State-owned freight logistics group Transnet insists that it has made "considerable progress" in implementing reforms in line with government policy changes. It also argues that government guarantees remain crucial for it to proceed with its capital investment programme, while also refinancing maturing debt, accessing funding and maintaining sufficient liquidity.

Transnet made these assertions in response to questions posed by Engineering News following the publication of a letter by Business Leadership South Africa CEO Busisiwe Mavuso in which she argued that the entity was "resisting change and moving too slowly".

Mavuso also linked a recent S&P Global downgrade of Transnet's credit rating both to its financial predicament, as well as a lack of reform progress. She also urged government not to approve further bailouts and/or guarantees, unless the conditions were made stricter.

"Private sector partnerships (PSPs) in ports and rail concessions must be accelerated.

"Companies are ready to invest in our logistics infrastructure, but they need certainty that political interference and Transnet's resistance won't undermine their investments," Mavuso wrote.

Transnet is already trading with the support of a R47-billion government guarantee extended in 2023, and a further R51-billion guarantee facility was recently approved.

In response, Transnet said the reforms were a focal point in its strategy to improve operational efficiency and included steps to corporatise the Transnet National Ports Authority and the Transnet Rail Infrastructure Manager, while disposing of noncore assets.

This commercial separation of the port and rail infrastructure from operations is designed to enable open access to the network, including by introducing private train operating companies into freight rail.

"The integration of the private sector through PSPs is an important element of the reform process.

"This is in line with our efforts to modernise rail assets, such as locomotives and freight wagons, and optimise rail operations by leveraging private-sector efficiency and capital," Transnet said in its response.

It said it welcomed the recent conclusion of the Department of Transport's request for information process to gauge market interest for PSPs in selected rail and port infrastructure and operations.

"Private sector participation in key freight logistics corridors such as those for iron-ore and manganese exports represents a proactive and strategic move towards the revitalisation of the country's freight logistics infrastructure."

However, it also underlined the importance of the government guarantees, arguing that they enabled Transnet to fund much-needed capital investment, which was necessary for modernising ageing infrastructure and improving port and rail efficiencies.

"The government guarantees will be deployed to ensure that the appropriate level of liquidity is maintained to service all Transnet's obligations."

The group stressed that its immediate priority was on actively implementing focused interventions to enhance its operational and financial performance.

"These measures will enable Transnet to deleverage its balance sheet and focus on optimising its capital investment programme to restore the network."

Transnet also underlined its participation in the National Logistics Crisis Committee (NLCC), which had been set up to collaboratively address South Africa's transport and logistics challenges.

It described the NLCC as a "structured and appropriate forum for Ms Busi Mavuso to contribute to constructive dialogue and problem solving".

President Cyril Ramaphosa has offered an optimistic assessment of the economic reforms being undertaken in South Africa's electricity and freight logistics sectors, amid growing concern about the pace of progress with regard to opening the country's railways and ports to competition and signs of potential stalling in the electricity sector.

In his weekly letter, Ramaphosa highlighted the release of the latest progress report on Operation Vulindlela, the scope of which was recently widened by the Government of National Unity to include municipal recovery, digital services and spatial equality components.

The initiative previously focused on addressing unreliable electricity supply, inefficient rail and ports, high data costs, water-licence backlogs, and a visa system that had deterred investors and tourists.

Linking the reduction in loadshedding over the past year to the reforms, Ramaphosa said that, during the second wave of Operation Vulindlela there would be accelerated moves to introduce competition in electricity generation to introduce greater choice for consumers and drive down costs.

"As part of this process, work is under way to establish an independent Transmission System Operator (TSO) within the next five years, in line with the Electricity Regulation Act.

"We have also made significant progress towards enabling greater investment in our transmission network, including from the private sector, with regulations to govern these investments."

However, recent developments in the electricity industry have also raised concerns that the pace of reforms is slowing, with Eskom showing a willingness to exercise its market dominance and with the National Energy Regulator of South Africa (Nersa) still not adequately capacitated to shepherd through the regulatory changes needed for the transition.

Recent developments in relation to electricity trading have provided some visibility of the problems that are emerging, with Eskom having objected to the most recent licensing of traders and having excluded traders from using its newly launched virtual wheeling platform.

While Eskom has consistently expressed its commitment to reform, and the National Transmission Company South Africa (NTCSA) is making significant progress in establishing the South African Wholesale Energy Market, the utility has also argued that an orderly transition should be based on established rules, which it says are not yet in place.

In response, Nersa has belatedly announced a process for establishing trading rules by June next year; a development which Eskom has told Engineering News was an "important step forward in the evolution of the electricity industry in South Africa".

Nevertheless, the utility has not withdrawn is threat to seek a legal review of the licences, telling Engineering News that the legal application had not been issued earlier because not all reasons for decision (RFD) had been published by Nersa.

"The six-month review period to challenge the Nersa decision starts to run from the date of publishing the RFDs, of which Eskom's external attorney are busy finalising."

TUSSLE OVER TSO

Some commentators have also expressed concern about the pace of unbundling at Eskom, which is meant to be separated into Eskom Generation, the NTCSA and the National Electricity Distribution Company of South Africa in line with a 2018 roadmap.

While NTCSA has been legally separated, it has not yet been fully unbundled to form the independent TSO referred to by Ramaphosa and there is also still much haggling over the future of the transmission assets.

The transfer of these assets to NTCSA is likely to be key to ensuring that it has the balance sheet to finance the much-needed expansion of the network.

In light of this tussle, Ramaphosa's emphasis on the need for an independent TSO could be a signal that he wants Eskom's management to continue to embrace the reforms that are seen as key to accelerating private investment and competition in the sector.

Meanwhile, t...

The Ford dealership network will see a R900-million-plus investment rollout over the next three years.

The money will not be spent by Ford, but by its partners and dealership owners, such as Motus, NMI and Super Group.

Ford Motor Company of Southern Africa (FMCSA) network operations manager Kuda Takura says the investment follows a rework of Ford's dealer design language.

The goal is to have an open, transparent facility that is less transactional, and with increased focus on customer relationships, social interaction, merchandise, accessories and lifestyle.

The US car-maker's in-house research shows that new-vehicle sales can increase by 26% at upgraded dealerships, with profits on average up 27%.

The three-year investment programme will kick off with 20 projects this year to the value of R292-million; 18 projects next year to the value of R300-million; and 19 projects in 2027 to the value of R310-million.

Ford has 118 dealers in Southern Africa and a vehicle parc of 527 000 vehicles. The group also has an engine, as well as vehicle assembly plant, in South Africa, and is one of the country's big-three auto exporters.

When considering local sales, the blue oval was number four in the local market for the first six months of the year.

Ford Motor Company Africa president Neale Hill says the dealership investment programme comes amid a "very, very competitive landscape", with the local market witnessing a plethora of new market entrants.

He believes the investment will serve as a boost for the 103-year-old company's competitiveness in the local market.

While the South African new-vehicle market has seen sales increase by 13.5% in the first six months of the year, Ford could not quite match this tempo, with sales up 7.9%.

Hill notes that the company had been lean on Ranger pickup inventory early in the year, with the situation improving from April onwards.

He adds, however, that the brand is still not "where we want it to be".

FMCSA sales operations director Ryan Searle notes that Ford has no vehicle on offer in the highly popular below-R500 000 category.

According to Hill, there is also no new Ford small car in the pipeline to ensure future participation.

Safeguard Local Manufacturing Hill regards the global automotive industry as finding itself in a "very interesting state of flux", with new brands increasingly doing battle with established brands, and petrol and diesel being challenged by new propulsion options.

US President Donald Trump has now also added to this already volatile mix by throwing "a rooikat" among the pigeons with his raft of tariff introductions.

"There is a lot of turmoil and it will take a while to settle down," says Hill.

"We [Ford South Africa] are not affected by the US tariffs, as we do not export to the US."

He warns, however, that the 25% tariffs imposed on South African-made vehicle and parts exports to US is of major concern to the local automotive industry in general, as well as the domestic economy.

He also warns against domestic auto industry production being displaced by imported goods, as this is the country's largest manufacturing base. "Once you lose your automotive manufacturing sector, you never get it back."

Engineering News editor Terence Creamer discusses the National Energy Regulator of South Africa's (Nersa's) start of a belated process to finalise rules for electricity traders and what this says about the state of South Africa’s energy transition and the regulator.

In a belated move, the National Energy Regulator of South Africa (Nersa) has announced an 11-month process to set rules for electricity trading, having already licensed ten trading entities, while also preparing to hold hearings on three more licence applications in August.

In terms of the timeline presented by the regulator, the intention is to have the rules Gazetted by June next year, and Nersa confirmed that that traders that were already licensed would continue operating while the rules were being finalised.

In a statement, Nersa indicated that it had the statutory authority, in line with Section 35 of the Electricity Regulation Act, to formulate a broad spectrum of rules governing the electricity supply industry, including electricity trading rules and import and export trading rules.

"These rules are designed to create a fair and balanced framework for electricity traders, supporting the structured growth of the electricity supply industry," Nersa said in a statement, arguing that the initiative would support a competitive and transparent electricity market.

The regulator would also seek to provide "clear guidelines for participation, compliance criteria and responsibilities for licensed traders, whether they own physical distribution assets or not".

"The development process will involve thorough research, benchmarking, engagement with stakeholders, public hearings and workshops to ensure a comprehensive and inclusive approach," it added.

It also outlined the following estimated timelines:

The presentation, in August, of position papers by members of a working group set up to develop the rules;Two working group sessions in September and October;A workshop, in November, on draft trading rules;A trading rules submission to the Nersa approval process also in November;A cross-border trading rules submission for Nersa's approval process in March 2026; andThe final Gazetting of the rules in June 2026.

The regulator's move to define the rules for trading follows a surprise indication from Eskom late last year that it intended to initiate a High Court review of Nersa's decision to grant four additional trading licences in what it described as its area of supply.

This, despite the fact that Nersa had already started approving trading licences in 2014 and had licensed five trading entities before Eskom's objection to the four additional licencees.

That legal process was yet to begin and it was not immediately clear whether Eskom would hold off now that Nersa had initiated a process to define the rules for trading.

Interestingly, the regulator is scheduled to hold hearings in August as part of an adjudication of yet more trading licence applications from Pioneer Power Trading, Nomusize and Red Rocket Trading.

To date licences have been approved for: PowerX, EnPower Trading, Neura Trading, Energy Exchange of Southern Africa, Envusa Trading, CBI Electric Apollo, Discovery Green, Green Electron Market and GreenCo Power Services. GreenCo Power Services has also been granted a cross-border electricity trading licence by Nersa.

In addition, Eskom Holdings' own National Transmission Company South Africa (NTCSA) also successfully applied for trading and cross-border trading licences from the regulator as part of its legal separation process.

Energy commentator Chris Yelland, of EE Business Intelligence, said establishment of a nearly one-year rule-setting process, more than ten years after having started licensing traders, raised questions, including about the role that the regulator was playing in helping South Africa advance beyond loadshedding to a more progressive electricity supply industry.

Yelland said it also raised a separate question about how long Nersa would require to approve the Market Code needed for the launch of the South African Wholesale Electricity Market, which is slated to be launched in April next year.

The NTCSA has also applied for a Market Operator licence, which still needs to be adjudicated by Nersa.

Eskom reports that repowering projects with a combined capacity of 5 GW are currently under development across six coal power station sites and that it is aiming to implement 2 GW by 2026, mostly through public-private partnerships (PPPs).

In a presentation to the Portfolio Committee on Electricity and Energy, the State-owned company said the projects formed part of the repowering component of its Just Energy Transition (JET) strategy, which was also central to "kickstarting" a broader aspiration to introduce 20 GW of clean generation by 2040.

Group executive for generation Bheki Nxumalo reiterated that the JET strategy - which involved both 'repowering' the sites using renewables, battery and even gas technologies, as well as 'repurposing' of power station assets for alternative economic activities, such as training, manufacturing and farming - had been decoupled from the coal shutdown plan to create "breathing space" for better planning and implementation.

The decoupling followed criticism that the closure of the Komati power station took place before the repowering and repurposing projects were fully funded or ready for implementation.

It has also been facilitated by the fact that Eskom received permission from government to continue to operate Hendrina, Grootvlei, Arnot, Camden and Kriel, which were meant to have been decommissioned during the 2020s, at existing minimum emission standards plant limits until March 31, 2030.

Group executive for renewables Rivoningo Mnisi revealed that, besides Komati, JET strategies had been approved for Hendrina, Camden, Grootvlei, and were at an advanced stage for Arnot and Kriel.

At Komati, where the repowering plan involved 122 MW of solar PV and a 150 MW battery energy storage system (BESS), contractors had been shortlisted for the supply and installation of a 72 MW solar PV plant and 150 MW BESS facility, with contract awards expected in the coming months.

However, Mnisi described developments at Grootvlei as "a living example of how JET should be implemented", explaining that the repowering and repurposing initiatives had been divided into two phases, with the first phase to proceed ahead of the plant's 2030 retirement.

For instance, the plan to build 195 MW of solar PV at the station had been broken into two, with the first 100 MW to be implemented by 2029 together with a 150 MW BESS project. The second 95 MW of solar PV would be implemented after the dead stop date for the station, where Eskom was also aiming to introduce two synchronous condensers; a technology that will help maintain grid stability as the penetration of variable renewable energy rises.

A similar staged approach would be adopted for the repurposing projects, which included a 5-ha climate-smart horticulture centre, a 15-ha commercial agricultural project, a training centre, and possible ash beneficiation projects.

Likewise two-phase development planning is under way at the other four stations to ensure the emergence of new electricity and non-electricity activities prior to decommissioning, and with plans to scale these up further following the ramp down of the final units.

Eskom again confirmed that the repowering initiatives being developed at the four stations included:

800 MW of solar PV at Arnot by 2030, alongside 200 MW of BESS and 168 MW of wind;680 MW of solar PV at Camden by 2028;587 MW of solar PV at Hendrina by 2028; and800 MW of solar PV at Kriel by 2030, together with 200 MW of BESS and 1 000 MW of gas to power.

Wind and BESS projects were also being developed for Camden and Hendrina.

Mnisi indicated that, owing to Eskom's balance sheet constraints, the projects would be pursued as PPPs and could involve blended finance that included both development and commercial finance.

"What is key is how we go to market with these initiatives and one of the key things we are working on very closely is around our PPP model," he reported.

"From what we see, there is no shortage of funding to support the clean-ene...

A strong global push towards using fully electric buses in cities, coupled with South Africa's lethargic progress - if any - towards clean fuel, may soon leave local city councils with no alternative but to buy electric buses, says MAN Truck & Bus South Africa (MAN SA) CEO Jan Aichinger.

South Africa's emission and fuel standard is set at Euro II, however, the global production of city buses using this level of dirty fuel may soon come to an end in favour of much cleaner and/or electric buses.

The European new-bus market is already at 50% battery electric year-to-date, says Aichinger, and this number is expected to reach 100% by 2030.

China has an even higher percentage of electric buses in use. As of 2024, battery electric, hybrid electric and fuel-cell electric city buses accounted for almost 100% of the Chinese new-bus market.

Also, Europe, currently at Euro VIe (the fourth enhancement of Euro VI standards), is set to go to Euro VII by 2027.

India and Brazil are at Euro VI, Russia is at Euro V and China is at China VI, which is equivalent to Euro VI, says Aichinger.

"South Africa is maybe going to Euro V in 2027 - nothing seems sure," says Aichinger.

"The problem is that nobody is going to keep on developing Euro II city buses for a very small right-hand-drive bus market buying small batches of vehicles, all with different specifications - high-floor for Rea Vaya in Johannesburg and smaller, low-entry for MyCiTi in Cape Town, for example.

"We, as a local industry, want to supply the local market with products of international standards, i.e. Euro V or Euro VI buses, which does not make sense if the equivalent fuel quality cannot be guaranteed.

"The authorities urgently need to roll out these standards.

"If South Africa imports more than 80% of its petrol and diesel, why are we not importing cleaner fuel?" he adds.

"Why order pizza with pineapple if you hate pineapple?"

Aichinger's remarks come as the City of Cape Town says bus companies have been alarmingly unresponsive to tenders for internal combustion engine (ICE) buses.

"These days, to build city buses in small batches, will take much longer than South Africa's local governments provide for in their traditional tender windows," notes Aichinger.

MAN SA is the local arm of the German truck and bus group. The company has a local bus chassis assembly plant in KwaZulu-Natal, as well as a bus-body-building operation in Gauteng, with a localisation of more than 90%.

Within the global MAN group, less than 10% of production are Euro II products.

"Only a fraction of the market is Euro II, and it's disappearing fast, which means there is no longer any research-and-technology spend to improve this technology; to improve these vehicles' fuel consumption," says Aichinger.

"This leaves South African operations at a disadvantage to most of their global peers as they are forced to pay more for fuel."

Cue the MAN Electric Bus MAN SA can still build its front-engine Euro II commuter bus, such as those found at eThekwini Transport or Golden Arrow Bus Services, but local governments procuring rear-engine city buses for operations such as MyCiTi and Rea Vaya may soon have no other choice but to go electric.

"City buses will soon all be electric - it is inevitable," says Aichinger. "This type of operation is the easiest use-case for electric vehicles, as it needs only one charge point, located at the depot.

"All of the journeys are also clearly mapped out and highly predictable, with a morning and afternoon peak and charging opportunity in the middle of the day."

In an effort to respond to changes in the local market, MAN SA has developed the MAN Lion's Explorer E in partnership with its German parent company.

The Explorer E is MAN SA's first fully electric commuter bus, with the option for this to also be transformed into a city bus.

"The beauty of electric buses is that they are far more modular than ICE vehicles, as you have far fewer moving parts," explains Aichinger.

Of the three unit...

Econometric modelling of the impact on South Africa of US tariffs - including the proposed 30% reciprocal tariff on all non-exempted goods, the 25% tariff on automotives and automotive components, and the 50% tariff on steel, aluminium and copper - indicates that yearly South African exports to America could decline by between $1.4-billion and $2.3-billion.

In 2024, South Africa exported goods to the US valued at $14.9-billion.

EY tax partner Duane Newman reports that its modelling suggests a potential fall in exports of between $1.4-billion and $1.6-billion yearly in 2024 prices. While Professor Lawrence Edwards, of the University of Cape Town's School of Economics, says its analysis points to a potential loss of $2.3-billion once the higher tariffs imposed on South Africa relative to competitor exporters are also taken into account.

Worryingly, the tariff figure imposed on South Africa could rise to 40% should President Donald Trump follow through on his threat to impose an additional 10% on countries that support the "anti-American policies of BRICS", of which South Africa is a member.

"Our real concern here is what our tariffs are relative to competitors, and if the competitors get lower tariffs compared to us, we could find that the export losses are accentuated," Edwards explained during a webinar held after Trump's July 7 letter to President Cyril Ramaphosa indicating that reciprocal tariffs would be implemented on August 1.

XA Global Trader Advisers CEO Donald MacKay, who hosted the webinar, noted that the US was an important market for South Africa, representing 8%, or R157-billion, of the country's yearly exports of R1.8-trillion. By contrast, South African exports to the US accounted for a mere 0.44% of America's yearly imports of R61.5-trillion.

While a good portion of the value of South Africa's exports were in the form of critical and precious minerals and metals currently exempted from the proposed 30% duty, exports subjected to existing and proposed US tariffs affected 1.3% of GDP.

Automotive and automotive parts, which were attracting tariffs of 25% under Section 232 of the Trade Act and which would not change should the 30% tariff be introduced next month, were seriously affected. While agricultural products such as citrus were vulnerable not only to the reciprocal tariff, but could lose further competitiveness should countries such as Chile and Peru face tariffs into the US that are significantly lower than the 30% to 40% now faced by South Africa.

However, Lawrence also highlighted the importance of the US to other smaller exporters, given that about 80% of the about 2 500 different products exported to the US would be subject to the reciprocal tariff, should it be implemented.

Lawrence, thus, encouraged the South African government to continue with its diplomatic efforts to avert the August 1 reciprocal tariffs given that Trump had left the door open in his letter for adjustments. This, despite South Africa's failure to secure concessions until now.

The country could also make unilateral moves to signal its intent to deal with some of the long-standing concerns raised by the US in relation to poultry, pork and beef and could even consider extending market access that was at least equal to what was currently available to EU and UK firms.

Newman added that South Africa could also seek to replicate the deal that the UK had reached with the US in relation to automotive exports, which included a quota allowing the first 100 000 cars exported to America yearly to enter under a 10% rather than a 25% tariff.

However, Newman also suggested that South African firms should begin preparing for a future where tariffs were increasingly the norm.

He argued that this would require a return to basics by initiating reviews of their vendor, customer and intercompany agreements on valuation, alongside customs classifications and rules of origin, so as to find ways of navigating what was poised to be a more protectionist era.

The South African Photovoltaic Industry Association (SAPVIA) is expecting the domestic market to recover this year to the record installation levels achieved two years ago, following a marked slowdown last year.

CEO Dr Rethabile Melamu tells Engineering News that installations fell by more than 50% to about 1 GW in 2024/25, covering the period from April 1 to March 31, from 2.4 GW in 2023/24.

The drop was most pronounced in the residential sector, which shrunk by more than 60% during the period, following substantial growth during South Africa's most intensive loadshedding years.

Residential, commercial and industrial (C&I) and private utility-scale installations have climbed to about 6 GW, with most of that capacity having been installed over the past five years when South Africa's power cuts became an almost daily or twice-daily occurrence.

That surge has contributed materially to the rise in the country's overall installed base to about 9 GW; a figure that stood at close to zero when SAPVIA was formed 15 years ago by its founding six members in anticipation of the first public procurement of renewables projects. Melamu reports that the organisation's membership currently stands at 701, having peaked at 783 in April 2024.

LARGE PROJECT UNDERPIN

SAPVIA, which monitors market activity using information collected from its members, alongside information provided by the regulator and academia, anticipates that installations could match the 2023/24 peak this financial year.

This recovery, Melamu reports, will be supported primarily by large C&I projects, both distributed and wheeling projects, as well as utility projects procured under government's Renewable Energy Independent Power Producer Procurement Programme.

However, there are also signs of a recovery in the residential market, spurred by rising Eskom and municipal tariffs, and the fall in prices for PV modules, batteries, and inverters. As an indication, 550 W PV modules are currently being sold for about R2 000 a unit, whereas their price was closer to R4 000 three years ago.

SAPVIA's bullish outlook is premised partly on an analysis of PV project registrations with the National Energy Regulator of South Africa, which reached nearly 15 GW by the end of June, with t 67% of these registered projects being solar PV based.

Melamu acknowledges the difficulties in tracking how many of these projects have advanced to construction and/or financial close, but says the accuracy of its market intelligence is being continually updated and enhanced by direct input from members, as well as through tracking by the University of Cape Town Business School, which is also monitoring developments in the pipeline.

The anticipated recovery is in line with SAPVIA's view that the South African PV market can sustainably add between 1.5 GW and 2 GW yearly across the three main market segments of residential, small C&I installations of below 30 kW, and large C&I and utility-scale installations.

The anticipated growth in the large C&I segment is being driven partly by the fact that these projects, which were conceived at the height of loadshedding, had matured to the point of a final investment decision. Most of these projects continue to be supported economically by the rise in tariffs and the fall in prices, and strategically because of moves by firms to decarbonise their production in response to consumer pressure or in anticipation of carbon border adjustment mechanisms in key export markets.

MARKET UNCERTAINTY

These tailwinds are expected to persist, but Melamu says there are also several uncertainties that could affect the outlook beyond 2025/26, including:

The possibility of lower-than-anticipated allocations to solar PV in the updated Integrated Resource Plan (IRP) post-2028, which is expected to be approved by Cabinet in the coming months;

Changes to the tariff structure that could unfairly discriminate against both small rooftop PV and electricity wheeled from utility plants;

Onerous and...

Electricity and Energy Minister Dr Kgosientsho Ramokgopa has provided the outline for an overhauled universal access strategy that employs a blended financing approach to electrify, by 2030, the more than 1.6-million households in South Africa that still do not have access to electricity.

Speaking in Parliament, Ramokgopa said the new model would move beyond the traditional grid-centric approach that had hitherto dominated South Africa's multi-decade electrification programme, so as to include micro- and off-grid technologies.

While 8.4-million households had been electrified under the previous model, raising electrification levels from 36% in 1994 to 94% in 2024, the momentum had slowed in recent years, and the Minister said a renewed effort was required.

The idea would be to use various technology solutions to address long-standing electrification backlogs, particularly in the Limpopo, Eastern Cape, and KwaZulu-Natal provinces, and especially in informal settlements, peri-urban areas and rural towns.

The new "comprehensive universal access strategy" was the outcome of a review by the Department of Electricity and Energy and would adopt a "coordinated, technology neutral framework that accelerates access delivery, integrates grid and non-grid solutions, and institutionalises implementation partnerships across all three spheres of government".

The new model would involve three core reforms, including: the consolidation of all access programmes under a single hybrid planning and funding framework; the tackling of overloaded or under-capacitated networks to facilitate load growth; and the integration of off-grid and micro-grid solutions, especially in rural areas and informal settlements.

"The universal access strategy reframes electrification as a developmental and rights-based obligation, rather than a legacy infrastructure backlog."

In addition, the funding model would be adapted to take account of the reality that the "scale of the challenge far exceeds the available fiscal envelope".

Under the strategy, government is proposing a repurposing of the Integrated National Electrification Programme (INEP) grant into a universal access grant, as well as to support the creation of a new blended-finance facility in collaboration with the National Treasury and development finance institutions.

A total of R13-billion had been allocated to INEP for the coming three years.

While INEP funding had traditionally been transferred to Eskom and municipalities to support electrification projects, Ramokgopa indicated that the funds could, in future, be used as a de-risking instrument to crowd in developmental and concessional finance, as well as private investment.

"By using public funds to de-risk private investments we are creating an infrastructure finance facility that will allow us to front-load the capital needed to accelerate roll-out."

The aim was to mobilise the financing, including debt financing, needed to accelerate the electrification roll-out in high priority provinces and municipalities, while creating a predictable project pipeline that was attractive to institutional investors.

"This approach positions universal access as a bankable development investment with measurable returns in health, education and economic participation," he asserted.

To ensure affordability, meanwhile, the department was reviewing the electricity pricing policy with he goal of creating a differentiated pricing structure "that protects vulnerable households, whilst also supporting large power users with internationally competitive tariffs for electricity intensive, locally beneficiated exports".