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Mozambican President Filipe Jacinto Nyusi last week inaugurated 1 058 m of rehabilitated berthing area – comprising berths 6, 7, 8 and 9 – at the Port of Maputo.

The berths, rehabilitated, expanded and dredged to depths of up to –16 m, are now fully operational, allowing the port to receive and load an increasing number of bigger vessels (capesize).

In his inaugural speech, Nyusi noted that an increase in shipments would mean more revenue and income for Mozambicans.

“These berths are a fundamental pillar for implementing the master plan launched in 2010, approved by the Government of Mozambique,” added Maputo Port Development Company (MPDC) CEO Osório Lucas.

“They are also the foundation of the new masterplan that we presented publicly yesterday.”

Plans for the port include construction of a new berth for bulk cargo; the creation of a food terminal (grains, sugar, vegetable oils, molasses); the expansion of the container terminal; the expansion of the intermodal container terminal; and the expansion of Grindrod’s TCM (drybulk) capacity to 12-million tons a year.

Lucas reinforced that it is essential to align investment throughout the corridor.

“We will continue to work with CFM [Mozambique’s State-owned ports and railways company] and Transnet to achieve a better balance between road and rail freight, promoting an integrated development that will further enhance the corridor’s growth.”

As the Department of Water and Sanitation (DWS) tables its budget for the next three financial years, Minister Senzo Mchunu has committed to ensuring that the department manages its significant budgets responsibly and effectively.

On May 13, Mchunu tabled a combined budget of R111.25-billion for the DWS and the Water Trading Entity over the medium-term expenditure framework (MTEF).

This comprises allocations of R34.97-billion, R37.33-billion and R38.95-billion in the 2022/23, 2023/24 and 2024/25 financial years respectively.

On the main account, the DWS was allocated R59.6-billion – R18.5-billion in 2022/23 and R20.1-billion and R20.9-billion in 2023/24 and 2024/25 respectively.

The main account budget includes R37.43-billion of conditional infrastructure grants for municipal water services, including R19-billion for the Regional Bulk Infrastructure Grant, which will be spent on 113 different projects across South Africa, and R14-billion for the Water Services Infrastructure Grant, which will be allocated to more than 200 projects across the country, Mchunu commented.

The Water Trading Entity, which largely relies on revenues from the sale of water, augments its budget for the development and management of national water resource infrastructure with a MTEF allocation of R9.55-billion.

In total, the medium-term expenditure estimate for the Water Trading Entity is R51.6-billion, comprising R16.4-billion, R17.2-billion and R18-billion in 2022/23, 2023/24 and 2024/25 respectively.

“At the end of the recent financial year, the Water Trading Entity was owed R24.57-billion by the customers that it sells water to. Municipalities and water boards account for 65% of this debt. Municipalities owed the water boards R13.94-billion, owing to non-payment by their water users. This in turn resulted in the water boards owing the department R7.6-billion.”

Direct municipal debt to the department amounted to R8-billion.

“It is critical that government as a whole, addresses the problem of poor revenue management and debts in the water sector. If this problem is not addressed, we will not see a sustainable improvement in water and sanitation services,” he warned, noting that the DWS is working with National Treasury, the Department of Cooperative Governance and Traditional Affairs and the South African Local Government Association on solutions to this issue.

“The underlying problem that we all need to focus on is weak billing and revenue collection at municipal level.”

Mchunu assured that the department had strengthened expenditure management and compliance enforcement to minimise unauthorised, irregular, fruitless and wasteful expenditure, an effort which resulted in no new unauthorised expenditure incurred in the 2021/22 financial year.

“Irregular expenditure which is still appearing in the department’s audit reports relates mainly to contractual obligations from prior periods, which have a carry-through effect on current running contracts,” he explained.

The cases where investigations into unauthorised and irregular expenditure have been concluded and recommendations implemented have been submitted to National Treasury for condonation and the department is working on finalising the remaining cases of irregular expenditure.

Further, the DWS has requested the CFO to prepare an action plan towards the department achieving a clean audit.

Historically, the DWS has underspent on its allocated budget, particularly the budget allocated for infrastructure projects.

“This is unacceptable in the context of the water and sanitation challenges facing the country, and we have requested the director-general and CFO to focus on addressing this in the current financial year,” Mchunu commented, adding that the director-general has indicated that he and the CFO are instituting improved project management, infrastructure procurement and delivery management and expenditure management systems and processes in the department to address this.

Meanwhile, several DWS ...

Finance Minister Enoch Godongwana reports that work is under way with the private sector to unblock the remaining obstacles to investment of about R54-billion in embedded generation projects.

Speaking during a presentation of Operation Vulindlela’s first quarter progress report, Godongwana said he was aware of frustrations over the slow pace of the structural reforms being championed under the initiative, including those designed to address the electricity crisis.

However, he said that the majority of the 26 high-priority reforms had either been completed or were “progressing well”, with seven experiencing implementation delays or critical challenges.

The progress update lists the emergency procurement of 2 000 MW of new generation capacity, as well as the initiative to improve the energy availability factor of the Eskom fleet to 70% as facing “critical challenges in implementation”.

However, the progress dashboard marks as “completed” the reform raising the licencing threshold for embedded generation from 1 MW to 100 MW.

The Presidency’s project management office head Rudi Dicks said that a distinction needed to be made between the actual implementation of the 100 MW reform, which was unveiled by President Cyril Ramaphosa and Mineral Resources and Energy Minister Gwede Mantashe in June last year, and the “follow-through” required to ensure implementation.

He said the announcement of the reform was “an important step” in itself as it set in motion a process of ensuring that miners and other energy intensive businesses reduced demand on the national grid by being allowed to develop their own generation.

“When we look at a reform there is a particular objective . but underneath that there may be a number of other areas that constrain us in getting to the point of greater levels of investment, economic growth and employment,” Dicks explained.

In the case of the 100 MW reform, the raising of the licensing threshold had unlocked a “robust investment pipeline” of 58 projects, with a combined energy generating potential of 4 547 MW.

However, several obstacles remained in ensuring these were made “shovel ready”, Dicks said.

A joint task team, involving government departments and agencies, the Minerals Council South Africa and the Energy Intensive Users Group was, thus, meeting weekly to track progress, resolve obstacles at an individual project level, as well as to address remaining constraints at a systemic level.

Dicks reported that the task team is working to address the following issues:

shortening the timeframes for environmental impact assessments and water-use licenses through the designation of embedded generation projects as Strategic Infrastructure Projects;

creating dedicated capacity in Eskom to process grid-connection applications more quickly;

putting in place wheeling frameworks and tariffs at the municipal level; and

simplifying the National Energy Regulator of South Africa’s (Nersa’s) registration process, including by addressing onerous requirements, such as the stipulation that a power purchase agreement be included at registration.

“All national departments, as well as Eskom, Nersa and the South African Local Government Association are cooperating actively to address these challenges,” Dicks confirmed.

He said that, if cleared, projects could be connected between 2022 and 2024.

During an earlier briefing, Eskom CEO André de Ruyter reported that more than 30 potential investors had participated in briefings held at the Majuba and Tutuka power stations, where the utility is preparing to offer 20-year leases to those investors seeking to take advantage of the 100 MW reform.

He also announced that steps had been taken to improve the operation of its Grid Access Unit, which was responsible for issuing budget quotes for grid connection.

“We have taken heed of the comments received from investors and also parties wishing to feed electricity into the grid, that our grid access unit processes were slow and cumbersome and...

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the outlook for load-shedding this winter, why the electricity system is in a precarious state, power utility Eskom's heavy reliance on its open-cycle gas turbine plants and the utility's calls for additional generation capacity.

Electricity utility Eskom has set a target date of August 2024 for the return to service of Medupi Unit 4, the generator of which was “catastrophically” damaged during an explosion on August 8, 2021.

Acting generation MD Rhulani Mathebula, who has stepped into the role following the resignation of Phillip Dukashe, says assurance and forensic investigations have been completed and that management expects to institute consequence management against those involved by the end of May.

The explosion occurred during the displacement of hydrogen with carbon dioxide and air, respectively, for the purposes of finding an external leak.

Mathebula reports that its captive insurer, ESCAP, has accepted the admissibility of the claim report issued by the loss adjuster, Sedgwick South Africa, and that the commercial process and award of the first contract for the refurbishment of the generator stator is expected by no later than June 15.

“Based on preliminary results from the property damage assessment and long-lead items, the commercial operation of Medupi Unit 4 is expected by August 2024,” he reports.

Meanwhile, Eskom also reports that functional specification has been completed for sign-off on the installation of flue gas desulphurisation (FGD) on the six Medupi units, in line with a stipulation of a World Bank loan.

COO Jan Oberholzer says the retrofitting of FGD to the six Medupi units at the power station is expected to cost between R35-billion and R42-billion, based on its experience with installing the technology at the Kusile power station.

Eskom is working to compile a scope of work, but does not yet have a final date for the issuance of a tender.

Separately, the Eskom board has approved new target dates for the completion of the remaining Kusile units, with Unit 4 slated for commercial operation in January 2023, Unit 5 in December 2023 and Unit 6 in May 2024.

Previously, Eskom had expected Unit 4, which was first synchronised to the grid on December 23 last year, to enter commercial operation in July this year.

Oberholzer says Eskom has every intention to “beat those dates”.

To do so, however, will require more rapid progress on securing coal for the plant, as well as ensuring that the ash-handling facilities are in place.

The CEOs of three leading South African development finance institutions (DFIs) have established a collaborative platform, known as the DFI CEOs Forum, that aims to support the financing of the country’s just transition to a low-carbon economy and climate resilient society by 2050.

Led by Development Bank of Southern Africa CEO Patrick Dlamini, Industrial Development Corporation CEO TP Nchocho and National Empowerment Fund CEO Philisiwe Mthethwa, the forum will seek to locate, define and execute just transition financing.

It is also open to all public national and provincial funds, DFIs and fund managers in South Africa.

A DFI Just Transition Task Team, made up of executives from each organisation, will be created to coordinate work programmes on behalf of the forum and the initial three workstreams include:

Workstream 1, which will define the strategic thrust of South African DFIs and their role in South Africa’s decarbonisation;

Workstream 2, which will study the financial impacts and opportunities associated with the transition and map the options for mobilising climate finance; and

Workstream 3, which will assess and outline DFI opportunities in advancing or participating in the carbon-credit market.

The forum will be guided by the Just Transition Framework being finalised by the Presidential Climate Commission and the individual DFIs will act both collectively and individually, in line with their core mandates, to support South Africa’s just transition.

The DFIs indicated that the decarbonisation of the electricity system will be an immediate priority, with a focus on decommissioning and repurposing Eskom’s coal-fired power stations, the upgrading and extending the grid, and a rapid ramp-up of new renewable projects.

“Early scoping of technology and project pathways as well as financing the development of a hydrogen production sector is essential to achieve the decarbonisation of the petrochemical sector.

“Support for a transformation of the motor and transport sector towards electric vehicles, is also important,” the CEOs noted in a joint statement.

The statement also underlined the importance of decarbonisation for South Africa’s agriculture, manufacturing and mining exports, the competitiveness of which would increasingly depend on them securing low-carbon energy inputs.

The DFI CEOs Forum also stressed the importance of developing mechanisms, institutional capacity, and governance frameworks to finance both green-economy investments and the social aspects of th transition.

“In this regard, justice for workers and communities who are negatively impacted by the phase-down of the coal value chain must be ensured.”

The forum’s creation comes as South Africa is gearing up to negotiate the terms and conditions of an $8.5-billion climate finance offer made by the European Union, France, Germany, the UK and the US on the side-lines of the COP26 climate talks, in Glasgow, Scotland.

Presidential Climate Finance Task Team head Daniel Mminele, who will play a central role in the negotiations, has indicated that South Africa aims to pursue a financing solution that embraces a “different paradigm” with regard to the allocation of risk, as well as return expectations and investment horizons.

Mminele has also stressed that any debt should be extended on terms that were more attractive than could be secured in the capital markets and should not include unduly onerous reporting requirements.

Toyota South Africa Motors (TSAM) has resumed operation of its catalytic convertor export line and will, in the next few days, also open the Hino truck assembly line. This follows extensive flooding at the Prospecton plant, in Durban, a month ago.

TSAM notes, however, that it will take some time for its main assembly lines – Hilux, Fortuner, Hiace, Corolla Cross and Corolla Quest – to reopen.

The local arm of the Japanese vehicle manufacturer expects to lose around 45 000 units in production, with these vehicles destined for both the local and export markets.

TSAM president and CEO Andrew Kirby says the organisation is implementing “a careful and systematic phased plan” to return the Durban facility to working condition.

He adds that the flooding “has been a tremendous setback for the company, but we have extensive insurance coverage. We are also fortunate that our parent company, Toyota Motor Corporation, is supporting us with all the cashflow challenges that we are likely to encounter.”

“We’ve created an internal slogan for our recovery, called ‘Rebuilding Better Together’,” says Kirby.

“This talks to how we all work together as one team to find a way of renewing and improving our site at the same time.”

“We’ve been through the process of cleaning, drying and flushing,” Kirby explains.

“Now, we are checking all of our equipment, repairing, powering up the control panels and having to order replacement parts where necessary. We are at a point where it’s not easy to predict when we would be able to start-up.”

Toyota global president Akio Toyoda has sent close to 60 top specialists and engineers from Japan to support the recovery of the TSAM plant.

TSAM notes that it is working closely with the City of eThekwini to address some of the infrastructural shortfalls in the area around the plant to prevent a reoccurrence of a similar disaster.

From a human resource perspective, the majority of Toyota employees fall under the National Bargaining Forum (NBF) and, as such, payment is governed by the rules of the NBF, whereby 50% of wages are paid when there is no work available.

However, TSAM says it is working to boost employee earnings by bringing in staff on a rotational basis to assist in clean-up activities; working with government to provide temporary financial relief measures; requesting financial institutions, with whom employees have loans, for a three-month payment holiday; and working with local nongovernmental organisations to use TSAM employees to provide community support following the widespread floods.

Employees who volunteer for such activities will be paid by TSAM.

TSAM sales and marketing senior VP Leon Theron emphasises that Toyota customers remain the company’s priority.

“We are constantly communicating with customers whose vehicle deliveries have been impacted by the floods, and we are truly appreciative of their patience to date.

“With regards to completely built-up models, it’s business as usual – in fact, we have been able to negotiate additional supply despite global shortages. So, we’ll have extra units to compensate for the temporary lack of availability on locally-built models.”

Eskom COO Jan Oberholzer has appealed for urgent and coordinated public-private action to close an immediate electricity shortfall of up to 6 000 MW and to prepare the way for the replacement of 22 000 MW of coal capacity that will be shut over the coming 14 years.

Speaking during a system briefing and amid persistent bouts of power cuts, Oberholzer said the time had come to stop talking and begin acting as ‘South Africa Incorporated’ to tackle the immediate crisis and to prepare for the longer-term transition from coal.

By 2035, Eskom is scheduled to have decommissioned nine power stations with a combined capacity of 22 000 MW, nearly 10 000 MW of which is scheduled for closure by 2030.

For the bulk of the new electricity to arise from variable renewable sources, with associated capacity factors of about 30%, Oberholzer said that South Africa should be preparing to introduce at least 50 000 MW by 2035.

He stressed that this was required in addition to the 4 000 MW to 6 000 MW required to close the current shortfall in generation.

“As SA Inc, we need to understand where we find ourselves from an energy industry point of view, as well as the landscape that we are currently in, and what is coming at us,” Oberholzer said.

The transition challenge was also not unique to South Africa and was likely to result in a competition for equipment and resources, which Oberholzer argued could also present a significant manufacturing opportunity for the country.

“[But] we need to stop talking and we really now need to understand that we have a significant challenge that we are facing, and that we need to get our energy, our focus and all the activities needed to make sure that we have sufficient capacity to grow the economy of this country.”

Oberholzer also stressed South Africa could not rely, particularly in the short term, on a turnaround in the performance of the undermaintained coal fleet to offer supply relief, while providing evidence of how the maintenance backlog had been allowed to grow since the late 1990s.

Presenting benchmarks of Eskom’s performance relative to those of other utilities, using information compiled from VGB, of Germany, Oberholzer showed how Eskom’s energy availability factor (EAF) had been above the global average until 2012.

The utility also created “unsustainable virtual capacity” since 2002 by running its plants hard, as reflected in an energy utilisation factor that remained above that of its peers from 2002 until the present.

Planned maintenance, meanwhile, had dipped below that of its peers for much of the period, during which Eskom’s unplanned capacity loss factor (UCLF) decoupled from the VGB median, particularly since 2011.

In the year to March, Eskom’s UCLF rose to 28%, underpinned by a surge in partial load losses, and the coal fleet’s EAF fell to a dismal 55.5%.

Eskom also experienced its worst-ever year for unplanned automatic grid separation trips, which increase to 697 from 392 in the previous financial year.

“We remain committed to improving the performance of generation, [but] bringing new capacity on to the grid is critical.

“And with power stations reaching the end of their operational life, the gap will increase.”

Electricity utility Eskom has again highlighted the risk of load-shedding during the current winter period, during which it will rely heavily on the country’s expensive diesel-fuelled open-cycle gas turbines (OCGTs) to either avoid rotational cuts or reduce the intensity of such cuts.

Transmission MD Segomoco Scheppers again confirmed that there could be as many as 104 days of load-shedding during the period from May to the end of September, with the utility having already implemented 32 days of load-shedding from January 1 to May 11.

Such a worst-case scenario would arise should Eskom fail to restrict unplanned unavailability, or the combination of full and partial breakdowns, to below 12 000 MW, which has been set as the ‘base case’ threshold for avoiding power cuts this winter.

If breakdowns can be limited to 12 000 MW, the utility expects to operate through winter without resorting to load-shedding, while burning about R1-billion worth of diesel.

However, should breakdowns rise to 13 500 MW, there will be 37 days of rotational cuts at Stage 2 (2 000 MW) and the diesel costs would rise to R3.1-billion during the period.

At a breakdown level of 15 000 MW, the prognosis deteriorates materially to 104 days of load-shedding at higher than Stage 3 (3 000 MW) and a diesel burn of R7.1-billion.

During the most recent summer, the average level of breakdowns during evening peaks was 14 588 MW.

However, acting generation MD Rhulani Mathebula says that the performance of the coal fleet, whose unreliability lies at the heart of the current load-shedding risk, typically improves.

This improvement is partly the result of lower planned maintenance, which will be ramped down to meet higher levels of winter demand of closer to 35 000 MW, as well as the fact that several of the power stations perform better in colder conditions, especially the dry-cooled plants.

Already in the year-to-date, the utility has made expensive use of its OCGT plants to limit the intensity of load-shedding, have spent R6.4-billion on diesel during the 2022 financial year, its worst-ever load-shedding year.

The price of diesel has also surged following Russia’s invasion of Ukraine and COO Jan Oberholzer reports that Eskom is estimating that the rise will have a R15-billion to R20-billion negative impact on its costs this year.

This impact will be felt directly through its purchases of diesel to produce electricity and indirectly in the rise in coal costs, given that coal miners rely heavily on diesel to produce the energy mineral.

Scheppers reinforced that the utility’s ability to consume diesel was, thus, constrained by the group’s finances, as well as the logistical infrastructure used to supply diesel to its OCGT plants.

The utility has stated previously that these logistics constraints place a R1.5-billion-a-month cap on its diesel spend, with logistics at its Ankerlig plant being particularly constrained by the fact that it relies on road tankers for refuelling.

In other words, should the level of breakdowns rise to the 15 000 MW-type level, Eskom’s ability to lower the intensity of load-shedding through the use of the OCGT plants will be constrained in the period ahead.

Human Settlements Minister Mmamoloko Kubayi has tabled her department’s Budget Vote for the 2022/23 financial year at a time when there is rising demand for reform on housing delivery and heightened attention on the portfolio following flood disasters in KwaZulu-Natal and the Eastern Cape.

The Department of Human Settlements’ (DHS’s) budget allocation for the 2022/23 financial year amounts to R33-billion, of which R18.7-billion is allocated to provincial grants, R11.7-billion to municipal grants and R1.6-billion to Human Settlements entities.

In delivering the budget on May 10, Kubayi highlighted how the Human Settlements Development Grant Framework for the new financial year now provides for provinces and municipalities to access up to 30% of the Human Settlements Development Grant for bulk and linked infrastructure services, to help unlock some of the blocked housing projects in the country and considerably increase the scale of housing delivery in a short space of time.

The department will also start implementing front-loading in the Northern Cape and Eastern Cape in the 2022/23 financial year, which will help unlock stalled projects and increase the pace of provision of title deeds to rightful property owners.

To deal with a slow pace of delivery in the department, the DHS has established a “war room” team to fast-track implementation of projects and coordinate reporting of various entities of the department. The team will also identify strategic partners who can assist in unblocking project implementation.

The DHS intends on undertaking a scoping exercise that will include site verification and estimation of all cost implications related to the unblocking of housing projects. Kubayi confirmed that a diagnostic report would be published by the end of the current financial year.

Meanwhile, Kubayi implored municipalities to effectively deal with illegal occupation of land. She mentioned that there are about 2 700 informal settlements in South Africa, most of which are located on unsuitable land, in terms of housing emergencies.

“It is these areas that are most impacted by natural disasters, as evidenced a month ago on the KwaZulu-Natal coast.”

She referred to the flash flooding experienced in Durban and surrounds and up to certain areas of the Eastern Cape, which left more than 15 000 houses damaged to varying degrees.

During the 2021/22 financial year, the DHS published a request for proposal calling on private developers to partner with government on integrated housing projects’ development. The department received 95 proposals from individual companies, consortiums, developers and communities that own parcels of land.

Kubayi noted that announcements on Phase 1 of this initiative will be made upon the successful conclusion of public-private partnership agreements.

In the new financial year, the DHS has decided to focus on housing for mining communities and, to strengthen the department’s relationship with mining companies, will establish a framework to help guide the implementation of joint projects for housing.

Kubayi concluded her address by acknowledging the persistent title deeds backlog, and reiterated the department’s commitment to fast-tracking delivery of housing deeds by partnerships with financial institutions and the Youth Employment Service.