Eskom and Transnet woes: Government-business collaboration pays off

SA has gone 43 days without load shedding and Transnet’s rail and port performance is on the mend. All going well, load shedding may be history by the end of 2025.

That’s largely the result of the collaboration between business and government, known as the Joint Steering Oversight Committee (JSOC), which was launched 11 months ago to pull SA back from the brink of economic implosion.

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It was launched under the president’s office at a time when load shedding was a daily occurrence and Transnet’s rail performance had regressed to post-World War 2 levels.

A JSOC update on Thursday put some flesh on the skeleton of an initiative that many at the time dismissed as another forum for talk and not much else.

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More than 150 CEOs from the private sector have signed up for the initiative, which is focused around three key areas deemed most urgent: energy, transport and logistics, and crime and corruption.

Some 350 specialists have been deployed to power stations, Transnet and various crime initiatives, racking up close to 7 000 hours of contribution.

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Here are some of the milestones:

Energy

• Load shedding is down 61% for the period December 2023 to February 2024 compared to the same period the prior year;
• Stage 4 load shedding is down 80%;
• Six gigawatts (GW) of new generation capacity has been added to the grid;
• The investment pipeline for new power generation has doubled;
• Requests for proposals (RFPs) have been issued for 7.6GW of renewable energy, gas-to-power and battery storage;
• New CEO for Eskom appointed (Dan Marokane);
• The National Transmission Company of South Africa (NTCSA) has been established, and a board put in place to unbundle and separately manage Eskom’s transmission grid; and
• Eskom’s energy available factor has improved above 55%.

Transport and logistics

• New CEOs appointed at Transnet (Michelle Phillips) and Transnet Freight Rail (Russell Baatjies);
• 36% less waiting time to anchor vessels (as at March 2024);
• 45% fewer vessels anchored outside Durban;
• National Treasury agreed to a R47 billion guarantee for Transnet, subject to conditions;
• R700 million investment in key rail corridors, much of it for security (with the private sector providing drones and other security support to combat cable and equipment theft);
• Transnet’s draft ‘Network Statement’ has been published as the first step to attracting private investment and readying the rail provider for competition before the end of 2024; and
• The decline in freight volumes was arrested in 2024 and volumes for the 2024/5 year are targeted for 193 million tonnes (Mt), just short of the 200-220 Mt needed to support economic recovery.

Crime and corruption

• Twenty high priority and complex cases identified for prosecution with the National Prosecuting Authority (NPA) as part of a strategy to remove SA from the Financial Action Task Force grey list;
• Crime call centre modernised;
• NPA Amendment Bill tabled to establish the Investigating Directorate against Corruption and provide for the appointment of anti-corruption investigators;
• Exodus of skills from the NPA has been arrested and it is being re-staffed;
• Plans in place to leverage R56 million investment by the South African Banking Risk Information Centre (Sabric) and Banking Association of SA (Basa) for the creation of a forensic analysis centre and training for complex cases; and
• A key target is the reduction of infrastructure crime at Eskom and Transnet, and there is evidence that this is happening.

‘Quick results’

Speaking at a PSG investor conference on Thursday, Transnet chair Andile Sangqu said the willingness of business to assist in turning around performance at the ports and rail operator has delivered some quick results.

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One of these was the supply of drones and 24-hour security on key corridors to combat cable theft, which has been crippling operations.

Another was the loan of seven cranes by international shipping companies, which were delivered and deployed to Cape Town to ease port congestion around the festive season.

Earlier in the day, Rudi Dicks, head of project management in the Office of The Presidency, pointed to some encouraging investments in the renewable energy space, with a decline in unplanned outages, aided by 4 000MW of new power coming on stream in 2024 and an expected 7 000MW in 2025.

James MacKay, CEO of the Energy Council of SA, said ending load shedding is the first target in a much larger campaign towards net zero carbon emissions by 2050, a tough target that is likely to be missed. This is the same target being pursued by the UK, which has a 15-year head start on SA.

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The proliferation of rooftop solar systems is an important part of easing the energy crisis, and now the focus is on large corporate buyers and developers building wind and solar systems at utility-level scale.

The business partnership with government has had a significant impact on addressing the energy crisis by building strong governance structures and good working relations through the National Energy Crisis Committee (Necom), which is tasked with fixing Eskom and adding new sources of power to the grid, according to MacKay.

A total of R1.5 trillion is needed over 10 years to sustain the energy transition, equivalent to R1.5 billion a year. That requires unbundling Eskom, and setting up a new company to manage power transmission.

“We need to get our focus out of energy scarcity and load shedding [and on] to the bigger picture,” said MacKay.

Jannie Durand, CEO of Remgro and head of the Joint Initiative to Fight Crime and Corruption (JICC), said crime reduces GDP by an estimated 5%, with knock-on impacts on tax collection and the cash economy.

“People must believe in the rule of law. That creates confidence for long term investment,” said Durand.

He added that the purpose of the initiative is to create jobs and revive the economy.

JSOC is vital to making SA attractive for investment and creating jobs.

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“If we can get regulatory structure in place, and we minimise [the] trust deficit, there are huge opportunities [in SA]. Look at how many installers have found employment in solar.”

This article was republished from Moneyweb. Read the original here