Sona 2024: Ramaphosa extends hand to private sector to tackle energy, logistic crisis in SA

PRESIDENT Cyril Ramaphosa has given the strongest indication yet that the government will stick to its newfound policy of relying on the private sector to fix the energy and logistical crises that have become an albatross to South Africa’s economic activity.

During his State of the Nation Address (Sona) last night, Ramaphosa said the government would be seeking private sector players to plough money into the expansion of the country’s electricity transmission grid to accommodate additional renewable energy.

Last year, the National Treasury decided to shoulder R254 billion of Eskom’s more than R400bn to relieve its balance sheet amid the unbundling process, on condition that the struggling power utility does not take new debt or invest in new generation capacity but focuses on maintenance and transmission infrastructure.

Ramaphosa said the government was reforming the energy system to make it more competitive, sustainable and reliable into the future to ensure that the country never faced a similar crisis of load shedding ever again.

“We are going to build more than 14 000km of new transmission lines to accommodate renewable energy over the coming years,” Ramaphosa said.

“To fast-track this process, we will enable private investment in transmission infrastructure through a variety of innovative investment models.

“As we undertake these reforms, we are positioning our economy for future growth in a world shaped by climate change and a revolution in green technologies.”

On logistical challenges, Ramaphosa said the government was taking action to improve the ports and rail network, and restore them to world-class standards in a bid to deal with severe inefficiencies.

Volumes at Transnet have declined over the past few years because cargo has moved from rail to road due to the collapse of the railway network.

The logistical challenges from Transnet rail and ports network have seriously damaged economic growth and commodity exporters, the country’s foreign currency earners, have not been able export goods from South Africa to the international market.

A consultancy firm has estimated that the economy will lose R353 billion this year because of problems at Transnet.

Mining companies like Kumba Iron Ore have flagged Transnet for their poor performance in the fourth quarter of 2023, saying that rail performance challenges continued to place significant pressure on its value chain.

Kumba yesterday said that ore railed to Saldanha Bay Port decreased by 19% in the fourth quarter of 2023 compared to the same period a year before, resulting in on-mine stockpiles increasing to unsustainable levels.

Ramaphosa said the government had been working closely with business and labour, and had established dedicated teams to turn around five strategic corridors that transport goods for export purposes.

He said the number of ships waiting to berth at the Port of Durban, which has experienced severe congestion in recent months, had reduced from more than 60 ships in mid-November to just 12 ships at the end of January.

“Transnet has appointed an international terminal operator to help expand and improve its largest terminal at the Port of Durban. And we are overhauling the freight rail system by allowing private rail operators to access the rail network,” Ramaphosa said.

“With the current conflict in the Middle East affecting shipping traffic through the Suez Canal, South Africa is well positioned to offer bunkering services for ships that will be rerouted via our shores.”

FNB chief economist Mamello Matikinca-Ngwenya said exports of goods and services had generally underperformed imports since March 2011, reflecting reduced production and export competitiveness.

“The forecast assumes this trend continues until the execution of Transnet's recovery plan and the freight logistic roadmap is complete or at an advanced stage,” Matikinca-Ngwenya said.

“Growth in exports is expected to average 1.7%, while imports are envisaged to average around 3.0%, consistent with expected improvement in domestic demand.”

BUSINESS REPORT