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Increasing calls from the public for the petrol price to be deregulated speak of ignorance, warns Fuel Retailers Association (FRA) CEO Reggie Sibiya.

“As fuel prices continue to rise, there is pressure on retailers to cut margins and be in competition with each other, which is absolutely impossible. If you look at the retail margin it is R2.28 a litre.

“People think there is a lot to share in the margin – there is nothing to share. We actually need more to sustain our businesses.”

Sibiya says that countries such as the UK, where the fuel price has been deregulated, in June hit a petrol price of more than R35 a litre.

“We must realise that deregulation will not drive prices down on an ongoing basis.”

Deregulation could also mean that people will have to fill up their own tanks and pump their own tyres, adds Sibiya.

It must also be taken into consideration that numerous service stations are run as “highly geared” small and medium enterprises, he notes.

A continued flow of new entrants into the market is also “making the cake smaller”.

The recent steep hikes in fuel prices, twinned with the Covid-19 pandemic, have also led to a dramatic reduction in fuel sales, says Sibiya.

“Some service stations lost up to 80% of their volumes during the pandemic. They are still in the process of recovering from Covid-19.”

Sibiya notes that job opportunities at service stations are related directly to sales volumes, and that the industry may see job losses if volumes do not recover or if margins are affected.

“Then, on top of that, we see illegal trading where wholesalers are selling fuel directly to the public,” laments Sibiya.

“If you are a wholesaler, you must operate as a wholesaler.”

“You cannot go and start retail sales. But this is rampant. We are pushing the Department of Mineral Resources and Energy to manage this situation, which is getting out of hand.”

Sibiya notes that it is important for the fuel retail sector to “unify as an industry”, otherwise “government becomes a winner that takes all”.

The Department of Employment and Labour (DEL) is finalising policy that will help to regulate the extent to which foreign nationals can be employed in South Africa, Minister Thulas Nxesi said on Friday.

His comments come as trucker drivers this week intensified their national strike against the employment of foreign nationals, blocking the N3 in both directions on Van Reenen’s Pass and at the Tugela Plaza, in KwaZulu-Natal, disrupting supply chains and freight logistics between Gauteng and the main port.

Similar blockades took place on several national routes last year, prompting President Cyril Ramaphosa to order an Inter-Ministerial Committee, led by Nxesi, to address the concerns raised by truck drivers and small truck operators.

The committee has already held a number of consultations with truck drivers’ representatives and small truck operators.

Nxesi said government was committed to addressing their issues in a way that ensured the long-term viability of interventions, some of which would require a longer runway, owing to legislative changes. For example, government in February formulated a National Labour Migration Policy (NLMP), which aims to effectively manage the rapid expansion of international migration flows.

The department has concluded its consultative process for the NLMP and is in the consolidation phase.

"The department intends to complete synthesising the recommendations by the end of June this year, and then present a consolidated document at Nedlac for a formal consultation with social partners,” Nxesi reported.

The proposed NLMP aims to address South Africans’ expectations regarding access to work opportunities, given worsening unemployment and the perception that foreign nationals are distorting labour market access. The NLMP, together with proposed legislation, will introduce quotas on the total number of documented foreign nationals with work visas that can be employed in major economic sectors.

The NLMP goes hand-in-hand with a proposed Employment Services Amendment Bill, which provides a policy framework and the legal basis to regulate the extent to which employers can employ foreign nationals in their establishments while protecting the rights of migrants.

Although Nxesi recognised the validity of some of the truck drivers’ concerns, he said the “sabotage and staged crime being witnessed should be treated as such”.

“What the truck drivers are doing is an affront to the entire South African community and should not be taken lightly,” Nxesi said, adding that it is posing a risk to human lives as well as the economy.

Meanwhile, the DEL is also working to clamp down on truck drivers’ illegal behaviour and creating the perception that the department is not doing anything to address their concerns.

“We will not tolerate lawlessness in the form of road blocking. We urge law enforcement to unleash the full force of the law on those who use illegal means to express their grievances while undermining the rights of others,” Nxesi averred.

Business Unity South Africa have stated their concern over national road blockages and disruption to alternative routes between Johannesburg and Durban. The organisation says this is a recurring occurrence and that there are hardly ever consequences for those perpetrating these acts.

In the last few days, there have been more than 350 trucks blocked on either direction on the N3, leading to truck drivers being exposed to severe cold, possible violent looting and other aggravated assault, not mentioning they do not have the means to survive for days stranded in a truck in the middle of nowhere, the Road Freight Association (RFA) reports.

The association bemoans the trade that will be lost this month over the unrest, highlighting the risk of ports becoming ghost towns and businesses closing down. RFA estimates that more than R300-million worth of damages and negative costs to the economy have already been incurred this month. "Act now, or we will have less of a country left,...

Eskom acknowledges that transmission constraints remain an obstacle to the introduction of new renewables generation, but the utility also highlights that 32 GW of grid capacity is immediately available to those independent power producers (IPPs) willing to build projects outside of the country’s prime solar and wind regions.

Renewables developers have hitherto targeted the Northern, Western and Eastern Cape provinces, owing to the fact that the solar and wind resources in these regions are among the best globally and superior to those in South Africa’s other six provinces.

A recent survey comprising more than 240 contributions from members of the country’s renewables associations indicates that, while wind and solar projects with a combined capacity of 64 GW are being considered for development, 57 GW of that potential is proposed for development in a region where there is only 5 GW of residual grid capacity available.

Eskom’s most recent Generation Connection Capacity Assessment shows, for instance, that the Northern Cape is saturated, while the Western and Eastern Cape have less than 3.5 GW available – a figure that was enlarged to 5 GW as a result of a decision to curtail dispatchable capacity from the open-cycle gas turbines in favour of renewables.

Strategic grid planning manager Ronald Marais says that the survey results have validated the grid-development approach Eskom is pursuing under its Transmission Development Plan (TDP), which includes transmission line and substation investments aimed at unlocking the generation potential of the Cape provinces.

However, the TDP projects will take time to implement, and Eskom is thus pursuing a specific intervention in parallel in an effort to attract wind and solar investors to Mpumalanga, where the grid constraint is far less acute.

The utility is running a competitive process for the lease of grid-ready land to IPPs seeking to take advantage of a recent market reform allowing distributed generation projects below 100 MW to proceed without a licence, even when the electricity will require wheeling over Eskom or municipal networks.

Marais told delegates to a recent RES4Africa Foundation conference that Mpumalanga has about 6.5 GW of grid supply area capacity, which could be unlocked by developing some additional distribution infrastructure.

“Because most of the coal stations in the province are directly connected to the transmission system, there is no distribution infrastructure, which would have to be developed to bring the electricity produced by the renewables generators back to the substations that are connected to the transmission grid,” Marais explains, likening the distribution infrastructure to on-ramps to a highway that would otherwise be bypassing the area.

Besides Mpumalanga, however, there was also grid capacity in KwaZulu-Natal (6 GW), Gauteng (4.5 GW) Free State (4.1 GW), the North West province (3.5 GW) and Limpopo (2.5 GW).

However, the survey of IPPs pointed to a material mismatch between preferred projects sites and available grid capacity, which had led Eskom to conclude that only 19 GW of the 32 GW of available grid capacity was likely to be taken up by utility scale renewables investors in the near term.

Marais, therefore, urges ongoing collaboration between the renewables industry and Eskom to further investigate ways to unlock the capacity that is already available, as well as to ensure better planning for future grid infrastructure.

The utility is hoping to accelerate future grid connectivity through a spatial planning approach that ensures that new renewables projects are developed in “clusters” around the major corridors.

“Solving the grid constraint problem will require collaboration, as Eskom will not on its own be in a position to find the solutions,” Marais stresses.

Nonprofit organisation the Motsepe Foundation has launched two large-scale agricultural and farming projects involving rural and traditional communities in Limpopo and Mpumalanga, in partnership with agriculture industry association Agri SA and established commercial farmers and agribusinesses.

Owing to legal and tax requirements and because of the commercial nature of the two projects, the Motsepe Foundation has facilitated about R70-million in funding for the projects through a company established by the Motsepe family called the Motsepe Company.

“It is imperative that traditional communities, poor rural and urban communities, black farmers and other historically disadvantaged communities participate in and benefit from the agricultural and farming industry in South Africa. We have a lot of urgent work and measures to implement to make this happen,” Motsepe Foundation founder Dr Patrice Motsepe said at the launch in Sandton on June 15.

He said it was important that commercial banks and other financing institutions stepped in to provide commercial loans to these traditional and historically disadvantaged communities and farmers.

“The banks have a duty to provide funding that makes commercial sense. However, because some of the farming and agricultural ventures are classified as high risk, the interest rates are very, very high. It makes it very difficult to back the loans and also to retain some of the profits,” Motsepe said.

MPUMALANGA

The agricultural project in Mpumlanaga involves the Hhoyi Traditional Authority, led by Inkhosi Sandile Ngomane, the Siboshwa Traditional Authority led by Inkhosi Nicholas Ngomane and the Matsamo Traditional Authority led by Inkhosi Mduduzi Shongwe.

The project involves three sugarcane joint ventures covering 10 456 ha, which were established for the benefit of the Hhoyi, Siboshwa and Matsamo traditional communities. The project is being carried out in partnership with consumer foods producer RCL Foods.

RCL Foods and the Motsepe Company are each providing soft loans of R36-million at 3% interest. RCL has a long history with this project and the communities. In addition to its shareholder loans, RCL has taken over high-cost loans from commercial banks and the Land Bank.

About 200 permanent and 1 000 seasonal jobs are being saved as a result of the funding provided by the Motsepe Company and RCL.

The soft loans by the Motsepe Company and RCL will rescue a land reform project that was funded by the South African government and handed over to the Hhoyi, Siboshwa and Matsamo traditional communities.

This land reform project failed, however, because the traditional communities did not have the capital, financial and technical resources, nor the requisite skills and expertise for the sustainability and long-term success of the project.

LIMPOPO

The agricultural project in Limpopo is a citrus farming project – the Majeje project – which is being established for the benefit of the Majeje traditional community led by Hosi Ntsanwisi. The project is being carried out in partnership with fruit producer Komati Fruit Group and financial institution Absa.

The Mostepe Company will be providing a R30-million long-term soft loan to help fund the project, which will see citrus fruits planted on 457 ha of irrigated land. The expectation is that the project will create about 50 new permanent jobs and 300 seasonal jobs.

The Majeje citrus project will use community land adjacent to the existing successful Komati citrus farms. The land is underdeveloped because of the lack of capital, financial and technical resources and the appropriate skills and expertise.

The R30-million long-term soft loan that is being provided by the Motsepe Company has facilitated the unlocking of about R90-million of funding to the Majeje citrus project from Absa.

Motsepe said the establishment of mutually beneficial partnerships between traditional and other historically disadvantaged communities, black farmers and established farmers woul...

It is impossible to draw a direct comparison between South Africa and other countries that have adopted strategies to push the uptake of electric vehicles (EVs), warns Frost & Sullivan research director Craig Parker.

He says that South Africa’s economic structure and demographic profile are unique, with a significant disparity in wealth.

“This will have direct implications on how government and the private sector can drive the uptake of EVs. It also means that strategies that have been implemented in developed economies may not be relevant in the South African context.”

In Europe, incentivising EV uptake through city-level initiatives that directly impact the consumer has been successful ­­– for example, implementing an incentive or penalty that directly correlates to the number of kilometres driven in a specific city area, explains Parker.

“These are usually the most effective as they hit the pocket of the consumer who drives the most, and there is a direct use-to-cost reward or penalty involved.

“However, the South African conundrum comes into play as people from different economic classes share the same roads.

“Imposing a blanket penalty on kilometres driven in, or to, a city centre [in a vehicle powered by an internal combustion engine] will have a significantly greater negative impact on the poor than those with higher income.

“Also, the major difference between South Africa and other countries is that our ‘public’ transport services are not entirely ‘public’,” adds Parker.

“It is dominated by the taxi industry, which is not governed by local city budgets.

“This means that while public transport policy may shift to EV technology, moving the taxi industry to EVs will require substantial buy-in from the associations and this may not be feasible.”

But how should South Africa then drive its EV initiatives – if any?

“It will be important to focus on the logistics industry and public transport initiatives,” says Parker.

“The last-mile delivery sector has significant potential for minimising carbon output and shifting to renewable EV solutions.

“Similarly, cities can adapt their own public transport systems and convert them to EV fleets.

“The shift from internal combustion engines (ICEs) to EVs in private transport and in the taxi industry would then be a natural process as EVs become more affordable and charging infrastructure more accessible.”

Fuel and Renewable Tax

National Treasury estimates that there will be a R90-billion yearly loss to the fiscus as fuel use and, therefore, government income from the fuel levy, finally disappears.

In the run-up to that day, fuel tax revenue will systematically decrease because of a decline in demand, says Parker.

During this period of limited demand, government may be able to take advantage of the fact that lower oil prices could allow them to increase the fuel levy.

“This, however, is not a sustainable scenario. Another, more controversial scenario is that government may institute a renewable generation tax that will target solar and wind generation by private individuals to power their homes and vehicles to replace the fuel levy.”

Many countries currently have renewable energy tax credits that incentivise the use of renewable energy, notes Parker.

In South Africa this is also the case. Since January 1, 2016, an amendment to Section 12B of the Income Tax Act (Act 58 of 1996) allows for depreciation in the year of commissioning of the full (100%) cost of a grid-tied solar photovoltaic system of less than 1 MW that is used for electricity generation by a business for use in its operations.

Current taxation related to renewables is mostly concerned with tax breaks and credits to drive installation.

But, once renewable generation becomes the norm and carbon cannot be taxed effectively, it is very likely that renewable generation will be taxed, says Parker.

“In terms of revenues associated with the fuel levy, such as for the Road Accident Fund, other alternatives, such as mandatory public ...

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about warnings that load-shedding could become much worse if urgent action is not taken, proposals by Meridien Economics and other experts on how to end load-shedding and the need for political will and coordination in the energy sector.

Volkswagen Group South Africa (VWSA) has implemented two projects to reduce the environmental footprint of its Kariega plant, situated in the drought-stricken Nelson Mandela Bay municipality.

The first project is a wastewater recycling facility, which has been constructed onsite at the plant.

This facility will recycle production-related wastewater from various production areas, for reuse in certain production processes.

In addition, to cut the company’s freshwater consumption by an estimated 26%, it will also serve to reduce VWSA’s reliance on municipally supplied water amid the ongoing drought in the region.

At the same time, the company installed 3 136 solar photovoltaic panels, which have been generating renewable, carbon-neutral energy since April.

The panels, installed on the roof of the final assembly building, will reduce VWSA’s carbon emissions by an estimated 2 590 t of carbon dioxide (CO2) a year.

At full capacity, the panels will produce an estimated 2 500 MWh, which is enough energy to cover between 3% and 3.5% of the plant’s electricity requirements.

Both projects form part of the German auto maker’s We//2025 corporate strategy, and are included in the Zero Impact Factory strategy VWSA embarked on in 2020.

Zero Impact Factory is aimed at reducing the company’s production-related environmental footprint, with a focus on climate change, environmental impact and the responsible use of natural resources.

In this regard, VWSA achieved the following reductions last year (compared with the baseline set in 2010) – 49% reduction in energy use; 49% reduction in CO2 emissions; 65% reduction in water use; 66% reduction in waste; 31% reduction in solvent emissions; 50.9% reduction in overall environmental impact.

VWSA has also embarked on an ongoing biodiversity roadmap, starting in 2021 with a project to replace alien plants and trees within the Kariega premises with indigenous, water-wise plants such as spekboom, fever trees and coral trees.

These efforts include planting a carbon bank of more than 4 800 spekboom cuttings.

"As with our colleagues across the Volkswagen Group, we are committed to protecting the environment in whatever way we can,” notes VWSA production director Ulrich Schwabe.

“These two projects will make a massive difference in preserving the environment, and achieving our goal of carbon-neutral production by 2030.”

The Presidential Climate Commission (PCC) is initiating a process of research and consultation on South Africa’s future energy mix, which it aims to present to Cabinet before the end of 2022.

Speaking at a conference hosted by the RES4Africa Foundation in Johannesburg, executive director Dr Crispian Olver said that the commission was close to finalising its work on a just transition framework and that it was, thus, turning its attention to the country’s energy mix.

He noted that the PCC consultations would coincide with government’s plan to update the Integrated Resource Plan (IRP) for electricity and revealed that, in advance of the IRP update, the PCC had been requested by Minerals Resources and Energy Minister Gwede Mantashe to make recommendations on the energy mix.

Mantashe announced earlier this month that the IRP of 2019, which is widely regarded as being out of date, would be updated and extended beyond 2030. However, no timeframe was provided for the review, nor did the Minister outline what process would be followed.

Olver said the commission would host a series of dialogues over the coming months to assess a broard range of issues, from the role of gas and coal in the mix, through to the future industry structure and the role of transition finance.

He promised that the commission’s report would be released for public comment before any recommendations were made to Cabinet.

A PCC report on what emission-reduction commitments should be made ahead of the COP26 climate negotiations was adopted by Cabinet in 2021 and led to South Africa submitting a substantially more ambitious Nationally Determined Contribution (NDC) than was initially proposed.

This revised NDC pledge subsequently formed the basis for the signing of a Just Transition Partnership in Glasgow, Scotland, with the European Union, France, Germany, the UK and the US.

The partnership agreement included an offer of $8.5-billion in concessional climate finance to support South Africa’s decarbonisation efforts, and negotiations are currently under way to convert the offer into loans and grants for specific electricity, electric vehicle and green hydrogen projects.

The PCC’s work on the energy mix follows its completion of an intensive set of consultations on a framework for a just transition, the report from which will be presented to Cabinet soon.

Olver said the aim was to build an “overwhelming coalition” involving labour, civil society, government and business “so that the one or two negative forces that we cannot completely persuade are outnumbered by this broad social coalition that has formed around this climate transition”.

To ensure support, the PCC will recommend several key interventions, including active labour market interventions such as apprenticeships, reskilling and employment incentives for job placements.

“The good news is that following the lowest-emission scenario is going to massively increase jobs, including in the short- to medium-term,” Olver said, highlighting research indicating that such a pathway would create an additional 200 000 net jobs in the first 15 years relative to the IRP pathway.

The City of Cape Town will, on July 1, start a feasibility study on the devolution of the city’s passenger rail system from the Passenger Rail Agency of South Africa (PRASA) to the metro.

PRASA currently operates all commuter passenger rail systems in the country, with the exception of the Gautrain.

“The contract for the rail devolution feasibility study was recently awarded to an external service provider,” Cape Town Mayor Geordin Hill-Lewis tells Engineering News Online.

“The full time allotted for the study is three years, but we are hoping to conclude it sooner.”

A large urban rail system is a complex service, notes Hill-Lewis.

“We do not currently know the status and value of all the assets in the system, for example, and how much investment is required in terms of repairing and replacing infrastructure. Our first step, therefore, is to conduct a feasibility study to clarify all of these details.

“Once the study’s preliminary results start coming in, we will have a much better idea about overall timelines for the rail devolution project.”

The newly published White Paper on National Rail Policy allows for the devolution of PRASA’s passenger rail systems to local councils through a process that includes a feasibility study.

Hill-Lewis says the City of Cape Town (CoCT) is “committed to taking over rail in Cape Town because it is in a shambles”.

“We don’t have a choice but to do what we can to fix it. The problem is that the national government’s mismanagement of Metrorail, in the past decade especially, has left us with just 33 operational train sets in Cape Town in 2020, compared to 95 in 1995.”

In 2019, Metrorail was operating 444 weekday trips, which fell to 270 in 2020 before the pandemic.

“Now, in 2022, there are around 150 weekday trips on average,” says Hill-Lewis.

“The Central Line is no longer running, and some other lines are operating on limited service. Even before 2019, when the rail service was already known to be unsafe and unreliable, up to 500 000 commuters used Metrorail trains in the Western Cape every day.

“Once we restore the system and improve it to the extent that it will become a viable alternative to road-based travel – getting people out of cars and into trains – we may see 600 000 to 700 000 people using rail every day in the metro alone.”

Hill-Lewis emphasises that safe, reliable and affordable public transport is a fundamental requirement for the success of any major city.

“It is impossible to get people to work and perform other basic human functions without adequate mobility.

“Accordingly, the city’s economy is highly dependent on a well-functioning public transport system. The question then, is, what kind of public transport system should we have?”

Hill-Lewis says that Cape Town is “by far” the most congested city in the country, with no room to expand most of its main roads.

“It is impossible for roads to remain our primary means of mobility as Cape Town continues to grow.

“The only mass mover of people that has proven itself to be safe, reliable and effective in cities where this is the case is rail.

“We have an extensive and established commuter rail network that has existed for over 150 years. If we want to ensure Cape Town’s success, we need to reverse rail’s decline and get the system functioning even better than it was before.”

But What Will It Cost?

The devolution of the commuter rail function from the national government would have to be accompanied by the handover of the budget for that function from the national fiscus, explains Hill-Lewis.

“It would be impossible for the city to administer urban rail within its current budget.

“This is an example of a question that will be answered in much more detail by the feasibility study as the specifics are unclear at this stage.

“It is, however, quite clear that our future model for rail administration will depend heavily on private sector partnerships (as concessionaires or otherwise) and investment.”

First Priority

Once CoCT takes over ...

A comprehensive strategy for drastically reducing, or even eliminating, the scourge of rotational power cuts in South Africa by early 2024 has been outlined in a new public-interest report published by Meridian Economics.

The authors warn, however, that load-shedding is poised to rise to extreme levels unless unprecedented interventions, underpinned by “substantial political will”, are taken urgently to introduce about 10 GW of mostly wind and solar photovoltaic (PV) generators into the energy-starved system by that date.

The detailed two-part report includes a model showing that 96.5% of the load-shedding implemented by Eskom in 2021 (officially the country’s worst-ever year for power cuts) could have been averted had there been 5 GW more variable renewable-energy generation available – a scenario that could well have prevailed had it not been for the seven-year disruption to the country’s renewables procurement programme.

Besides reducing the deleterious economic impact of load-shedding on the economy as a whole, the additional 5 GW of wind and solar would have also created a net annual saving of R2.5-billion for Eskom, as a result of lower diesel and coal consumption.

The model also shows that there is likely to be a four-fold increase in load-shedding next year when compared with the 1.8 TWh of unserved energy in 2021, which affected 1 165 hours, rising to a ten-fold increase in 2026, under a business-as-usual approach, which the report terms as its ‘Base Case’.

To avert such an outcome the authors have crafted a plan, dubbed the ‘Solution Case’, that includes a suite of interventions to be pursued simultaneously and by multiple participants to resolve the crisis.

PRESIDENTIAL UNIT

Given the scale of the implementation challenge, however, the authors argue strongly for the creation of a dedicated and well-resourced power crisis implementation unit inside The Presidency to drive and monitor the programme and reduce the potential for bureaucrats and politicians to frustrate progress.

“Implementing these reforms will require political will at a scale that has not yet been demonstrated in dealing with South Africa’s power crisis,” Meridian Economics MD Dr Grové Steyn, who co-authored the report together with Adam Roff, Peter Klein, Rian Brand, Celeste Renaud and Lonwabo Mgoduso, avers.

“It will therefore be critical that a single, neutral overarching entity in government takes the lead in setting out the elements of the game plan that must be implemented, and drives its implementation.

“In our view, the natural place for this role is in The Presidency,” Steyn says.

Most of the resource components of the Solution Case outlined in the second part of the report, titled ‘Resolving the Power Crisis Part B: An Achievable Game Plan to End Load-Shedding’, are drawn from interventions already under way to either add new generation or to reduce demand.

“We think the fastest way of doing this is to take what we've got on the table – what is currently being procured and being pursued as a result of the recent deregulation allowing projects below 100 MW to proceed without a licence – and make that work more effectively and a bit faster,” Steyn explains.

Therefore, the main resource components of the plan draw on the current and upcoming bidding rounds of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), the embedded generation projects being pursued by energy-intensive companies and -miners, as well as from a reconfigured Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), but excluding the controversial power ships, which face legal and environmental obstacles that are unlikely to be resolved in the timeframe envisaged in the report.

In addition, the authors argue that efforts should be made to obtain additional energy from the multitude of existing and new projects that are distributed throughout the grid, while leveraging and incentivising demand response through aggregators to s...