South African Business 2024

SPECIAL FEATURE
million 20-foot equivalent units) to 11-million
TEUs by 2032.
The 2022 deal involving a 15-year concession
for the loading of grain at one of Durban’s
agricultural terminals was won by Afgri, one of
South Africa’s biggest agricultural firms. Afgri
will deal with the operation and maintenance of
all landside operations, and the deal includes a
similar arrangement at East London. The other
two terminals in Durban are operated by SA Bulk
Terminals and Bidvest Bulk Terminals.
A similar plan to concession certain dedicated
rail lines to private operators has not gone smoothly.
The private sector was initially very interested in the
idea of running currently closed branch lines to a
railhead delivering grain in the Free State or coal in
Mpumalanga, for example. However, the length of
contract time offered to the private operators was
not long enough for them to feel it was worth their
while. There was only one bid so the whole process
has been put on hold while the model is reworked.
Seeing opportunity in a crisis
The conversation about the global climate crisis
has seized the limelight across the world in a way
that few other topics have since World War II. The
debate in South Africa has its own unique contours,
particularly as so much of the country’s electricity
generation comes from coal, about 80%. The fact
that many people would lose their jobs if coal mines
close down is an important factor in calculations,
and a key reason why South Africa is at the forefront
about the need for a “Just Energy Transition”.
In addition to this, Eskom has not been able to
avoid regular power cuts. An excellent programme
exists to procure the energy that South Africa
needs to expand the economy, the Renewable
Energy Independent Power Producer Procurement
Programme (REIPPPP). In Round Five of the REIPPPP,
the cheapest solar generation cost was 37.5c/kWh
while the best wind cost was 34.4c/kWh. These
represent remarkably low costs.
When President Ramaphosa announced that
private power investors could create up to 100MW
of power without having to wait for licensing, he
potentially opened up a path to growth.
The utility’s inability to provide enough
electricity to power the economy (and its huge
Eskom’s Hex BESS site at Worcester is the largest
battery storage project in Africa.
debt) rank as the biggest risks to the South African
economy. Opportunities for private consortiums are
expanding and every window of the REIPPPP has
been oversubscribed so there is an appetite to enter
the South African energy market.
The Northern Cape has attracted the bulk of
solar projects, and the Eastern Cape has become
the home of the wind farm but the Western Cape
has a good mixture of both modes of renewable
energy. It also has an enthusiastic metropole, Cape
Town, and a provincial administration determined
to take full advantage of nature’s bounty. Following
the announcement by the City of Cape Town that
residents could get cash for power in late 2022,
Versofy Solar received 1 500 enquiries in the month
of January and has experienced a surge of orders for
rooftop installations since then.
In 2023 a major wind farm project was
announced for Mpumalanga, proving that
preconceptions about renewable energy resources
in that province were wrong.
Eskom’s unbundling will be another spur to
growth. The legal separation of transmission is the
first step, and considerable progress was made on
this in 2023. The other two elements, generation and
distribution, will follow. The idea is not to privatise the
entities but to find private partners and to allow for
competition within the various fields.
The R130-billion pledged at COP26 by the EU,
the US, Germany, France and the UK to assist South
PHOTO: SA Government News Agency
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SOUTH AFRICAN BUSINESS 2024