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The State-owned company acknowledged during a virtual consultation on the draft report this week that the submission had failed to meet the initial six-month deadline set in a directive issued by then Minister Dr Deon George on March 31, 2025. That directive followed Eskom's 2024 application for exemption from the sulphur dioxide (SO2) minimum emission standards (MES) for Medupi, in which it also questioned the appropriateness of the FGD installation. This despite it being a condition of a $3.7-billion loan to Eskom approved by the World Bank in 2010. The exemption was granted until 2030, but the directive stipulated that the BCA for FGD at Medupi be expanded to include an assessment of alternatives to installing FGD, while comparing the cost of complying with SO2 standards with the human health costs of not complying. The draft report, thus, includes not only BCA conclusions for the installation of Wet, Semi-Dry and Dry FGD technologies, but also six alternative emission-reduction scenarios. Only the wet FGD solution actually meets South Africa's MES, as set under the country's National Ambient Air Quality Standards (NAAQS), for which the Department of Forestry, Fisheries and the Environment is responsible for enforcing. However, Wet FGD is also listed as having the highest upfront capital cost of R56-billion, compared with R48-billion for Semi-Dry FGD and R15-billion for Dry FGD. The total 45-year project lifetime cost for Wet FGD, meanwhile, was outlined as being a nominal R383-billion, the recovery of which would potentially add 4c/kWh to the electricity tariff. Across all three FGD technologies, the BCA ratios are well below one, suggesting that the monetised value of health benefits is lower than the required capital and operating expenditure for FGD. Eskom's proposed alternatives are based partly on these costs and the poor BCA ratio, as well as its assessment of the measured ambient air quality across the Waterberg Bonjanala Priority Area between 2022 and 2024, which indicates "general compliance with NAAQS indicating that the airshed is not saturated". The health benefits of these alternatives were thus focused more on the Highveld rather than in the Waterberg. The capital costs for the six alternative scenarios in the draft range from R5-billion to R11-billion, and include: an air quality offset programme involving the expansion of a clean cooking initiative to 96 000 households in close proximity to coal stations that currently use dirty fuels;the retrofit of Arnot, Camden, Grootvlei, Hendrina and Kriel power stations with small modular nuclear reactors (SMRs);the building of solar, wind, battery and pumped hydro across six sites;the installation of so-called high-efficiency, low emission (HELE) circulating fluidised bed combustion technology at Hendrina, Grootvlei and Duvha;the introduction of coal beneficiation and efficiency improvements at all Eskom's coal stations to reduce emissions; andthe installation of post-combustion carbon capture utilisation and storage (CCUS) technologies. The draft report indicates the clean cooking offset programme as having the highest BCA ratio for both particulate emissions and SO2 reductions, but questions have been raised about the long-term sustainability of such offsets. Positive health benefits were also indicated for the renewables and SMR alternatives, but these were not fully quantified in the form of a BCA ratio, as the study did not consider the power generation benefits. Negative ratios were provided for the HELE, coal beneficiation and CCUS alternatives, while the draft report also highlights that several of the technologies that have been considered are pre-commercial in nature. Various alternative interventions, including substitute technology solutions, were raised during the virtual public consultation process. Renew-e managing partner Etienne Rubbers argued, for instance, that Eskom must be prepared to invest the capital that it would otherwise need to spend on...

The World Bank Group has approved $350-million, or about R5.6-billion, to capitalise South Africa's new credit guarantee vehicle (CGV), which is being established to mobilise private finance for public infrastructure without requiring additional government guarantees. The World Bank board of executive directors' approval of the 'South Africa Blended Finance Platform for Resilient Infrastructure Program' opens the way for establishing the CGV, which the International Bank for Reconstruction and Development will help capitalise through the $350-million in approved funding. The CGV will be a private non-life insurance company, regulated by the Prudential Authority, and the National Treasury has already announced that it will inject seed equity of R2-billion into the vehicle, giving it a minority shareholding. "Investment in infrastructure is central to South Africa's efforts to restore growth and create jobs," World Bank division director for South Africa Satu Kahkonen said in a statement confirming the approval. "This operation supports the government's agenda by helping mobilise private investment for infrastructure that improves services, strengthens competitiveness, and expands economic opportunity," she added. The CGV will issue market-based credit guarantees that will help derisk investment in infrastructure, crowd in private capital, and reduce reliance on sovereign guarantees, the bank explains. It adds that, over a ten-year period, the programme could mobilise about $10-billion of capital (about R160-billion), including capital from private investors, commercial lenders and institutional investors, generate about 997 000 direct and indirect jobs, and support a lowering of carbon emissions. The CGV's initial focus will be projects aimed at expanding the country's electricity grid infrastructure, but its scope will be broadened in future to include water, freight logistics, education and health infrastructure. South Africa has initiated an independent transmission project procurement programme, but has delayed the release of a request for proposals to seven pre-selected consortiums so that the bid window can coincide with the launch of the CGV later this year. The pre-qualified bidders will compete to build 1 164 km of powerlines and associated substation infrastructure across seven preselected corridors; projects that are expected to have a combined investment value of about $1-billion. In his February Budget speech, Finance Minister Enoch Godongwana said the CGV would be incorporated as a company in the coming months, once development partners had confirmed their capital participation. "Thereafter, the CGV will apply for a licence from the Prudential Authority. We are targeting the CGV to be operational later this year," the Minister added, a timeframe he reiterated when the World Bank approval was confirmed.

Engineering News editor Terence Creamer discusses power utility Eskom's discounted tariff offer to two ferrochrome companies and the need for transparency on how this offer will be structured and financed.

Leading South African independent power producer Anthem has announced that its giant 475 MWac (620 MWdc) Notsi solar PV project in the Free State has advanced to financial close after concluding private offtake agreements with electricity traders Discovery Green and NOA Group. The R9-billion transaction has been supported by a consortium of lenders, including Standard Bank, Nedbank, ABSA and Vantage GreenX Note. Anthem is the lead developer, generator, majority equity participant and long-term operator of the facility, and the Reatile Group is Anthem's equity partner in the project. Notsi follows a multi-offtaker wheeling model, making use of agreements with Eskom to wheel power over the national grid through 20-year-plus offtake agreements with traders Discovery Green and NOA Group. It further highlights the increasing role of traders in supporting new generation projects; a trend that was underlined in a recent South African Energy Traders Association report showing that most of the more than 1 GW of new projects that reached financial close in 2025 were backed by trader offtake commitments. The two traders will sell the electricity to large and small businesses across a range of sectors, including industrial, retail, mining and farming enterprises. Discovery Green, which has contracted for 290 MW, has also confirmed that some of the electricity will be allocated to Ampli Energy, its joint venture with Sasol that offers month-to-month supply deals to small companies. Spanning more than 1 000 ha, equivalent in size to about 1 000 rugby fields, Anthem says Notsi ranks as the largest solar PV project in South Africa. It will comprise over 860 000 solar panels and have a yearly energy output of about 1 500 000 MWh. A China Energy Engineering Corporation-Northwest Electric Power Design Institute JV has been appointed as the engineering, procurement, and construction contractor, while Anthem will assume the operations and maintenance responsibilities post year two of operations. Construction is expected to be completed within 26 months. IMMENSE SIZE Anthem CEO James Cumming says Notsi has been developed at an "immense size" to provide low-cost wholesale power to the private market, while also ensuring it can amortise the significant grid upgrades the project is building on behalf of Eskom and the National Transmission Company South Africa. "The scale and strategic relevance of Notsi epitomises the progress of solar energy wheeling in South Africa," he adds, arguing that the multi-offtaker wholesale model represents the future of energy security in South Africa. Anthem, which was launched in 2025 following the integration of African Clean Energy Developments and EIMS Africa under the African Infrastructure Investment Managers-managed IDEAS Fund, with the Mahlako Energy Fund and Norfund, now has more than a gigawatt of wind and solar projects for private offtake in operation or under construction. This is in addition to the renewables capacity it has built following public procurement bidding rounds, which translates to a portfolio of more than 2.7 GW across 17 operating wind and solar projects. It also has an 11 GW greenfield pipeline. Discovery Green CEO Andre Nepgen says the Notsi project will introduce significant new renewables capacity onto the grid at a time when businesses are prioritising long-term price certainty and a clear pathway to decarbonisation. He also notes that the project is permitted for a battery energy storage system and that Discovery Green is considering other hybrid and flexible generation to balance variable renewable electricity, where the commercial case makes sense. "Projects of this scale enable Discovery Green to offer businesses, whether big or small, access to globally competitive energy prices without investing themselves or taking unnecessary risk," Nepgen asserts. NOA Group CEO Karel Cornelissen describes the Notsi project as an important milestone in its work to "aggregate renewable energy f...

South Africa has the potential to capitalise on a domestic industrial hemp market opportunity valued at R40-billion by 2040; however, this requires proper industry development and policy support, a new industrialisation study published by the Localisation Support Fund (LSF) in partnership with the Presidency, the Industrial Development Corporation and the Department of Trade, Industry and Competition has found. The study outlines a path for hemp industrialisation to become a meaningful driver of reindustrialisation, diversification, decarbonisation, export growth and inclusive rural economic development across the country. Commissioned by the LSF and undertaken by strategy and advisory company Zageta Solutions together with the Development Policy Research Unit at the University of Cape Town, the study builds on previous work and aligns with the objectives of the National Cannabis Master Plan. Globally, the hemp market is projected to grow from about $10-billion in 2025 to $37-billion by 2032. Presenting key findings from the study at the launch in Johannesburg on March 4, the study authors said the domestic industry is projected to grow from R7.3-billion in 2025 to R17.7-billion by 2030, and R40.4-billion by 2040. Diverse agro-ecological zones and a counter-seasonal production cycle would enable South Africa to supply global markets year-round, filling gaps left by Northern Hemisphere producers. Importantly, the country's established manufacturing clusters in automotive, textiles, pulp and paper and food processing provide ready-made demand pathways for hemp-derived inputs, lowering the barriers to commercial scale-up. As a later entrant, South Africa can also bypass the costly trial-and-error phase that slowed early adopters, instead designing value chains that are competitive and standards-aligned from inception. The country can also leverage its role as a continental trade gateway under the African Continental Free Trade Area. Since 2022, South Africa has issued 1 725 permits, granting legal cultivation rights across 29 000 ha of land, primarily in Gauteng, KwaZulu-Natal and the Eastern Cape. The study cautions that the absence of industrial-scale processing infrastructure, especially in primary processing, is the most critical bottleneck to sector growth. Also, regulatory fragmentation, especially the need to clearly separate industrial hemp from intoxicating cannabis in legislation, continues to constrain investment and industry development. The study identifies five priority industrial pathways where South Africa's hemp sector should concentrate its early development efforts. The food and beverage sector has been identified as the most immediately accessible, with grain-based products such as hemp milk, flour and edible oils integrating readily into existing oilseed and food-processing platforms. Personal care, which encompasses hempseed oil-derived creams, serums and wellness products, offers similarly low entry barriers and strong alignment with the country's existing manufacturing base, lending itself to small, medium and micro enterprises. Pulp and paper presents a strategic opportunity to absorb underused straw biomass through biodegradable packaging and cellulose-based materials, leveraging established technology already from the forestry sector. The remaining two priority pathways point toward longer-term industrial scale. General textiles are highlighted as ideal for non-woven and technical applications that can use fibre from dual-purpose grain crops without requiring the highest processing standards. Building and construction, driven by global decarbonisation imperatives, focuses on materials like hempcrete and insulation, with hemp hurds accounting for roughly 65% of the stalk offering substantial volumetric supply potential. The five pathways were selected because they share a common profile, mainly, strong and growing demand, proven or adaptable technology and realistic prospects for localisation within S...

Eskom announced on Friday that it had extended an eleventh-hour 62c/kWh tariff offer to ferrochrome producers Glencore-Merafe Chrome Venture and Samancor, but indicated that negotiations on the precise terms and conditions still needed to be finalised before the package could be submitted for regulatory approval. Hence the details of the package, including its structure, duration, take-or-pay commitments, and any risk-and-reward sharing, would only be made available once the negotiations had been concluded and a submission was made to the National Energy Regulator of South Africa (Nersa) for its approval of the discounted tariff. Eskom CEO Dan Marokane promised that the terms and conditions would be shared transparently both in the submission and during the public participation process that Nersa would conduct. He also indicated that the package being prepared for Glencore-Merafe Chrome Venture and Samancor would form the basis of a standard smelter offer that could be extended to other ferroalloy producers, including those smelters that process manganese and vanadium. No timeframe was given for concluding the Nersa process in relation to the ferrochrome offer, or for launching a broader standard offer for smelters. R10bn From Existing Debt-Relief Package Marokane promised that other electricity customers would not be leaned on to subsidise the reduced tariff to the smelters. Instead, the initial funding to close the revenue gap that would arise for Eskom would be secured within the framework of the existing R230-billion debt relief package that had been extended to the utility by government, with an outstanding R10-billion transfer from the National Treasury to Eskom under the package to be used to close the gap this year. Much store was also being given to Eskom meeting its target of making cumulative savings of R112-billion by 2029 to help fund the lower tariffs to the smelters without breaching its commitment of keeping future standard tariff hikes to single-digit levels. The current Eskom standard tariff stands as 195.95 c/kWh, a price that includes subsidies for those industrial customers that have secure a negotiated price agreement with Eskom. Announcing the offer just hours before the February 28 deadline set for reaching a deal with the two companies to prevent the closure of further capacity, Electricity and Energy Minister Dr Kgosientsho Ramokgopa expressed optimism that the offer would be sufficient to avert large-scale planned retrenchments. In fact, the Minister argued that there was potential to restart mothballed capacity and raise the number of smelters in operation from 11 currently to 49 by the end of 2027 and increase employment in the sector from about 11 400 people to over 121 000 people over the same period. Marokane emphasised the importance of the smelters to Eskom's overall demand, noting that restored demand from Glencore-Merafe Chrome Venture and Samancor would represent yearly sales of 12.8 TWh, while a return of other smelters would represent 26 TWh, excluding the large aluminium smelters. Ramokgopa acknowledged that other electricity consumers, including struggling households and businesses, might perceive the offer being made to the smelters as unfair. However, he said the decision to support the sector was based on difficult trade-offs that took account not only of the risks to jobs and industrial capacity but also South Africa's critical minerals ambitions. He also said that upcoming revisions to the electricity pricing policy would seek to ensure greater fairness by outlining support for poor households and small businesses, alongside efforts to sustain strategic beneficiation and industrial capacity.

South African Reserve Bank governor Lesetja Kganyago says the spin-offs from the policy decision to lower the inflation target have "exceeded our most optimistic expectations". On November 12, Finance Minister Enoch Godongwana announced that the new inflation target for South Africa would be 3% with a one percentage point tolerance band. The previous target range of 3% to 6% had been in place for 25 years. In response to a question posed on the impact of the change during a recent Budget media briefing, Kganyago said the bank had expected that lowering the inflation target would result in a 200 basis point lowering of bond yields, alongside a strengthening of the rand and a lowering in the country-risk premium. "What we have now calculated is that, from December 2024 to date, bond yields in South Africa have gone down by 400 basis points. That's significant and it's a significant saving." He acknowledged that the better-than-expected performance could not be attributed to the new target alone, with other positive changes having also occurred simultaneously, such as improved commodity prices that also accentuated the appreciation of the rand. The lowering of the target had also had an influence on inflation expectations, a channel that the target aims to specifically address. "[In] December, when the inflation expectations survey by the Bureau for Economic Research came out, inflation expectations were at their lowest since we started surveying inflation expectations in South Africa. And that is significant, because that decline says to us that inflation expectations are converging towards the target," Kganyago said. R277BN DEBT WINDFALL Meanwhile, National Treasury director-general Dr Duncan Pieterse provided a quantitative assessment of the impact that recent monetary and fiscal policy developments would have on the country's debt profile. He said a National Treasury calculation showed that by 2028/29, government's debt stock would be R277-billion lower as calculated in the 2026 Budget relative to what was shown in the Medium-Term Budget Policy Statement (MTBPS) of November. Pieterse said R47.6-billion of that could be attributed to lower revaluations of the country's inflation-linked bonds, which were revalued quarterly. "Because of lower inflation, that bond portfolio is now going to cost us R47.6-billion less than we thought in the MTBPS," he explained. "But it's important to say that the other elements of that R277-billion lower debt stock have to do with improving fiscal credibility. "For example, we are issuing bonds at far lower discount rates now than we did last year, and because we are issuing cheaper bonds our debt stock is going to be lower by about R59-billion and that's really because of the fiscal improvements that we are seeing alongside the shift in the inflation target."

A study has been launched to assess South Africa's existing railways manufacturing capacity and capability and to make recommendations on how policy and procurement can be leveraged to bolster localisation and transformation. The study has been commissioned by the Localisation Support Fund (LSF) and will be conducted by Letsema Consulting over the coming six months. It is being supported directly by the African Rail Industry Association (ARIA), which has urged its members to provide detailed inputs, as well as the Department of Trade, Industry and Competition, which has provided funding. ARIA chairperson Anand Moodliar says the study will assess the opportunities for expanding rail localisation as both Transnet and emerging private train operating companies (TOCs) gear up to meet the target of lifting rail volumes to 250-million by 2030 from the approximately 160-million tons achieved by Transnet in 2024/25. Moodliar, who is also CEO at the Barberry Group, one of 11 TOCs to have secured slots to operate on the Transnet network, says this will require the Transnet Freight Rail Operating Company to deliver about 185-million tons yearly and the TOCs the other 65-million tons. To scale up to 65-million tons, the TOCs would need to invest between R30-billion and R40-billion in locomotives and wagons, which together with ongoing Transnet investment, created the potential for local industrialisation. To deliver on the slots awarded to it, Barberry has ordered 28 of Alstom's 23 Class electric locomotives, a model for which there is already local manufacturing, as it has also been procured by Transnet. Moodliar also highlighted some of the local-content spin-offs relating to a R3.4-billion rolling stock investment programme by Traxtion, which has also secured slots to operate on the Transnet network. Transnet is in the process of establishing a leasing company to supply local locomotives and wagons to the TOCs, and chief business development officer Yolisa Kani reveals that it has received interest from half of the 11 TOCs and has already signed four contracts. Moodliar expresses confidence that this rising level of investment activity is sufficient to stimulate a supplier ecosystem supportive of localisation and transformation, while also stressing the importance of competitive supply if the industry is to recapture rail volumes from a road industry that is highly competitive. The LSF's Tondani Nevhutalu says there is currently more than R2.5-billion of rail equipment being imported yearly, much of which could potentially be met by domestic industry should a supportive policy and procurement framework be developed. She reports that the study will assess aggregated demand across Transnet, the Passenger Rail Agency of South Africa and the Gautrain and evaluate local supply capabilities to meet that demand. Five workstreams will, thus, be created to study demand aggregation, supplier capability, policy instruments, procurement reforms and competitiveness. Letsema Consulting's Shenelle Nair says the aim will then be to identify strategic opportunities for localisation and transformation based on the demand-side mapping, the supply-side assessments, and a review of the policy instruments. The study will also make recommendations for new policy instruments including which products and components should be designated by government for localisation and what local-content thresholds should be put in place to support industrial growth. ARIA CEO Mesela Nhlapo says that, with the reform of the rail sector now advancing, localisation represents the next big challenge for the industry. "Every locally produced locomotive, wagon and rail component represents livelihoods, technical skills and opportunities for artisans, engineers, technicians and small businesses across the value chain, Nhlapo asserts.

Engineering News editor Terence Creamer discusses the big themes in the 2026 Budget, delivered by Finance Minister Enoch Godongwana on February 25, as well as what the Budget means for business and the economy.

Accelerating infrastructure investment emerged as a central theme of the 2026 Budget, which Finance Minister Enoch Godongwana characterised as representing a "turning point" for both debt stabilisation and for government's reform-led growth agenda. Having signalled in November that there would be a concerted effort to shift the composition of spending to infrastructure, Godongwana confirmed that capital payments would be the fastest-growing item of government expenditure over the coming three years. He also announced that infrastructure spending by the public sector would total R1.07-trillion over the period and that accelerated efforts would be made, through government's reform agenda, to attract private investment into infrastructure. This in a bid to lay the foundations for higher growth than was currently being achieved. While the Treasury made a modest upward revision to the growth outlook relative to the one outlined in the Medium-Term Budget Policy Statement (MTBPS) of November, the forecast remained muted. Government revised its estimate for 2025 to 1.4% from 1.2%, and is projecting growth of 1.6% in 2026, up from the 1.5% outlined in November. It is still expecting growth of 1.8% in 2027 and 2% in 2028. SPENDING SHIFT In an important shift, the Budget indicates that payments for capital assets will grow by nearly 10% over the coming three years, compared with growth of 4.4% for employee compensation, albeit with employee compensation remaining the largest share of expenditure by economic classification. Consolidated government expenditure is projected to increase at an average annual rate of 3.9% over the period, from R2.58-trillion in 2025/26 to R2.89-trillion in 2028/29. However, the Budget deficit is projected to narrow from 4.5% of GDP in 2025/26 to 2.9% of GDP in 2028/29, while Godongwana promised that public debt would peak in 2025/26 at 78.9% of GDP. The peak in gross debt was higher than the 77.9% signalled in November, a rise that was attributed to pre-funding to take advantage of favourable market conditions that is resulting in cheaper borrowing costs. There is also a steeper fall in the debt-to-GDP profile thereafter than outlined previously. The Minister said that, for the first time this decade, a fiscal framework was being tabled in which debt-service costs would grow more slowly than overall expenditure. Debt-service costs would reduce from 21.3% of revenue in 2025/26 to 20.2% in 2028/29. The Budget Review also provides details of several infrastructure reforms aimed at improving delivery and attracting private investment to tackle deep backlogs that have arisen as a result of serious underinvestment in infrastructure projects, which have also been prone to corruption and mismanagement. The result is large deficits in electricity, rail, roads, water, sanitation and municipal infrastructure, which the National Treasury acknowledges is limiting productivity and raising the cost of doing business. It is also a cause of deep frustration among residents, which have had to endure extreme electricity loadshedding, poor transport services and what is now regarded as a water crisis. R1.07-TRILLION PUBLIC PIPELINE As a share of GDP, fixed investment declined to 14.2% in 2024 from 14.8% in 2023, well below the National Development Plan's 30%-of-GDP target. "Accelerating investment, while improving project execution and maintenance, is critical to crowd in private capital and expand productive capacity," the Budget Review states. The R1.07-trillion in infrastructure investments by the public sector will be distributed across the three spheres of government, as well as public entities and State-owned companies. More than 54%, or R577.4-billion, will be executed by State-owned companies and public entities, with funding pooled from the national Budget, own revenue and private investors. Provinces are expected to spend R217.8-billion on infrastructure over the same three-year period, with municipalities projected ...

Budget outlines shift from oversight to 'structural intervention' to tackle municipal dysfunction Amid growing dissatisfaction with the performance of many of the country's 257 municipalities, 162 of which are categorised as being in financial distress, the National Treasury has outlined what it describes as a fundamental shift in the subnational fiscal architecture that moves from oversight to active structural intervention. "At the municipal level, this shift involves changes to legislation, governance arrangements and technological intervention," the Budget Review states, indicating that the proposed municipal reforms are rooted in the revised White Paper on Local Government. It also states that national government will use powers granted to it under the Constitution to stabilise the system, with unauthorised, irregular, fruitless and wasteful expenditure in municipalities having reached R236.3-billion in 2023/24. "After years of support measures to strengthen financial governance, the National Treasury has invoked section 216(2) of the Constitution against persistently noncompliant municipalities, enabling the Treasury to halt national transfers to those in consistent breach of the Municipal Finance Management Act (MFMA)." The provision had already been applied against 75 municipalities. JOBURG INTERVENTION? Asked during a Budget media briefing specifically about the City of Johannesburg, which is facing financial and operational Finance Minister Enoch Godongwana indicated that a direct intervention was likely. However, he said the form that such an intervention could take had not yet been determined. The reasons for municipal financial instability are identified in the review as being underpinned by weak revenue collection, poor credit control and a lack of financial discipline. These weaknesses are being amplified by rising electricity and water input costs. But the accumulation of arrear debt owing to entities such as Eskom is attributed mainly to failures to bill accurately, collect revenue consistently, and ring-fence and remit collections for bulk services. "These weaknesses have left 88 municipalities with unfunded budgets and limited capacity to maintain infrastructure and sustain services." ESKOM DISTRIBUTION AGENCY AGREEMENTS Government has endorsed Distribution Agency Agreements (DAAs) to empower Eskom to take over electricity distribution on behalf of defaulting municipalities to ensure revenue is collected, current accounts are paid and service reliability is restored. It has also written to 15 of the 71 municipalities that have signed up for its debt-relief programme, but which are not meeting the conditions, to enter into DAAs with Eskom or face being excluded from the scheme and becoming vulnerable to Eskom direct credit control mechanisms. The National Treasury says a combination of targeted investment in revenue infrastructure, performance-based grant reforms, and long-term financial planning support will be pursued to improve municipal self-reliance and fiscal sustainability. At the legislative level, the MFMA Amendment Bill is scheduled for public comment in early 2026, with the aim of strengthening monitoring and intervention tools. Under Phase 2 of Operation Vulindlela, an initiative that has overseen reforms to stabilise electricity supply and restore key freight logistics services, reforms are under way to shift to a utility model for water and electricity, with these services run like businesses accountable to government and the public. In his Budget speech, Godongwana argued that revenue collected for a specified function should be used primarily to sustain that function before any cross-subsidisation took place. "In reality, this principle is consistently flouted. For instance, Johannesburg's water revenue is R11.9-billion but only R1.3-billion is allocated to Joburg Water for capital expenditure. This has contributed to the massive backlog of R64-billion that is needed to fix water supply pro...

The government is the biggest beneficiary of the South Africa auto industry, says manufacturing and industrialisation expert Justin Barnes. The average tax on an average vehicle sold in South Africa is roughly R120 000. "So, on average, when you buy a [R500 000] motor car in the market, R120 000 is handed over to government in the form of value-added tax, ad valorem (luxury) tax, carbon tax and the tyre levy." For a more luxurious vehicle, priced at more than R800 000, the tax burden is 34%, notes Barnes. Barnes' comments come as government is reviewing its ad valorem duty structure on new light vehicles, as part of an effort to address the dominance of imported vehicles versus locally manufactured vehicles – or, in other words, it is mulling a potential tweaking that could possibly accrue some benefit to local assemblers. South Africa last year saw 15.7% growth in new-vehicle sales, to 597 000 units. Within this number, however, the percentage of vehicles assembled in-country as completely knockdown (CKD) units made up only 33% of sales – down from 56% in 2006 – this while imports continue to surge ahead. Barnes says the current level of taxation means that government derives a "huge fiscal benefit" from healthy automotive sales. The opposite, however, is also true, as a decline in sales, and in local manufacturing, both have fiscal consequences in terms of the revenue flowing to government. "There is a serious economic consequence for the automotive industry if it is overtaxed and the market is penetrated too aggressively by imported vehicles that don't offer the underlying value addition [local car makers offer]," notes Barnes. "This industry creates R120-billion worth of direct gross value-added through the seven vehicle assemblers. "You have to try to balance the tensions between what is good for production, but you also have to ensure that the market is not negatively affected by creating too much protection for the local industry through some form of price advantage that the consumer ultimately has to bear." Toyota South Africa Motors (TSAM) president and CEO Andrew Kirby agrees with Barnes, describing the ad valorem tax on a R500 000 vehicle as "enormous". "The question is how to adjust this to see a volume benefit, so that the net income received by the fiscus remains strong. It is possible to do that." Kirby says it is possible that a 1% price drop can see a 3% increase in sales in some instances. "So, yes, there is potential, and ad valorem is the obvious way to tweak that. Justin is doing a lot of modelling to see how we can tweak the ad valorem portion of vehicle tax to generate an improvement in affordability. But we need to balance the books for government." While ad valorem tax started out as a luxury tax, it has since become 'just a vehicle tax', adds Barnes. Ad valorem was implemented when South Africa's cheapest cars started at a price point of R40 000. "It had a flat gradient and only started being punitive at R500 000." Thirty years later, however, many entry-level vehicle prices are now priced nearer to R500 000. "It has now become punitive," says Barnes. "Ad valorem must be dealt with. It is highly problematic and anti-developmental. It does not work in favour of the market or [the auto] industry. It needs to be adjusted for us to move forward." Cohesive Framework Needed Barnes also argues for a more comprehensive, cohesive management of South Africa's vehicle parc. Policy around local vehicle assembly and imports are handled by the Department of Trade, Industry and Competition, while the Department of Transport handles vehicle registration and the country's fleet management, with National Treasury "collecting the money". Going forward, this has to be more coordinated, says Barnes. He says South Africa cannot afford the "massive overtaxing" in the domestic market side, very generous support from government to the local assembly industry through the Automotive Production and Development Programme (APDP...

Energy and chemicals group Sasol is aiming to begin ramping up internal coal production and reducing external coal purchases after its destoning plant reached beneficial operation in December. CEO Simon Baloyi said the project, which involved a repurposing of the Twistdraai export coal plant, had been completed within its budget of about R700-million and was facilitating the delivery of coal to Sasol's Secunda Operations with a total sinks content of about 12%. This lower level of rock fragments and other impurities in the material is expected to significantly reduce the damage caused to Secunda's gasifiers by low-quality coal. It is also expected to increase yields from the gasifiers, which provide the synthetic-gas feedstock needed to produce fuels and chemicals at the Mpumalanga complex using the Fischer-Tropsch process. Sasol is now also leasing out its export entitlement at the Richards Bay Coal Terminal. "External coal purchases remained elevated in the first half during the destoning plant ramp-up and while coal purchases will continue in the second half to supplement our own production, it is expected to be lower than the first half and to normalise in financial year 2027," Baloyi said. During the interim period external purchases of 4.9-million tons were required to balance lower own production and support increased coal consumption at Secunda Operations. CFO Walt Bruns told Engineering News that external purchases would fall in the second half to about 4-million tons and that he expected them to normalise to a yearly rate of between 4-million and 6-million tons. Previously closed low-quality sections had already been brought back into operation, and the focus was now on increasing internal production volumes, with saleable production expected to be 28-million to 30-million tons in the 2026 financial year. Bruns indicated that Sasol was aiming to increase that to between 32-million and 34-million tons, but introduce that additional internal supply at costs below the average of R700/t it was spending to source coal externally. It might also need to expand its destoning operations, but Bruns said there was other coal washing capacity available and that the group could, thus, consider toll processing instead. HIGHER SECUNDA OUTPUT Sasol reported weaker financial results for the period on the back of difficult market conditions and impairments, with earnings before interest and tax of R4.6-billion being 52% lower than the prior period. Nevertheless, it was able to report a 10% period-on-period increase in output at its Secunda Operations to 3.7-million tons during the interim period, owing to improved gasifier performance and the fact that there had been no phased shutdown during the period. It maintained its full-year production guidance of between 7-million and 7.2-million tons, however, indicating that the repair of its gasifier fleet was still ongoing. In Mozambique, meanwhile, gas production was 4% lower than the prior period, which Sasol attributed mainly to the expected natural decline in producing wells from its Petroleum Production Agreement (PPA) asset in Pande and Temane. This was only partially offset by an increasing contribution from the Production Sharing Agreement (PSA) that was ramping up. "External gas sales in South Africa was 6% lower than the prior period mainly due to lower customer demand resulting from business closures. Internal demand was also lower due to increased pure gas production from coal at Secunda Operations during the first half of 2026," Sasol said. Combined gas production volumes in 2026 from the PPA and PSA licence areas in Mozambique have been revised to between 0% and 5% below that of the 2025 financial year, from 0% to 10% above 2025, mainly due to delays in relation to the PSA and Central Térmica de Temane (CTT) gas-to-power project. Sasol booked an impairment of R3.9-billion in relation to PSA during the period, indicating that while the quantum of gas remained unchanged, a r...

Engineering News editor Terence Creamer talks about the recent attention being given to South Africa’s economic reforms.

State-owned freight logistics group Transnet has initiated the first stage of a process to select a private partner for the Richards Bay Dry Bulk Terminal (RBDBT), a key export terminal in KwaZulu-Natal for bulk commodities such as chrome and magnetite. Transnet has issued a request for qualification (RFQ) document with a deadline of August 31 and intends inviting respondents that are able to demonstrate technical capability, operational experience, financial capacity, and compliance with its requirements to bid into a subsequent request for proposal process. It will also host a briefing session with prospective respondents on March 19. The terminal is currently handling some 16.7-million tons of dry bulk yearly, which is below its 18.5-million tons nameplate, and Transnet is aiming to use a private sector participation (PSP) model to potentially expand the terminal's capacity to 26.9-million tons and position it as a leading regional export hub. Significant investment will be required to modernise and expand the RBDBT, including: the conversion of Berth 702 from import to export use; the development of a new Berth 802, adjacent to Berth 801; upgrades to stockyards, additional tipplers, and conveyor systems to increase throughput and reliability; and the integration of advanced mechanisation and digital technologies to enhance productivity, reduce vessel turnaround times, and lower demurrage costs. "Given the scale of capital needed and Transnet's current balance sheet constraints, a PSP transaction offers the most practical and sustainable mechanism to unlock investment," Transnet states. Transnet Port Terminals (TPT) will remain the 51% owner of an envisaged special purpose vehicle, which will be responsible for the financing, operations, maintenance, and performance improvement of the terminal under a sublicensing agreement with TPT. Transnet has identified chrome and magnetite, which together account for nearly 50% of the terminal's existing throughput, as the primary growth commodities for RBDBT, arguing that their long-term demand outlook is robust owing to global trends in steel production, stainless-steel consumption, and the transition toward low-carbon, green steel manufacturing. In a statement, Transnet described the issuance of the RFQ as an important milestone in Transnet's Reinvent for Growth Strategy, saying that it signals the organisation's readiness to engage the market to strengthen operational performance and attract private investment. "Through the PSP process, Transnet seeks to leverage private sector expertise and capital to improve operational efficiency and reliability, while supporting future capacity growth and retaining strategic oversight of the asset." Transport Minister Barbara Creecy, in her speech in response to President Cyril Ramaphosa's State of the Nation Address, signalled that the process to select a partner for RBDBT would be initiated in February. She also announced that two other PSP programmes were likely to be initiated in 2026, including the Ngqura manganese export corridor PSP by mid-year, and the Container Corridor PSP by the end of 2026. Through the Ngqura manganese export corridor concession the aim is to consolidate manganese exports in Nelson Mandela Bay through a new 12-million-ton bulk terminal at the Port of Ngqura, integrated with an upgrade of rail capacity from the Northern Cape to Ngqura. The container corridor PSP, meanwhile, aims to use a 25-year concession model to mobilise private capital, expertise, and operational capacity to tackle the underperformance of South Africa's primary container logistics corridor linking Johannesburg and Durban. "There are limited State resources to upgrade our rail network. This makes private-sector infrastructure investment critical," Creecy said.

The multiyear slide in South Africa's metals and engineering sector, which makes up about 25% of South Africa's manufacturing sector and 5% of GDP, continued last year, the Steel and Engineering Industries Federation of Southern Africa (Seifsa) has confirmed. In its 'State of the Metals and Engineering Sector 2026' report, Seifsa shows that production fell by 1.6%, having declined at a compound annual growth rate of 1.7% since 2008. In addition, employment fell by 0.43% to about 360 000 employees from over 575 000 in 2008. The sector's weak performance comes despite signs of growth in other parts of the South African economy, which has experienced four consecutive quarters of expansion, raising yet more deindustrialisation concerns. The deterioration in 2025 was particularly pronounced in the upstream basic iron and steel subsector, which saw ArcelorMittal South Africa move its Newcastle mill into care and maintenance and wind down much of its long-steel business. Production in the subsector fell by 12% for the year as a whole, and Seifsa indicated that capacity utilisation fell to only 53% for the year, and slumped precipitously in the fourth quarter of 2025 to only 48%. Despite weak domestic steel consumption, which has declined by 12% since 2018, there had still been a 93% rise in imports over the period, rising to nearly 1.6-million tons last year. Seifsa CEO Tafadzwa Chibanguza stressed that the difficulties were not confined to the upstream sector, however, with downstream companies also reporting insufficient demand, suboptimal capacity utilisation levels and growing import threats. These difficulties were being amplified by the reality that South Africa's developmental-State model had "reached its fiscal and operational limits", while other countries were employing trade and industrial policies that were limiting export prospects for domestic firms. Chibanguza argued that both these realities would have to be navigated for the "green shoots" of growth being experienced elsewhere in the economy to be transmitted to the metals and engineering sector. The domestic economy, he said, would need to do the "heavy lifting" by raising gross fixed capital formation well beyond the current level of 12% of GDP, and by adopting an investment architecture based on public–private partnerships (PPPs). However, PPPs alone would prove insufficient "without embedding domestic capacity development" into their design. "If not structured carefully, PPP programmes may crowd-in capital fiscally, but fail to catalyse industrial deepening or strengthen local capacity," Chibanguza warned. Seifsa also remained concerned about the prevailing uncertainty in relation to the public procurement framework. Concerns that it has been especially vocal in expressing in relation to the potential for local industry to be excluded, owing to the way the rules have been drafted, from participating in the inaugural procurement of electricity transmission infrastructure from the private sector. Seifsa warns that interim arrangements are disrupting localisation enforcement and investment planning, while weakening one of the State's most powerful industrial policy levers. Chibanguza said that 2026 should not be about managing the ongoing decline of the sector, but about converting reform into sustained domestic demand and the country's long-term industrial base. "The principal risk is not reform failure, but reform without execution," he said. Such an outcome, he warned, would entrench stagnation, as it would be characterised by policy drift, procurement instability, and rising administered costs, in a context of intensifying global trade fragmentation.

A new report commissioned by the South African Energy Traders Association (SAETA) identifies the unbundling of Eskom Holdings as the most important economic reform since 1994, arguing that a new competitive electricity sector construct is required to attract the capital needed to deliver security of supply and affordability. Titled 'Policy to power: 10 actions to deliver green, accessible and secure electricity' the SAETA report has been produced by research and consulting firm Krutham. SAETA itself represents electricity traders and its members include Africa GreenCo, Apollo, Discovery Green, Enpower Trading, Envusa, Etana, EXSA, Investec, Lyra Energy, Mainstream, NOA, POWERX and Sturdee Energy. The unbundling announcement took other parts of government and organised business by surprise in stating that the transmission assets would not be transferred to a new independent and State-owned Transmission System Operator (TSO), but would instead be retained by an Eskom Holdings subsidiary in the form of the National Transmission Company South Africa. The move led to concerns that Eskom was pursuing a restructuring model that was not in line with the economic-reform commitments made under Operation Vulindlela; reforms that envisage a transition to a competitive electricity supply industry in order to derisk a sector that, under its prevailing monopoly structure, has experienced years of debilitating loadshedding, tariff surges that have made several sectors uncompetitive and costly misgovernance and corruption. In his SoNA speech, Ramaphosa insisted that the TSO would have ownership and control of transmission assets and be responsible for operating the electricity market. He also announced a dedicated task team under the National Energy Crisis Committee to address various issues relating to the restructuring process and gave it three months to report back with clear time frames and a phased implementation plan. In response, Eskom said it fully supported the task team that was being created to deliver the TSO. The SAETA report argues that, if executed efficiently and timeously, Eskom's unbundling will enable competition, crowd-in private capital and support a resilient power system. "It will facilitate the establishment of a wholesale electricity market, encouraging competition, enabling trading among many participants and providing the foundation for an electricity multi-market." The unbundling of Eskom Holdings has, thus, been included as one of ten priority actions that the report describes as the "minimum set of decisions and deliverables required to move from policy and legislation to a functioning electricity multi-market". REFORM ROADMAP The first action identified, however, is for a Cabinet-endorsed electricity reform roadmap that sets out the intended market target state, key milestones and institutional responsibilities. "The roadmap should bring together existing reform strands under the Electricity Regulation Amendment Act including the establishment of the South Africa Wholesale Electricity Market, Eskom Holdings' unbundling and reform of pricing and the distribution industry. "Clear targets, sequencing and accountability, backed by political authority, are essential to maintain momentum, reduce uncertainty and give investors confidence as reforms move into a more complex execution phase," the report states. "South Africa has made progress, but the window is narrow. Reform is not self-executing. It requires active intervention, political backing, and disciplined delivery. "The opportunity is substantial: lower-cost power, cleaner electricity, stronger growth, and reduced pressure on the public balance sheet. The cost of delay is equally clear. "The direction is right. Now is the time to move faster, with clarity and purpose, to unlock the benefits for households, businesses, and the economy," Taylor said. The other nine priority actions listed in the report, include: "They connect generators, customers, financiers a...

In this opinion article, Harald Winkler and Tracey Davies argue that suspending the carbon tax, which is reportedly under consideration by government, would be a reckless, self-defeating retreat that shields a handful of high emitters and leaves the rest of the country to pay the price. There are credible reports that Electricity and Energy Minister Kgosientsho Ramakgopa is working on a proposal to suspend the carbon tax, and that National Treasury has been asked to motivate why the tax should be retained. Suspending the tax would be a disastrous move for South Africa's economy. Pricing carbon has multiple economic benefits. It is an efficient way to incentivise behavioural change by big emitters that reduces greenhouse gas (GHG) emissions. It ensures that the cost of carbon is borne by the polluters who produce it rather than the economy and society more broadly. It raises revenue which can be spent to ensure poor households benefit, and on climate mitigation and adaptation measures. Appropriate climate-related interventions have been debated repeatedly in South Africa since at least 2005, and a decade-long stakeholder engagement process preceded the 2019 introduction of the Carbon Tax Act. The proposal that the tax should be suspended is a bolt from the blue, and its advocates are not acting in the best interests of the county. Corporate lobbying against the carbon tax South Africa's biggest emitters have a clear, short-term interest in avoiding a carbon tax. Sasol, Eskom, the Minerals Council South Africa, Business Unity South Africa and others have successfully lobbied to delay climate action, and government has repeatedly capitulated. While claiming to agree with the need for climate policy in principle, these entities consistently work to undermine its efficacy and implementation. It appears that this approach has now found favour with Minister Ramakgopa, who is in a powerful position to advance their agenda with the Cabinet. The rationale for a pause of the tax seems to be based partly on the argument that to date, it has been ineffective in driving decarbonisation and is therefore unnecessary. The irony of this is that its "ineffectiveness" is a direct consequence of those same vested interests lobbying to undermine it. It appears that government is especially receptive to the fossil fuel lobby at present. Several ANC ministers are self-proclaimed coal advocates and climate sceptics, and the DA, which has big business as a core constituency, likes to position itself as anti-tax. The new, controversially appointed Minister of Forestry, Fisheries and the Environment has no prior record to indicate that he understands or is committed to climate action and environmental justice. Big emitters pay a little, Eskom not at all Only a handful of entities pay any significant amount of carbon tax (the biggest emitters, like Sasol), and there are very few companies whose competitiveness is affected by it. The carbon tax has had no influence on the price of electricity to date, because Eskom's carbon tax liability has been offset using the environmental levy on non-renewable electricity and the renewable energy premium. There is therefore no pass-through of carbon costs to the electricity price. While the mechanism for offsetting is set to change from 2026, the effect will be the same until at least 2030, i.e. the electricity supply industry will continue to be shielded from the tax. Positioning SA for future global economy Our country should take a proactive approach, not roll back the law. The carbon tax is overdue to enter its second phase, in which rates should be increasing significantly to "provide a strong price signal to both producers and consumers to change their behaviour over the medium to long term" - i.e. to finally give effect to the polluter pays principle. However, in 2025 National Treasury weakened its Phase 2 proposals in the face of concerted pressure from high emitters. In even considering rolling back climat...

Eskom has raised a slew of legal and technical issues with the draft trading rules being considered for approval by the National Energy Regulator of South Africa (Nersa) and has indicated that it is ready to take legal action should the rules not be amended. This new threat of a legal challenge was made during Nersa hearings into the trading rules on February 12. It follows Eskom having initiated a High Court review application in 2025 challenging the regulator's decision to grant electricity trading licences to five companies, despite several other licences having already been granted over several years. Following pressure from Electricity and Energy Minister Dr Kgosientsho Ramokgopa, Eskom announced last year that it would "stay" the review application to allow for the Nersa-led process to finalise the trading rules. It emerged earlier this year that Eskom is proceeding with its review application to "protect its legal position". However, it stressed that it was continuing to participate in regulatory processes in the interests of developing "trading rules that enable a fair, transparent and sustainable competitive marketplace". During the virtual hearings that involved 12 oral presentations, including from various licensed traders and the National Transmission Company South Africa, Eskom, represented by Onicah Rantwane and Camintha Moodley, expressed strong opposition to the draft rules under consideration. The State-owned company said that, if implemented, the rules would "compromise the orderly, phased, and sustainable implementation of retail competition and weaken confidence in electricity market reform". While insisting that Eskom supported bilateral trading and recognised the urgency for rules to protect traders, utilities and customers, Moodley outlined ten legal problems that Eskom had identified with the draft rules. These included reference in the draft rules to provisions in a market code that had not yet been approved, as well as insertions that Eskom said contradicted other pieces of legislation, including legislation confirming that Eskom and municipalities were licensed to distribute and supply electricity. Therefore, she said Eskom reserved its right to institute a legal review in terms of the National Energy Regulation Act, while also urging Nersa to urgently workshop the trading rules to allow for a redrafting of the document. Rantwane, meanwhile, argued that the draft rules could allow certain market participants to unfairly avoid certain system and policy costs, including fixed generation and grid infrastructure costs, social subsidies for vulnerable consumers, legacy costs and top-up energy charges. She argued that the rules should require that all grid-connected customers be subject to "non-bypassable charges", which should be unbundled from energy charges. Eskom also outlined two alternatives for what it termed a "phased market opening", both of which were conditional on broader tariff reforms, including: a 'tariff reform-driven opening', whereby market access was granted only after increasing charges in a way that ensured all customers covered fixed grid and generation costs; or a 'volume-restricted opening', where market access would be phased in more slowly using volume limits, allowing incumbents to maintain customer load while tariffs were gradually adjusted. Here, Rantwane made reference to a move by Namibia to cap at 30% the initial amount of electricity that could be supplied to large customers by private sellers. Eskom found support during the hearings from the South African Local Government Association, which presented jointly with the Association of Municipal Electricity Utilities. Both also called for a "structured engagement" with Nersa on the regulatory framework. Most of the other presenters – including the South African Electricity Traders Association, and traders such as Discovery Green, Africa GreenCo, G7 Renewable Energies, and Sasol – were broadly supportive of the framework tha...

A large-scale hybrid solar and battery project, underpinned by a landmark 25-year private power purchase agreement (PPA) with Sasol and Air Liquide, has achieved financial close and is targeting to enter into commercial operation in 2028. The Naos-1 hybrid solar and battery project is under construction at a site near Viljoenskroon, in the Free State. It is being built by the SOLA Group, which did not disclose the project cost, saying only that the project is considered to be the largest wheeling project by value in South Africa. The South African independent power producer developed and designed the project and will also implement and operate what is described as the largest privately contracted hybrid renewable energy project to reach financial close in South Africa to date. Naos-1 will comprise a 300 MW (435 MWp) solar PV facility coupled with 855 MWh (660 MWh contracted to Sasol and Air Liquide) of lithium-ion battery energy storage, with the wheeled electricity to be purchased at "competitive tariffs" by Sasol and Air Liquide. The PPA terms were not disclosed, but SOLA MD commercial Jonathan Skeen told Engineering News that the tariff was well below prevailing Eskom rates, and highly competitive relative to tariffs from new wind projects but with higher certainty of contracted energy volumes and timing. "The project also achieves much higher buyer savings than a standalone PV-only project of the same size," he said. The project, SOLA added, was the country's first utility-scale solar PV and battery energy storage project purpose-built for wheeling to private end-users across the grid. "Naos-1 represents a major step forward for dispatchable renewable energy in South Africa's private power market, and is the result of our intensive and innovative collaboration with Sasol and Air Liquide over several months", SOLA MD commercial Jonathan Skeen added. "The project delivers energy during peak periods at substantially lower rates than Eskom peak rates. Beyond this, it is able to adapt as peak demand periods shift, while also providing flexibility to adapt to shifts in buyer demand." Sasol executive VP Dr Sarushen Pillay reported that the project formed part of the group's broader transformation strategy towards a low-carbon energy portfolio. And Air Liquide CEO for Africa, Middle East and India Nicolas Poirot said the hybrid solution set a new benchmark for reliable, firm renewable energy at scale. Financial close was achieved following a multi-lender project finance process involving South Africa's major commercial banks including the Development Bank of Southern Africa as the largest senior debt financier, alongside Nedbank, RMB, Investec and Absa. The 100% South African and 51% black-owned project is majority owned by SOLA, alongside Ubuzwe, with equity financing provided by RMB and Sanlam, while engineering, procurement and construction will be carried out by SOLA Build and WBHO. SOLA Assets MD Katherine Persson said that reaching financial close on schedule for a project of such scale, novelty, and complexity, and following accelerated PPA negotiations, demonstrated SOLA's unrivalled record in delivering clean energy for its partners on time and to budget. The company indicated that it had a further 600 MW of hybrid solar and battery projects at a highly mature development stage, and Skeen reported that SOLA had a target of achieving 2 GW of solar power and 5 GWh of storage by 2030.