Electricity and Energy Minister Dr Kgosientsho Ramokgopa says the private sector participation framework being developed for the transmission sector will be unveiled within five weeks, while announcing that it will also offer a template for other infrastructure-focused State-owned enterprises (SoEs) seeking to crowd-in private investors.

In his contribution to the debate on the 2025 State of the Nation Address (SoNA), Ramokgopa emphasised the central role of infrastructure in raising South Africa’s growth to the 3% target outlined by President Cyril Ramaphosa in his earlier speech.

With gross fixed capital formation languishing at 14% of GDP, well below the National Development Plan’s 30% target, and with South Africa’s deep fiscal constraints, the Minister said that private-sector investment would be crucial for raising yearly infrastructure investment to the plan’s R2.1-trillion aspiration.

The R940-billion in public infrastructure investment referred to by Ramaphosa in the SoNA, Ramokgopa said, was what government departments and SoEs were planning to invest over the coming three years.

“We need to design bespoke financing instruments that will tap into the liquidity of the private sector, [while] ensuring you provide sufficient guardrails to protect the investments of the private sector,” he argued, adding that infrastructure needed to be an asset class that could crowd-in private investment.

He made specific reference to the work under way to begin procuring independent transmission projects (ITPs) to help accelerate the roll-out of the National Transmission Company South Africa’s Transmission Development Plan.

“On the electricity front, we make the point that the State’s sovereign balance sheet is weak, the Eskom balance sheet has been eroded, [so] we need to design an instrument that helps us to ensure that there is accelerated private-sector investment.

“We need to modernise and grow the transmission grid by over 14 000 km in the next ten years [and] we need about R450-billion.

“We have designed an instrument, President, [and] we will be introducing that instrument to the country in the next five weeks.

“We are going to use that instrument as a template; we will take it to Transnet, we will take it to all SoEs so that we are able to drive this infrastructure going forward,” he said in the closing speech of the SoNA debate, ahead of Ramaphosa’s official reply to the debate.

The first pilot procurement of ITPs is expected to be launched towards the end of 2025, with the National Treasury and World Bank currently finalising a credit guarantee instrument to de-risk grid projects in the absence of government guarantees.

Regulations for ITPs are also being prepared for release for public comment, alongside a Ministerial determination that will be required to trigger the inaugural procurement programme. The initial bid window will be overseen by the Independent Power Producer Office, which has been responsible for the public procurement of new private generation since 2011.

Meanwhile, Ramokgopa said that specific freight rail corridors were being prioritised for private-sector participation as part of a goal of increasing railed volume from 149-million tons last year to 250-million tons by 2030.

Even in the vital water sector, Ramokgopa argued that there were both social and commercial aspects that could facilitate private-sector involvement, pointing to the Vaal Gamagara Scheme and the Lebalelo Water Users Association as examples of ways to combine public and private investment to shore up supply.