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Government and business have set a goal of increasing South Africa's electricity generation capacity by 10.5 GW by the end of 2025 as part of ongoing collaborative efforts to tackle growth-sapping power disruptions and reduce the intensity and almost daily frequency of loadshedding by year-end.

In a briefing held following the latest meeting between President Cyril Ramaphosa's Cabinet and those senior business leaders who have committed to supporting government in overcoming its loadshedding, logistics and crime crises, the Presidency's Rudi Dicks said the capacity could arise from multiple sources, including by recovering capacity from Eskom's unreliable coal fleet.

The lion's share, however, would arise from ongoing solar rooftop investment, public procurement and utility-scale projects being pursued by various companies on the back of a reform allowing distributed plants of any size to proceed without a licence, even when using the grid to wheel electricity.

Eskom's Generation Recovery Plan would focus on operational improvements at Matla, Majuba, Kendal and Tutuka, as well as within Rotek, and would seek to build on recent partnership successes with business at Kusile, Kriel and Matla.

However, Dicks said it would also hinge on securing "many more skilled resources" over and above the support that had been provided so far by the 75 individuals who had already been assigned to assist on a pro bono basis.

While some services would continue to be delivered on that basis, work was also under way by Eskom, business and the National Treasury on a proposed mutual cooperation agreement (MCA) to enable Eskom to "procure skilled experts, strategic parts and ringfenced projects".

Business for South Africa's Martin Kingston noted that such an agreement was already in place between Transnet and the Richards Bay Coal Terminal, which he described as a "cost-recovery mechanism".

Dicks said the MCA sought to formalise the partnership between Eskom and the private sector, while stressing that it would be seeking a deal that not only complied with legislation and supply-chain management regulations but still allowed for some "pro bono work to continue".

"Pro-bono support has already been provided but this does not cover technical engineering expertise to address both the main and auxiliary plant problems," Dicks added.

Kingston, meanwhile, offered an assurance that the MCA with Eskom would be transparent and structured to either remove or manage any potential conflicts of interest.

The proposed MCA follows the recent release of a report commissioned by the National Treasury in 2023 into the state of the Eskom coal power stations, in which the Vgbe-led report authors described the State-owned utility's governance structure and processes as "dysfunctional".

They made several recommendations for improving the management structure, including the establishment of an interim team of independent experts, outside of Eskom and reporting to the National Treasury, whose members would be situated at the stations to follow up key risk areas and intervene if required.

Dicks said the Vgbe report had confirmed the National Energy Crisis Committee's (Necom's) own analysis of the challenges, as well as what the required focus to ensure improved plant performance was.

GRID FOR UPCOMING BID WINDOW?

Outside of Eskom, business and government also agreed that actions should be taken to support ongoing private investment at a rooftop and utility scale, as well as ensure the success of the public procurement bid windows launched for renewables, gas-to-power and battery storage.

Together, these private generation investments were expected to provide the majority of the additional 10.5 GW of capacity to be added or recovered by the end of 2025.

It was also agreed that Eskom and the National Energy Regulator of...

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Bid Window 8 of government's Renewable Independent Power Producer Procurement Programme will be the last bid window under IRP 2019, says Mineral Resources and Energy Minister Gwede Mantashe.

"We'll then have issued all the bid windows provided for under IRP 2019."

Speaking at the Africa Energy Indaba 2024 in Cape Town on Tuesday, Mantashe noted that IRP 2019 is currently being updated into IRP 2023.

Mantashe said government would issue requests for proposals for 5 616 MW of renewable energy under Bid Window 8, as well as for Bid Window 3 of battery storage, both by the end of the current financial year.

He added that once this had happened, his Ministry would have had issued more renewable bid windows than "any other Ministry from 2011 to 2018".

"We have no attitude against renewables. We support all energy technologies that give us energy."

Mantashe also reiterated that government's goal to develop 2 500 MW of nuclear power was "not a dream".

"There will be nuclear in our country in addition to Koeberg. There is already an agreement. Procurement capacity is being worked on and we are investing in that capacity."

Mantashe emphasised that no party had yet been earmarked to develop government's nuclear ambitions and that the process would be open to all investors.

He added that government wanted to develop its nuclear capabilities to include nuclear fuel.

"We have rich deposits of uranium in South Africa, but…we are resisted by a partner called the US from developing it up to nuclear fuel stage.

"They say develop it up to yellowcake, export it, and then import fuel.

"In our view we should be allowed to develop fuel. We are not going to get into military applications, but we are going to use it for energy."

Mantashe also noted that government's ambition of forming a national petroleum company will no longer be "an aspiration" by this time next year - "it will be action".

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South African imports of solar panels, lithium-ion batteries and inverters climbed to a record $3.8-billion last year, or about R70-billion, while imports of wind turbines began to recover following a two-year lull, analysis compiled by Trade & Industrial Policy Strategies senior economist Gaylor Montmasson-Clair shows.

Imports in 2023 were double the $1.7-billion of 2022 and lifted the overall value of the three energy components imported over the ten years from 2014 to 2023 to above $10-billion.

The analysis points to an extremely strong rise in solar-panel imports last year, which was also the country's worst-ever year for loadshedding.

He describes panel imports of $947-million, or R17.5-billion, as "mind boggling", while noting that imports peaked in the second quarter at $450-million.

Over the full year, about 5 GW worth of panels were imported, up from 1.3 GW in 2022.

Montmasson-Clair, who is also facilitator of the South African Renewable Energy Masterplan (SAREM), a multistakeholder initiative aimed at stimulating industrialisation around South Africa's renewables and battery storage investments, believes South Africa should be considering its localisation options more seriously while recognising that some of the demand may have been stimulated by the National Treasury's tax incentive.

He reports that SAREM is considering various localisation drivers that boil down to ensuring that public demand from the large-scale renewables procurement programme and the roll-out of solar at public facilities play an anchoring role by supporting localisation.

"Any public support should come with a degree of localisation," he argues.

For manufacturers to be competitive across markets, including the private market, Montmasson-Clair says various supply-side support measures will be required, including investment incentives and possibly even carefully calibrated tariffs on a limited set of products.

There is also a need to sort out the broader ecosystem, particularly through skills development, improved testing and certification facilities and a mandatory quality standard to fight sub-standard imports.

The value of lithium-ion battery imports, meanwhile, reached $1.75-billion last year, more than double the $730-million recorded in the prior year.

"At an average of $139/kWh, that's about 12.5 GWh, or about 3.8 GW to 5.0 GW of capacity."

As with solar, the demand was underpinned primarily by loadshedding, but it also coincided with a strong rise in the registration of distributed plants with the National Energy Regulator of South Africa.

Montmasson-Clair says local manufacturing, based on imported cells, is booming and should be actively supported to grow domestic production and to phase out the import of battery packs.

"Once the market has consolidated or stabilised, we will have a better idea whether cell manufacturing is viable for this market segment."

Meanwhile, South Africa's wind industry started importing again in 2023, following two years of inactivity, with demand underpinned by projects procured under the much-delayed Risk Mitigation Independent Power Producer Procurement Programme, alongside wind farms being built on the back of corporate power purchase agreements.

Wind turbines with a combined value of $200-million were imported, mostly in the fourth quarter of last year.

Montmasson-Clair argues that industrial development in the wind sector requires constant demand, which has been absent even after the resumption of public procurement in 2020 and dampened further by the fact that none of the wind projects that bid for a 3 200 MW public-auction allocation progressed to preferred bidder status. This, after Eskom claimed that there was no remaining grid-connection capacity in the Eastern, Northern and Western Cape provinces, where the country's best wind resources are ...

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South Africa's Transnet National Ports Authority (TNPA) expects to appoint a developer within months for the common-user infrastructure required to support the proposed liquefied natural gas (LNG) terminal at the Port of Richards Bay, in KwaZulu-Natal.

In January, the State-owned company announced that it had selected a consortium comprising Vopak and Transnet Pipelines to design, develop, construct, finance, operate, and maintain an LNG terminal in the South Dunes Precinct at the deep-water port for a period of 25 years.

In parallel, TNPA was evaluating bids for a service provider to complete detailed engineering, design and construction of the marine infrastructure, gas transmission pipeline and bulk services required to operate the LNG terminal and to link it to a dedicated LNG berth able to accommodate a floating storage regasification unit.

The request for proposals (RFP) closed on November 20 and TNPA is targeting to make the appointment during March.

The developer will carry out the construction of marine structures such as berths, bollards, fenders, pipe racks and bund walls as well as the development of a gas transmission pipeline for handling LNG imports and bulk services infrastructure.

The project, together with the terminal itself, has been described as one of two catalytic projects already under way within TNPA's Eastern Region, which incorporates the ports of Durban and Richards Bay.

At the Port of Durban, meanwhile, TNPA anticipates appointing a service provider for the detailed design and commissioning of berth infrastructure works of the Point Container Terminal Marine Infrastructure and Bulk Services project by April.

The project seeks to expand the terminal's capacity from 0.2-million twenty-foot equivalent units (TEUs) to 1.8-million TEUs.

During a recent stakeholder engagement held at the Port of Durban, TNPA portfolio director Dr Bridgette Gasa-Toboti indicated that the two projects were in line with the goals of accommodating larger container vessels and meeting the country's new energy requirements.

She indicated that they were part of a broader project pipeline that included short-, medium- and long-term projects, with the projects earmarked for implementation between 2024 and 2029 collectively valued at R11-billion.

Besides the LNG and Point Container Terminal, the project pipeline also encompasses the deepening and lengthening of berths 203, 204 and 205 at the Pier 2 Durban Container Terminal.

The RFP for a multibillion-rand main marine construction works package will close on April 19, with constructure currently scheduled to begin between August and December 2024.

The project will result in a berth length increase from 914 m to 1 210 m to safely accommodate the simultaneous berthing of three Super Post Panamax vessels 350 m in length and with a draft of 14.5 m.

A service provider had also been appointed in January to undertake prefeasibility studies for both the Base and Satellite Stations to enable the construction of the South African Navy Base project at the Port of Richards Bay.

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An expert assessment of the state of Eskom's 14 coal-fired power stations conducted between March and May 2023 describes the prevailing "fixation" on the coal fleet's energy availability factor (EAF) as a "dead end" that is leading to poorer plant performance.

Conducted for the National Treasury by a Vgbe-led consortium, the report noted that outage and maintenance activities had been deferred over the last months and years to lift - or at least to maintain - the EAF.

Rather than restoring the plants to "as new conditions" after outages, the priority had instead been to "quickly" fix generation bottlenecks, which resulted in plants being forced to continue operating at the expense of their technical condition.

"The consequences are reflected in the high number of incidents, trips and partial load losses," the authors state.

The cycle, they add, has gained so much momentum that it could lead to the collapse of plants or to further capacity losses.

"It must be stopped immediately by executing proper maintenance and outage work - even if this means a higher level of loadshedding for a limited period of time.

"Moreover, up to 6 000 MW in partial load losses could be reactivated by fixing the plants' defects and applying prudent operation and maintenance practice."

That said, the report also notes that, at about 51%, Eskom's coal fleet EAF is much lower than international norms of 78% despite Eskom's maintenance budgets being higher.

Nevertheless, the EAF recommendations in the assessment appear to conflict with Eskom's Generation Recovery Plan, which is still premised on recovering the EAF to 65% by the end of March and to 70% by March 31, 2025.

The National Treasury said that some of the reports findings would be incorporated into Eskom's 2024/25 Corporate Plan but did not offer specifics.

The assessment, which was compiled as part of an effort to understand the state of the coal fleet after the National Treasury extended a R254-billion debt-relief package to Eskom, attributed the low EAF to a "dysfunctional" and overly complex management system within Eskom Generation.

The report concludes that the solution lies in improving operation and maintenance and conducting these activities according to industry standards, including by decentralising decision-making and providing power station managers with "full budget responsibility and accountability".

"This change in governance requires changes in the management structure of the Generation Division.

"The Vgbe team proposes decoupling the coal fleet from the rest of the generation business.

"The sole objective of this coal division should be the revitalisation of the existing power plants."

The report was released on the same day that Dan Marokane formally took up his position as CEO of the embattled State-owned utility with a board instruction to assess the Generation Operational Recovery Plan during his first 100 days in office.

The board also indicated that he should prioritise a review of the unbundling plans and engagements with internal and external stakeholders.

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National Treasury director-general Dr Duncan Pieterse says the reforms being proposed to facilitate greater private sector investment into infrastructure could obviate the need to introduce a policy of 'prescribed assets', whereby pension funds would be required to direct a specified level of resources towards government-selected assets.

Pieterse made the statement in response to a question posed during a virtual event hosted by PSG regarding government's position on prescribed assets, which the governing African National Congress has included in its election manifesto as an instrument it could consider introducing to stimulate infrastructure investment and industrialisation.

"From our perspective, part of the reforms that we are introducing in the infrastructure space is precisely to allow the private sector to invest in infrastructure provision, without us having to require any form necessarily of prescription.

"So, for example, if you start delivering the kinds of instruments that we were talking about in the Budget last week - [such as] infrastructure bonds or special vehicles through which the private sector can participate in government investment - then you will achieve the objective of greater leverage of pension-fund and other assets without having to resort to having to prescribe it, which is why there was such an emphasis in the Budget on these unique infrastructure instruments that we'll be introducing in the coming months."

Pieterse highlighted the proposals made in the Budget to simplify and reform the public-private partnership (PPP) framework to crowd-in private investment into areas such as water, transport and human settlements that have hitherto been dominated by public finance.

"Then, of course, we have the broader reforms that we've been working on over the last few years in electricity, freight logistics, and other parts of the network industries, because these are the key sectors that have been dampening our growth prospects," he added.

In his Budget speech, Finance Minister Enoch Godongwana said that the proposed PPP amendments would seek to reduce procedural complexity, create capacity to support and manage PPPs, formulate clear rules for managing unsolicited bids, and strengthen the governance of fiscal risk.

It was also confirmed that an infrastructure finance and implementation support agency would be established to coordinate the planning and preparation of large projects.

The agency would incorporate the functions of project preparation, PPP technical support and data management, and departments, as well as public entities and municipalities, would be able to use its services to prepare, plan and execute projects.

A document released as an annexure to the Budget Review also indicated that legislative amendments would be proposed later in the year to create two pathways for PPPs: one for high-value projects and a simplified version for projects valued below R2-billion.

"We are reviewing institutional arrangements and governance for catalytic infrastructure. The intention is to create clearer mechanisms for accountability, cooperation and coordination," the Minister said, adding that the intention was to fast-track delivery, particularly of blended-finance arrangements.

He also confirmed that several new financing instruments would be introduced, including infrastructure bonds and concessional loans.

"As part of this, a flow-through tax vehicle for specific infrastructure projects, similar to trusts and other investment vehicles, is being considered.

"A new funding window for proposals under the new dispensation of financing instruments will be opened to public institutions shortly," he added.

Engineering News editor Terence Creamer discusses the business community's reaction to the appointment of permanent executive leadership at Transnet; signs that the turnaround and reforms at Transnet are starting to show some results; and when these developments are likely to start having a positive impact on volumes.

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Both Cabinet and organised business have lauded the five-year public-private partnership agreement between Sasol and Transnet Freight Rail (TFR), under which the energy and chemicals group will fund the maintenance and repair of a dedicated fleet of 128 ammonia tankers.

In a statement following its February 28 meeting, Cabinet welcomed what it described as a "first-of-its-kind" partnership agreement, which it said would advance the country's Freight Logistics Roadmap, drafted to turn around the underperforming sector.

Likewise, in welcoming the appointments of Michelle Phillips and Nosipho Maphumulo as CEO and CFO respectively at Transnet, Business Unity South Africa said the State-owned utility's recovery would be assisted through the signing of "mutual cooperation agreements" between Transnet and its customers.

Neither Sasol nor TFR were willing to disclose the contract value, but Sasol CEO Fleetwood Grobler previously underlined the risk that "persisting supply-chain challenges in South Africa" posed to its chemicals business.

Sasol Chemicals produces and sells more than 540 000 t/y of ammonia, which is used to make a variety of fertilisers and industrial chemicals for the agriculture, mining, textile and metalworking industries and supplies to key clients such as AECI in Modderfontein had been disrupted by the lack of availability of rolling stock.

AECI told shareholders shortly after the Sasol-TFR deal was announced that it was still pursuing a hybrid sourcing strategy to reduce its dependence on South African supply and had already successfully imported ammonia through the Port of Richards Bay.

Sasol and TFR confirmed with Engineering News that no new wagons would be purchased under the agreement.

Instead, the focus was on refurbishing, with the support of Transnet Engineering, the existing assets to enable their full utilisation, while minimising the need for significant capital investment.

Sasol base chemicals VP David Mokomela confirmed that the agreement would secure the transport capacity needed by the group's Secunda and Sasolburg facilities, while acting TFR CEO Russell Baatjies described the agreement as a significant step toward addressing the industry's current capacity challenges.

"These trains will operate primarily on the Secunda-to-Isando and Sasolburg-to-Isando routes, which are in the Central Corridor," the companies confirmed in response to questions posed by Engineering News.

"The Richards Bay service (through the North Corridor) may be considered, depending on market demand and capacity availability," they added.

Besides rolling stock repair and maintenance, the companies confirmed that other investments were also being implemented on the Secunda-Isando corridor.

"These include the opening of rail maintenance facilities in Secunda … [and] other investment types that are currently under review, all aimed at enhancing rail efficiency for the benefit of the industry."

Both Sasol and TFR insist that the transaction, which covers 128 ammonia rail tankers in a bigger fleet of 350, did not require approval by the competition authorities, but they confirmed that it was assessed by the Competition Commission as well as internal legal counsel.

"As this is specialised equipment, it is not open to others.

"However, TFR is engaging other players who may wish to also pursue a similar approach with the entity."

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Organised business says the appointment of a permanent executive team at Transnet - led by CEO Michelle Phillips, who has been acting in the role since September and who has been with the utility for 20 years - will enhance stability in the relationships between Transnet and the business sector and accelerate the implementation of the Transnet Recovery Plan.

Phillips' appointment was announced by Public Enterprises Minister Pravin Gordhan on February 28 alongside that of Nosipho Maphumulo, who has been appointed CFO.

"We have, over the past months, seen a much-needed improvement in the relationship between the country's transport and logistics authorities and those businesses whose existence is dependent on efficient and effective logistics," Busa president Mxolisi Mgojo said in a statement.

Likewise, Business Leadership South Africa CEO Busisiwe Mavuso said Phillips had demonstrated decisiveness and an ability to get things done over the past six months, during which business had intensified its collaboration with the utility in support of its recovery.

"Phillips knows what business and government are trying to achieve with the Business for South Africa freight and logistics partnership.

"She was the acting CEO when we achieved a 45% reduction in vessels anchored outside Durban port and a 36%reduction in the waiting time to anchor for container vessels," Mavuso added.

The Minerals Council South Africa, whose members raised grave concerns about the utility's previous leadership, also congratulated Phillips and Maphumulo on their appointments and suggested that "green shoots" were showing in relation to Transnet's turnaround.

"The Minerals Council notes Ms Phillips's commitment to implementing the Transnet Recovery Plan, which includes sustainable cooperation with the private sector to improve operational efficiencies," the council said in a statement, noting that mining accounted for about 80% of Transnet Freight Rail's annual revenue.

The Minerals Council and its members were actively involved in four corridor optimisation processes to stabilise the performances of the railways serving the coal, chrome, iron-ore and manganese mines, with miners having resorted to more expensive road transport in many instances.

"Returning bulk commodities to rail is a priority for the mining industry."

Mgojo, who is also CEO sponsor of Business for South Africa's transport and logistics focal area, stressed that the progress made to date represented but the first step in addressing the crisis.

"Stability is essential to sustain the good work being done," he added, noting that the poor performance of the country's rail networks and ports was costing the economy an estimated R1-billion per day, with about R50-billion lost in the minerals sector alone in 2023.

Business is participating in the National Logistics Crisis Committee set up by President Cyril Ramaphosa in 2023 to improve Transnet's operational performance, implement rail and port reforms and to create enabling conditions for the freight transport system to operate effectively.

"Though we are not yet close to the realisation of our ultimate objectives, there have been tangible and encouraging advances," Mgojo said.

In particular, Busa highlighted the approval by Cabinet in December of the Freight Logistics Roadmap and the Rail Private Sector Participation framework, the establishment of an Interim Infrastructure Manager by Transnet Freight Rail, and the signing of mutual cooperation agreements allowing customers to assist with the procurement of spare parts.

It also noted the approval of a R47-billion guarantee facility for Transnet by the National Treasury, the deployment of technical experts from business into Transnet, and the implementation of best practices into day-to-day operations.

"We expect that with skilled and exper...

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JSE-listed AECI, which is undergoing far-reaching restructuring to re-focus on its core mining and chemicals businesses and reduce debt, reports strong initial interest in the six noncore companies that it plans to dispose of over the coming 18 months for combined proceeds of about R2.5-billion.

CEO Holger Riemensperger insists that there will be "no fire sale" and reports that a comprehensive disinvestment roadmap has been finalised for Much Asphalt, Animal Health, Schirm, Sans Fibers, Beverages and Public Water.

The roadmap is being implemented by a newly assembled mergers and acquisitions team that is currently overseeing a staged and structured sale process with the support of advisers and investment banks.

The proceeds will be used to pay down debt, which stood at R4.3-billion at the end of December, down from R5.3-billion in the previous financial year. Gearing also fell from 45% in 2022 but remained elevated at 35%.

However, Riemensperger stresses that the restructuring is governed primarily by the group's strategic goals of doubling the profitability of the core mining and chemicals units by 2026 and positioning the mining business as a top-three global supplier of explosives, detonators, and mining chemicals.

The strategy relies heavily on the accelerated internationalisation of the mining business, which was developed over the last century primarily to support the South African resources industry, which still accounts for 30% of the mining unit's revenue.

The group intends sustaining its markets share in South Africa but is targeting to continue to expand aggressively in Australia, while increasing its market share in several South American markets, as well as in the US and Canada.

Riemensperger reports that these markets have been selected largely because of their increasing exposure to the energy transition minerals, also known as critical minerals, such as lithium, copper and cobalt. Demand for these minerals is also seen as underpinning AECI's growth into the rest of Africa, with sales to the copper- and cobalt-rich Democratic Republic of Congo already growing strongly.

By 2026, South Africa's revenue contribution within AECI's enlarged mining business could be about 10%, while Australia's revenue contribution is likely to have grown to a similar level.

Riemensperger says the group has adopted an asset-light approach to its internationalisation, which is typically facilitated by a small acquisition in the target market to provide AECI with a licence to operate that could otherwise take several years to secure.

The international businesses are not backward integrated into feedstocks such as ammonia or ammonia nitrate, which together with the company's mobile emulsion plants, offers them greater flexibility.

In fact, Riemensperger argues that backward integration into ammonia is no longer a competitive advantage for explosives firms, particularly in a context where some clients are willing to pay a premium for products based on green ammonia.

Nevertheless, security of ammonia supply remains a key business imperative for AECI's Modderfontein facility, in Gauteng, which has experienced disruptions in recent years as a result of the deterioration in Transnet Freight Rail's (TFR's) service.

The group, thus, welcomed news of a five-year partnership between Sasol and TFR for a dedicated fleet of 128 ammonia tankers, which should materially improve the reliability of supply between Secunda and Modderfontein.

However, AECI will continue to pursue a "hybrid" ammonia supply model, having recently imported the feedstock through the Port or Richards Bay.