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R54bn performance-based grant launched to support metro infrastructure delivery

The National Treasury has officially launched a R54-billion performance-based grant in a bid to increase investments in water, sanitation, electricity and waste infrastructure services by the country's eight metropolitan municipalities, or metros.

Known as the Metro Trading Services Reform, the performance-linked incentive aims to mobilise more than R100-billion in infrastructure investment over the coming six years, with recipient municipalities required to match the infrastructure grants with their own revenues and borrowings.

A total of R27-billion has been set aside for the scheme in the current three-year expenditure framework, which was outlined in the February Budget.

Speaking at the launch, National Treasury director-general Dr Duncan Pieterse said the incentive would be made available to those metros that meet performance targets which they have set for themselves under 'Performance Improvement Action Plans' developed for each of their trading services.

"The Metro Trading Services Reform aims to ensure those services are run like integrated businesses.

"It creates a single unit of management accountability to deliver core trading services.

"It will ringfence the revenues and reinvest them in those services," Pieterse said at the launch function in Pretoria attended by various partners to the initiative, including the World Bank, the New Development Bank, the Asian Infrastructure Investment Bank, and representatives from country partners such as Switzerland, Denmark, Germany and France.

He said the scheme had been implemented in a context where many metros were failing to provide services or to collect revenue adequately.

"Even when they do, the revenue they collect goes into the general municipal pot, instead of being invested to maintain and upgrade infrastructure. As a result, the water leaks, the lights go out, the rubbish piles up."

He made specific reference to the City of Johannesburg, where its 2025/26 budget for 2025/26 estimated that R11.9-billion in revenue for water would be collected, but it would spend only R1.3-billion on water infrastructure, or less than 10%.

"eThekwini plans to collect R22-billion in 2025/26 from electricity charges. Almost 85% of this will pay for bulk charges to Eskom and the city plans to spend only R784-million on electricity infrastructure – so not even 5%," he added.

The Metro Trading Services Reform, he added, formed part of a comprehensive package of local government reforms that moved beyond oversight of local government towards more active intervention, including interventions to address capacity constraints to deliver infrastructure.

It also came as municipalities were expected to spend R205-billion of the R1-trillion that had been budgeted for infrastructure by government over the coming three years.

Pieterse said there was also an intention to break from past practices whereby funds were reallocated to other municipalities when a municipality was unable to spend its infrastructure budget.

"In effect, residents in those underspending municipalities would then lose the funding, in favour of those with better capacity.

"When the Budget was tabled in February, we included a new proposal: where municipal capacity to spend becomes a problem, instead of the funds being lost they will be transferred to entities such as the Development Bank of South Africa and the Municipal Infrastructure Support Agency, to ensure the spending takes place in that municipality to benefit the residents who live there."

The Metro Trading Services Reform has the support of the Department of Cooperative Governance and Traditional Affairs and the South African Local Government Association (Salga).

However, Salga CEO Sithole Mbanga stressed at the launch that the metros needed to be co-architects of the reforms and "not implementers of someone else's blueprint".

The metros, he noted, were also insisting that any structural...

PPC CEO Matias Cardarelli says there is "more to come" from the cement producer's operational and financial turnaround regardless of whether market conditions, which have remained subdued during the first two years of the group's recovery, improve on the back of promised infrastructure spending.

The company announced a strong performance for the ten months to January 31 during its Capital Markets Day on March 18, with the highlight being the rise in its earnings before interest, taxes, depreciation and amortisation (Ebitda) margin to 19.4%.

PPC's margin stood at 16.6% in the comparable period last year, and was at 12% when the turnaround was initiated.

The group's Ebitda was 22% higher period-on-period, while revenue increased by 4% mostly driven by the increase in PPC's Zimbabwe operations, while revenue from South Africa and Botswana remained largely unchanged.

Cardarelli said that internal rather than external factors had underpinned its recent earnings and margin recovery and that cost and price discipline would remain priorities for the coming three financial years, with any possible recovery in the construction market regarded as an additional advantage.

PPC's 2027 financial year is expected to be a year of consolidation ahead of another "step change" in 2028, when its modern R3-billion RK3 investment at its Riebeeck plant, in the Western Cape, will start fully contributing.

By that date, its Ebitda margin was targeted to be above 21% and the group's installed clinker capacity would have been renewed, which Cardarelli viewed as a key competitive advantage in a market where many other clinker assets were considered to be old.

"Technology upgrade is no longer optional . . . businesses that under-invest, are at risk, while the ones that are investing are the ones who will remain as the main players in the sector in the years to come," he said in a presentation to investors.

The relative age of the fleet and its proximity to key areas of demand would also enable PPC to respond to any possible infrastructure market growth, with government having indicated that it intended shifting the composition of spending towards infrastructure, while also crowding in private capital.

PPC said a 6% increase in clinker production was possible simply by implementing its plant performance improvement plan, which had already spurred a 10% year-on-year rise in output.

Through the group's 'Awaken the Giant' strategy, various other structural, cultural and personnel changes had been implemented, alongside major changes to logistics and procurement.

There had been a particularly keen focus on margin over volume, with Cardarelli describing "chasing market share by irresponsibly dropping prices" as value-destructive and overly reliant on favourable market dynamics to ensure sustainability.

"We follow the exact opposite strategy, with a contribution-margin focus. The external challenges are still there; they remain unchanged, [but] ...our strategy is designed to create value despite these headwinds, not to wait for them to disappear or to change."

He also expressed optimism about the prospects for an ongoing strong contribution from PPC Zimbabwe, which delivered a substantial increase in total dividends declared and paid out $36-million, or R595-million, in the current period, up from $8-million (R142-million) in the comparable period.

"There is more to come, and our confidence is grounded in fundamentals, not optimism," Cardarelli told investors.

Anthem CEO James Cumming says there is a "high probability" of a battery energy storage system (BESS) being integrated into its massive 475 MWac (620 MWdc) Notsi solar PV project in the Free State, with the site having already been permitted to include BESS.

The South African independent power producer started construction on the R9-billion project in March following financial close, which was concluded on the back of 20-year-plus offtake agreements with electricity traders Discovery Green and NOA.

Cumming tells Engineering News that it has been standard practice for some time for Anthem to apply for BESS authorisations when seeking environmental and other approvals for new PV or wind developments, even though it has not yet implemented any hybrid renewables-plus-BESS projects.

He also indicates that Notsi is unlikely to be the first Anthem project to integrate BESS, with talks under way with existing offtakers which have shown an interest in using BESS at its existing solar and wind facilities to help match their demand profiles, as well as a willingness to adjust their power purchase agreements to accommodate such matching.

Nevertheless, Cumming is confident that BESS will also be added to the Notsi project, but probably only after it enters into commercial operation following a 26-month construction period.

"We will build the project as a standalone PV site and then, at the appropriate time, approach Eskom as the first step to ensure we're in agreement with them on how we can interact with the grid should BESS be added."

"We will then work with the traders, Discovery Green and NOA, on the use case so as to understand what kind of sizing of batteries would be optimal."

Describing the integration of BESS as the "logical thing to do" as battery prices fall, Cumming believes batteries will become an integral part of its portfolio in future.

Besides allowing it to shift load from large-scale projects such as Notsi, BESS will enable it to offer ancillary services to the grid operator, avoid curtailment, and meet emerging balanced-responsible-party obligations that are required for participation in the South African Wholesale Electricity Market.

For the immediate term, however, Anthem's focus is on completing the Notsi project itself, which will cover an area spanning 1 000 ha and involve the installation of more than 860 000 solar panels.

A China Energy Engineering Corporation–Northwest Electric Power Design Institute JV has been appointed as the engineering, procurement, and construction contractor, and construction crews are being mobilised while detailed designs are being finalised.

The project has been made possible, Cumming confirms, by the emergence of well-capitalised traders that are able to provide Anthem and its funders with the demand certainty they need to proceed with such a large-scale development.

"In this case, we have two sophisticated and experienced trading businesses with well-developed sales teams that have secured offtake through innovative product offerings, which enables us to focus on doing what we do best, which is developing projects that are big enough to deliver a highly competitive levelised cost of energy, while also amortising the grid connection upgrades required."

The scarcity of grid in South Africa has increased the cost of connections significantly, which Anthem is mitigating in the case of Notsi by having a project that is large enough to absorb the full cost and initial capacity of the Main Transmission Substation (MTS) being self-built by Anthem and handed over to Eskom to ensure that the electricity can be wheeled through the grid.

"What we've done is to effectively utilise the entirety of the 500 MVA transformer that we're going to install at the Artemis MTS to help amortise the grid-connection cost while making the electricity as affordable as possible for our customers, Discovery Green and NOA," Cumming explains.

The role of the traders, he adds, is to place those electrons with fina...

Engineering News editor Terence Creamer discusses developments on the rail reform front and how this is spurring new thinking on localisation and in the container sector.

A new analysis of the crisis being faced by South Africa's ferrochrome industry as a result of uncompetitive electricity tariffs, outlines a possible renewables-battery-led scenario for meeting the industry's need for sustainably cheap and greener electricity without triggering an acceleration of what could otherwise be an Eskom death spiral.

Titled 'To Save or Not to Save SA's Ferrochrome Smelters and Eskom', the thought-leadership paper has been written jointly by Johan van den Berg, an energy professional with experience in the ferrochrome industry, Frank Spencer, an energy engineer, and Johan Roos, an Advocate in private practice.

The analysis follows confirmation that Eskom has made a 62c/kWh offer to Glencore-Merafe and Samancor, but has been published ahead of likely National Energy Regulator of South Africa hearings, where the details of that offer will be made public. This will include details on how Eskom will use a R10-billion portion of a larger R230-billion debt relief package extended to it by the National Treasury to close the immediate revenue shortfall that implementing the offer will precipitate.

The authors make the case for sustaining the industry, which currently has only four of its 48 smelters still operational; smelters that are producing about 19% of global ferrochrome, despite South Africa holding 72% of global chrome ore reserves.

They assert that doing nothing is not cost-free and could, in fact, be the most expensive option of all, albeit with costs that are diffuse, delayed and borne by people with little direct influence.

"The short answer to what we lose when ore leaves un-beneficiated is this: almost everything except the hole in the ground.

"The mining jobs remain, and the port throughput, but the manufacturing value, the dense employment, the fiscal contribution, the Eskom revenue and the strategic position all migrate offshore," the paper states, noting that between 30 000 and 68 000 direct and indirect South African jobs are at stake, along with more than R100-billion in yearly export value.

WEIGHING THE OPTIONS

Various options for sustaining the smelters are weighed, including restricting exports through legislation or fiscal structuring; direct support from the fiscus; cross-subsidisation of electricity prices to match the uneven playing field of global competitors; exempting the ferrochrome industry from the carbon tax; and/or subsidisation of the immediate construction of dedicated solar PV and battery energy storage systems (BESS) to supply the smelters.

The PV+BESS option, involving 8 GW of PV and 2 GW/24 GWh BESS, is described as "surprisingly compelling", while the authors rank the scrapping of the carbon tax as a "last resort" regressive step that would prolong high emissions and carbon dependency for longer than necessary.

While the analysis describes the PV+BESS solution as immediately feasible, it argues that it is nonviable, as it fails to protect the Eskom balance sheet over the medium term.

Instead, the authors propose a policy position that involves a combination of interventions over a four-to-six-year 'bridging' period, including the imposition of an export royalty on un-beneficiated chrome ore, together with a capital subsidy to support the building of a PV+BESS fleet that would be dedicated to supply the smelters.

The analysis shows that the PV+BESS option would require R157-billion in total capital expenditure, deployed over a three- to four-year construction period. However, R77-billion of that capital would need to be provided in the form of a one-off government capital subsidy to facilitate a 62c/kWh outcome.

That subsidy, the authors calculate, is lower than the R113-billion that would be required to 2030 for Eskom to subsidise the gap between providing electricity at 62c/kWh, escalating at 6% yearly, against its 196c/kWh average cost of supply, escalating at 8% yearly.

The authors show that the Eskom subsidy path would require R18.6-billion to close the gap in 2...

The State-owned company acknowledged during a virtual consultation on the draft report this week that the submission had failed to meet the initial six-month deadline set in a directive issued by then Minister Dr Deon George on March 31, 2025.

That directive followed Eskom's 2024 application for exemption from the sulphur dioxide (SO2) minimum emission standards (MES) for Medupi, in which it also questioned the appropriateness of the FGD installation.

This despite it being a condition of a $3.7-billion loan to Eskom approved by the World Bank in 2010.

The exemption was granted until 2030, but the directive stipulated that the BCA for FGD at Medupi be expanded to include an assessment of alternatives to installing FGD, while comparing the cost of complying with SO2 standards with the human health costs of not complying.

The draft report, thus, includes not only BCA conclusions for the installation of Wet, Semi-Dry and Dry FGD technologies, but also six alternative emission-reduction scenarios.

Only the wet FGD solution actually meets South Africa's MES, as set under the country's National Ambient Air Quality Standards (NAAQS), for which the Department of Forestry, Fisheries and the Environment is responsible for enforcing.

However, Wet FGD is also listed as having the highest upfront capital cost of R56-billion, compared with R48-billion for Semi-Dry FGD and R15-billion for Dry FGD.

The total 45-year project lifetime cost for Wet FGD, meanwhile, was outlined as being a nominal R383-billion, the recovery of which would potentially add 4c/kWh to the electricity tariff.

Across all three FGD technologies, the BCA ratios are well below one, suggesting that the monetised value of health benefits is lower than the required capital and operating expenditure for FGD.

Eskom's proposed alternatives are based partly on these costs and the poor BCA ratio, as well as its assessment of the measured ambient air quality across the Waterberg Bonjanala Priority Area between 2022 and 2024, which indicates "general compliance with NAAQS indicating that the airshed is not saturated".

The health benefits of these alternatives were thus focused more on the Highveld rather than in the Waterberg.

The capital costs for the six alternative scenarios in the draft range from R5-billion to R11-billion, and include:

an air quality offset programme involving the expansion of a clean cooking initiative to 96 000 households in close proximity to coal stations that currently use dirty fuels;the retrofit of Arnot, Camden, Grootvlei, Hendrina and Kriel power stations with small modular nuclear reactors (SMRs);the building of solar, wind, battery and pumped hydro across six sites;the installation of so-called high-efficiency, low emission (HELE) circulating fluidised bed combustion technology at Hendrina, Grootvlei and Duvha;the introduction of coal beneficiation and efficiency improvements at all Eskom's coal stations to reduce emissions; andthe installation of post-combustion carbon capture utilisation and storage (CCUS) technologies.

The draft report indicates the clean cooking offset programme as having the highest BCA ratio for both particulate emissions and SO2 reductions, but questions have been raised about the long-term sustainability of such offsets.

Positive health benefits were also indicated for the renewables and SMR alternatives, but these were not fully quantified in the form of a BCA ratio, as the study did not consider the power generation benefits.

Negative ratios were provided for the HELE, coal beneficiation and CCUS alternatives, while the draft report also highlights that several of the technologies that have been considered are pre-commercial in nature.

Various alternative interventions, including substitute technology solutions, were raised during the virtual public consultation process.

Renew-e managing partner Etienne Rubbers argued, for instance, that Eskom must be prepared to invest the capital that it would otherwise need to spend on...

The World Bank Group has approved $350-million, or about R5.6-billion, to capitalise South Africa's new credit guarantee vehicle (CGV), which is being established to mobilise private finance for public infrastructure without requiring additional government guarantees.

The World Bank board of executive directors' approval of the 'South Africa Blended Finance Platform for Resilient Infrastructure Program' opens the way for establishing the CGV, which the International Bank for Reconstruction and Development will help capitalise through the $350-million in approved funding.

The CGV will be a private non-life insurance company, regulated by the Prudential Authority, and the National Treasury has already announced that it will inject seed equity of R2-billion into the vehicle, giving it a minority shareholding.

"Investment in infrastructure is central to South Africa's efforts to restore growth and create jobs," World Bank division director for South Africa Satu Kahkonen said in a statement confirming the approval.

"This operation supports the government's agenda by helping mobilise private investment for infrastructure that improves services, strengthens competitiveness, and expands economic opportunity," she added.

The CGV will issue market-based credit guarantees that will help derisk investment in infrastructure, crowd in private capital, and reduce reliance on sovereign guarantees, the bank explains.

It adds that, over a ten-year period, the programme could mobilise about $10-billion of capital (about R160-billion), including capital from private investors, commercial lenders and institutional investors, generate about 997 000 direct and indirect jobs, and support a lowering of carbon emissions.

The CGV's initial focus will be projects aimed at expanding the country's electricity grid infrastructure, but its scope will be broadened in future to include water, freight logistics, education and health infrastructure.

South Africa has initiated an independent transmission project procurement programme, but has delayed the release of a request for proposals to seven pre-selected consortiums so that the bid window can coincide with the launch of the CGV later this year.

The pre-qualified bidders will compete to build 1 164 km of powerlines and associated substation infrastructure across seven preselected corridors; projects that are expected to have a combined investment value of about $1-billion.

In his February Budget speech, Finance Minister Enoch Godongwana said the CGV would be incorporated as a company in the coming months, once development partners had confirmed their capital participation.

"Thereafter, the CGV will apply for a licence from the Prudential Authority. We are targeting the CGV to be operational later this year," the Minister added, a timeframe he reiterated when the World Bank approval was confirmed.

Engineering News editor Terence Creamer discusses power utility Eskom's discounted tariff offer to two ferrochrome companies and the need for transparency on how this offer will be structured and financed.

Leading South African independent power producer Anthem has announced that its giant 475 MWac (620 MWdc) Notsi solar PV project in the Free State has advanced to financial close after concluding private offtake agreements with electricity traders Discovery Green and NOA Group.

The R9-billion transaction has been supported by a consortium of lenders, including Standard Bank, Nedbank, ABSA and Vantage GreenX Note.

Anthem is the lead developer, generator, majority equity participant and long-term operator of the facility, and the Reatile Group is Anthem's equity partner in the project.

Notsi follows a multi-offtaker wheeling model, making use of agreements with Eskom to wheel power over the national grid through 20-year-plus offtake agreements with traders Discovery Green and NOA Group.

It further highlights the increasing role of traders in supporting new generation projects; a trend that was underlined in a recent South African Energy Traders Association report showing that most of the more than 1 GW of new projects that reached financial close in 2025 were backed by trader offtake commitments.

The two traders will sell the electricity to large and small businesses across a range of sectors, including industrial, retail, mining and farming enterprises. Discovery Green, which has contracted for 290 MW, has also confirmed that some of the electricity will be allocated to Ampli Energy, its joint venture with Sasol that offers month-to-month supply deals to small companies.

Spanning more than 1 000 ha, equivalent in size to about 1 000 rugby fields, Anthem says Notsi ranks as the largest solar PV project in South Africa. It will comprise over 860 000 solar panels and have a yearly energy output of about 1 500 000 MWh.

A China Energy Engineering Corporation-Northwest Electric Power Design Institute JV has been appointed as the engineering, procurement, and construction contractor, while Anthem will assume the operations and maintenance responsibilities post year two of operations.

Construction is expected to be completed within 26 months.

IMMENSE SIZE

Anthem CEO James Cumming says Notsi has been developed at an "immense size" to provide low-cost wholesale power to the private market, while also ensuring it can amortise the significant grid upgrades the project is building on behalf of Eskom and the National Transmission Company South Africa.

"The scale and strategic relevance of Notsi epitomises the progress of solar energy wheeling in South Africa," he adds, arguing that the multi-offtaker wholesale model represents the future of energy security in South Africa.

Anthem, which was launched in 2025 following the integration of African Clean Energy Developments and EIMS Africa under the African Infrastructure Investment Managers-managed IDEAS Fund, with the Mahlako Energy Fund and Norfund, now has more than a gigawatt of wind and solar projects for private offtake in operation or under construction.

This is in addition to the renewables capacity it has built following public procurement bidding rounds, which translates to a portfolio of more than 2.7 GW across 17 operating wind and solar projects. It also has an 11 GW greenfield pipeline.

Discovery Green CEO Andre Nepgen says the Notsi project will introduce significant new renewables capacity onto the grid at a time when businesses are prioritising long-term price certainty and a clear pathway to decarbonisation.

He also notes that the project is permitted for a battery energy storage system and that Discovery Green is considering other hybrid and flexible generation to balance variable renewable electricity, where the commercial case makes sense.

"Projects of this scale enable Discovery Green to offer businesses, whether big or small, access to globally competitive energy prices without investing themselves or taking unnecessary risk," Nepgen asserts.

NOA Group CEO Karel Cornelissen describes the Notsi project as an important milestone in its work to "aggregate renewable energy f...

South Africa has the potential to capitalise on a domestic industrial hemp market opportunity valued at R40-billion by 2040; however, this requires proper industry development and policy support, a new industrialisation study published by the Localisation Support Fund (LSF) in partnership with the Presidency, the Industrial Development Corporation and the Department of Trade, Industry and Competition has found.

The study outlines a path for hemp industrialisation to become a meaningful driver of reindustrialisation, diversification, decarbonisation, export growth and inclusive rural economic development across the country.

Commissioned by the LSF and undertaken by strategy and advisory company Zageta Solutions together with the Development Policy Research Unit at the University of Cape Town, the study builds on previous work and aligns with the objectives of the National Cannabis Master Plan.

Globally, the hemp market is projected to grow from about $10-billion in 2025 to $37-billion by 2032.

Presenting key findings from the study at the launch in Johannesburg on March 4, the study authors said the domestic industry is projected to grow from R7.3-billion in 2025 to R17.7-billion by 2030, and R40.4-billion by 2040.

Diverse agro-ecological zones and a counter-seasonal production cycle would enable South Africa to supply global markets year-round, filling gaps left by Northern Hemisphere producers.

Importantly, the country's established manufacturing clusters in automotive, textiles, pulp and paper and food processing provide ready-made demand pathways for hemp-derived inputs, lowering the barriers to commercial scale-up.

As a later entrant, South Africa can also bypass the costly trial-and-error phase that slowed early adopters, instead designing value chains that are competitive and standards-aligned from inception.

The country can also leverage its role as a continental trade gateway under the African Continental Free Trade Area.

Since 2022, South Africa has issued 1 725 permits, granting legal cultivation rights across 29 000 ha of land, primarily in Gauteng, KwaZulu-Natal and the Eastern Cape.

The study cautions that the absence of industrial-scale processing infrastructure, especially in primary processing, is the most critical bottleneck to sector growth.

Also, regulatory fragmentation, especially the need to clearly separate industrial hemp from intoxicating cannabis in legislation, continues to constrain investment and industry development.

The study identifies five priority industrial pathways where South Africa's hemp sector should concentrate its early development efforts.

The food and beverage sector has been identified as the most immediately accessible, with grain-based products such as hemp milk, flour and edible oils integrating readily into existing oilseed and food-processing platforms.

Personal care, which encompasses hempseed oil-derived creams, serums and wellness products, offers similarly low entry barriers and strong alignment with the country's existing manufacturing base, lending itself to small, medium and micro enterprises.

Pulp and paper presents a strategic opportunity to absorb underused straw biomass through biodegradable packaging and cellulose-based materials, leveraging established technology already from the forestry sector.

The remaining two priority pathways point toward longer-term industrial scale.

General textiles are highlighted as ideal for non-woven and technical applications that can use fibre from dual-purpose grain crops without requiring the highest processing standards.

Building and construction, driven by global decarbonisation imperatives, focuses on materials like hempcrete and insulation, with hemp hurds accounting for roughly 65% of the stalk offering substantial volumetric supply potential.

The five pathways were selected because they share a common profile, mainly, strong and growing demand, proven or adaptable technology and realistic prospects for localisation within S...