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Transnet Freight Rail (TFR) will release a request for proposals (RFP) on April 1 for the sale of slots to private operators on the key container corridor linking Gauteng and Durban, as well as parts of the Cape corridor.

The State-owned utility tells Engineering News that it is in the process of finalising the number of slots to be made available during the first phase of the initiative, which is designed to arrest what has been a steady decline over several years, but which worsened considerably during the Covid lockdowns.

The initial focus will be on mainline slots, but some of the feeder lines connecting into the container corridor could be considered subject to the completion of an analysis of what the network is able to accommodate.

TFR says the slots will be sold through an open-market process, on a take-or-pay basis, and will be awarded to operators deemed to be “operationally ready or operators who can start operating within a month of the award process”.

Allocations will also favour operators that best utilise the maximum train configuration, with the current train carrying capacity being 100 TEUs, or twenty-foot equivalent units.

TFR’s current infrastructure mainly accommodates electric locomotives on the mainline, but the use of diesel locomotives is being investigated in light of high levels of cable theft.

The use of diesel locomotives is largely dependent on the tunnels and ventilation.

“TFR will release the RFP on 1 April 2022 and thereafter the normal open-market process will follow,” the utility said in response to questions posed by Engineering News after President Cyril Ramaphosa announced in his State of the Nation Address that Transnet would make slots available on the container corridor between Durban and City Deep.

The corridor is currently running at a loss, while on-time arrival of trains averages 20% and train running time averages 36 hours against an 18-hour design.

The unpredictability of service is undercutting TFR’s revenue and also negatively affecting the port system with containers arriving outside of the three-day stack window.

“The overall competitiveness remains a challenge hence we believe that the introduction of private operators will strengthen and densify the corridor, enhance efficiencies and contribute to growth in key sectors of the economy,” TFR explains.

As part of the initial roll-out to third-party operators, slots will be sold for a fixed period of a year, but TFR says it is still in the process of finalising the pricing and commercial access framework.

The policy for rail access is currently being finalised by the Department of Transport and Transnet reports that it is making its submissions and input through "set governance channels”.

The utility stresses that the slot sales do not represent a concession and that payments will most likely be on a monthly basis, similar to current commercial arrangements with RovosRail, which already uses the network.

TFR, thus, intends to continue funding the infrastructure maintenance requirements from its operating budget.

“However, where we are unable to meet the obligations due to funding, we will explore alternative funding mechanisms and options.”

Based on TFR’s analysis of current and projected volumes, the City Deep terminal is deemed to have adequate capacity for any additional volumes that could arise as a result of the initial slot sales.

In time, however, the existing terminal capacity may become inadequate and further inland terminal capacity may be required.

Transnet has pulled back from any immediate involvement in the Tambo-Springs inland terminal, which suffered a setback in February when the High Court interdicted, based on environmental concerns, the construction of the K148 road, a key access road for the project.

Transnet tells Engineering News that the contract with the Tambo Springs Consortium was terminated on contractual terms and that it also referred the matter to the Special Investigating Unit for investigation....

In spite of South Africa’s construction sector being one of the country’s slowest-growing sectors of the last decade, economic consultancy Econometrix chief director and economist Dr Azar Jammine remains optimistic that, following the National Budget Speech earlier this week, the South African government has reiterated its commitment to investing in infrastructure spend.

The announcement of the Economic Recovery and Reconstruction Plan in 2020 included 51 projects, worth R340-billion. This subsequently increased to include an additional 55 well-defined projects, worth R595-billion at the time the Medium-Term Budget Policy Statement was published in November 2021.

Taking this into account, Jammine tells Engineering News that “if only a small fraction of these projects see the light of day, it will still have an enormous impact in boosting overall capital investment and improving the delivery of services in South Africa”.

To put it into perspective, he explains that even if only R5-billion of the cumulative R935-billion pipeline materialises, it is equivalent to 126% of yearly total fixed investment in the country which, if spread out across ten years, will amount to a 12.5% increase in capital investment.

In turn, this would boost economic growth by 2% a year and result in the creation of thousands of new jobs.

Jammine comments, however, that “one can only hope” that the projects materialise, as it has the potential to be “the most important and relevant” game changer in the South African economy.

Former South African Finance Minister Trevor Manuel, meanwhile, suggests that one should be more cautious when considering the lead time for these projects, as most of the planned infrastructure projects would require the acquisition of land for service and require adequate planning.

“It’s frequently impossible to do this with a lead time that’s shorter than three years before equipment is on site. And the worrying thing is that [South Africa] tends to follow the announcements, which come before the three-year lead time,” he tells Engineering News, stressing that discussions need to be held to “shorten the timeframe” on these projects.

“I think we underspend on all kinds of infrastructure, roads and bridges and even our energy infrastructure. When we do spend, we overspend, and no country can spend on that basis. We need to build into the efficiencies of spending and ensure that it’s not just infrastructure spend, but that it’s efficient infrastructure spend, which creates employment and provides economic outputs in the present,” Manuel elaborates.

AfriSam sales and marketing director Richard Tomes, meanwhile, says the gaps in infrastructure across the nation are also largely affected by the country’s skills shortage.

“Things aren’t looking positive, and it’s largely because of the lack of actual infrastructure spend that has caused large [construction] companies to find themselves where they are,” he comments.

However, Jammine comments that the relationship between the private sector and the government in terms of cooperating to implement such infrastructure projects, has improved.

“I believe the government itself has experienced a change in the last year or so in terms of wanting to embrace the private sector more actively to assist in implementing projects.

“The government has come to recognise that it itself is not capable of carrying through with these projects on its own, and it was one of the most the most forceful aspects of the State of the Nation Address of President [Cyril] Ramaphosa when he said that it's the private sector that creates jobs, not the government,” Jammine explains.

He suggests that what the private sector must now do is “to try and engage government more actively” because, theoretically, the private sector should receive a far better reception than has been the case in the past.

“With its superior skills, [the private sector] should be able to actually ensure more work for itself and more success in actu...

The Competition Tribunal has conditionally approved the acquisition of Imperial Logistics by DP World.

DP World is ultimately controlled by the Dubai government. The conglomerate has been steadily expanding into Africa over the last few years.

The tribunal says the transaction for 100% of Imperial Logistics was “unlikely to substantially prevent or lessen competition in any market in South Africa”.

However, the deal has been approved subject to public interest-related conditions.

This includes the establishment of an employee share ownership programme (Esop) through which employees in South Africa will have a 5% interest in Imperial Logistics South Africa Group (ILSA), a subsidiary of Imperial Logistics.

Within 24 months of the merger implementation date, the new entity is to establish an Esop through which Imperial employees (excluding top and senior management) will benefit from an interest in ILSA through an employee trust.

Imperial employees will not be required to pay to participate in the Esop.

The Esop shareholding should also not substitute the existing historically disadvantaged persons shareholding in ILSA.

Imperial Logistics will also increase its enterprise and supplier development expenditure in South Africa, as well as its spend on corporate social responsibility initiatives and the training and development of black persons and procurement from black persons, says the Tribunal.

Imperial has also committed to incur capital expenditure of no less than R2.1-billion in South Africa over four years, ending June 30, 2025.

The tribunal also notes that no Imperial Logistics employees may be retrenched as a result of the acquisition for a period of three years from the implementation date.

The transaction is to be implemented on March 14.

Imperial is to delist from the JSE on March 15.

Gateway to Africa

“We are excited about concluding this transaction, which will be value-enhancing for our people, clients and principals, for our service offering across the markets we serve, and for our other key stakeholders who will benefit from DP World’s leading technology, capabilities, global networks, scale and key trade-lane volumes, while enabling us to build on our Gateway to Africa strategy and growth ambitions,” says Imperial Group CEO Mohammed Akoojee.

“Combining DP World’s world-class infrastructure, specifically its investment and expertise in ports on the African continent, with Imperial’s logistics and market access platforms, will enable us to offer integrated end-to-end solutions along key trade lanes into and out of Africa,” he adds.

“We are excited to conclude our acquisition of Imperial, which has a significant presence in Africa, a market where trade is expected to grow at more than twice the gross domestic product, driven by population growth, accelerated urbanisation and rising middle classes,” says DP World CEO and chairperson Sultan Ahmed Bin Sulayem.

“Imperial’s capabilities in market access and logistics and its extensive African and European footprint will complement and enhance our growth aspirations.”

Mineral Resources and Energy Minister Gwede Mantashe says he expects Eskom to make an application soon for a Section 34 determination to facilitate gas-to-power generation at some of the coal power stations that the utility aims to repower and repurpose as part of its unfolding just energy transition strategy.

Speaking during an energy dialogue hosted by the Central Energy Fund (CEF) and the Financial Mail, Mantashe indicated that the determination would be “in addition” to the 3 000 MW allocation for gas-to-power in the Integrated Resource Plan of 2019 (IRP 2019), which outlines the new electricity generation to be introduced to the system by 2030.

The Minister did not provide details on how an Eskom determination would be accommodated, saying only that it would give it the “right to procure gas generation as they are repurposing some of their plants in Mpumalanga”.

“Some of those power stations will replace coal turbines with gas turbines [and] reduce carbon emissions dramatically in the process,” Mantashe said at an event that attracted a vocal contingent of fossil-fuel advocates.

Eskom has stated that it has a ‘repowering’ project pipeline of 8 000 MW, including a potential 1 000 MW gas project, which could be implemented at one of the power stations scheduled for decommissioning.

The Komati, Camden, Grootvlei and Hendrina coal stations are scheduled for closure this decade.

Earlier, energy and chemicals group Sasol announced that it had signed a draft term sheet for the delivery, from 2026, of liquefied natural gas to Mpumalanga, through Mozambique’s Maputo port.

The gas would be used for Sasol’s own transition away from coal, but it has been speculated that some molecules could also be used for electricity as well as to shore up supply to industrial users mostly in Gauteng as imports from the Pande and Temane fields tapered.

Sasol has indicated, however, that it views gas as a transition fuel and that it intends to progressively introduce green hydrogen at its facilities in order to meet its own net-zero commitments.

Mantashe noted that the CEF, working with Coega Development Corporation, had issued a request for proposals (RFP) for a gas aggregator to secure the liquified natural gas necessary for gas-to-power generation, for which a separate RFP would be issued before the end of the year.

Under the Electricity Regulation Act, the Minister, in consultation with the National Energy Regulator of South Africa (Nersa), issues Section 34 determinations to facilitate government’s procurement of new generation capacity.

Besides a determination for 3 000 MW of gas, which was issued in September 2020, Mantashe has also already published determinations for 6 800 MW of wind and solar photovoltaic, 513 MW of battery storage and 1 500 MW of new coal.

Controversially, he also received Nersa’s conditional concurrence last year for a determination for the procurement of 2 500 MW of new nuclear generating capacity, despite there being no allocation for new nuclear in the IRP 2019.

The Nersa concurrence is subject to several suspensive conditions, including establishing, through a demand and generation profile analysis, the rationality of adding 2 500 MW of nuclear post-2030.

“We are addressing the suspensive conditions from Nersa that will enable the Department of Mineral Resources and Energy to issue a RFP for 2 500 MW of nuclear energy,” Mantashe said.

Warnings about the high cost of, and the lack of funding for, new nuclear and new coal were batted away, as were the concerns that the introduction of high levels of imported and domestic gas into the South African mix could result in stranded assets and reduce the competitiveness of South African exports as carbon tariffs were introduced by countries with net-zero emission targets.

Instead, Mantashe said that South Africa could not be an “island of angels when we are drifting into poverty”.

“We are committed to implementing a rational energy transition that addresses our national in...

Forestry, Fisheries and the Environment Minister Barbara Creecy has welcomed the announcement by Finance Minister Enoch Godongwana that government plans to progressively increase the carbon price every year to reach $20/t of carbon dioxide equivalent (CO2e) by 2026, $30/t of CO2e by 2030 and $120/t of CO2e by 2050.

“This policy trajectory for the carbon tax really will be very helpful in allowing us to achieve the Nationally Determined Contribution that we submitted for 2025 and 2030 to the United Nations in October last year,” she noted.

Speaking at the launch of the Mapungubwe Institute for Strategic Reflection’s (Mistra’s) new research publication ‘A Just Transition to a Low Carbon Future in South Africa’ on February 24, Creecy said the global transition to a low-carbon economy had already begun and that South Africa needed to keep pace if it wants to remain competitive.

“Countries that are investing significantly in low-carbon technologies will seek to protect these investments with a range of non-tariff and border tax adjustments. Unless we join the technological transition that is taking place across the globe, our economy risks being left behind,” she said.

If South Africa fell behind, the country would face redundancy and non-competitive exports owing to the high-carbon footprint inherent in South African production processes.

Despite the sense of urgency, Creecy said the extension of the first phase of South Africa’s Carbon Tax by three years to December 31, 2025 – announced in Godongwana’s Budget speech on February 23 – would allow government time to ensure the relevant “architecture” is in place and also to allow the National Assembly to properly consider the Climate Bill.

“There’s always been concerns raised around carbon budgets, carbon tax and all of these kinds of transitional agreements. I think that what this is doing is giving us a bit of space . . . so that we can sort out all the mechanisms and modalities,” she told Engineering News.

Carbon budgets are required by the United Nations Framework Convention on Climate Change (UNFCCC) but carbon tax is a domestic measure that is not required by the UNFCCC.

“Part of what we’ve got to work out is how these two things will work together and I think that the extension of the current jurisdiction gives us a bit of space to do that because we’re not sure how long it’s going to take for the Climate Bill to go through the National Assembly,” Creecy added.

She noted that, were it up to her, the Climate Bill would be passed by the end of the year.

Creecy said that, in the meantime, government had produced and adopted a national decarbonisation adaptation strategy and that it was working with provinces and municipalities across the country to “mainstream climate resilience”. This was to ensure that all the work needed over the next 10 to 15 years to improve climate resilience in South Africa was mainstreamed into planning and into budgeting, she said.

Mistra’s new publication aims to address all of these issues, broadening the discourse on how South Africa might effect a just transition to a low-carbon transition and explore the opportunities in, and impediments to, making the transition fair, affordable and socioeconomically viable.

South Africa has adopted a just transition framework and set a path for the low-carbon transition as outlined in the National Development Plan and the Integrated Resource Plan. However, it remains critical to interrogate how South Africa can ensure a just transition to a low-carbon economy.

The core focus of the research is the shift from the traditional economic development pathway that focuses solely on economic growth towards one that also considers the environment and broader society.

“A critical element in the discourse is about a disastrous impact of global warming on the poor. However, depending on how it is handled, the transition to a low-carbon future can itself further worsen the conditions of life of the marginalised. It is ther...

German premium car manufacturer Audi has officially launched its e-tron range in South Africa.

The range of electric vehicles (EVs) includes three e-tron 55 derivatives, the e-tron 55 Sportback, e-tron S Sportback, and the pinnacle of the line-up, the high-performance models in the form of the e-tron GT and RS e-tron GT.

“Never has any automotive brand anywhere in the world launched this many electric vehicles in one go,” says Audi South Africa head Sascha Sauer.

“By accelerating our transition towards e-mobility, we are fully embracing Audi’s global mission in transforming towards a provider of premium sustainable mobility, in line with our brand’s global commitments towards the Paris Climate Agreement.”

Audi says its transition towards electric mobility has yielded positive results for the e-tron model range around the world already.

This is evident in Audi’s fully electric car deliveries in 2021, which increased by 58% year-on-year.

Additionally, Audi more than doubled its product portfolio of fully electric models in the past year.

“From 2022 onwards, Audi South Africa is committed to grow the e-tron model range locally. [We’ll] introduce at least one new electric model each year, to grow consumer choice and to demonstrate our commitment in securing a leading EV position within the premium automotive market from the start here in South Africa,” says Sauer.

The Audi e-tron 55 First Edition

As part of Audi’s e-tron launch efforts, an e-tron 55 First Edition will be available for sale in South Africa from the second half of the year through Audi’s ten e-tron dealerships nationwide.

The e-tron 55 First Edition will be available in limited numbers and for a limited time. This model will start from R1.75-million and is the entry point into the e-tron range at launch.

As with all Audi e-tron models, the first edition model is supported by a five year/100 000 km Audi freeway maintenance plan and an 8 year/160 000 km battery warranty.

Pricing for the e-tron range is as follows:

The e-tron 55 First Edition – R1.75-million

The e-tron 55 Advanced – R1.99-million

The e-tron 55 S line – R2.04-million

The e-tron 55 Sportback S line – R2.11-million

The e-tron S Sportback – R2.42-million

The e-tron GT – R2.71-million

The RS e-tron GT – R3.3-million

The Energy Regulator announced on Thursday that Eskom’s tariff would rise by 9.61% on April 1, an increase that is less than half the 20.5% hike for which Eskom had applied.

The tariff decision includes allowable revenue of R250-billion, against the R293-billion for the year outlined in Eskom’s submission to the National Energy Regulator of South Africa (Nersa) in July last year.

Once converted into a retail tariff, the outcome is a surprise sub-inflation increase of only 3.49%.

The 6.12% balance is made up of legacy revenue decisions, including several regulatory clearing account determinations, which will be liquidated during the financial year.

The Energy Regulator which made the decision on February 24, a day ahead of the deadline set by the court to do so after Nersa initially rejected the Eskom submission in September last year, is the Nersa board and the structure legally responsible for allowable revenue determinations.

Full-time regulatory member for electricity regulation Nhlanhla Gumede said the allowable revenue approved by the Energy Regulator arose as a result of several adjustments to Eskom’s application.

The most significant of these was a R555-billion downward revision to the State-owned utility’s regulated asset base, which Nersa revalued to R703-billion against Eskom’s R1.3-trillion valuation.

The revaluation, which Gumede said was conducted as part of Nersa’s discretion when making revenue decisions, also affected the depreciation amount, with R42-billion approved for depreciation, instead of the R68-billion for which Eskom applied.

Nersa’s reversal of the negative return of -1.2% applied for by Eskom to “smooth the increase” fell well short in offsetting these two lower amounts; this even after granting Eskom a 1.08% return, which triggered a R22-billion swing in Eskom’s favour, from -R15-billion to a revenue amount of R7.5-billion.

Another significant amount disallowed related to Eskom’s application for R5.6-billion to address arrear debt.

Following consultations with various government departments, Nersa said it had been decided that the issue should be addressed outside of the regulatory framework so as not to penalise those who were already paying for their electricity.

Gumede said a “whole of government effort” was required to address this “real cost to Eskom”, especially given that many of those owing money were government departments and municipalities.

Nersa also reduced the amount that Eskom could recover from independent power producers (IPPs), mostly because electricity meant to be supplied from Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) generators would not be introduced during the upcoming financial year.

This decision was reflected in a R9.5-billion reduction, to R43-billion, in the allocation to Eskom to pay for electricity generated by IPPs that has been procured by government.

A R5.9-billion decrease, to R80-billion, in what was approved for primary energy partly reflected the higher coal and diesel use that would arise to offset the absent RMIPPPP volumes.

The diesel amount approved was based on a load factor of 3.5% for the open cycle gas turbines, which is higher than the 1% initially applied for but below the 7% that Eskom argued was necessary to offset the risk of load-shedding.

Gumede said the “single-digit increase” sought to strike a balance between the needs of Eskom and those of the economy and consumers.

“Considering the state of our economy and the interests of consumers, the overall tariff increase for 2022/23 will be contained below 10%,” he added.

ESKOM TO STUDY FINANCIAL IMPLICATIONS

Eskom CFO Calib Cassim said that the financial implications of the decision on Eskom’s long-term sustainability would need to be further assessed once the reasons for decision were published – Nersa has 60 days in which to publish its reasons.

“The Eskom board will deliberate further before deciding on how to continue to sustainably provide electricity to the ...

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the highlights of Finance Minister Enoch Godongwana's maiden Budget speech.

Finance Minister Enoch Godongwana has reiterated his commitment to clamp down on State-owned entities (SOEs) that are draining the fiscus with bailouts.

Delivering his Budget 2022 speech on February 23, he pointed out that more than R308-billion had been directed towards bailing out failing SOEs.

In 2020/21, SOEs made limited progress in their reforms and most of the companies deferred their capital investment projects for the time being.

The Minister noted that government would reduce the continual demands on South Africa’s limited public resources from SOEs and rather nudge them to develop and implement sustainable turnaround plans.

“The future of SOEs is under consideration by the Presidential SOE Council. Their future will be informed by the value they create and whether they can be run as sustainable entities without bailouts from the fiscus.

“Some SOEs will be retained, while others will be rationalised or consolidated,” he said.

The National Treasury would outline the criteria for government funding of SOEs during the upcoming financial year, he added.

DENEL & SAA

Unsurprisingly, the Treasury has announced that defence group Denel was still struggling to meet its obligations as they fall due.

Government had allocated the military and aerospace equipment manufacturer R3-billion in the current financial year to cover capital and interest payments on guaranteed debt.

Denel’s guarantee facilities decreased to R3.4-billion after R2.5-billion lapsed following the cancellation of its Egyptian missile contract and the maturity of R1-billion of its debt.

The Budget 2022 document states that broader alignment is required between the departments of Defence and Public Enterprises, as well as the Treasury and other relevant stakeholders to agree on Denel’s future.

This would enable Denel to enter into a strategic equity partnership, dispose of noncore assets and consolidate operations.

In the case of South African Airways (SAA), R16.4-billion had been set aside in 2020 for the local airline over the medium‐term expenditure framework period to settle State‐guaranteed debt and interest costs.

To date, government has paid R14.6-billion of this amount, with the remaining R1.8-billion to be paid in 2022/23.

In addition, the 2020 Medium Term Budget Policy Statement allocated R10.5-billion to SAA in 2020/21 for the implementation of a business rescue plan. The Department of Public Enterprises aims to finalise the partial sale of SAA to an identified strategic equity partner this year.

The carrier started scheduled flights in September 2021, in line with plans for a conservative re‐entry into the domestic and regional markets. It intends to re-introduce long‐haul routes in the second half of this year.

Finance Minister Enoch Godongwana confirmed that Eskom will receive a further R88-billion in government support until 2025/26 and that a comprehensive debt solution was still being explored for the financially unsustainable State-owned electricity producer.

The support comes in addition to the R136-billion already provided or committed to enable the utility to pay back its debt, which currently stands at close to R400-billion.

The utility has argued on several occasions that its debt position would be sustainable only if it was halved to about R200-billion.

Godongwana acknowledged that a portion of Eskom’s debt was “distressed” but said that further support would be contingent on the utility demonstrating turnaround progress and taking self-help measures.

“We expect Eskom to take steps towards cost containment, conclude the sale of assets and implement operational improvements to enhance the reliability of electricity supply,” the Minister said, while describing the utility’s current performance as being worse than it was when the electricity crisis first emerged in 2008.

He also argued that more attention needed to be given to fixing the electricity supply industry than to fixing Eskom alone, adding that more private investment was required to do so.

Repeating his “tough love” mantra, he said that Eskom and other State-owned companies in distress could not expect “blanket” support from the National Treasury and that every request for support would be treated on its own merits.

“We acknowledge, however, that Eskom is faced with a large amount of debt that remains a challenge to service without assistance.

“The National Treasury is working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders.”

The Minister describe the search for a solution as legally and technically complex and said the outcome would be announced within the next financial year.

Meanwhile, the National Treasury confirmed that Eskom’s guarantee exposure increased by R29.6-billion to R327.9 billion in 2021/22 owing to additional drawdowns.

Government’s total amount for approved guarantees is expected to decrease by R21.5-billion to R560.1-billion by the end of March 2022, with associated exposure estimated to increase by R32.1-billion to R416.8-billion.

Eskom accounts for 78.7% of these guarantees.