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Following a strategic review of the National Transmission Company South Africa's (NTCSA's) corporate plan, which includes focusing on accelerating the delivery of the Transmission Development Plan (TDP), long-term agreements were signed with 28 local companies to provide the NTCSA with the services for the construction of substations.

To date, the NTCSA has signed agreements with over 60 suppliers over the last few months, enabling them to respond to tenders and supply services in the areas of transformers, engineering services, overhead lines and substations.

With a focus on enhancing infrastructure delivery capabilities, the NTCSA says it is not only expanding its infrastructure delivery capabilities but also forging strategic partnerships to expedite the development of transmission infrastructure.

"The NTCSA leadership has identified two priority programmes, the Additional Transformation Programme providing 13 GW, and the Expedited Projects Programme, supplying 24 GW, to accelerate the delivery of transmission infrastructure. These projects are at various stages of implementation in terms of design, procurement and construction," says NTCSA interim CEO Segomoco Scheppers.

"The substation panel contracts signed today are one of the critical milestones to enable the delivery of the priority programmes. This collaboration between the public and private sectors will act as a catalyst for economic growth, fostering innovation and enhancing the competitiveness of local industries on a global scale," he adds.

The substation services companies form part of the two panel categories, Panel A - Engineering, Procurement and Construction (EPC) and Panel B - Procurement and Construction (PC) with 18 and 20 companies signed on respectively. Some of the EPC contractors are also providing PC services.

The NTCSA says the panel contracts were signed and established after an open tender process was followed to source capable service providers and contractors to partner with the NTCSA to deliver on its mandated objectives.

The next phase of the two prioritised programmes will entail the panellists competing for various projects throughout the panel.

Further, the process to augment both panels of EPC and PC substation contractors will be opened every year around August and September to enable other companies within this field of the industry to participate to increase capacity and be able to deliver on the NTCSA's infrastructure programme, it adds.

LOCALISATION STRATEGY

The NTCSA notes that the contracting strategy has been designed to allow for efficient procurement processes to maintain and strengthen governance while reducing lead times to adequately deliver on the TDP requirements, while promoting localisation.

The scope for substation construction has been divided into two different panels - A and B.

This approach, NTCSA explains, is to allow for a specialised focus on each aspect of the infrastructure development, thereby optimising the overall process.

"Having the two panels provides flexibility in the procurement strategy approach and ensures inclusivity of all contractor capabilities.

"The long-term agreements set with the substation panel contractors demonstrate a commitment to continuity and stability in the energy sector, providing these companies with a platform to compete for various tenders," it adds.

The NTCSA says the synergy of EPC capacity, along with internal efficiency improvements, as well as various Government-led initiatives on private sector participation in transmission, will enable it to deliver the required transmission infrastructure at an accelerated pace.

The NTCSA says it will continue to provide regular updates on the TDP projects and related initiatives.

The Panel A and Panel B local companies that have signed agreements include:

*ACTOM;

*Adenco Construc...

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JSE-listed Murray & Roberts (M&R) has voluntarily requested a halt in the trading of its shares after announcing that its M&R Limited division and the division's subsidiary OptiPower have been placed in business rescue.

M&R, as well as its indirect subsidiaries Murray & Roberts Cementation, Murray & Roberts UK, Cementation APAC, Cementation Canada and Terra Nova Technologies, continue as a going concern and will continue to deliver on their contractual obligations.

The decision to place M&R Limited and OptiPower in business rescue follows discussions with certain of the division's largest creditors and stakeholders.

Metis Strategic Advisors has been appointed business rescue practitioner (BRP).

The group says in a statement that it is critical for M&R Limited to find a solution for its declining liquidity position, arising principally from the losses in OptiPower, which has been exacerbated by the descoping of the contract at the Venetia diamond mine.

Following extensive modelling and testing of all viable options to address the liquidity constraints, the board believes that, based on best estimate budgets, the company's six-month cashflow is deemed to be vulnerable to the risks of the timeframes within which shareholder approval could reasonably be obtained for the disposal of noncore assets; and final losses in OptiPower as a result of delays in procurement and project progress.

Considering the risks and given the uncertainty regarding that company's short-term cashflow, the board is of the opinion that the best option to ensure the sustainable restoration of M&R Limited is to start business rescue of that company.

Under the direction of an experienced BRP, a return to sustainability has been assessed as readily achievable.

The business rescue process could incorporate some or all of the group's deleveraging plan.

M&R has resolved to start a process of disposing of noncore assets to meet the group's obligations to a consortium of four South African banks and restore liquidity.

As previously reported, the group reached an agreement with the consortium for the remaining R409-million debt, which provides for this debt to be repaid by January 31, 2026.

M&R points out that, while the group considerably reduced its debt with the consortium, it has been conducting its business in South Africa with restricted working capital facilities for an extended period.

This continued illiquidity has negatively impacted on OptiPower's operations and given rise to unnecessary and substantial losses in the group, it points out.

In an unrelated development, Murray & Roberts Cementation's South African operations were impacted by the recent descoping of the Venetia contract. The contract represented more than 50% of Murray & Roberts Cementation's business in South Africa.

"It is important to note that only M&R Limited and its trading division, OptiPower, is placed in business rescue. The group's core assets by value and earnings contributions are its underground mining businesses, which will continue to operate as going concerns, delivering on their contractual obligations with good prospects into the future," group CEO Henry Laas assures shareholders.

"The holdings board is confident that M&R Limited is well suited for a successful business rescue. The group remains solvent as disclosed in its financial statements for the year ended June 30, with a portfolio of high-quality assets in its core underground mining businesses.

"On this basis, the holdings board is confident that a successful business rescue will result," he adds.

"We will continue with the process of disposing of noncore assets and it is our expectation that the disposals will realise sufficient cash to settle the outstanding debt of R409-million owed to the banking consortium and most of, if not all 'post commencement financ...

Engineering News editor Terence Creamer discusses government's planned release of a remodelled Integrated Resource Plan (IRP) for electricity next week; what can be expected from the document; and the short period that has been set aside for public consultations on the document.

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The head of the National Transmission Company South Africa (NTCSA) has confirmed that the entity's board will insist that any independent transmission projects (ITPs) procured in the coming years should not reflect as a liability on the new entity's balance sheet.

However, interim CEO Segomoco Scheppers tells Engineering News that he remains confident that such a framework will be found in the coming months, and that an ITP pilot procurement programme will be launched next year as has been signalled by government.

The Ministry of Electricity and Energy and the National Treasury view the procurement of ITPs as key to accelerating the implementation of the NTCSA's ambitious Transmission Development Plan (TDP).

The TDP involves the building of 14 500 km of new transmission lines and the addition of 210 transformers by 2034, which are required to integrate 56 GW of new generation. It represents a fivefold increase in delivery over the next ten years compared with the previous decade and it has been estimated that it could involve investments worth some R390-billion.

In the Medium-Term Budget Policy Statement, the National Treasury confirmed that a pilot ITP procurement process was being prepared for the second half of 2025 using a build-operate-and-transfer (BOT) model and supported by a new credit-guarantee vehicle.

The World Bank's Multilateral Investment Guarantee Agency has been playing a central role in designing the instrument, which will seek to mimic the role that government guarantees conventionally play to de-risk projects for ITP developers but without exposing the national balance sheet to yet more contingent liabilities.

It has also been confirmed that the Independent Power Producer Office, which has overseen the public procurement of more than 7 GW of operational renewable-energy capacity since 2011, will oversee the pilot programme to procure South Africa's first ITPs.

Work is also under way to finalise the regulations for the publication of the Ministerial determinations needed to facilitate the procurement process, as well as the selection of mature ITP prospects from within the NTCSA's existing TDP pipeline.

However, Scheppers says the credit-guarantee vehicle is not designed to shield the NTCSA's balance sheet.

Additional work is, thus, still needed to finalise a design that is acceptable to the entity, whose board is said to be reluctant to "encumber" an already-stretched balance sheet further.

The board has, thus, endorsed only a so-called build-and-transfer solution, which is described as engineering, procurement, and construction (EPC) with finance, while management continues to explore the BOT-type solutions that are more typical globally.

"One of the pegs that has been placed in the ground by the board is that the ITPs should be properly off-balance-sheet," Scheepers tells Engineering News.

"This is something that government has accepted and National Treasury has said they will look at solutions."

Meanwhile, the NTCSA is pressing ahead with its own-build initiatives using a combination of traditional contracting models, including EPC contracting, which was introduced recently.

"NTCSA has identified 47 priority projects that can be fast-tracked to accelerate TDP delivery.

"These projects are expected to unlock 37 GW of new generation capacity by 2034."

Besides conventional investments into powerlines and transformers, NTCSA is also preparing to start adding synchronous condensers to provide inertia, voltage support and short-circuit power as the penetration of inverter-based renewables rises.

Seven synchronous-condenser sites have been selected, including Gromis, Aggeneis, Ferrum, Gamma, Koruson, Grassridge and Vuyani.

The entity's new corporate plan, which is under development, is expected to cater for the addition of the first synchronous condense...

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A remodelled Integrated Resource Plan (IRP) for electricity will be released to the public next week and is expected to deviate materially from the heavily criticised draft IRP2023, which was published for public comment in January.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa says the revamped document has taken account of changes in the electricity supply industry since the publication of the draft IRP2023, as well as the 4 338 stakeholder comments received on the document, including 136 "substantive" comments.

He has also announced that physical and virtual stakeholder engagements will be held from November 25 to 29 with the goal of finalising the update by November 30 and securing Cabinet approval for the final publication of what he calls "IRP2024" in the first quarter of next year.

The document will also have to be considered by the social partners at the National Economic Development and Labour Council ahead of gazetting.

The remodelling work has been conducted by the South African National Energy Development Institute (SANEDI) and will include a single horizon to 2050 - a departure from the draft's two horizons, covering the period to 2030 and from 2031 to 2050.

SANEDI CEO Dr Titus Mathe says the new document includes revised and updated assumptions, including an increase in the assumed energy availability factor of Eskom's coal fleet from around 50% to 60%, reviewed grid assumptions, as well as the delayed decommissioning of coal units that were meant to be shut between 2024 and 2030.

The base case will, thus, no longer reflect a continuation of loadshedding, the inclusion of which in the draft IRP2023 raised strong objections.

Mathe indicates that all the revisions will be released only at the first meeting, which is scheduled to take place physically at the Council for Geoscience on Tuesday, November 26.

However, he confirms that gas-to-power continues to feature heavily in the generation mix, especially after 2030, while the allocation to wind has also been increased substantially from that which was assumed in the draft IRP2023.

He also indicates that new nuclear will remain a feature of the remodelled plan beyond 2030, despite ongoing concern about the cost of the technology relative to possible alternatives.

While electricity stakeholders are keen for greater IRP certainty, particularly given that the current IRP2019 is considered to be sorely outdated, the truncated nature of the proposed consultation process could raise fresh concern and could even risk being challenged.

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The country must have a frank discussion about the 30% local procurement rule, which has been abused by the so-called construction mafia, says Public Works and Infrastructure Minister Dean Macpherson.

Macpherson spoke at the National Construction Summit on Crime-Free Construction Sites, held in Durban on Tuesday.

"We remain fully committed to the empowerment of local communities," he noted.

"But, it is clear that the 30% local procurement rule, which was introduced by the National Treasury under former President Jacob Zuma, has been used by criminal syndicates to extort contractors.

"We need to have an honest conversation about whether the…rule achieves its intended outcomes, or whether other interventions can be used to meaningfully empower our people.

"To end the influence of these criminal syndicates at infrastructure projects, it will require that we remove the incentives for these criminal syndicates to operate at construction sites," added Macpherson.

"Once we open the door to negotiations, and once we give in to paying what is, essentially, a bribe, it means that these criminal syndicates are incentivised to repeat their actions elsewhere."

The 30% local procurement rule stipulates that 30% of spending on public infrastructure and procurement worth more that R30-million should go to subcontractors based in local communities.

However, criminals are using the 30% rule to demand that 30% of project costs are paid to them directly.

"Or, they demand that only their people or contractors be hired for construction to continue. In many cases, these criminal syndicates demand the 30% payment without ever doing any work," said Macpherson.

"They demand their 30% share, even if the construction project isn't valued over R30-million. And now, they are demanding a 30% share from the private sector as well - even though the National Treasury rule has never applied to their projects.

"In the end, it is legitimate, hardworking black businesses in the built environment that have suffered the most, when they were supposed to benefit the most."

Deputy Minister of Finance Ashor Sarupen said in his address that no challenge in the construction industry was more urgent than the persistent site disruptions by criminal syndicates and protesting communities.

He said the construction mafia had disrupted more than 180 projects worth R63-billion since 2019, using tactics such as extortion, intimidation, violence and sabotage.

"Their demands for up to 30% of contract value undermine the integrity of our procurement systems and delay critical infrastructure delivery.

"Let us be clear: these disruptions are not merely operational challenges," said Sarupen.

"They represent a critical stress test for our economic governance. They expose the vulnerabilities in our institutional frameworks."

To address the challenge, government had started to reform the public procurement process, explained Sarupen.

"The Public Procurement Act, signed into law earlier this year, lays the foundation for a more transparent, efficient and inclusive procurement system."

Under the new regulations, subcontracting will be allowed only where feasible, and the process is expected to follow due process to prevent abuse.

Government entities will also have the option to pay subcontractors directly, eliminating the delays and exploitation often experienced under the current system.

"These reforms are designed to empower small and emerging contractors, while safeguarding the integrity of our procurement processes," said Sarupen.

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The issues of electricity affordability and Eskom's inefficiencies emerged as recurring themes as the National Energy Regulator of South Africa (Nersa) kicked off nationwide public hearings in Cape Town on Monday into the utility's latest revenue application.

Through its sixth multiyear price determination (MYPD6) submission, Eskom is requesting an increase in its allowable revenue to R446-billion in 2025/26, R495-billion in 2026/27 and R536-billion in 2027/28.

If approved, it would result in tariff hikes of 36.15%, 11.91% and 9.1% on April 1 of each of the three years covered. This, in light of Eskom also estimating a weak sales outlook, falling from 179 TWh to only 172 TWh by the end of the period on expectations that sales to large consumers will fall.

As a consequence, the standard tariff could rise to 266.78c/kWh next year from 195.74c/kWh.

In his presentation, Eskom CFO Calib Cassim provided a breakdown of the key drivers of the proposed increase, including a rise in primary energy costs to R128-billion next year, underpinned by coal costs of R93.6-billion. This makes primary energy the single-largest part of the proposed hike, comprising 11.2% of the 36.15% being sought.

The other components included in the revenue request are: operating expenses of R93.3-billion, including R37.4-billion for employee costs; a controversial R8.9-billion included to cover a portion of outstanding arrear debt owed to Eskom by municipalities; R66.6-billion for electricity purchases from independent power producers; R10-billion for international electricity purchases; R66.9-billion in depreciation costs; R42-billion for a return on assets, based on a 4% return; R6.5-billion for the environmental levy; R5.5-billion for the single quarter in Eskom's next financial year that will be affected by the new carbon tax; and R16.7-billion in approved clawbacks through the regulatory clearing account.

In addition, 5.7% of the increase relates to the implementation of additional negotiated pricing agreements (NPAs) with electricity-intensive companies, such as smelters.

The NPAs arise from a government policy decision to provide qualifying companies with an incentivised tariff, paid for by standard tariff customers.

Applicants for the incentive have to prove that electricity is a significant driver of their operating costs and that they are consuming a minimum of 80 GWh yearly at a load factor of greater than 70%.

Cassim reported that 12 TWh of sales next year would be covered by NPAs, a 121% increase in NPA sales when compared with 2024/25.

Nersa panel members questioned whether Eskom had raised the implications of the steep rise in the number of NPAs with government. Cassim replied that it would do so in future, but that it was currently focused on implementing the policy.

GUMEDE SUSPENDED

The Nersa panel was chaired by Nomfundo Maseti, with the fulltime member responsible for electricity, Nhlanhla Gumede, having been suspended ahead of the proceedings. The other panel members were Nersa chairperson Thembani Bukula, CEO Nomalanga Sithole, full-time regulator Muzi Mkhize and part-time regulator Thembeka Semane.

Panel members questioned whether Eskom should be considered an efficient operator, using as a proxy the fact that the utility was planning to increase its energy availability factor to 70% by March, instead of the 75% initially announced.

Concern was also expressed as to whether the application had been fully recalibrated to the more stable operating conditions at the coal stations; an improvement that had left the country loadshedding-free since March 26.

Panel members highlighted, in particular, Eskom's request for revenue for higher volumes of heavy-fuel oil, which is used to restart coal units on their return to service, as well as the low sales volumes being forecast.

Presenters, me...

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Out of the 206 infrastructure projects overseen by the Department of Public Works and Infrastructure (DPWI) this financial year, 164 projects are experiencing delays, says Public Works and Infrastructure Minister Dean Macpherson.

Addressing Parliament this week, he said this represented a 79% delay rate across the department's portfolio for this financial year.

"The financial toll alone is substantial, with an estimated R1.3-billion already invested in projects in this financial year that are yet to reach completion.

"Over several financial years, the number jumps to R2.9-billion in delayed construction projects."

Macpherson regards these delayed construction sites as crime scenes.

"Individuals have been paid for work they have not completed. It results in half-finished buildings, idle construction sites, and, most importantly, wasted public funds."

Macpherson said one such example was the Telkom Towers project in Tshwane, where around R1-billion was spent on upgrades over ten years with little to show for it.

"The complex, intended to become the South African Police Service headquarters, still has the Telkom sign in front of the building.

"To avoid further waste of public finances, we are now exploring options to either repurpose this asset or remove it from our portfolio altogether, with an independent investigation underway."

In order to reverse the trend of unfinished construction projects, Macpherson said his department would implement "several drastic measures" to overhaul the way it managed and executed projects.

"Going forward, contractors who do not meet their obligations on time and within budget will face immediate repercussions, including blacklisting.

"And not just the businesses - the individuals themselves. They belong in jail, not on construction sites…Contractors who underperform or engage in noncompliant practices will no longer have the privilege of working on public projects."

Working through the Construction Industry Development Board, the DPWI will also ensure that only contractors of the appropriate size and adequate level of expertise will be awarded large construction projects.

"In conjunction with this, we are enforcing new regulations for tender evaluation to ensure transparency and accountability," said Macpherson.

"By adopting a public-facing system that records the tender process, we are committing to openness in contractor selection.

"Moving forward, audio and video recordings will provide a transparent view of how decisions are made, which will prevent any bias or irregularity in the awarding of contracts."

The DPWI will also empower the Council for the Built Environment to set mandatory standards across the construction sector.

"Legislation will require registration for all practitioners in the built environment.

"We believe this measure will ensure that only qualified, accountable professionals are entrusted with our nation's infrastructure projects."

Contract Management Unit

Macpherson said the DWPI would create a Contract Management Unit, which would monitor contractor performance to ensure projects adhered to budgetary and time constraints.

"By centralising contract oversight, we will identify potential issues early, implement corrective actions, and hold contractors accountable at every phase of a project."

The DPWI is also developing a pre-approved panel of contractors which have demonstrated their capacity to complete projects on time and within budget.

"This panel of contractors will also serve as an intervention unit to finish incomplete projects," said Macpherson.

"It will allow the department to select contractors with proven track records, reducing the risk of project delays and budget overruns."

However, the challenge of delays did not rest solely with contractors, warned Macpherson.

"We have seen that client departments of...

Engineering News editor Terence Creamer discusses the much-anticipated hearings into Eskom's latest revenue application next week, the hearing date that has been set for Eskom’s retail tariff plan application; and and the likely outcomes of these the MYPD6 and retail tariff plan hearings.

This audio is brought to you by Endress and Hauser, a leading supplier of products, solutions and services for industrial process measurement and automation.

The Energy Council of South Africa has called for an overhaul of the way government procures new electricity generation and storage capacity from independent power producers (IPPs), describing the current model as outdated.

Addressing the Portfolio Committee on Electricity and Energy, CEO James Mackay highlighted the important role that the IPP Office had played in establishing credible procurement processes and in overseeing what was widely regarded globally as a successful programme.

However, he said the current model remained largely based on 2010 design principles that were overly reliant on State guarantees and did not reflect changing market dynamics, including the increasingly prominent role being played by private procurement.

Public auctions were still required, but the council argued that these should target areas of potential market failure or where strategic investment support was required.

In parallel, conditions should be created, through legislative changes and policy certainty, to ensure that private investors were able to compete to supply generation in areas where the technology and market risks had decreased.

In the near term, public auctions could also help support investment stability in light of the council's estimation that South Africa needed to ramp up yearly installations of wind and solar PV to at least 5 GW to avert any future risk of loadshedding.

However, Mackay argued that the instrument should increasingly be used to support national planning objectives.

These could include the promotion of specific investment locations to align with available grid capacity, facilitating investment in dispatchable technologies, or the unlocking of solutions required for system stability where market signals alone were insufficient to ensure bankable projects.

IPP Office head Bernard Magoro told lawmakers that several options were being assessed to alter the public procurement model to accommodate the changes that had taken place in the electricity market, as well as those that would arise as South Africa's legislative environment changed.

Government is also keen to reduce the contingent liabilities on the national accounts that have arisen from the extension of State guarantees to IPPs. These have been provided as cover for any possible default by Eskom or any prospect of expropriation or nationalisation.

This exposure currently stands at R226-billion, arising from 110 power purchase agreements that have been signed since 2011.

While stressing that the guarantees had never been drawn upon and that government's exposure would fall steadily as IPP debt and equity was repaid, Magoro indicated that the National Treasury was nevertheless keen to reduce its exposure further.

In October, Electricity and Energy Minister Dr Kgosientsho Ramokgopa confirmed that government was considering far-reaching changes to the IPP public procurement programme with the aim of accelerating 10 000 MW of additional renewables capacity covered by the Ministerial determinations issued to enable such procurement.

Lawmakers were also provided with details on some of the other key constraints facing the roll-out of additional generation capacity in the short-term, including the lack of certainty on curtailment, insufficient grid capacity, and grid-access rules that remained cumbersome and uncertain given that the regulator had not yet considered the interim rules that Eskom was currently implementing.

Magoro also used the platform to confirm that the evaluation of bids received for the latest renewable energy and battery storage bidding rounds were well advanced.

He reported that preferred bidders for both the 5 000 MW allocated for bid window seven of the renewables programme and the second battery storage bidding round for 615 MW/ 2 460 MWh could be announced by the end of November....