South Africa Gives Progress Update On Infrastructure Reforms

About 4GW of private power will be added by end of 2024.

By Chriselle Moraes on
2nd June 2023

The South African government is making efforts to end the crises affecting the country's infrastructure sectors by increasing private sector participation in its power, rail and water industries.

According to the progress report on Operation Vulindlela, a joint initiative of the Presidency and National Treasury to speed up implementing structural reforms and support economic recovery, firm steps have been taken to compensate for the deteriorating performance of state-run companies. 

Third party access will be given to state freight rail tracks by the end of October; private terminal operators are being sought for Durban Pier 2 Container Terminal and Ngqura Container Terminal, and a unit has been established to encourage private sector investment in water projects. 

Meanwhile, private investors are expected to add approximately 4GW of power to the grid by the end of 2024 following regulatory reforms.

South Africa suffers power cuts lasting over 10 hours a day. Decrees in 2021 and 2022 removed caps on the size of power plants that companies can build for their use. This has resulted in the registration of 108 projects with a combined capacity of over 10GW for construction. About 1GW of power is expected to come online this year, with 3GW planned for 2024.

In the next quarter, an Electricity Regulation Amendment Bill will be introduced to parliament to create a competitive electricity market. A board will be appointed for the National Transmission Company of South Africa (NTCSA), an independent subsidiary of Eskom, overseeing the national grid. 

Efforts are also being made to speed up the procurement of new power generation capacity, facilitating the procurement of independent power by municipalities and relieving state utility Eskom’s debt burden. Earlier this year, South Africa signed power purchase agreements for 975MW of projects under its renewable energy programme.

The 2023 Budget gave Eskom R254 billion (US$12.8 billion) in debt relief and introduced tax incentives for businesses and households to invest in rooftop solar. 
“The primary focus is on addressing the electricity crisis and improving the efficiency of freight rail, both of which are weighing heavily on economic growth,” said Khumbudzo Ntshavheni, South Africa’s Minister in the Presidency.

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