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Eskom has welcomed Finance Minister Enoch Godongwana's formal endorsement of the Distribution Agency Agreement (DAA) intervention for addressing municipal arrear debt, which had climbed to R105-billion as of the end of September.

CEO Dan Marokane told the Parliamentary Portfolio Committee on Electricity and Energy that the DAA was but an interim solution to halting the steep climb in outstanding payments and would have to be followed up by a "fundamental restructuring" of the distribution sector to make it viable.

"The issue of municipal debt is no longer an Eskom problem, it's a country problem and we have requested support.

"We are happy that the discussions that we have invested in over the last seven to eight months with the National Treasury and with the South African Local Government Association (Salga) have really led us to a point where the Minister of Finance was able to articulate the position that he did last week (November 12)," Marokane said.

He made no reference to Salga's previous objections to the DAA, having recently described the mechanism as "a backdoor takeover" of municipal functions by Eskom.

Marokane said refinements had been made drawing on lessons from the initial DAAs that had been implemented, but did not provide details.

He said only that upcoming agreements would be structured as "win-win" solutions, whereby municipalities gained from improved revenue collections and Eskom was able to secure payments.

He also used the platform to welcome Godongwana's endorsement of the mechanism in the Medium-Term Budget Policy Statement (MTBPS); one which highlighted widespread non-compliance by those municipalities that had signed up to the National Treasury's debt-relief scheme.

The scheme allows for the write-off of arrear debt owing to Eskom should various conditions be met, including keeping current accounts up to date.

"While 24 municipalities have qualified for the first one-third write-off after 12 consecutive months of payments and 21 have generally maintained payments, as of 7 May 2025, 47 municipalities remain in default," the MTBPS document stated.

However, Eskom revealed that only 9 of the 71 municipalities that were signed on to the scheme were currently paying their current accounts.

With Godongwana's endorsement, Eskom expected the DAA to be integrated into the debt relief programme, with targeted write-offs of up to R62.6-billion for compliant municipalities.

CFO Calib Cassim told the committee that the municipal debt problem posed a significant risk to Eskom's recovery and could nullify the R230-billion debt relief that had been extended to the utility by the National Treasury.

Cassim has stated previously that the debt could exceed R300-billion by 2030 unless arrested, and told lawmakers that it also threatened any recovery to Eskom's credit rating, which currently stood three notches below an investment grade.

R25.9BN INTERIM PROFIT

After reporting a R23.9-billion profit for the 2025 financial year as a whole, Eskom reported a R25.9-billion profit for the first half of the 2026 financial year, up from the R17.8-billion profit recorded in the same period last year.

The increase was attributed to the 12.74% tariff increase implemented on April 1, with sales having declined period-on-period by 3% to 92.8 TWh.

Eskom historically makes the bulk of its profit in the first half of its financial year, which coincides with the high-demand and high-tariff winter period when little maintenance is done.

Nevertheless, the group is on track to deliver another profit for the full year and is aiming to increase its investment grade credit rating before returning to the debt markets in about 18 to 24 months to help fund its capital investment programmes.

"But when we discuss this with the rating agencies, their biggest concern is that they do not see how we are addressing the municipal debt.

"Until we close that issue, I think it's going to be very difficult to convince the rating agencies to upgrade Eskom,"...

Raising gross fixed capital formation (GFCF) to between 18% and 20% of GDP is key to lifting growth to the 3% target, The Presidency's project management office head Rudi Dicks argues. While also asserting that there are signs that Operation Vulindlela-linked reforms are starting to spur higher levels of capital investment in the economy.

Pressed during a PSG webinar to put a figure to the investments catalysed by Operation Vulindlela, Dicks stated that R500-billion had been unlocked mainly in the form of renewable-energy projects, but also in the areas of telecoms, transport and water.

However, he said raising GFCF from about 14% currently to 20% would involve yearly capital investments of R1.6-trillion, which would require a "significant jump" in both public and private investment spending.

While highlighting reform progress in the areas of electricity, logistics and water, Dicks stressed the importance of sustaining momentum, particularly in the implementation of reforms needed for "true competition" in areas traditionally dominated by State-owned companies, such as Eskom and Transnet.

This would require a full unbundling, he said, of the National Transmission Company South Africa (NTCSA) from Eskom in line with the five-year horizon set for the creation of the Transmission System Operator (TSO) in the Electricity Regulation Amendment Act.

In addition, the National Ports Authority should be finally unbundled from Transnet, while the Transnet Rail Infrastructure Manager should be fully independent of Transnet Freight Rail, with the sector overseen by an independent Transport Economic Regulator.

He acknowledged the "administrative complexities" with the unbundling processes, but said such vertical separation had to be implemented to stimulate private sector investment in these sectors and to facilitate competition.

"We've got to set up the administration process to ensure that the unbundling does happen," he said, indicating that transaction advisers would be required and solutions would have to be found in relation to the debt covenant issues that had arisen.

Dicks made the statement against the backdrop of some concern about the pace and nature of the unbundling being pursued at Eskom in relation to the NTCSA, and major delays in the unbundling of the National Ports Authority.

In fact, the latest quarterly report on the implementation of Operation Vulindlela Phase 2 stated that several electricity reforms were facing implementation challenges and that interventions were required.

There was also some debate whether Eskom intended fully unbundling the NTCSA with its transmission assets, or whether some form of lease-back arrangement was being considered.

The quarterly Operation Vulindlela report listed the development of a detailed implementation plan for the establishment of the TSO "outside Eskom" as a key next step and set a deadline for completing the plan of March 2026. This, alongside the implementation of measures to ensure the functional independence of the NTCSA during the transition period.

The same deadline was set for the completion of preparatory work for the unbundling of the National Ports Authority from Transnet.

Dicks said that 2026 should also be the year when the South African Wholesale Electricity Market was established, the litigation-delayed private sector participation at the Durban Container Terminal proceeded, some private train operators entered the network and requests for proposals for private sector participation in rail and grid infrastructure were issued.

"These will be important indicators for us, and it will help build confidence when we see the hard investments actually being done."

Dicks' comments follow on from the Medium-Term Budget Policy Statement, which also placed significant emphasis on shifting government spending from consumption to capital investment, while also facilitating higher levels of private investment into public infrastructure.

While announcing a goal of investing R1-t...

Eskom CEO Dan Marokane has called for South Africa's Transmission Development Plan (TDP) to be complemented by a "regional TDP" to support the development of the grid infrastructure required to enable expanded electricity trade across the Southern African Power Pool.

Speaking at a B20 side event on the just energy transition hosted by Standard Bank, Marokane reported that the Department of Electricity and Energy, which is Eskom's shareholder department, was urging Eskom to adopt a regionally focused strategy now that its operational problems had eased.

He reported that Eskom's improved energy availability factor had already allowed it to support several Zambian mining operations with electricity, but that limited transmission infrastructure remained a major constraint.

"Regional integration must now be part of our strategy," he said, adding that a regional TDP could help raise electrification penetration and unlock the territory's mining potential as demand for critical minerals increased.

Standard Bank Corporate and Investment Banking head of power Rentia van Tonder also underlined the urgency of building regional grid infrastructure for catalysing growth across Southern Africa, particularly in countries facing severe electricity deficits.

Also citing recent projects by the bank in Zambia, she said innovative partnerships that combined renewables and battery storage with new financing models had been key to powering certain mining operations. However, access to regional electricity sources through an expanded grid would improve reliability and lower costs.

These regional investments she argued were required in addition to South Africa's plan, as outlined in the TDP, to construct 14 500 km of new powerlines and 133 000 MVA of additional transformers by 2034.

The National Transmission Company South Africa, which is an Eskom subsidiary, usually updates the TDP yearly.

However, it has received a two-year exemption from the regulator from doing so to enable it to align the grid plan with the recently released Integrated Resource Plan 2025, and potentially to consider integrating regional interconnectors.

It has been estimated that some R440-billion will be required over the coming ten years to implement the TDP, including through private-sector participation in the form of the Independent Transmission Project (ITP) procurement programme.

The request for proposals for the first ITP procurement phase, in which 1 164 km of powerlines and 2 630 MVA of transformation capacity across seven corridors is to be allocated, has been delayed until the second half of 2026.

This, to allow for the finalisation of the Credit Guarantee Vehicle (CGV), which will allow for the procurement to proceed in the absence of government guarantees.

Finance Minister Enoch Godongwana announced during his Medium-Term Budget Policy Statement that the South African government would contribute R2-billion to capitalise the CGV, but would be a minority shareholder in what would be an independent, non-life insurance entity with an initial capitalisation of $500-million (about R8.5-billion).

The entity would be governed by an independent board and regulated by the Prudential Authority, with development finance institutions expected to own most of the shares.

Van Tonder underlined the importance of the CGV for attracting both private capital and commercial lenders to large-scale grid projects.

"It's far more than just crowding in local banks," she said. "The CGV can unlock cheaper capital, lower the fiscal burden, create longer loan tenors and reduce the overall cost of capital through blended-finance structures."

Unlocking electricity infrastructure is also a key theme of the B20 South Africa Energy Mix and Just Transition Task Force report prepared ahead of the B20 gathering and G20 Leaders' Summit.

Task force chairperson Daniel Mminele said that modernising grid infrastructure across Africa was one of three recommendations made in the report.

The other two relate...

Public Works and Infrastructure Deputy Minister Sihle Zikalala has raised concern about ongoing systemic problems in South Africa's contractor-development programmes, warning that fewer than 36% of contractors enrolled in government support initiatives are progressing beyond the initial stage.

Speaking at the 2025 National Construction Summit, in Ekurhuleni, on November 14, he said evidence from recent monitoring reports showed that delays, fragmented implementation and funding gaps continued to undermine emerging contractors despite extensive training efforts.

Zikalala cited findings from the Construction Industry Development Board (CIDB) 'Construction Monitor Report', noting that provincial case studies revealed persistent obstacles in the contractor-development pipeline.

He said "systemic challenges are still there", including low progression rates, inconsistent programme roll-out and limited post-training support.

He emphasised that many participants in the National Contractor Development Programme continued to struggle to enter the market after completing their training.

He said payment delays and funding gaps remained major obstacles across departments, further weakening the effectiveness of the development programmes.

Zikalala added that contractors frequently reported that they were trained but still unable to secure work.

"Contractors say, 'We have been trained through the BUILD Programme, we have been trained and taken through the Vuk'phile Programme, but after these programmes we get no jobs. We get nothing - no way to practise and show our skills'," he said.

Zikalala said the department intended to strengthen the structure and implementation of the BUILD Programme to provide more practical opportunities for emerging contractors.

He said R300-million had been allocated through the programme, including financial support. Competency assessments for 1 000 contractors had already begun, and roadshows were being undertaken with the CIDB to engage small contractors and improve programme effectiveness.

Zikalala also welcomed the recognition of the first cohort of contractors certified through the Construction Management System, noting that the department would ensure these contractors were supported in accessing clients and opportunities within government.

"We are proud that, today, the first cohort of certified contractors is being recognised. These contractors have undergone Construction Management System training and certification," he said.

He linked the challenges in contractor development to the broader national infrastructure agenda. He noted government's adoption of the National Development Plan and development of the National Infrastructure Plan 2050 to support long-term, infrastructure-led growth.

Zikalala also referred to the Medium-Term Budget Policy Statement delivered on November 12, noting the introduction of new guidelines on unsolicited bids from the private sector, adjustments to the Budget Facility for Infrastructure to allow four bid windows a year, and the launch of a new infrastructure bond.

Although he welcomed these measures, he said the primary objective remained improving the infrastructure pipeline and ensuring coherent delivery.

Zikalala confirmed that Infrastructure South Africa would remain the single point of entry for national infrastructure coordination. He also commended efforts to address corruption in the sector and restated the need to ensure that corrupt companies and contractors continued to be blacklisted.

He said professionalising the public works sector remained a priority, with the Council for the Built Environment working to strengthen capacity. This included efforts to ensure that development initiatives improved the quality and consistency of infrastructure delivery nationwide.

Zikalala also confirmed that the Integrated Social Facilitation Framework, developed from a 2021 Cabinet concept, had now been fully endorsed and legally vetted as a national policy instrument. He sai...

Public Works and Infrastructure Minister Dean Macpherson has touted significant progress in cracking down on the "construction mafia", with hundreds of arrests and convictions helping to stabilise the sector.

The construction mafia refers to criminal groups that demand a share of project contracts or payments, often through intimidation or violence.

Speaking at the 2025 National Construction Summit, in Ekurhuleni, Gauteng, on November 13, the Minister said law enforcement and industry partnerships had begun to turn the tide against the criminal networks that had long disrupted building projects, extorted contractors and delayed public infrastructure delivery.

Government's response began with the signing of the Durban Declaration, in Durban, KwaZulu-Natal, on November 19, 2024, a joint initiative between the Department of Public Works and Infrastructure (DPWI), the South African Police Service and the National Treasury.

"The declaration was government's line in the sand, a commitment to restore law and order to construction sites and end the reign of terror that was choking investment, delaying delivery and putting lives at risk.

"Since then, we've seen over 770 cases of construction-related extortion and intimidation reported across the country. Of those, 241 arrests have been made and, most importantly, 176 individuals have been convicted," Macpherson said.

He said KwaZulu-Natal - previously regarded as the hotspot of construction-related crime - had experienced a "massive drop" in site disruptions. Incidents had reportedly declined from more than 60 a month last year to fewer than ten a month currently.

Macpherson attributed this reduction to a coordinated response between the police, business stakeholders and public entities.

As part of the government's wider law-enforcement effort, dedicated hotlines have been established for communities to report project stoppages as they happen. Macpherson said police and private security agencies were now working together to dismantle the networks behind the intimidation and extortion.

Yet, he cautioned that policing alone would not solve the problem.

"Law enforcement is only one part of the equation and crime flourishes where systems fail," he said.

He said the DPWI had worked to address structural issues, including unclear regulations, weak community engagement and poor project preparation, that made projects vulnerable.

To strengthen early engagement, Macpherson said government was in the process of finalising the Integrated Social Facilitation Framework, designed to involve local communities before projects begin.

"This means local communities will not only become meaningful participants in our projects but also our first line of defence against those who seek to disrupt them," he said.

He said this effort to squash the construction mafia came amid renewed government efforts to revive the construction industry, which he described as a key driver of South Africa's economic recovery.

Macpherson noted that 30 000 new jobs were created in the construction sector in the third quarter of this year, representing more than half of all jobs created during the period.

"This is no coincidence. It's the direct result of reforms, partnerships and determination that the government is bringing to this industry," he said.

Macpherson also highlighted reforms to support emerging contractors through a revitalised Construction Industry Development Board National Contractor Development Framework. The initiative includes a R300-million budget allocation to help smaller builders enter the formal system with better compliance and support.

Macpherson acknowledged that, despite the progress made in stabilising the construction industry, further action was required to restore investor confidence and ensure efficient project delivery.

He said one of the biggest challenges had been government's slow payment processes and project approval delays.

"I also recognise that contractors have borne the brunt of our ...

Godongwana outlines plans for shifting spending focus towards infrastructure

Finance Minister Enoch Godongwana has outlined several initiatives being undertaken to finally begin shifting the composition of government spending from consumption to capital investment, including plans for a R15-billion infrastructure bond in the coming months.

Such a shift has been signalled for several years, but the Medium-Term Budget Policy Statement (MTBPS) reaffirms that capital payments will be the fastest-growing area of spending over the coming three years, with plans also advancing to accelerate private sector participation in the financing and delivery of infrastructure.

"[W]e are shifting the composition of spending from consumption to investment. Capital payments are the fastest growing expenditure item at 7.5% over the medium-term," Godongwana said in his address to Parliament.

Gross fixed-capital formation has been in decline as a share of GDP since the 2008 global financial crisis, and currently stands at about 14%, which is below pre-Covid levels and less than half of the 30% targeted by the National Development Plan 2030.

"Government's focus on growth-enhancing infrastructure reforms aims to reverse this systemic underperformance, spurring a virtuous cycle of investment, growth and job creation.

"Providing policy certainty and easing supply-side constraints will boost investor confidence and unlock private investment, which accounts for about 70% of total gross fixed-capital formation," the MTBPS states.

The National Treasury is preparing a minimum R15-billion infrastructure bond issuance for Budget Facility for Infrastructure (BFI) special window projects, having recently reconfigured the BFI to accommodate four yearly bid windows instead of one.

"The bond forms part of our efforts to introduce dedicated financing instruments that can mobilise cheaper financing to support our infrastructure agenda," Godongwana adds.

The BFI's bid windows enable public institutions, including national departments, provinces, municipalities and State-owned enterprises, to request funding for part of the cost of a project, as a basis to attract additional private funding.

In the first two quarters since the reconfiguration, 28 submissions with a total capital cost exceeding R379.1-billion were received and approvals were made for projects in the science, water and sanitation and transport and logistics sectors, including two major rail rehabilitation projects for the North Corridor and the Iron Ore Corridor.

Director-general Duncan Pieterse said that, while Transnet had stabilised volumes on the two key corridors, the BFI funding, together with additional private funding, would seek to raise volumes.

Some R937-million and R3.4-billion in adjustments are reflected in adjustments made for non-interest expenditure for the North Corridor and Iron Ore Corridor respectively.

Approvals were also made for the Square Kilometre Array and the Polokwane Regional Waste Water Treatment Works.

VISIBILITY OF INFRASTRUCTURE BORROWING It was also announced that the 2026 Budget will for the first time show borrowing for infrastructure, including for on-budget capital funding, as a separate category of broader government borrowing.

In addition, a consultation paper discussing the design of the long-term instruments for mobilising institutional and retail investor funding for infrastructure investment will be published in early 2026 "to solicit stakeholder views on the reforms and other mechanisms to enhance private infrastructure investment".

Various initiatives to mobilise private sector participation in the delivery of infrastructure have also been outlined in the MTBPS, including:

The implementation of regulatory reforms in support of public-private partnerships (PPPs), including the introduction of new guidelines relating to unsolicited bids with provisions made for recoverable development fees, and a commitment to further streamline the PPP manual in 2026, as w...

Engineering News editor Terence Creamer talks about the big themes in the 2025 Medium-Term Budget Policy Statement (MTBPS) presented by Finance Minister Enoch Godongwana on November 12.

The Mossel Bay municipality has cut the ribbon on the Hartenbos Waste Water Treatment Works solar PV plant and microgrid project.

Developed in partnership with Solareff and Element Consulting Engineers, the hybrid, grid-tied microgrid is designed to ensure uninterrupted power supply to the wastewater treatment facility, up to and including Stage 6 loadshedding.

Under normal conditions, it operates in parallel with the Eskom grid.

In the event of grid interruptions, the battery energy storage system (BESS) takes over, supported by solar generation during daylight hours.

Standby diesel generators provide additional backup if needed.

Excess solar energy is fed into the municipal grid, thereby reducing the Mossel Bay municipality's long-term energy costs and boosting its sustainability.

The energy project, situated on 3.5 ha of municipal land, was designed with future expansion in mind and can be scaled up to 5 MVA as demand grows.

Current solar generation capacity is 2.112 MVA from 4 536 PV panels. PV inverter station capacity is at 3.2 MVA, with BESS inverter station capacity at 2.75 MVA.

Generator farm capacity is 1.6 MVA.

The new substation tied to the project includes 11 kV switchgear and control systems that can switch seamlessly between solar, battery and diesel backup.

"As a municipal manager, I am proud to say that we are one step closer in making our city and our town sustainable," says Mossel Bay municipality's Colin Puren.

Solareff held the ground-breaking ceremony to kickstart the project in November last year, and reached practical completion at the end of September this year.

"We all know the history of Eskom and energy prices in South Africa, so the Mossel Bay council decided to start investing in energy sustainability," explains Mossel Bay municipality Mayor Dirk Kotzé.

"This [project] means that our bulk infrastructure will be able to cope with extended periods of loadshedding."

"What these types of projects further provide is grid resilience," adds Solareff chief commercial officer DeVilliers Botha.

"You would have often heard that we need to expand the transmission grid in the country to provide power across the country.

"However, if we install more of these types of microgrid systems, we bring resilience and also stability to local grids."

Engineering News editor Terence Creamer joins me to discuss what amendments the International Trade Administration Commission of South Africa (Itac) has made to the contentious price preference system (PPS) for scrap metal and what the reaction has been.

Following consultations with the Department of Energy and Electricity (DEE) on an initiative to procure new grid infrastructure from private consortiums, local Industry has again urged government to specify minimum percentages of locally sourced products and services for the upcoming procurement of Independent Transmission Projects (ITPs).

In a joint statement, the Steel and Engineering Industries Federation of Southern Africa, the Power Line Association of South Africa and the Manufacturing Circle highlighted that the country's existing transmission infrastructure had been delivered by local contractors and manufacturers, and that this capability remained largely intact.

They argued that the ITP programme represented "a once-in-a-generation opportunity to strengthen local industrial capacity, create jobs, and position South Africa as a competitive player in the global transmission supply chain".

Ahead of the meeting, which took place on October 31, the associations wrote to the Independent Power Producer Office, which is overseeing the initial procurement of 1 164 km of powerlines and 2 630 MVA of transformation capacity across seven corridors, expressing their anxiety that local industry was being sidelined.

Particular concern was raised about the criteria outlined in the request for qualification (RFQ) documentation, which the organisations argued was onerous and not enabling of participation by local industry.

During the consultation, Electricity and Energy Minister Dr Kgosientsho Ramokgopa indicated that it would seek to address some of the issues raised before the release of the request for proposals (RFP), and even indicated that government was willing to pay a premium for local content.

The Minister also said that those issues not fully addressed would be "remedied" in future ITP bidding rounds, but that efforts would be made to create space in the first round for both local content and for local engineering, procurement and construction contractors.

However, it was also announced that the RFP had been delayed until the third quarter of 2026 from an initial proposed release date of before the end of 2025. This, largely to align the procurement timetable with the launch of the Credit Guarantee Vehicle, which was being set up to ensure that the ITP programme could proceed in the absence of government guarantees.

A total of 17 consortiums had responded to the RFQ, and a draft RFP would be issued by December 15 to those consortiums selected to participate in the bidding process once the final RFP was released in 2026.

Besides urging government to stipulate local content in line with designations set by the Department of Trade, Industry and Competition and National Treasury, the three entities also recommended that the majority South African equity participants in the consortiums had proven technical expertise, and that there be a mandatory inclusion of South African contractors and/or manufacturers.

They also proposed a sectoral industrialisation commitment to ensure that, where possible, all steelwork and hardware components were locally manufactured.

Certainty of demand was also underlined as a key requirement for facilitating industrialisation spin-offs from the ITP, which is a component of the National Transmission Company South Africa's (NTCSA's) larger Transmission Development Plan (TDP).

The TDP, which will not be updated for the next two years to allow the NTCSA to align it to the newly released Integrated Resource Plan 2025, envisaged the roll-out of 14 500 km of new powerlines and 133 000 MVA of additional transformers by 2034 at an estimated cost of above R400-billion.

"If industry knows what volumes will be procured locally, it can confidently invest in expanding manufacturing capacity - and that investment will translate directly into jobs and industrial growth," the three organisations said, while also arguing that the ITP could become a launchpad for export-led growth in engineering and manufacturing.

"Th...