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State-owned power utility Eskom has reported a R25.5-billion loss before tax for the financial year ending March 31, 2024, following a year marked by operational setbacks, financial strain and systemic inefficiencies.

With 329 days of loadshedding and heavy reliance on costly open-cycle gas turbines (OCGTs) during the 2024 financial year, along with escalating municipal debt, the utility continued to face persistent challenges while working towards recovery.

Despite these hurdles, Eskom's leadership, led by Group CE Dan Marokane, emphasised early signs of improvement in the current financial year.

"The 2024 financial year was exceptionally challenging," Marokane said during a presentation of the group's results on December 19. However, he added that the utility has "laid a solid foundation for recovery in the 2025 financial year".

OPERATIONAL SETBACKS

Eskom's plant availability declined to 54.56% in the 2024 financial year, compared with 56.03% the previous year, resulting in significant unplanned outages and an inability to meet 13.2 TWh of electricity demand.

This performance necessitated heavy reliance on diesel-fired OCGTs, with costs escalating to R33.9-billion, up from R29.6-billion in the 2023 financial year.

"Operational inefficiencies remain one of Eskom's biggest challenges, and the performance of our generation fleet is critical to ensuring energy security, but systemic issues such as aging infrastructure and deferred maintenance continue to undermine reliability," Marokane said.

The utility also recorded a decline in its environmental performance, with sulphur dioxide emissions increasing to 0.79 kg/MWh, up from 0.70 kg/MWh the previous year. Distribution energy losses, much of which the utility said stemmed from electricity theft, reached 13.9 TWh, reflecting broader governance issues.

Adding to these pressures was a sharp rise in municipal arrears, which grew to R74.4-billion by the end of the 2024 financial year and further to R90.1-billion by November.

The ballooning debt burden has left Eskom struggling to recover payments from municipalities, with only ten of 71 participating municipalities honouring their current accounts by late 2024.

Municipal arrears and electricity theft continue to undermine progress, with theft alone accounting for an estimated revenue loss of R23-billion yearly. Chairperson Mteto Nyati warned that failure to resolve these issues could jeopardise Eskom's long-term financial health.

CFO Calib Cassim highlighted the financial implications of these municipal arrears, stating that municipal non-payment not only affects Eskom's liquidity but also undermines its ability to fund critical maintenance and infrastructure upgrades.

Further, Eskom's after-tax loss surged to R55-billion, driven by a one-off derecognition of a deferred tax asset worth R36.6-billion following the separation of its transmission business, National Transmission Company of South Africa (NTCSA).

While this accounting adjustment impacted the bottom line, Cassim pointed to notable financial improvements enabled by government support, such as the R76-billion in government debt relief for the 2024 financial year, which the entity converted into equity.

This subsequently alleviated debt-servicing obligations and freed up cash for operations and investments. This support also allowed Eskom to increase its cash reserves to R23.6-billion, up from R7.5-billion the previous year.

Revenue grew by 14% to R295.8-billion, bolstered by an 18.65% tariff increase. However, the gains were tempered by a 3% decline in sales volumes owing to loadshedding and increased adoption of self-generation solutions, such as rooftop solar installations, which now account for an estimated 6.1 GW of capacity.

Cassim acknowledged that while tariff increases are critical to covering costs, they pose...

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The Department of Public Works and Infrastructure (DPWI) has released requests for proposals (RFPs) for 24 underutilised State-owned properties across the country.

Members of the public and private entities have until March 13 to make proposals on how these properties can be used to ensure they contribute to the public good, help ignite job creation and add value to their communities.

The release of the RFPs follows a month after Public Works and Infrastructure Minister Dean Macpherson, KwaZulu-Natal MEC for Public Works and Infrastructure Martin Meyer and eThekwini Mayor Cyril Xaba signed a memorandum of understanding (MoU) to use public assets for public good.

"This marks a major milestone for the department in the Seventh Administration where we will make good on our promise to invite private and public role-players on this scale to bring us proposals on how these properties can be used towards truly benefitting the people of South Africa, either through repurposing or redevelopment.

"This means that, where feasible, the State may partner with the private sector to ensure that properties contribute to economic growth and job creation. We believe these properties will attract significant investment and jobs through their redevelopment," Macpherson comments.

He adds that the DPWI is hoping to use these properties as an example of what can be achieved with underutilised State-owned properties countrywide.

"We will soon be signing similar MoUs with other metropolitan municipalities in Gauteng and the Western Cape to expand the process. This process signals a shift from the department that previously hung onto properties despite serving no purpose.

"With this programme, the era of State-owned buildings standing empty, attracting crime to communities and chasing away investment is ending," the Minister says.

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The South African Bureau of Standards (SABS) has denied a series of allegations of longstanding and ongoing corruption and mismanagement.

In an open letter sent to Trade, Industry and Competition Minister Parks Tau on December 10, penned by an anonymous whistleblower, the SABS was accused of, among other things, irregular recruitment practices, board dysfunctionality, quashed whistleblower reports, inconsistency in dealing with disciplinary issues and financial misconduct.

Several open letters of this nature have been written to Tau in recent months, with little to no perceived action being taken. The Department of Trade, Industry and Competition has declined to comment on the matters raised by the whistleblower and others.

One of the key issues raised in the latest whistleblower letter was the allegation that questionable bonuses had been paid to executives.

"The very same executives that have been reported via so many whistleblowers have now gone and paid themselves exorbitant bonuses.

"How on earth is this possible when the SABS is literally burning? Further to this, [the acting CEO] has not even completed four months of his term and he believes he needs a bonus. They have been getting acting allowances for years. How is it possible that they can be so greedy?" the author of the letter asks.

However, when Engineering News reached out to the SABS to confirm the bonuses, the bureau denied having paid them, stating "No performance bonuses were paid for executives nor any SABS employees in 2024".

On December 3, Engineering News reported that several SABS executives had been suspended over the past few months and that the bureau had suffered a crippling cyber-attack despite multimillion-rand investments in cybersecurity upgrades.

"[Several executives have been] suspended, the SABS is at a standstill because of a cyberattack, accreditations are being suspended because the SABS is unable to deliver, training services are suspended because the maintenance of facilities is atrocious . . . and the leadership . . . pay themselves a bonus authorised by the board," the whistleblower alleges.

However, the SABS is adamant that the whistleblower has an agenda to discredit the institution and its leadership for an unspecified reason.

"These claims . . . appear to be part of a deliberate effort to misrepresent the organisation and its leadership. After thorough internal reviews, we categorically state that these claims are baseless, lack context and are not supported by any credible evidence. These allegations seem intended to create a false narrative of leadership instability at the SABS," the SABS said in response on December 12.

In a response to the SABS denial, National Assembly MP and Democratic Alliance (DA) Trade, Industry and Competition spokesperson Toby Chance said the bureau's statement raised more questions than it answered.

He said that, among other issues, the cursory statement put out by the SABS did not address the substantive issue raised by the anonymous whistleblower of the suspension of National Education, Health and Allied Workers Union (Nehawu) chairperson Mohola Maremela when he demanded accountability from the acting CEO.

According to the whistleblower letter, the union at the SABS has been very vocal about the alleged corruption and calling for the heads of the executives. However, this has been met with swift reprisal from SABS leadership.

"The SABS has invested more money and resources in trying to find the whistleblowers than in dealing with the allegations of maladministration, corruption, dysfunction or in dealing with the cyberattack.

"The SABS has responded by suspending [Maremela] and threatens employees who speak out. The internal channels for reporting whistleblowing are compromised [and the current executive leadership] squash all legitimate concer...

Engineering News editor Terence Creamer discusses government's plans to pursue private sector participation in the transmission grid; a request for information issued in relation to Independent Transmission Projects (ITPs); the National Transmission Company South Africa’s stance on the matter; and the prospects for ITPs in South Africa?

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The selection of Pele Green Energy (PGE) to supply renewable energy to the South African ferrochrome smelters operated by the Glencore Merafe Venture represents an important milestone in the steady yet uneven evolution of South Africa's electricity industry.

Its significance is not immediately apparent, largely because the novelty of such multidecade power purchase agreements (PPAs) between electricity-intensive private firms and independent power producers (IPPs) has worn off somewhat three-and-a-half years after President Cyril Ramaphosa successfully twisted a reluctant Gwede Mantashe's arm to enable such deals at scale.

Initially a 100 MW cap was placed on these agreements, but that too was eliminated in July 2022, as South Africa sought to further accelerate the construction of new generation in a context of extreme loadshedding, which has thankfully eased since late March as Eskom improved the performance of its coal fleet.

Various companies have taken advantage of the space created partly to secure cleaner electricity amid rising regulatory, shareholder and customer pressure on companies to reduce their carbon emissions, as well as to prepare for the looming risk to their export competitiveness as country's move to implement carbon border adjustment mechanisms.

This greening motivation was highlighted when Glencore's ferroalloys division and its joint venture partner Merafe Resources confirmed that PGE's 100 MW Sonvanger solar PV project had reached financial close and would provide "clean, reliable and sustainable energy" to their smelters.

Besides reducing Scope 2 emissions, such deals are also designed partly to shield companies from Eskom's uncertain tariff trajectory, as well as to diversify supply away from a monopoly provider whose poor performance in recent years has sapped both investor confidence and growth.

The 20-year Sonvanger solar contract, which arose following a competitive process involving multiple recognised IPP bidders, includes several other noteworthy milestones, however.

The winning bidder is not only a wholly South African entity, but is also 100% black-owned, the sole equity participant in the R2-billion project, initially developed for a public procurement round, and which has secured an 85% debt component provided by Nedbank and Absa.

CEO Gqi Raoleka tells Engineering News that the project underlines PGE's status as a fully-fledge IPP; a goal that seemed audacious when five black entrepreneurs established the company to participate as a junior sponsor of the 36 MW Solar CPV 1 project during the first public procurement round for renewables in South Africa in 2011.

More importantly for Raoleka, however, is that the project offers a tangible counterpoint to the cynicism that still surrounds the ecosystem that was created by government 15 years ago and which viewed the emergence of black IPPs as a key policy goal.

While few black IPPs have emerged, he argues that the ecosystem has been key to PGE's development from what was then a minority black economic empowerment partner.

It provided the framework for the company to take ownership of CPV 1 and develop operational and maintenance capabilities.

It also fostered financial innovation that, for PGE, culminated in the pioneering R2.5-billion Sithala facility concluded last year with Nedbank, Norfund and the Industrial Development Corporation.

This arrangement helped facilitate its competitive bid for the Glencore Merafe Venture and is providing the capital base for PGE's plan to expand its portfolio from what was 1 GW in 2022 to 5 GW by 2027.

Today, the 100-employee company is a far larger, at times equal, partner in various renewables and battery projects procured by government, six of which reached financial close in the past 12 months.

In addition, the Sonvanger project indicates that the...

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South Africa has issued a request for information (RFI) to gauge the level of interest and readiness of industry to participate in Independent Transmission Projects (ITP) as it prepares to launch an ITP pilot tender in 2025.

Described as a "sounding exercise", the RFI has been unveiled jointly by the National Treasury and the Ministry of Electricity and Energy, and includes a deadline for responses of February 28.

It comes as government seeks to integrate private-sector participation into the roll-out of electricity grid infrastructure, where an investment backlog estimated at up to R390-billion is constraining the connection of new, mostly renewables, generation.

The ITPs will be aligned with the project portfolio in Eskom's Transmission Development Plan, which envisages the construction of 14 500 km of new powerlines and 133 000 MVA of additional transformers by 2034.

Eskom has divided the TDP into two phases.

During the first phase to 2030, 5 043 km of powerlines and 41 325 MVA of transformers are planned, as compared with 9 450 km and 91 325 MVA of transformers between 2031 and 2034.

The ramp-up under the first phase is also relatively modest, with only 286 km planned for the current financial year, alongside 2 380 MVA, rising to 2 122 km in 2029 and 18 735 MVA.

Eskom has acknowledged that a step change is needed in the pace of construction but has yet to fully embrace the ITP concept.

In their joint statement, the National Treasury and the Ministry of Electricity and Energy indicate that the ITP programme is a strategic response to South Africa's constrained fiscal position, Eskom's limited balance sheet, and the need for greater private-sector involvement in the country's energy transition.

The National Treasury has also been working with the World Bank for some time on the creation of a credit guarantee instrument that will be structured to de-risk the projects and lenders in the absence of government guarantees.

The RFI exercise, the departments add, will seek to gather insights on the market's interest, capabilities, and potential solutions for accelerating transmission infrastructure development.

It will also assist in the design of an effective procurement framework, inform the development of regulatory instruments, and guide the preparation of the tender documents.

Government urged interested parties, including developers, funders, and financiers, to participate and provided a link to a website containing additional information and instructions for RFI respondents.

The website is hosted by the Independent Power Producer Office, which has overseen the public procurement of more than 7 300 MW of operational renewable-energy capacity since 2011, and the entity has also been designated to oversee the pilot ITP procurement programme.

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State-owned electricity utility Eskom has provided some additional detail regarding the decision to continue operating 17 coal units across five power stations beyond their original decommissioning dates.

The decision is in line with a May 23 determination by then Forestry, Fisheries and the Environment Minister Barbara Creecy to allow Eskom to operate Hendrina, Grootvlei, Arnot, Camden and Kriel at existing minimum emission standards (MES) plant limits until March 31, 2030.

The units - three at Grootvlei, six at Hendrina and eight at Camden - were planned to be shut down by September 2027, 14 of which were scheduled to close between 2023 and the end of 2025.

The approval was given following a period of intense loadshedding and represented a significant change in strategy, with potential implications for South Africa meeting its decarbonisation goals.

South Africa's most recent Nationally Determined Contribution (NDC) was lodged with the United Nations Framework Convention on Climate Change ahead of the Glasgow COP of 2021, where an initial $8.5-billion was secured for the country's Just Energy Transition (JET). The figure has since increase to $13.8-billion.

South Africa is in the process of updating its NDC for submission to the same body in 2025; one that will need to reflect the delayed decommissioning of the five coal power stations.

Eskom CEO Dan Marokane indicated in May that it would still be possible to meet the 2030 NDC target but that a "course correction" would be required.

He also told the Presidential Climate Commission in June that the delay would add about R90-billion to Eskom's operational costs over the period to the end of the decade, while yielding R102-billion in additional revenue.

Addressing the last day of the National Energy Regulator of South Africa's nationwide hearings in eThekwini, Eskom Generation GM Eric Shunmagum said the decision to continue operating the units had been factored into its latest revenue application, or MYPD6, covering the next three financial years to 2027/28.

"The total maintenance increase from MYPD5 to MYPD6 is R23-billion," Shunmagum said, while confirming that R8.4-billion, or 36.4%, of that amount was attributable to the additional maintenance that would be performed at Camden, Grootvlei, Hendrina, Arnot and Kriel.

Overall, Eskom is applying for R88.1-billion for maintenance over the full three-year period and across its three divisions of generation, distribution and the National Transmission Company South Africa. Eskom's forecasted spend on coal over the three years, meanwhile, has been estimated at R289-billion.

Shunmagum said there was no intention to revive any of the 16 units that had already been shut at Komati (nine units), Hendrina (four) and Grootvlei (three), nor to restart Duvha Unit 3, which was severely damaged in an explosion in 2014 and where Eskom has decided against pursuing a repair. He also stressed that none of the units remained in its regulatory asset base.

However, he argued that it was technically and financially justifiable to continue to operate the five coal stations beyond their 50-year lives considering the MES approval and given the delays in the introduction of anticipated capacity from independent power producers relative to the schedule outlined in the 2019 edition of the Integrated Resource Plan (IRP). Government is aiming to secure Cabinet approval for a 2024 edition during the first quarter of 2025.

The 17 units have a combined capacity of 4 100 MW and Shunmagum reported that they had delivered 9.4 TWh of energy since the start of April, representing 7.2% of total Eskom output.

Besides helping with loadshedding, which has not been implemented since March 26, he said the additional production had also mitigated the need to operate the open-cycle gas turbines (OCGTs) at high level...

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With the 2024/25 season expected to benefit from La Niña rains, solid exports having been reported in the year-to-date, food price inflation having come down to 2.8% in October and the Agribusiness Confidence Index having increased by ten points to 58 in the fourth quarter of the year, experts are optimistic that the agriculture sector will grow meaningfully in 2025.

During a media day hosted by the Agricultural Business Chamber of South Africa (Agbiz) on December 6, CEO Theo Boshoff said the sector would benefit further from political stability effected by the Government of National Unity, progress with rail reforms, improved energy security and South Africa's positioning within BRICS and in leading the Group of 20 (G20) next year.

The threats to the sector, however, include rising protectionism globally, geopolitical instability that impacts on prices and supply chain activity and green trade barriers.

Agbiz chief economist Wandile Sihlobo pointed out that the reaction of countries such as China to new import tariffs imposed by the US may cause disruption in the global agriculture market. Hence, he emphasised the importance of expanding agriculture exports into the new BRICS Plus member countries for diversification - including Egypt, Ethiopia, Iran and the United Arab Emirates.

China remains a vital market for South Africa's agricultural exports, with China accounting for 10% of fresh produce purchases globally every year and the country continuing to have a deficit in its food balance.

The BRICS Plus countries, on the other hand, now accounted for half of global agricultural output and imports alike. Agbiz said an agriculture trade agreement between the BRICS Plus members was needed to enable more trade between the nations. Sihlobo pointed out that BRICS Plus was currently more of a political formation than an economic formation, since intra-BRICS trade remained low.

Currently, the BRICS countries account for a small share of South Africa's agricultural exports at 8% over the past ten years. This while the original BRICS countries, before the additional members added in 2023, imported an average $300-billion worth of agricultural products every year.

"As BRICS matures from the political front, deepening regional economic integration and trade is the most logical step towards expanding the ambition of the group, particularly in agriculture," Sihlobo said.

He added that Brazil, South Africa and Russia typically have large surpluses of products that India and China import from the world market. "Reducing import tariffs and other non-tariff barriers, or the opening of tariff rate quotas for specific agricultural products would help expand the level of ambition in a more meaningful way."

Sihlobo emphasised the importance of BRICS Plus formulating an intergovernmental working group that explored the scope for reducing import tariffs and removing non-tariff barriers, including on phytosanitary protocols, among the members, as well as developing terms of reference that established the work of a negotiation platform between the members.

In turn, the G20 represents 80% of global trade and 75% of global GDP, which can bode well if South Africa uses this platform to advance agriculture trade agreements, sustainable food systems and overall agriculture development.

Boshoff said Brazil, as the G20 leader for 2024, left much for South Africa to build on, including its policy recommendations on a non-discriminatory and equitable multilateral agricultural trading system, eliminating market-distorting barriers and financing mechanisms for decarbonisation.

Brazil also recommended changes to customs processes and procedures and reforming the World Trade Organisation's Dispute Settlement Body.

South Africa exported $10.5-billion worth of agricultural goods in the year-to-date, marking ...

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The Royal Society, in the UK, has provided funding to support a three-year collaborative roads project between the UK's University of Nottingham (UoN) and South Africa's Stellenbosch University (SU).

The initiative aims to advance sustainable road construction methods in South Africa, focusing on improving mobility and furthering inclusive economic growth in rural communities.

In South Africa, nearly 80% of the road network consists of rural and low-volume roads.

These roads face significant challenges, including limited materials for construction, low funding, and less maintenance compared with highways.

The project, led by UoN transport engineering assistant professor Dr Anand Sreeram (UoN) and Dr Elaine Goosen (SU), will look at how some of these issues could be addressed by using locally sourced waste materials for road construction, creating a sustainable circular economy targeted at creating opportunities for small businesses, while also fostering skills development in rural areas.

"The main objective of the project is to enable the development of rural infrastructure using technological innovation to overcome local barriers and enable social mobility," says Sreeram.

"We are very excited to start this initiative, as it is not often that we get to work on projects that can have such direct impact on improving the lives of people."

The UoN says developed countries, such as the UK, have managed to implement circular economy frameworks in construction, utilising digital tools to manage material flows and overcome key market barriers, enhancing transparency and long-term value.

The proposed research aims to bring these techniques to South African rural road applications.

The project will combine the expertise of the UK and South African partners in pavement engineering, waste recycling, digitisation and the circular economy to develop new construction methods.

The standardisation of such technology is expected to enhance rural mobility and economic participation in rural communities, by allowing new businesses to enter the material supply and construction value-chains.

This could ultimately help reduce poverty, enhance the quality of life for residents in these regions, and provide a model that can be adopted in other developing countries.

The Royal Society is an independent scientific academy, dedicated to promoting excellence in science for the benefit of humanity.

Engineering News editor Terence Creamer discusses the key themes that emerged during a briefing by Eskom and the National Transmission Company South Africa (NTCSA) to lawmakers this week. The briefing focused on the Transmission Development Plan and its implementation, private sector participation in the grid and Eskom's plans to remain a big contributor of electricity generation.