (OCGTs) more optimally.

The Meridian analysis is based on actual Eskom data run through two separate platforms – a spreadsheet model and a dedicated system modelling software tool that simulates hourly dispatch more accurately – to verify the findings.

The analysis confirmed that, while a combination of 60% wind and 40% solar photovoltaic (PV) renewables mix would have a greater impact, loadshedding could have nevertheless still been reduced by 62% even if the capacity had arisen only from solar PV, even if much of that capacity had been derived from rooftop PV, which is less potent than utility scale solar farms that often include tracking technology.

“Incentivising residential, commercial and industrial customers to invest in distributed PV generation can clearly have a profound impact on reducing loadshedding.”

“Based on international experience, this can also be achieved in the shortest space of time compared to other new generation interventions,” Meridian states, referencing Vietnam where more than 9 GW of rooftop solar were added in 2020 alone.

Mallinson concurs, reporting that his model shows that loadshedding could have been reduced to about 2.95 TWh last year, or to about 40% of the eventual total, had there been an additional 5 GW of solar PV in the system.

The figure would probably be somewhat lower, however, if the solar energy had been derived from rooftop sources only, given that such facilities are unlikely to match the 28% capacity factor that the Eskom data is recording for the more efficient utility-scale solar farms. The capacity factor reflected for wind in the Eskom data is nearly 40%.

“However, 5 GW of rooftop solar would still make a significant contribution, particularly in a context where the system is so energy starved that Eskom is unable to fully deploy its pumped hydro stations, which are currently reliant on high diesel burn rates or loadshedding in order for their upper dams to be replenished.”

That said, Mallinson is highly pessimistic about the outlook for loadshedding in 2023, noting that even a rapid acceleration in the roll-out of rooftop systems will take time to implement.

Should Eskom’s coal fleet fail to recover from the dismal performance of January, when the fleet’s capacity factor fell to below 45%, and should Eskom fail to secure a higher budget for diesel to cover the gaps left by three Kusile units being inoperable, Medupi Unit 4 having exploded and the prospect of Koeberg operating at half its capacity due to two successive life-extension outages, Mallinson believes ...

The share price of JSE-listed real estate investment trust (Reit) Attacq, which is developing Waterfall City, rose by nearly 22% on the morning of February 13 after the company announced that it had entered into a nonbinding term sheet with the Government Employees Pension Fund (GEPF), represented by the Public Investment Corporation.

The GEPF will acquire a 30% interest in the ordinary shares and shareholder loans held in Attacq Waterfall Investment Company (AWIC), a wholly-owned subsidiary of Attacq and the owner of Waterfall City.

The investment will be made through issuing new AWIC equity, acquiring AWIC shareholder equity and shareholder loans from Attacq, and the extension of an additional pro rata shareholder loan by the GEPF.

The conclusion of the transaction will result in the GEPF owning 30% of AWIC for an estimated cash consideration of R2.8-billion.

The proceeds will be used to optimise the capital structure of both AWIC and Attacq by deleveraging the group’s balance sheet, enhancing the liquidity position of Attacq and improving investment capacity.

“We are pleased by this transformative transaction for Attacq, to introduce the GEPF as a long-term strategic investment partner to AWIC. Working closely alongside our new partners, we remain committed in fulfilling our strategic purpose of creating sustainable value for all stakeholders.

“The transaction aligns with Attacq’s strategy to optimise the group capital structure by creating a significant deleveraged balance sheet with the capacity to fund the world-class Waterfall City development pipeline with no additional capital required from shareholders in the medium term,” comments Attacq CEO Jackie van Niekerk.

“Furthermore, Attacq will benefit from numerous cost savings and efficiencies, while retaining its important Reit status. Attacq will retain full control of AWIC through its majority stake and will continue to provide asset management and administration services to AWIC at market-related fees,” she adds.

“Attracting this significant investment from the GEPF is a major affirmation of the quality of Waterfall City, one of South Africa’s fastest growing work and lifestyle precincts. We can now expedite the ongoing rollout of developments within Waterfall City as part of our precinct strategy which focuses on creating safe, smart and sustainable retail-experience, collaboration and logistics hubs,” acclaims Attacq CIO Peter de Villiers.

“We are truly excited about this milestone transaction for Attacq and Waterfall City. It also provides the GEPF with a unique investment opportunity in the co-ownership of a world class city.

“Once implemented, Attacq will see its gearing reduce from 37.2% to [about] 24% on a pro forma basis providing the balance sheet to develop out Waterfall City. Attacq’s capital structure will also be optimised resulting in a reduced cost of capital thereby enhancing returns for Attacq’s shareholders. It’s a win-win for all stakeholders,” avers Attacq CFO Raj Nana.

The transaction is subject to the fulfilment of certain conditions. Since the transaction is classified as a Category 1 transaction in terms of the JSE listings requirements, majority shareholder approval is required.

Attacq’s share price rose to R8.71 on the news, representing a 21.99% increase on the close of R7.14 a share on February 10.

The National Energy Regulator of South Africa (Nersa) is seeking public comment on electricity procurement determinations received from Mineral Resources and Energy Minister Gwede Mantashe that are intended to open the way for Eskom to procure new emergency and cross-border capacity.

Mantashe has granted Eskom an exemption from the Electricity Regulations on New Generation Capacity to proceed with all three procurement programmes, which have been named the cross-border procurement programme, the loadshedding reduction programme and the emergency procurement programme respectively.

In a letter to the regulator dated January 31, 2023, Mantashe said the exemption granted to Eskom for the programmes is to enable the utility to “expeditiously deliver the much-needed generation capacity”.

He also noted that Eskom will be applying to the National Treasury for various other procurement related exemptions, but that there is an expectation that the programmes will comply with all other relevant legal prescripts.

The determinations have been submitted under Section 34 of the Electricity Regulation Act, and are required to enable procurement in line with allocations outlined in the current Integrated Resources Plan (the IRP 2019), or to exempt such procurement from the IRP 2019. The regulator’s concurrence is also required before procurement can proceed.

The consultation paper released by Nersa indicates that Mantashe is proposing that Eskom procures the following capacity “to address the current energy crisis and contribute towards energy security”:

up to 1 000 MW of cross-border capacity from a range of energy producers, including utilities or independent power producers in the Southern African region;

up to 2 000 MW of new generation capacity under the loadshedding reduction programme from a range of energy technologies in accordance with the short-term risk mitigation capacity allocated for the years 2025 to 2028 in the IRP 2019;

Up to 800 MW of new generation capacity from a range of energy technologies in accordance with the ‘Emergency Generation Procurement Programme’ for the years 2029 to 2030 outlined in the IRP 2019.

A separate consultation paper has also been released to enable Eskom to procure 344.5 MW of new generation and storage capacity, comprising:

75 MW of solar photovoltaic (PV), to be located at the Lethabo power station in the Free State;

19.5 MW of solar PV, to be located in Sere in the Western Cape;

100 MW of solar PV, to be located at the Komati power station, in Mpumalanga; and

150 MW of battery energy storage at the Komati power station.

Both consultation papers are available on Nersa’s website and stakeholders have been given until March 15 to submit written comments on the ministerial determination.

The determinations appear to be in line with the ‘Road to End Loadshedding’ released by the National Energy Crisis Committee in January, as well as President Cyril Ramaphosa State of the National Address in which he announced that Eskom would “procure emergency power that can be deployed within six months to close the immediate gap”.

The loadshedding reduction programme, in particular, also again raises the prospect for the entry of powerships, which have so far failed to progress under the risk mitigation procurement programme.