Coega Commentary – State of the Nation Address 2022

Gqeberha, 11 February 2022 – The Coega Development Corporation (CDC) welcomes the address by the President of the Republic of South Africa, His Excellency, Matamela Cyril Ramaphosa during the State of the Nation Address 2022, last night. The President sets out government’s key policy objectives and deliverables for the year ahead, highlights achievements, flags challenges and outlines interventions to unlock development interventions for the coming financial year. We were encouraged by the President’s comments on the economy, energy projects, infrastructure development, to mention but a few.

The CDC is encouraged by policy interventions outlined by the President to unlock economic development for inclusive growth and sustainability which forms part of the Economic Reconstruction and Recovery Plan as a common programme to rebuild the economy. Government’s commitment is welcomed to accelerating structural reforms to modernise and transform industries, unlock investment, reduce costs, and increase competitiveness and growth.

To this end, unlocking investment is important for the sustainability of the CDC, as the developer and operator of the 9003ha Coega Special Economic Zone. To take advantage of the big frontier investment opportunities, the CDC is creating investment-ready platforms, and recently announced major investment projects that are “game changers” for the country and that will improve socio-economic development.

These projects include, amongst others, the aquaculture development zone (ADZ) which is part of the Provincial Oceans Economy Master Plan; a catalytic infrastructure of R206 million has been made from the stimulus fund for the development of the first 100 hectares. This project is targeted to create 500 construction and an estimated 5,600 operational jobs could be realised as private sector investments are made over the next few years.

Other game changing projects are in the energy sector. The rapid expansion of the country’s energy generation capacity is important. As a result, Coega welcomes government’s commitment to go ahead with several new energy generation projects which will be coming online over the next few years and these include up to 800 MW from those risk mitigation power projects that are ready to proceed, says the President. Some of these projects proposed for location at Coega include, the Karpowership Coega project, which entails the generation of 450 MW electricity from a floating mobile powership moored at the Port of Ngqura and the Mulilo Total Coega project which entails the construction and operation of a 200 MW gas power station in Zone 13 of the Coega SEZ, utilising reciprocating engines to generate electricity. The expectation is that these projects will achieve financial close by the end of March 2022. Together with the operational R3,5 billion Dedisa Peaking Power Plant producing 342 MW, the Coega SEZ precinct will have approximately 1,000 MW power generation capacity which is important to improve energy security and thus boost investor confidence. Reliable energy is critical to drive increased industrialisation and stimulating inclusive socio-economic growth.

With respect to the LNG to power project to realise the 3000MW gas power requirement in the Integrated Resource Plan (IRP) 2019, a lot of progress is being made. The CDC has concluded a Joint Development Agreement (JDA) with the Central Energy Fund (CEF) and Transnet and additionally, through the Eastern Cape’s Provincial Economic Investment Stimulus Fund, the CDC is also conducting enabling activities for the development of the gas sector. The JDA partners issued a Requests for Information to interested parties on the 3rd of November 2021, to solicit interest from the market for the supply of gas and gas infrastructure. The next phase will see the necessary Request for Proposal being issued to further advance this project, and ensure realisation of the critical energy supply objectives of the country.

CDC welcomes the President’s undertaking on renewable energy production. The CDC is focusing on solar and wind energy generation as part of making the Coega SEZ a sustainable and future resilient investment location of choice. The organisation is in the process of rolling out solar rooftop project in the Coega SEZ. The project is currently at advanced stages and will see the roll out of the first 5MW Solar PV programme.

The CDC further welcomes the President’s comments on water as the country’s most precious natural resource that is vital to life, to development and to economic growth. The CDC has identified water restrictions in Nelson Mandela Bay Metropolitan Municipality (NMBM) as a critical factor that influences investor attraction, as perceptions largely drive investor decisions. Water desalination has been identified as an option to mitigate recurring droughts to prevent water crises and look to future water sustainability for the Metropolitan Municipality could potentially face. To this end, the CDC and NMBM have been working together over the past few years to develop a programme that could augment the water mix in the NMBM with desalinated water. The CDC is working with its partners including the NMBM to deliver a 15 Megalitre per day (MLD) desalination plant in Zone 10 of the Coega Special Economic Zone (SEZ).

The CDC welcomes government’s dedication to infrastructure development as being central to economic reconstruction and recovery. The CDC has been creating an investment ready infrastructure in the Coega SEZ which has enabled the growth of operational investors to more than 50 world class companies. Recently, the CDC has successfully completed commissioning of investment projects which include, amongst others, Seraphim - Solar Cell Manufacturing (R362m investment), African Port Logistics and Infrastructure (Pty) Ltd (APLI) (R180m investment) and DHL/Mondelez (R17,9m investment).

Moreover, the CDC is renowned for its infrastructure prowess, as a trusted implementing agent of choice in South Africa for complex and mega projects. The CDC is responsible for one of the biggest projects in Gauteng since the Gautrain, namely, the Tshwane Automotive Special Economic Zone (TASEZ) in which the Ford Motor Corporation of SA is investing more than R15,8bn. This project is in partnership with the Department of Trade, Industry, and Competition, Gauteng Provincial Government, and City of Tshwane. Ford is planning to utilise a railway line from Tshwane to Gqeberha to export new vehicles using the Port of Gqeberha. The CDC is also assisting various Government departments on infrastructure investments in various sectors, with a significant portfolio in the socially critical health and education sectors. The CDC is also working with its key partner Transnet as implementing agent to fast track the development of the Ngqura Manganese Export Terminal.

In conclusion, the CDC welcomes the focus on the African Continental Free Trade Area (AFCFTA). The resolutions of the African Union Summit that trading can begin under the African Continental Free Trade Area agreement is a significant milestone for the CDC. The organisation is already pursuing opportunities on the continent providing Technical SEZ advisory, Dry Ports development, and Infrastructure Implementation Currently, the CDC is undertaking various projects in Nigeria, Senegal, Cameroon for Central African Republic, and Zimbabwe.