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The State-owned Enterprises (SOEs) that were previously under the stewardship of the Department of Public Enterprises (DPE) will report to their respective line departments in terms of policy and regulatory matters, President Cyril Ramaphosa told lawmakers on Wednesday.

Replying to the debate on the Presidency's Budget Vote, Ramaphosa acknowledged questions raised by Members of Parliament about the future SOE ownership model in light of his decision to dissolve the DPE.

The decision raised the potential for moral hazard between policy making and governance given that the Ministry of Public Enterprises had hitherto acted as shareholder representative at Eskom, Transnet, Denel, South African Airways, Safcol and Alexkor with the goal of reducing likely conflicts of interest at the line departments.

"As I indicated in the Opening of Parliament Address, we are introducing legislation to establish a State-owned holding company to oversee and coordinate key strategic SOEs.

"The legislation will assign the functions of the Holding Company (Holdco), which will cover issues of governance, financial management, remuneration standards and similar matters.

"This is in line with global best practice and is the approach taken by many countries with SOEs that successfully fulfil a social and economic development mandate."

He also announced that the Department of Planning, Monitoring and Evaluation (DPME) had been assigned the responsibility to finalise the processes towards the establishment of the Holdco.

"It will establish a dedicated SOE Reform Unit with the appropriate expertise to oversee this work."

In an earlier Budget Vote speech, Minister in the Presidency Maropene Ramokgopa, who leads the DPME, urged lawmakers to support the timeous processing of the National State Enterprises Bill, which includes far-reaching changes to the shareholder management model.

Ramokgopa used the platform of the Budget Vote to espouse the benefits of a centralised shareholder management model, which she argued had the following advantages:

a clear delineation of the policymaking, shareholding, and regulatory roles by the State in governing SOEs;

greater coherence and consistency in the application of corporate governance standards across all SOEs; and

greater transparency and accountability for SOE operations, by enabling uniform oversight and performance monitoring.

She also used the address to dismiss persistent arguments that the new model and the dissolving of the Public Enterprises Ministry were designed to facilitate privatisation.

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The Port of Richards Bay, in KwaZulu-Natal, is progressing with planning for infrastructure and terminal investments aimed at consolidating its position as a bulk export hub for key minerals such as coal and chrome, while also diversifying its activities to include more containers, as well as the importation and storage of liquefied natural gas (LNG) and liquid fuels.

The developments are included in a masterplan and the Transnet National Ports Authority (TNPA) estimates that investments of more than R30-billion will be required over the coming ten years to open up new berths, as well as to facilitate the relocation of the South African Navy from the Port of Durban to the Port of Richards Bay.

Besides the new LNG Berth 207 and associated infrastructure, which is scheduled to be operational in 2027, new berths are planned in the coming five years at Berths 605, 709 and 710, as well as 802 and 803.

TNPA has appointed Grindrod South Africa as the preferred bidder to develop and operate a container handling facility at the port, in line with a strategy to increase the yearly container handling capacity at the port from 50 000 twenty-foot equivalent units (TEUs) to 200 000 TEUs. The project will involve capital investment of about R285-million.

Meanwhile, FFS Tank Terminal has been appointed to develop and operate a brownfield liquid bulk terminal under a 25-year terminal concession also in line with the masterplan, while a tender evaluation is currently under way for five greenfield liquid bulk terminals in the South Dunes Precinct.

To sustain its position as a bulk export hub, however, the Bayvue Rail Yard is being expanded to accept longer trains in anticipation of rail recapturing some of its former position at the port, where trucks have been playing a significant role in recent years as the rail service collapsed.

During a recent briefing, port manager Dennis Mqadi stressed that the port, which has been operational since 1976, has not been designed to receive road trucks.

However, monthly volumes had a one point peaked at 35 000 trucks, stretching both its infrastructure and that of the surrounding town to breaking point and resulting in serious safety and security problems.

Various initiatives have been launched together with the surrounding municipality to manage the high truck volumes, which have settled at between 500 to 700 a day. Interventions are also being made through the Presidency's National Logistics Crisis Committee to ensure a recovery in freight rail.

"It must be emphasised that we are not shifting away from bulk exports at Richards Bay, we are just adding and complementing those bulk export with new growth activities," Mqadi explains.

He also reports that steps are being taken to improve the deepwater port's climate resilience, as well as to green its operations.

The port's breakwater will be enhanced to protect and sustain the current infrastructure, which has come under threat from recent extreme weather events.

The breakwater's dolos will be refurbished and/or replaced to position them to cope with 11-m-heigh waves and enable the port to receive the latest generation of vessels. The project is anticipated to start in the first quarter of 2025/26.

To green the port, TNPA is seeking a partner to develop a 20 MW solar PV plant, construction of which Mqadi says will begin soon and will assist the port in lowering its carbon emissions.

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Energy storage company Balancell is moving into a new R80-million factory in Ndabeni, Cape Town, as the business gears up to grow its capacity roughly tenfold, says chief commercial officer Ian Pieters.

The lithium ferro-phosphate battery assembler's previous plant was limited to 250 MWh capacity a year, with the new facility scaling that up to between 2 GWh and 3 GWh a year.

Lithium ferro-phosphate batteries are generally regarded as more stable and less temperature sensitive in lithium chemistry, explains Pieters.

Coupled with Balancell's three-tiered safety features, embedded into the battery, the fire risk is significantly lower, he adds.

"Balancell has also designed these batteries to be almost as energy dense as other lithium chemistries."

Pieters says Balancell's expansion project is driven by strong demand for energy storage products locally and globally.

This demand is then also driving Balancell's expansion into the rest of Africa and Europe.

"We recently commissioned a large 2.5 MWh stationary battery installation for a factory in Nigeria," says Pieters.

The company's products will also soon be in Europe, with Balancell's first battery systems set to arrive in Portugal in September.

Breakthrough Customer

Balancell's biggest customer is Toyota Material Handling, a subsidiary of CFAO in South Africa.

Toyota acted as the breakthrough client for Balancell, allowing the company to grow in tandem with the popular Japanese brand.

"They liked the quality of our system, the durability, the real-time communication and the intellectual property in our battery management system (BMS)," says founder and CEO Dr Ian de Vries.

"At the time of our launch we were the only battery manufacturer in South Africa with a locally designed BMS that had real-time communication - and not only when charging, but also when in operation.

"Balancell's technology can measure energy in and out of the battery more accurately, and faster than most batteries globally, and this allows the BMS to better protect the battery and optimise its performance," notes De Vries.

"Toyota took a positive view on a South African startup and, as a result, we have installed more than 3 500 batteries (59 500 kWh) in Toyota's forklifts," says Pieters.

"We believe there remains substantial room to grow in what we call the industrial motive market," he adds.

"I think we have only scratched the surface of what is possible, as a lot of traditionalists are stuck on using lead-acid batteries in their forklifts, especially in Europe."

Pieters says South Africa has been one of the fastest adopters of lithium batteries in the industrial space, with the logistics market moving rapidly from diesel and lead-acid batteries to lithium batteries.

He believes that larger stationary energy storage projects, the mining sector and the public transport sector also offer opportunities for growth.

"We are speaking to a few bus manufacturers about electric buses, for example. We are also looking at rolling out our technology in mining equipment, such as underground locomotives."

One of the first markets where Balancell had success, and where it remains active, is the cleaning equipment and access equipment markets.

Joule Roots

Balancell was established 14 years ago by De Vries and a team of senior engineers who had all been involved in the design and production of South Africa's first electric car - the Joule.

Prior to that, De Vries was an associate professor at the Cape Peninsula University of Technology.

He had also founded two other startups - in electric bicycles and power electronics - and was consultant on Round 1 of government's Renewable Energy Independent Power Producer Procurement Programme.

"When we started, lithium batteries were two-and-a-half times more expensive than lead-acid batteries," notes Andrew McPherson, a Balan...

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The Crestcare Hospital Group has cut the ribbon on its newest development, the R238-million acute hospital in the Western Cape town of Malmesbury.

Crestcare's majority shareholder is black-owned and managed private equity firm Summit Africa.

Summit Africa private equity partner and value-add lead Ngange Nongogo tells Engineering News Online that the Crestcare group typically targets rural and peri-urban areas that are viewed as underserved by the big four hospital groups in South Africa, with the group's tariffs also lower than that of the competition.

He says Summit Africa is focused on making financial, as well as social impact. Listing on the JSE is not being excluded as a future option.

Situated in the agricultural heart of the Swartland, the new Malmesbury hospital means that the town's residents no longer have to travel more than 40 km to the nearest private healthcare facility.

The new hospital is expected to create 170 new jobs once fully operational.

"Bringing critical acute care closer to communities has a ripple effect," says Crestcare Malmesbury Hospital CEO Charl Hambridge.

"Every hospital bed added creates 1.5 direct jobs, and each R1-million invested in a hospital can generate an equivalent annual income for local small, medium-sized and micro businesses."

Opening for admissions on August 1, the hospital will feature 84 beds and four advanced operating theatres, including a high-tech laminar flow theatre.

Laminar flow theatres work to prevent airborne bacteria from infecting open wounds, while also removing and reducing levels of bacteria on exposed surgical instruments, surgeons and the patient's skin.

With an emphasis on acute care, the hospital focuses on the immediate and short-term treatment of any critical or life-threatening injury, illness or disease, with several specialist areas such as emergency and trauma care, intensive care, as well as neonatal and pediatric intensive care units.

Oncology and dialysis units are potentially on the cards once the hospital expands, says Crestcare CEO Kit Wostenholm.

The facility's landlord is Twin City.

The launch of Crestcare Malmesbury follows the opening of the newly expanded Crestcare Zoutpansberg in December, a 92-bed acute hospital in Louis Trichardt, Limpopo, serving Makhado and the broader Vhembe district.

The other entities in the group include Crestcare Nelspruit, a specialist hospital serving patients in the broader Mpumalanga, Mozambique and Swaziland regions; as well as the Apex Soweto Day Hospital, in Gauteng; and LifePath, the second largest mental health and addiction treatment provider in South Africa.

Looking ahead, Nongogo says the key focus is to consolidate the Crestcare group into one cohesive entity with similar branding and standard operating procedures, while also putting in place a central management office.

There is also an expansion on the cards, in growing a 14-bed hospital to a 77-bed hospital, as well as the acquisition of an existing 163-bed facility.

The group aims to have at least 800 beds within the next two years, specifically in peri-urban, rural and township areas.

"Notwithstanding the potential introduction of National Health Insurance, we view the healthcare sector as a defensive asset class," says Nongogo.

"For this reason, we continue to invest directly in the provision of quality, affordable healthcare services in peri-urban, rural, and township areas, where there is a significant undersupply, by partnering with local communities and medical specialists."

Nongogo adds that healthcare infrastructure investments in rural areas benefit from high barriers to entry and are tenant-driven, non-speculative ventures with capital protection through the land value, yearly property revaluations, rental escalations and long, triple-net leases.

Engineering News editor Terence Creamer discusses the key themes of interest to business raised during President Cyril Ramaphosa's Opening of Parliament speech; the ongoing and new reforms that will be pursued by the Government of National Unity; and the immediate priorities from an economic perspective.

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A second round of economic reforms under Operation Vulindlela, together with green industrialisation and scaled-up infrastructure development have been placed at the centre of the government of national unity's (GNU's) agenda for driving inclusive growth and job creation, which President Cyril Ramaphosa outlined in his opening of Parliament address on Thursday night.

Speaking 50 days after highly competitive elections where no single party secured an outright majority and days after the new members of the expanded executive met at a Cabinet lekgotla to agree on priorities for a GNU that includes ten political parties, Ramaphosa announced that inclusive economic growth had been placed at "the top of the national agenda".

"The Government of National Unity will pursue every action that contributes to sustainable, rapid economic growth and remove every obstacle that stands in the way of growth," he announced, while confirming that the other two priorities agreed were that of reducing poverty and building a capable State.

In outlining his growth vision, Ramaphosa confirmed that a second phase of Operation Vulindlela would be initiated to consolidate reforms already under way in the electricity, freight logistics and water sectors, as well as to facilitate an injection of skills and tourists through visa reform, while also adding new reform priorities.

During the second phase specific focus would be given to the following areas:

reforming the local government system and improving the delivery of basic services;

harnessing digital public infrastructure for growth and inclusion; and

releasing public land for social housing and redirecting housing policy to enable people to find affordable homes in areas of their choice.

Emphasis was also given in the speech to the issue of growing service delivery backlogs at the municipal level, with the goal of repositioning struggling municipalities and metros as "providers of social services and facilitators of inclusive economic growth".

"We will ensure that the institutional structure and funding model for local government is fit-for-purpose, and that municipalities are financially and operationally sustainable.

"We will put in place systems to ensure that capable and qualified people are appointed to senior positions in municipalities, and ensure independent regulation and oversight of the appointment process."

Infrastructure development, green energy and the associated industrial spin-offs, manufacturing, agriculture and tourism were also identified has key growth levers for the coming five years.

"From our largest metros to our deepest rural areas, we have a clear intention to turn our country into a construction site, as roads, bridges, houses, schools, hospitals and clinics are built, as broadband fibre is laid and as new power lines are installed," Ramaphosa said to enthusiastic applause.

While yet again signalling government's desire to add value to the country's minerals ahead of export, Ramaphosa argued that it was also time to "seize the enormous opportunity in renewable energy for inclusive growth".

"As we undertake a just transition towards renewable energy, South Africa must create a green manufacturing sector centred on the export of green hydrogen and associated products, electric vehicles and renewable-energy components."

He also announced that the country's sector Masterplans would be reviewed and indicated that the intention of the GNU would be to "pursue a smart industrial policy that focuses on the competitiveness of our economy, and that incentivises businesses to expand our exports and create jobs".

Reducing red tape was another priority area, with departments and public entities having been directed to reduce the undue regulatory burdens that hold back businesses, especially small firms, which "hold the greatest po...

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Eskom has lodged a surprise objection to the issuance of licences to private traders in areas where its distribution entity currently holds a licence, arguing that the current rules of the National Energy Regulator of South Africa (Nersa) prohibit two or more licensees supplying the same area.

The objection was made during virtual Nersa hearings being held to consider the granting of generation, trading, as well as import-export licences to various entities, including Discovery Green, CBi Electric Apollo, Green Electron Market and Africa GreenCo.

Presenting on behalf of Eskom's distribution division, Mohlago Masekela said that should trading licences be issued to the applicants, the holders would be entitled to sell electricity to existing Eskom customers.

"This arrangement will result in two or more licensees supplying in the same areas or to customers within another licensee's area of supply," Masekela said, while noting that such activities were prohibited by Nersa's Rules for Licensable Areas of Supply.

Quoting from the rules, she highlighted several prohibited activities, including a prohibition on licensees supplying the same area or customers within another licensee's area of supply except for legacy cases; a licensee lodging a dispute on an unlicensed electrified area after the supply area is energised, with such lodgement required before an electrification project commences; and a licensee supplying an area that qualifies as a licensable area without Nersa's approval.

Masekela said that granting the licences would also compromise the sustainable and orderly development of electricity supply infrastructure and allow for a cherry-picking of customers.

Such cherry-picking was evident, she argued, in various applications indicating the traders intended contracting with large power users rather than residential or small business customers.

Eskom also noted that current tariffs made accommodation for cross subsidies and that if a contributing customer was removed from the cross-subsidy base, it would place pressure on the remaining customers.

"Having said that, Eskom objects to the granting of the licences where Eskom customer will be taken over," Masekela concluded.

Eskom's objection resulted in a flurry of questions from Nersa regulators, who asked whether acceding to Eskom's objection would not breach competition and energy regulation legislation, as well as run contrary to Nersa's own mandate to facilitate competition.

Asked whether Eskom had engaged with the applicants before raising its objection at the hearing, Eskom said it had become aware of the applications only through a Nersa notice and that it had, thus, not met with the applicants prior to the virtual meeting.

During the same hearings, Eskom's recently separated National Transmission Company South Africa (NTCSA) made no similar objection to the application of import and export licences.

Using presentation slides displaying the Eskom logo, NTCSA's Andrew Etzinger did however highlight the need for enabling rules and processes.

He also underlined the importance of "safeguarding the recovery of all costs in compliance with the electricity pricing policy".

"A key principle is that the use of Eskom assets may be required to facilitate the transactions of the other trading participants.

"Eskom, and the South African consumer who has funded these assets, must be compensated for usage," Etizinger said, while calling for rules and frameworks to be developed expeditiously.

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While proclaiming industrial policy to be the "centre piece" of the government of national unity's economic development strategy, new Trade, Industry and Competition Minister Parks Tau indicated he would be leaning on local procurement to create early-stage demand in targeted sectors.

In his maiden Budget Vote address to Parliament, attended by his predecessor Ebrahim Patel, Tau said industrial policy was the anchor around which the Department of Trade, Industry and Competition (dtic) would deploy trade instruments, incentives, tools and regulation, including any support for new energy vehicle production and green industrialisation.

Over the coming three years, R30.1-billion had been allocated to the dtic, of which 48.7% had been allocated to its incentive schemes.

The department would also seek to build on the sector partnerships in already identified prioritised sectors, including those eight sectors where masterplans had been negotiated.

"These masterplans have supported localisation, increased investment, exports and job retention. This administration will focus on integrated implementation mechanisms, deploying a government-wide set of tools," he said.

This, despite African National Congress Member of Parliament Mzwandile Masina, himself a former Trade, Industry and Competition Deputy Minister, appealing in his response to the Budget Vote that it no longer be business as usual at the dtic, given ongoing deindustrialisation.

For his part, Tau underlined the importance of manufacturing-led growth, arguing that jobs were created both upstream and downstream of such sectors and that manufacturing-linked jobs were also more resilient and higher paying than those in other sectors.

He also linked localisation directly to employment, stating: "We have industrial capabilities as a country. We must stop exporting jobs."

To leverage local procurement, however, the dtic would need to play a more active role in "identifying procurement opportunities, advocating for local-content requirements, monitoring implementation and evaluating impact".

"In identified industries, including infrastructure build programmes, we will work with relevant State-owned enterprises and industry to support local manufacturing of our key products and create jobs," Tau added.

That said, he also underlined the importance of growing exports in a context where the domestic market was too small and growing too slowly to sustain manufacturing-led growth and where a weak fiscal outlook was limiting infrastructure investment.

The weak fiscal position of government was underlined by Deputy Minister Zuko Godlimpi, who said that industrial financing should not be limited to public financing alone.

Godlimpi also argued that greater coordination of macroeconomic policy, where industrial policy was prioritised, could also go a long way to supporting a manufacturing-led growth strategy.

Meanwhile, Tau stated that, in order to reduce South Africa's dependence on its small domestic market, the dtic would implement new export measures that would be coupled with an expansion of current measures and improve their effectiveness.

Government would also seek to leverage its international relations to expand its export footprint, including with the BRICS+ bloc, through the African Continental Free Trade Area, as well as through the African Growth and Opportunity Act with the US and the Economic Partnership Agreement with the EU.

In his address, Deputy Minister Andrew Whitfield, of the Democratic Alliance, also argued that South Africa could become an export-oriented economy.

Achieving such a goal, Whitfield added, would require a "dedicated focus on implementing measures to boost the competitiveness of local industries in global markets, streamlining export processes, lowering trade barriers, offering financial and technical...

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Forestry, Fisheries and the Environment Minister Dr Dion George has promised "wide consultation" on South Africa's next nationally determined contribution (NDC) decarbonisation pledge that will be lodged with the United Nations next year.

Delivering his maiden Budget Vote, George stressed that South Africa remained a responsible global citizen and committed to the multilateral rules-based regime under the United Nations Framework Convention on Climate Change and its Paris Agreement.

His speech followed sign-off by previous Forestry, Fisheries and the Environment Minister Barbara Creecy on an appeal by Eskom regarding ongoing non-compliance by Eskom coal power stations with minimum emission standards (MES); a decision that could have an impact on South Africa meeting its prevailing NDC commitment.

Creecy's decision followed an appeal of the National Air Quality Officer's October 2023 MES decision, which Eskom said would lead to the shutting of 30 000 MW of capacity, as the cost of retrofitting the plants to meet air-pollution limits would be a prohibitive R300-billion.

"We are preparing our second nationally determined contribution through technical work and then wide consultation, [and] will take into account the outcome of the first global stocktake, and communicate another fair and ambitious contribution in 2025."

George, who is one of the Democratic Alliance Ministers in the government of national unity, also reaffirmed his commitment to implementing a just energy transition.

"We plan to accelerate investment in renewable-energy projects.

"We need to strengthen our transmission grid and with our abundance of solar, wind and mineral resources, we are well positioned to generate jobs in renewable energy, green hydrogen, green steel, electric vehicles and other green products.

"A particular focus is Mpumalanga where many livelihoods are at risk, and we remain committed to facilitating new industries, new economic opportunities and sustainable jobs," George said.

Meanwhile, he committed his department to finalising all environmental impact assessment (EIA) applications within the regulated timeframe during 2024/25 financial year.

He said decisions on 320 EIA applications were issued in 2023/24, 99% of which were issued within the regulated timeframe.

"As a means to enable the country's response to the energy situation, the department made a commitment to finalise energy generation, transmission and distribution infrastructure applications within 57 days from the receipt of the final report," he confirmed.

He reported that 80.5% of energy generation, transmission and distribution applications were issued on time after the receipt of the final report, enabling a generation potential of 51 358 MW of energy within the regulated timeframe.

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Newly appointed Water and Sanitation Minister Pemmy Majodina has assured of the continuity of the various reforms and improvements initiated by her predecessor Senzo Mchunu, who is now Police Minister.

Majodina was appointed Water and Sanitation Minister on June 30 following the formation of South Africa's seventh administration under the Government of National Unity.

Tabling the Department of Water and Sanitation's (DWS's) Budget Vote on Friday, she said that many of the reforms that would be continued were mandated by the National Development Plan and the Presidency's Operation Vulindlela.

In addition to this, the DWS is focusing on three key priorities over the next few years to ensure that the availability of water does not become a constraint to investment and economic growth, and that there is sufficient water to meet the needs of South Africa's population.

These include timeous investment in additional water resource infrastructure to capture the remaining 25% of South Africa's exploitable surface water resources; diversifying the country's water mix and increasingly making use of other sources of water, such as groundwater, water reuse and desalination; and implementing more effective water conservation and demand management programmes to bring the water consumption per capita levels in line with, or below, the international average.

Further, the many water resource infrastructure projects which are in various stages, from the fund-raising and design phases to construction, will continue, following Mchunu's efforts to unblock projects that had stalled and accelerating those whose implementation had slowed.

Among these projects are the new R26-billion Upper uMkhomazi dam and associated works, which will provide urgently needed additional water to eThekwini and surrounding districts in KwaZulu-Natal, and the new R1.8-billion Cwabeni off-channel storage dam, which will provide additional water to Port Shepstone and surrounding areas in KwaZulu-Natal, besides many others.

"We are also implementing the R24-billion Olifants river water resource development project in Limpopo and the R10-billion Vaal Gamagara Phase 2 project in the Northern Cape," she commented.

"These two projects are being implemented in partnership with the mining sector, with joint funding by government and the mines. Both projects will increase water supply and ensure water security to enable investment in mining. Communities adjacent to the bulk pipelines will also benefit from these projects."

Meanwhile, Majodina tabled a DWS budget of R134.9-billion over the medium-term expenditure framework (MTEF), comprising allocations of R42.6-billion, R46.3-billion and R45.9-billion in the 2024/25, 2025/26 and 2026/27 financial years respectively.

On the main account, the department has been allocated R72.9-billion over the MTEF, comprising allocations of R24-billion, R25.1-billion and R23.7-billion in the 2024/25, 2025/26 and 2026/27 financial years respectively.

"Included in the main account budget are conditional infrastructure grants for municipal water services totalling R36.3-billion over the MTEF. This includes R20.1-billion for the Regional Bulk Infrastructure Grant and R16.1-billion for the Water Services Infrastructure Grant."

The Water Trading Entity, which is mostly funded through revenue collection from the sale of water and receives some transfers from the fiscus for infrastructure projects, has been allocated R61.9-billion over the MTEF - R18.5-billion, R21.2-billion and R22.1-billion in 2024/25, 2025/26 and 2026/27 years respectively.

"We will make every effort to ensure that the department deploys these resources as efficiently as possible to ensure that service delivery reaches our communities. This includes our commitment to prevent improper expenditure.

"We will also continue to clear ...