AutoTrader's 2023 South Africa Electric Vehicle (EV) Buyers Survey shows that 63% of respondents believe they would purchase an EV within the next five years, down from 65% in 2022.

Some marginally better news is that 7% of respondents indicated that they would never purchase an EV in 2023. A year ago this figure was 6%.

While EV adoption remains low and slow in South Africa, EV experience, however, has seen an increase, with 12% of respondents having been in an EV last year, compared with almost 20% in 2023, with 18- to 24-year-olds having the most EV exposure.

The survey also reveals that 59% of respondents noted that they were willing to spend up to R500 000 on an EV, down from 64% in 2022, 72% in 2021, and 74% in 2020, which indicates that people are becoming increasingly willing to spend more on an EV.

EVs are, on average, still significantly more expensive than comparable internal combustion engine (ICE) vehicles.

There is currently no battery EV on the South African market priced below R500 000.

Survey respondents noted that an EV's higher price point remained its biggest drawback, along with charging time, lack of charging infrastructure and impact of loadshedding.

Its main advantages according to respondents? Reduced carbon emissions, reduced air pollution and cheaper running costs.

Men, it turned out, were more willing to spend in excess of R500 000 on an EV, while women appeared more concerned with performance, higher resale value, and safety than their male counterparts. They were also more optimistic about an EV's ability to produce a range of 500 km-plus.

Significantly, 82% of respondents said they would consider purchasing an EV if it could be fully charged in under an hour at a fast charging station.

As to charging costs, people aged over 34 remained the most realistic, estimating the cost to charge within the R200 to R500 price range.

The report also notes that respondents viewed BMW as the most trusted EV manufacturer in South Africa (52% of respondents), ahead of Mercedes-Benz (43.3%) and Toyota (37%), while battery efficiency (think charging time and range), safety and price were cited as the top influencing factors when purchasing an EV.

Toyota does not currently have a EV in the local market, as opposed to BMW and Mercedes-Benz, which both have numerous models available.

Respondents were also willing to consider used EVs, with 48.5% of respondents stating they would consider a used EV over a new EV, owing to a lower price point.

Engineering News editor Terence Creamer discusses the background to Transnet's proposed recovery plan; some of the key components of this plan; and if Transnet is likely to get the support it is looking for from government.

State-owned freight logistics group Transnet confirmed that an open and transparent framework for granting private train operating companies' third-party access to the South African railway network hitherto monopolised by Transnet Freight Rail (TFR) will come into operation in April next year.

In unveiling a recovery plan for the embattled group, chairperson Andile Sangqu reported that TFR would be separated vertically by the end of October to create two separate divisions, to be named the Transnet Freight Rail Operating Company (TFROC) and the Transnet Rail Infrastructure Manager (TRIM).

"In support of the recovery plan, the TRIM will focus on protecting and restoring rail network capacity for commercially viable high-volume traffic to assist TFROC in delivering the highest possible tonnage for each of the six-month components of the plan," Sangqu said at a briefing to unveil a turnaround plan that is premised on a material recovery in rail volumes.

TFROC would be headed by Russell Baatjies and TRIM by Bessie Mabunda and the commercial and personnel separation of the entities was well advanced.

In November, a network statement would be published clarifying the group's approach to third-party access, which had hitherto not advanced at a pace in line with the priority that the reform had been given by government.

Last year, Transnet sought to sell 16 slots to private operators on its container and Cape corridors through a competitive process, but only Traxtion Sheltam was conditionally awarded slots between Kroonstad and East London on the Cape Corridor. That award was terminated, however, in anticipation of a new approach to third-party access.

The reform received fresh impetus following the formation of the National Logistics Crisis Committee and the establishment of the Interim Rail Economic Regulator Capacity.

"Third-party access will be opened by April 2024," Sangqu confirmed, while insisting that the rail reform programme remained on track and was a critical part of the group's recovery plan.

Baatjies, who is acting TFR CEO, said once the network statement had been published, a submission would be made to the Interim Rail Economic Regulator Capacity for a rail-access tariff.

Chief of strategy and planning Andrew Shaw said the separation between rail operation and infrastructure was in line with the Economic Regulation of Transport Bill and the National Rail Policy and would differ from the National Ports Act in that there would be no "grandfather rights" for TFROC.

"In the case of rail access, it's a free open system of allocated train-access slots," he asserted. "So, there's much greater transparency in the system than even in the port system."

Shaw also confirmed that Transnet intended pressing ahead with a 20-year lease of the full container corridor between Durban and Johannesburg, but did not provide an update on the process, which had been delayed.

Separately, Transnet was pressing ahead with a plan to establish a rail rolling stock leasing company by way of a private sector partnership.

Shaw reported that Transnet had rolling stock that it no longer used, and which could be repurposed to help facilitate third-party access.

The absence of rolling stock for lease emerged as a key constraint for companies that expressed an initial appetite for the now terminated slot-sale process.

"It creates the opportunity for us to create contracts into Transnet Engineering to repair that rolling stock … and then to use it through a lease company, which we are in advanced stages of setting up, in such a way that it can be a conduit to get that into the market."

Absent an equity injection or debt relief from government, Transnet chairperson Andile Sangqu says the State-owned entity will not be able to deliver on what he described as a "credible" recovery plan for turning around the group's dismal operational and financial performance.

The slump in the group's performance is epitomised by the 77-million-ton collapse in rail volumes over the past six financial years, from 226-million tons railed in 2017/18 to only 149-million tons in 2022/23, as well as a decline in revenue over the period from R73-billion to R69-billion.

The group, which recently shed its CEO, CFO and rail head, reported a R5.4-billion loss last year and will also report a loss during the current financial year. Transnet has advertised the CEO position internally and externally, with a closing date of October 19.

Without being drawn on the specifics, Sangqu confirmed during a briefing that Transnet had approached both the National Treasury and the Department of Public Enterprises with various funding options but that it was the prerogative of the shareholder to decide on the nature and timing of any possible assistance.

Media reports indicate that Transnet has requested relief covering R61-billion of its R130-billion debt, as well as a R47-billion equity injection.

Finance Minister Enoch Godongwana is due to release the Medium-Term Budget Policy Statement on November 1 in a context of a fiscal position that is expected to have deteriorated since the February Budget, which included a R254-billion debt-relief package in favour of struggling State power utility Eskom.

Sangqu acknowledged that government had "many other constraints and that it will be a balancing act" if Transnet were also to be funded.

"What we have been able to present is a credible plan that we believe will be able to turn the fortunes of the company around and also restore confidence in the logistics sector," Sangqu said, likening the request to those regularly made by private companies when in need of a capitalisation when asked whether Transnet was seeking a bail-out.

"So, we are really hoping that on the basis of the case that we have presented, we would be able to get the support from government."

Acting CFO Hlengiwe Makhathini underlined this point, saying that the financial position would improve if volumes increased in line with the recovery plan's targets, but that Transnet's immediate financial constraints meant that it could not approach the market independently to fund the plan.

"We don't want to pre-empt how National Treasury will respond, but what we just want to emphasise is that, for our recovery plan to work, we do need government support in one way or the other."

Transnet's interest payments have climbed to R13-billion yearly and Makhathini described the monthly repayments of more than R1-billion as unsustainable.

Acting CEO Michelle Phillips reported that the recovery plan, which has been divided into 6-, 12- and 18-month periods, was premised primarily on a recovery of rail volumes from the 149-million tons reported last year to between 154-million tons and 170-million tons by the end of March next year.

She described the 170-million-tons goal as a "stretch target".

In the six months to the end of September, volumes stood at 76-million tons, which means that the 78-million to 94-million-tons balance would have to be achieved in the second half, which was traditionally a period when lower rail volumes were recorded.

Given the weak financial position, rail and port operations will focus on the highest-margin traffic, while addressing starting to address a maintenance backlog estimated at R50-billion.

The recovery discounted any possible uplift that might be gained should a settlement be reached with CRRC of China, which stopped supplying parts and locomotives to Transnet after the contract was declared illegal.

A settlement agreement was nearly concluded last year but was thwarted by CRRC's ongoing disputes with the South African Re...

The World Bank has approved a $1-billion development policy loan to support electricity market reforms under way in the country, as well as South Africa's low-carbon transition.

As a development policy loan, the funding will be directed to the National Treasury, which immediately indicated the timing of the loan to be opportune, although no details were immediately provided regarding the loan's terms or its concessionality.

"This operation comes at a crucial time for South Africa as it will provide much needed fiscal and technical support, enabling us to pursue our policy priorities in the energy sector including easing the electricity crisis in the long term, stimulating private sector engagement and creating jobs in the renewables space," deputy director-general for asset and liability management Mmakgoshi Lekhethe said in a statement confirming the loan.

It is the third policy loan extended since the conclusion of a Just Energy Transition Partnership with several developed countries, with the French and German development banks, AFD and KfW respectively, having extended €300-million apiece in November last year.

The loan was a collaborative effort between the World Bank, the African Development Bank, KfW and the government of Canada and the World Bank said it had been informed by South Africa's development priorities, including the Energy Action Plan to tackle loadshedding and the Just Energy Transition.

The funding would support reforms in the electricity market, as well as decarbonisation efforts and World Bank country director for South Africa Marie Francoise Marie-Nelly argued that the reforms would benefit the economy and the environment, while also advancing the energy transition.

The approval comes amid South Africa's worst-ever year for loadshedding, which has severely undermined growth and confidence, with the rotational cuts of 2022 (the previous most intensive year for power disruptions) having shaved an estimated 2% to 3% from gross domestic product.

The bank said the funding would facilitate a restructuring of the power sector through the unbundling of Eskom and support a redirecting of resources toward investments in transmission and plant maintenance.

"Second, the operation supports a low carbon transition by encouraging private investment in renewable energy, including by households and small businesses, and strengthening carbon pricing instruments."

South Africa, the bank highlighted, was amongst the world's top 20 greenhouse gas emitters, with 45% of those emissions arising from the coal-based electricity sector.

The World Bank announcement followed recent confirmation by the South African government that it had received additional pledges, worth nearly $3.5-billion, in support of its Just Energy Transition Investment Plan (JET IP), increasing the overall envelope of concessional debt and grant funding to $11.9-billion.

It also comes ahead of the approval of the JET IP implementation plan, which is expected to serve before Cabinet ahead of the upcoming COP28 climate talks to be held in Dubai, United Arab Emirates from November 30 to December 12.

Electricity Minister Kgosientsho Ramokgopa has described South Africa's highly fragmented electricity distribution industry as a threat to energy security that warrants attention "on the scale and intensity" that has been given to the country's generation shortfall in the recent past.

Delivering an update on the implementation of the Energy Action Plan in Parliament, Ramokgopa said that a significant number of municipalities were in a state of paralysis and unable to perform their mandated duties, including in the area of electricity distribution.

He described a recent six-week outage in the Ditsobotla local municipality as emblematic of the structural weaknesses in the sector.

The crisis was broad-based, however, manifesting in both an inability of municipalities to service their Eskom accounts, as well as a chronic under-investment in new distribution assets and maintenance of existing infrastructure.

Illegal connections were also resulting in a growing failure of infrastructure as demand exceeded capacity, while theft and vandalism was triggering lengthy outages and increases in reactive maintenance expenditure.

He said that, as of July 2023, the total overdue municipal debt to Eskom stood at R63.2-billion, representing growth of R4.7-billion on the figure reported at year-end.

"These conditions have highlighted the threat to energy security and warrant similar attention on the scale and intensity the generation industry has seen in the recent past," he said.

Ramokgopa reported that the following policy considerations were receiving urgent attention in an effort to tackle the crisis:

Deliberations on the future of municipal revenue in the context of revenue migration due to an increased uptake in behind-the-meter, small-scale embedded generation projects;

The funding and project management of investments required to strengthen, expand and modernise the distribution infrastructure to support growth and the future architecture of the industry in line with constitutional directives; and

Moves to bring policy and regulatory certainty regarding feed-in tariffs and wheeling agreements.

"These discussions are at various stages, and members of this house, particularly the Finance and Cooperative Governance and Traditional Affairs Portfolio Committees, must take a keen and robust interest in the discourse."

Transnet Freight Rail (TFR) and Traxtion Sheltam report that they have agreed to terminate the conditional 2022 award of slots to Traxtion Sheltam between Kroonstad and East London on the Cape Corridor amid progress towards a new third-party-access framework.

The joint announcement ends an unsuccessful pilot project, which the two companies dubbed Phase 1, initiated in April 2022, through which TFR sought to sell 16 slots to private operators on its container and Cape corridors through a competitive process as part of an initial effort to open its network to third-party operators.

From the outset, potential participants warned that the two-year slot contract was simply too short to ensure that returns could be made on what could involve significant capital investments in light of limited rolling-stock leasing options.

Only two companies made formal applications - two for the Container Corridor and one for the Cape Corridor - by the August 31, 2022, submission deadline and on November 25 of that same year, TFR announced the conditional award of slots to only Traxtion Sheltam.

The award was subject to the completion of the application process, including the fulfilment of all condition's precedent before the planned start date of April 1, 2023.

In the statement the two companies confirmed that the negotiation phase had been protracted and complex, with various design challenges that made it difficult to finalise a commercial service offering.

"Given the above scenario and the reform work that the Department of Transport, and the Interim Rail Economic Regulator Capacity have embarked on, and which informs Phase 2 of the third-party open access regime, TFR and Traxtion Sheltam have jointly agreed to terminate the current slots awarded under Phase 1," the companies said.

They added that they recognise the increased speed of government's reform agenda in the sector, including moves to separate the vertically integrated structure into one that includes infrastructure owners, infrastructure managers and rail operators.

Under the emerging framework, the rights and obligations of the various participants would be clarified and implemented under what has been dubbed Phase 2.

No mention was made of a proposed 20-year operating lease offer for Transnet's underperforming and crime-ridden container corridor between Durban and Johannesburg, which has also not progressed as initially anticipated.

Traxtion Sheltam said it was looking forward to participating in Phase 2 and the realisation of rail reform in South Africa.

The termination of the slot sale also comes as government is finalising a so-called Freight Logistics Roadmap in response to the collapse of the freight rail service on certain corridors, which also led to the creation earlier this year of the National Logistics Crisis Committee (NLCC) under Operation Vulindlela.

On October 26, the NLCC is scheduled to brief the media on plans for the modernisation of the freight transport system.

Electricity Minister Kgosientsho Ramokgopa says attention should shift to adding new and cleaner generation to the loadshedding-prone electricity system, acknowledging that it would be the "height of folly" to rely on significantly extending the life of the breakdown-prone coal stations.

While much of his latest briefing on the implementation of the Energy Action Plan was dedicated to improvements in the operating performance of some of Eskom's coal units, Ramokgopa said there could be no "overreliance" on the units in future. This, given their advanced age and the fact that many trade-focused domestic industries had to decarbonised to remain internationally competitive.

He refused to be drawn on the contents of a report commissioned by the National Treasury to assess the state of Eskom's coal plants, including the potential for concessioning and some limited life extensions considering the slow pace at which South Africa had added new capacity in recent years.

Eskom's Eric Shunmagum confirmed that the utility had made comments and had also challenged some of the recommendations made by the Vgbe-led consortium that drafted the report and said that Eskom was working with the National Treasury to ensure a "fair and balanced" technical assessment emerged.

For his part, Ramokgopa underlined the need for new and cleaner non-Eskom generation capacity, saying: "We are doing all that we can to restore the reliability of these units, but you can't take away the fact that they are aging . . . [The] only reason we are going this route [of focusing on the performance of the coal power stations] now is because it the shortest way to ending loadshedding."

The future, however, depended on adding new generation and unlocking the estimated 66 GW of mostly wind and solar capacity estimated to be at various stages of development across South Africa, including in areas such as Mpumalanga were there was grid connection capacity available.

"An overreliance on these [coal] units I think is particularly unhelpful; it's the height of folly to suggest that, going into the future, this is going to resolve our problems . . . and that's why we must accelerate the onboarding of new generation," the Minister said.

He again emphasised the importance of expanding the grid to facilitate additional renewables generation. He did not answer a question, however, on when he expected Eskom to publish its updated Generation Connection Capacity Assessment, the absence of which is believed to be one of the reasons why the seventh renewables round was not launched in September as initially scheduled.

Likewise, Eskom has not released its updated approach to the issue of curtailment, which could unlock significant grid capacity even in those areas previously indicated to be oversubscribed.

Interim CEO Calib Cassim did state recently, however, that he saw unlocking immediate grid capacity through curtailment as an urgent priority while Eskom and other stakeholders assessed funding options for expanding the transmission network.

Without offering any update on when South Africa would launch additional public procurement rounds, Ramokgopa reported that 1 338 MW of private generation was expected to connect to the grid in 2023, followed by 3 081 MW in 2024.

He also stated that one project falling under the much-delayed risk-mitigation scheme was on track to reach legal close by the end of October, and two further projects by December. The projects would contribute an additional 424 MW, he said, implying that the 1 200 MW powership projects were not the ones in question.

He added that three more projects from the delayed fifth renewables bidding round were on track to reach commercial close by the end of November, representing 300 MW.

The Minister also stated that the capacity of rooftop solar had doubled since July 2022 to over 4 500 MW, which had helped to reduce loadshedding over the winter months.

He insisted that government remained supportive of yet further rooftop inv...

In an update presented to the Portfolio Committee on Agriculture, Land Reform and Rural Development on October 20, the South African Poultry Association (Sapa) has estimated that 30% of the South African poultry industry has been impacted on by the latest outbreaks of Highly Pathogenic Avian Influenza (HPAI).

Sapa broiler organisation GM Izaak Breitenbach said the current outbreak of the H5N1 and H7N6 strains of HPAI will cost the industry in excess of R1.8-billion, which is the amount of losses the industry experienced during the prior period of HPAI outbreaks in 2019, which saw three-million birds culled.

Sapa egg organisation GM Dr Abongile Balarane estimated that the losses to the industry could be as high as R3-billion, given that a 30% impact to the industry equates to 30% of its yearly revenue of about R12-billion lost.

South Africa had about 27-million layer hens that produce eggs on a daily basis, of which five-million had to be culled for both HPAI strains. Another 2.5-million broiler chickens also had to be culled this year, bringing the total amount of culled chickens to 7.5-million.

The H7N6 strain of the virus was first reported on June 1 on a farm in Mpumalanga. DALRRD animal health director Mpho Mojo confirmed that the H7N6 strain of the virus spreads slower and is less deadly than its H5N1 counterpart, adding that many birds often survive the disease; however, it has nonetheless had a significant impact on the local poultry industry.

Additionally, she said that, because the H7N6 strain only occurs in South Africa and is not closely similar to any other AI strains in the rest of the world, it means that the few vaccines that have been developed against H7 may only have limited efficacy against South African strains.

Before any new vaccine can be registered, they need to be carefully assessed and may require local trial work to confirm their efficacy, which may delay their registration.

Balarane confirmed that locally produced vaccines were being developed but said this was a process that would take some time to complete.

Sapa anticipated that the poultry industry would have been reduced to 17.3-million layer hens by early 2024, down from 27.6-million layer hens in 2019 and 27.4-million in 2022.

Balarane said it would take the industry 17 months to recover lost production, with farmers intending to focus on recouping the 30% impact of the poultry industry next year.

Since HPAI first became a widespread problem in South Africa in 2017, more than 13-million birds had been culled.

With the local poultry production comprising 95% of caged operations, 1% of barn systems and 4% of free range systems, it means that most chickens are in close proximity to each other and easily spread the disease.

Mojo noted that there were fewer cases of HPAI reported in areas where small-scale farmers have free range operations and are based far from other farms.

Breitenbach highlighted that reported cases of HPAI had come down in October, compared with September, which was a positive indicator; however, a new case of the H7N6 virus having been reported in George in the Western Cape was giving rise to concerns that another outbreak would occur in the Western Cape.

HPAI outbreaks had in the year to date predominately been occurring in Gauteng, followed by Mpumalanga.

In fact, 95% of all broiler breeder chickens in Gauteng had been culled in the greater Gauteng region.

HPAI MITIGATION

Mojo explained that HPAI was introduced through emigrating wild birds, with factors such as high rainfall, the presence of wetlands, the presence of irrigated crops and wetlands and chicken density adding to the risk factors for flocks contracting HPAI.

She believed the most effective approach to ensure that HPAI does not spill over from wild birds to poultry flocks was to introduce strict measures to ensure wild and domestic birds do not come into contact, including by feeding birds undercover and removing large bodies of water in the farm's surrounding...

Engineering News editor Terence Creamer discusses the potential implications of Cabinet's approval of the Green Hydrogen Commercialisation Strategy; the components of the strategy; what this means for provinces keen to tap into this emerging industry; and if there is a risk that green hydrogen will compete for precious renewable electricity?