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The Lesotho Highlands Development Authority (LDHA) has advertised the tender for the construction of the Polihali Transfer Tunnel, with the tender advertisement for the construction of the Polihali dam expected in due course.

Interested construction firms have until August 30 to submit tenders.

“Our objective is to attract firms with experience in the construction of major underground works under complex geological and geotechnical conditions, diverse environmental conditions, in remote areas and at high altitude. Equally important is to attract firms that have impeccable records in delivering projects of this magnitude within budget and the set timeframes,” LHDA CEO Tente Tente said.

With the water delivery scheduled for 2027, timeous construction of the dam and transfer tunnel is critical to meeting the water delivery deadline of the project.

The 38-km-long Polihali Transfer Tunnel, with a 5 m nominal bore, will transfer water by gravity from Polihali to the Katse reservoir. Tunnel boring and drill and blast methods will be used to excavate the tunnel.

The Polihali dam will create a reservoir on the Senqu and Khubelu rivers with an estimated surface area of 5 053 ha and a full supply storage capacity of 2.325-billion cubic metres.

The flow from the Polihali reservoir through the transfer tunnel will increase the volume of water in the Katse dam.

“The current water transfer volumes of 780-million cubic metres a year to the Gauteng region of South Africa will incrementally increase to 1.27-billion cubic metres a year, and will simultaneously increase the electricity generation at the ‘Muela hydropower plant, a further step in the process of securing an independent power supply to meet Lesotho’s domestic needs,” he said.

The Metsi a Senqu-Khubelu Consultants (MSKC) joint venture, which comprises Lesotho-based FM Associates and South African firms Zutari, Hatch Africa, Knight Piesold and SMEC South Africa, was awarded the contract for the design and construction supervision of the Polihali Transfer Tunnel and its secondary structures.

“The tender for the construction procurement of the transfer tunnel is launched as construction activity on ten advance infrastructure contracts progresses steadily, with some contracts expected to be completed in 2021, including the Polihali diversion tunnels,” Tente added.

Cumulative excavation progress in both tunnels is in the order of 1 243 m out of a total of 1 810 m to date. Construction of the 33 kV line, which will provide temporary power supply to the Polihali village, was completed in 2020.

Work on the 132 kV line has advanced with construction of access roads, 91 tower foundations and the erection of 84 towers out of a total of 93.

The Polihali and Katse civil works, access roads, pipe laying for potable water and sewerage lines has been completed, and construction on the Phase II main access roads is progressing well.

South Africa’s renewable-energy procurement programme, which finally resumed again on April 12 following a seven-year disruption, continues to attract strong interest with some 800 people, including representatives from over 300 registered bidders, participating in a virtual bidders conference on Wednesday convened to focus on the qualifying criteria for participation in the fifth bid window.

Besides attracting over 580 South African participants, including representatives from the Department of Mineral Resources and Energy, the National Energy Regulator of South Africa and Eskom, the conference was also attended by delegates from Egypt, India, Germany, France, Italy, Korea, Japan, China, Singapore, Russia, Ireland and Norway.

During the previous four bid windows of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which involved a total of seven rounds between 2011 and 2014, South Africa procured a total of 6 422 MW from 112 independent power producers and attracted investments of nearly R210-billion.

Of these projects, 76 are currently operational, with those procured during the fourth bid window currently entering into production. These projects reached financial close only in 2018, after Eskom refused, between 2015 and 2018, to enter into new power purchase agreements, claiming a return to a surplus position.

The utility’s current leadership is far more supportive of the REIPPPP, seen as crucial to helping close a prevailing supply deficit of at least 5 000 MW, which together with an unreliable coal fleet, has made the system prone to load-shedding.

In 2020, South Africa endured its most intensive year of load-shedding, despite a Covid-linked demand slump, with 1 798 GWh shed at an estimated economic cost of between R80- and 160-billion.

IPP Office head Bernard Magoro told participants to the conference that the fifth bid window, during which 1 600 MW of onshore wind and 1 000 MW of solar photovoltaic (PV) capacity would be procured, represented the start of an intensive procurement phase for the coming 12 months, during which four additional programmes would be launched.

Besides a sixth REIPPPP bid window for a further 2 600 MW of wind and solar PV capacity, which would be opened in August, the IPP Office would open bidding for 3 000 MW of gas-to-power (December), 1 500 MW of new coal (December) and 513 MW of battery energy storage (August).

In parallel, it was aiming to ensure that projects procured under the controversial Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) reached commercial close by the end of July. The 2 000-MW programme was facing a legal challenge, however, which could result in a delay.

Magoro said prospective bidders for the fifth bid window had until July 16 to submit final written questions ahead of the August 16 bid submission date.

Preferred bidders would be named in either October or November, with commercial and financial close scheduled for February or March. The projects then had 24 months to enter into commercial operation, or face penalties.

Qualifying wind and solar PV projects could have a minimum contracted capacity of 1 MW, while the maximum contracted capacity would be 140 MW for wind and 75 MW for solar PV.

PASS OR FAIL CRITERIA

The bids would be evaluated using a three-part methodology, with projects proceeding to ‘Part C’, only if they meet the criteria set out under ‘Part A’, which includes general requirements and the rules for procurement, and ‘Part B’, which outlines minimum qualification criteria, including economic development criteria such as meeting local content and broad-based black economic empowerment (BBBEE) thresholds.

Bids that meet the criteria set out in Parts A and B will then be assessed using government standard 90/10 comparative evaluation breakdown, with price counting for 90% and BBBEE contributor status 10%.

The approach differed from the 70/30 price-to-BBBEE formula applied previously under the REIP...

Freight logistics group Transnet expects to proceed with three private sector participation (PSP) projects before the end of the year, with Public Enterprises Minister Pravin Gordhan confirming that the State-owned group’s new strategy is to drive volume growth “by developing key strategic partnerships in its core segments”.

Delivering his Budget Vote address on Tuesday, Gordhan said the transformation and reconfiguration of Transnet was under way to position it to meet the mandate outlined in South Africa’s Economic Reconstruction and Recovery Plan.

The plan prioritises the construction of social and economic infrastructure, including transport infrastructure, as part of South Africa’s recovery from years of economic stagnation that had worsened substantially as a result of the Covid-19 pandemic.

Gordhan indicated that investments worth about R100-billion were required to improve the country’s freight logistics networks and to reposition the Port of Durban “as an African and Indian Ocean hub for containerised cargo”.

Some of the new infrastructure would be delivered using a PSP model and Transnet CEO Portia Derby indicated that expressions of interest would be released to the market once all authorisations were secured.

She did not provide specifics, but said: “We have committed that at least three of the transactions get done in this financial year.”

Besides repositioning the Port of Durban, which a recent World Bank report ranked a lowly 349 out of 351 container ports assessed for its Container Port Performance Index 2020, with the Port of Ngqura ranking last, Gordhan said the PSP projects could involve both branch and mainline rail networks.

In his recent Budget Vote speech, Deputy Finance Minister David Masondo reported that some progress had been made in improving operations at the Port of Durban since the World Bank study was carried out, but that there was “still a long way to go to make our container ports internationally competitive”.

Masondo said a provision in the National Ports Act of 2005 for the corporatisation of the Transnet National Ports Authority was aimed at providing it with a degree of independence to enable it to treat all port operators equally and to invest its profits in the ports.

“However, there has also been policy contention within government regarding implementation of this structural reform, with the potential benefits in terms of port competitiveness being weighed up against the financial risks to Transnet.

“Together with the Department of Public Enterprises, Operation Vulindlela has been carrying out research on the implications and advantages and disadvantages of this structural reform, with a view to assisting Cabinet to reach a decision on this matter as soon as possible,” Masondo reported.

Meanwhile, Gordhan said that, in addition to container and automotive growth strategies, Transnet was enhancing its export growth capability in the bulk sector, focusing on mega corridors through the road-to-rail initiatives.

Questioned as to whether the road-to-rail battle had not already been lost on the Durban-to-Gauteng corridor, Derby acknowledged that it was the “hardest corridor to operate”.

However, she remained adamant that there were opportunities for Transnet to capture market share and reported that it had already managed to secure new manganese, chrome and grain volumes.

“[But] it is difficult, especially with cable theft where the route design from City Deep to Durban for a train is 20 hours and, because of cable theft, it can take us up to 38 to 40 hours.”

The use of locomotives on the corridor was also being “complicated” by cable theft, which was challenging Transnet’s previous assumptions regarding the mix of diesel and electric locomotives on the network.

“With the amount of cable theft that we are experiencing we are having to rethink how much diesel we have in the system . . . and if we increase diesel, we walk away from our strategy to also deliver decarbonisation.”

However, Der...

The Department of Water and Sanitation (DWS) has set aside R1.1-billion over the medium-term expenditure framework (MTEF) period for the refurbishment of the Vaal River wastewater treatment plants.

A further R700-million, over the MTEF period, has been set aside to add more capacity on the sewer network.

The years-long pollution of the Vaal river has been a significant challenge threatening the Vaal River System, which spans three provinces and two countries, and necessitating intervention by the department.

Government plans to invoke Section 63 of the Water Services Act, which would see the DWS taking over water and sanitation services within the jurisdiction of the Emfuleni local municipality.

The DWS has been in discussions with and received the concurrence of Cooperative Governance and Traditional Affairs Minister Dr Nkosazana Dlamini-Zuma and Gauteng Premier David Makhura , with the support of Deputy President David Mabuza , to intervene.

“We are, all three spheres of government, in agreement that this should be done and we have already put in place steps to implement this, pending Cabinet agreement,” said Water and Sanitation Minister Lindiwe Sisulu .

The plan will soon be presented to Cabinet for further guidance and endorsement.

“Emfuleni municipality as a water service authority will be taken over by the national government and Rand Water has been appointed as the implementing agent to take full responsibility of operations and maintenance of the municipality’s water and sanitation infrastructure. Coupled with this is the refurbishment of the wastewater systems,” she continued.

The department is finalising the appointment of contractors to urgently address the dire situation and undertake the upgrade of the Vaal River infrastructure to prevent sewage spills.

The tenders were advertised in November, with closure in January, for the expertise required in the areas of civil engineering, mechanical engineering and consultants to implement the work.

“We have already started putting out requests and advertising for engineers.”

Speaking during the department’s budget vote on May 25, she said, however, that the problem will not be solved with infrastructure capacity only.

“What has got us to where we are in the Vaal crisis can be grouped into three pillars: infrastructure, governance and institutional capacity and finance. There are additional factors, such as other provinces contributing to the crisis, resulting in the continued state of pollution of the Vaal River.”

The river’s geographic position and flat topography resulted in the Vaal becoming a “collection point” from various sewer points and putting excessive strain on operation and maintenance of pumps at stations.

“Ideally, sewer treatment is a municipal service that requires costs recovery as a minimum.

“However, the high unemployment and dwindling revenue collection in the Vaal area is making it difficult for the Emfuleni municipality to recover any costs or generate an income to cover operation and maintenance, let alone expansion of the treatment plants,” she added.

Meanwhile, Sisulu tabled an estimated MTEF budget allocation for the DWS of R16.9-billion for 2021/22, R17.4-billion for 2022/23 and R18.03-billion for 2023/24.

The final departmental appropriation budget for the financial year ended March 31, 2021, was R16.99-billion, the expenditure of which amounted to R14.5-billion, representing 85% of the total adjusted appropriation.

Public Enterprises Minister Pravin Gordhan reported on Tuesday that, while Eskom was able to reduce its debt by R83-billion, from R484-billion to R401-billion, during the 2021 financial year, efforts to find a lasting solution to the State-owned utility’s unsustainable debt remained a “work in progress”.

Gordhan told lawmakers that the management of Eskom’s debt was one of the key priorities to return the entity to a sustainable path, but in a subsequent media briefing acknowledged that “we haven’t been able to move as fast as we thought we might be able to move”.

He said the process for deliberating on a solution was an interactive one, involving Eskom the Department of Public Enterprises, the Public Investment Corporation and the National Treasury, and had been negatively affected by Covid-19 restrictions.

“There are some concrete proposals on the table in this regard,” Gordhan insisted, but did not commit to any timeframe for the finalisation of a solution.

Eskom CFO C alib Cassim said that Eskom remained reliant on transfers from the National Treasury, but that, during the 2021 financial year, it had been able to reduce its overall debt holdings to R401-billion.

The reduction was achieved partly as a result of Eskom repaying more (R65-billion) than it raised (R15-billion) and partly as a result of favourable foreign exchange conditions during the year.

The forex benefit could be sustained in the current year should the rand remain strong, but Cassim stressed that conservative hedges remained in place.

He said the current strategy was to continue to borrow less than it was due to repay over the coming five years, which would be facilitated by maintaining a tight rein on capital expenditure over the period.

“Within the borrowing plan we have also assumed [ongoing] government support to help us meet our maturity profiles in terms of our debt-service commitments.”

70% EAF TARGET

Speaking as Eskom announced that the risk of load-shedding had increased again, owing to the fact that 14 857 MW was unavailable due to breakdowns and 2 220 MW as a result of planned maintenance, Gordhan said that government was insisting that the utility improved the performance of its coal fleet.

He said the target remained for Eskom to improve the fleet’s energy availability factor from about 63% currently to “70% and beyond by the end of the year”.

Meanwhile, Gordhan announced that Eskom had made progress towards “functional restructuring”, with the divisionalisation of the utility into separate generation, transmission and distribution entities to be concluded by June 30.

“A total of 9 400 employees have been relinked with power stations with 6 773 employees moved from corporate functions to divisions in readiness for legal separation,” he reported.

The legal separation of the transmission company would be completed by December 31, followed by the legal separation of the distribution and generation companies, still under Eskom Holdings, by December 31, 2022.

KOMATI TO BE JUST-TRANSITION PILOT

The Minister expressed support for Eskom’s “just energy transition strategy” and confirmed that the repurposing and repowering of the Komati power station was being prioritised as a pilot project under the strategy.

Several development finance institutions had expressed an interest in providing both funding and technical support for the Komati project, which Gordhan said should be implemented in a way that safeguarded the livelihoods of the workers and communities that would be affected by the closure of the power station.

Quoting from the International Energy Agency’s recently released ‘Net Zero by 2050’ report Gordhan said “clean energy transitions must be fair and inclusive, leaving nobody behind”.

He stressed, however, that South Africa needed to rapidly embrace renewable technologies in line with the Integrated Resource Plan’s indication that there should be 18.2 GW of renewables in the country’s electricity mix by 2030.

“South Africa can emerge as a ...

The organisation whose initial analysis indicated that reforming Schedule 2 of the Electricity Regulation Act to exempt embedded generation projects of at least 50 MW in size from the country’s cumbersome licencing process could unlock 5 000 MW of new capacity within five years has made its formal submission on a draft amendment to the legislation.

In the submission, Meridian Economics warns that South Africa’s electricity crisis is worsening and that the immediate capacity shortfall of between 4 000 MW and 8 000 MW is hindering South Africa’s economic recovery.

It also warns that there could be delays in the implementation of government’s utility scale procurement programme, with the powership-heavy Risk Mitigation Independent Power Producer Procurement Programme facing a legal challenge and with the renewables procurement programme running about a year behind schedule.

Meridian argues that facilitating a substantial uptake of embedded or distributed generation projects expeditiously “presents the largest quick-win to address part of this shortfall and alleviate the large economic cost of power shortages”.

It notes that there is widespread support for lifting the current Schedule 2 licence-exemption threshold to at least 50 MW, despite the draft amendment published by Mineral Resources and Energy Minister Gwede Mantashe on April 23 proposing that the exemption be increased from 1 MW to only 10 MW.

Meridian noted that this support has been expressed in various public statements by Eskom, Minerals Council South Africa, numerous industry groups as well as the Congress of South Africa Trade Unions.

“Lifting the licence-exemption threshold will send a clear and important market signal to project developers and investors that government is inviting investment and implementing the necessary reforms to facilitate the process.”

It again argued that the reform would support the introduction of some 5 000 MW of capacity over the coming four to five years, which would be sufficient to add an additional 11 000 GWh a year and go a long way to addressing the country’s electricity shortage.

“Raising the threshold to only 10 MW will limit the embedded generation investment case by restricting the licence exemption to smaller, more expensive projects with a limited number of customers, lower economic viability and this may deter several potential investors and financiers,” Meridian warns.

Besides lifting the threshold, Meridian argues that the amendment to Schedule 2 should also include the following:

allowing licence-exempt facilities to sell to multiple customers and aggregators; defining ‘’own use” projects as a specific project category that is exempted from licensing; and accommodating ‘interconnected’ projects in the licence exemption.

The submission stresses that none of its recommendations have implications for technical and environmental permitting of embedded generation projects, which are not dealt with under the National Energy Regulator of South Africa’s exemption schedule, but by separate authorities.

“Generation projects will still need to demonstrate technical and environmental compliance, enforced by Eskom or municipal distributors, and the relevant environmental department.”

In addition, Meridian stresses that these projects will not impact Eskom negatively in the near-term, as they will inject additional power on to the grid that will allow Eskom to reduce its use of expensive diesel-fired peaking turbines and create more opportunities for the utility to optimally utilise its pumped storage assets.

“Furthermore, ramping up the number of customer wheeling agreements will see a new revenue stream for both Eskom and municipalities, which generate income through wheeling charges.”

The submission also states that the reform could be significant for South Africa’s economic recovery, as the installation of 5 000 MW of embedded generation could result in investment of between R75- and R85-billion and create between 12 000 and 16 ...

Public Works and Infrastructure Minister Patricia de Lille and Special Investigating Unit (SIU) head Advocate Andy Mothibi on May 24 launched the new Infrastructure Built Anti-Corruption Forum (IBACF).

They were also joined by Public Prosecutions Deputy National Director Advocate Rodney De Kock and Infrastructure South Africa (ISA) head Dr Kgosientsho Ramokgopa .

The IBACF is an initiative by the Anti-Corruption Task Team, government and civil society, together with the built environment sector.

It will monitor infrastructure projects more effectively and put systems in place to detect and prevent corruption.

The initiative comes at a time when South Africa has embarked on the implementation of the Infrastructure Investment Plan approved by Cabinet in May 2020. Cabinet also approved the establishment of ISA as the administrative arm responsible for monitoring the implementation of the plan.

The establishment of this IBACF is in line with the National Anti-Corruption Strategy which was approved by Cabinet in November 2020 to help step up the fight against corruption and fraud in the country.

The forum also aligns with one of the seven key priorities of the sixth administration, which is to build a capable, ethical and developmental State.

“Corruption within the built environment has run rampant for too long. The State has structures in place but government cannot do this work alone and that is why we have brought the private sector, public entities and civil society together in this forum so that we can work on more effective ways to detect, prevent and act against corruption,” De Lille said.

“Anyone involved in corrupt activities and found guilty of such must face consequences. They must face the full might of the law. We must work together to put an end to this scourge because corruption steals from the poor.

“We also need a clear path to delivering quality infrastructure to create the crowding in effect of more investment by the private sector,” the Minister added.

Mothibi said that, based on the SIU’s investigations under various proclamations over the years totalling over R10-billion to date, is that the construction sector is vulnerable to, besides others, price fixing, high Construction Industry Development Board gradings being issued to non-deserving contractors, and the issuing of illegal environmental permits for large developers to develop infrastructure in sensitive environmental areas.

There is also an issue of defrauding the State through the use of substandard construction material to make more profit and the use of fees, bribery or kickbacks to secure work, besides others.

The ISA has in the last year, upon request, worked with the SIU on some cases.

The IBACF is led by the SIU and the Department of Public Works and Infrastructure and also includes representatives from a number of other industry bodies in the country.

The role-players have specifically been approached in consultation with the SIU to ensure inclusive and widespread oversight and the ability to take action when needed.

The mandate of the forum is to collaborate, consult and support and cooperate with one another to fight fraud and corruption in the sector through criminal prosecution and civil litigation, as well as through prevention initiatives such as corruption risk assessments, awareness programmes, identification and detection of corruption, controls improvement, systemic recommendations, monitoring and reporting.

The forum will have oversight of investigations and will see various agencies working together to investigate any reported and alleged corruption so that we enhance accountability in the implementation of the Infrastructure Investment Plan projects.

The forum members have agreed that one of its main and immediate areas of work will be to look into how whistle-blowers can be incentivised and rewarded for coming forward with information on corruption that leads to successful prosecution.

OPERATING MODEL

The forum has an operationa...