Page 8 - AfrElec Week 09 2023
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AfrElec POLICY AfrElec
Tax breaks for private sector renewable
energy investments
SOUTH AFRICA MINERALS Council of South Africa, a body However, Godongwana warned that the elec-
representing South Africa’s mining industry tricity supply crisis, if unresolved, could slow the
employers, has welcomed a government pro- economic growth rate to 0.2% for 2023 and 1.3%
posal to assume power utility Eskom’s debt and in both 2024 and 2025.
provide tax incentives to boost private sector Companies that will invest in renewable
investment in renewable energy projects. energy projects, said the minister, will from
In a release on February 22 issued shortly March 2023, be entitled to tax breaks of up to
after Finance Minister Enoch Godongwana had 125%, provided they commission their invest-
presented the 2023 national budget, the Min- ments before the end of March in the 2024/25 Companies
erals Council said the commitment to assume financial year.
Eskom’s $13.8bn obligations will help free it up “This is a significant development to encour- investing in
to conduct maintenance and invest in new elec- age the private sector to bring their more than 9 renewable energy
tricity generation. gigawatts of renewable energy projects into pro-
“While we welcome the financial measures duction as quickly as possible,” Langenhoven projects will from
minister Godongwana outlined to alleviate said.
Eskom’s debt, which will assist with its running Apart from the electricity shortage, mining March 2023 be
income and expenditure, we are absolutely aware companies producing bulk commodities for
that this intervention will not give the country export have complained of inefficiency at rail entitled to tax
urgently needed electricity in the near term,” said logistics and port management utility, Transnet. breaks of up to
Henk Langenhoven, Minerals Council’s chief Companies are reporting full stockpiles
economist. “We believe that the acceleration in of minerals such as iron ore, coal, manganese 125%
the tariff path as outlined by the National Energy and chrome that they cannot send to ports. As
Regulator of South Africa will not slow down.” a result, the exporters forfeited about $2.7bn in
Eskom is failing to provide enough electric- 2022 and $1.9bn in 2021, the Minerals Council
ity to the economy, not only because of the debt estimates.
it cannot repay, but also its aged and inefficient In a bid to streamline Transnet’s operations,
predominantly coal-based production plants. As the government will split its biggest division,
a result, the utility rations electricity for as long Transnet Freight Rail, into rail and infrastruc-
as 10 hours daily. ture by October 2023. This, Langenhoven said,
In his medium-term budget speech in Octo- lays “groundwork for the private sector to par-
ber 2022, Godongwana forecast the economy ticipate in the country’s rail network, improving
could grow by 1.4% in 2023 and 1.7% and 1.8% efficiencies and boosting exports. The urgency
in the following two years, respectively. The of including the private sector on the country’s
economy grew at an estimated 2.5% in 2022. railways cannot be understated.”
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