MEC for Finance, Mlungisi Mvoko, Confirms R1.8bn Allocation for Coega Return Effluent Scheme - Eastern Cape Budget Speech 2023/24

[Image extracted from project video linked in text below] Construction of the Return Effluent (RE) Scheme will include infrastructure upgrades in zones 3, 4, 5 and 6 of the SEZ and the construction of a pipeline to convey treated effluent or industrial quality water from the Fishwater Flats Wastewater Treatment Works, to the Coega SEZ for industrial use.

Gqeberha, South Africa, 14 March 2023 - The Coega Development Corporation announced today that it welcomes the R1.8 billion budget allocation by the Honourable Mlungisi Mvoko – MEC for Finance, Economic Development and Environmental Affairs, for the Coega Return Effluent Scheme, an innovative water sustainability initiative. While the announcement has provided the necessary degree of certainty in terms of project progression, the final approval is subject to the submission of administrative information to National Treasury.

This comes after Coega made a successful application through the Budget Facility for Infrastructure (BFI), meeting the stringent project preparation requirements. Out of the R3,1 billion required for the full scheme, the allocation of R1,8 billion for phase 1 is an important investment that will positively impact water supply in the Nelson Mandela Bay Metro in the medium-to-long term. This investment reaffirms Coega Special Economic Zone (SEZ) as a leading SEZ on the continent and a preferred sustainable and competitive investment destination. This significant milestone announcement by the MEC for Finance will enable, in the medium-to-long term, a sustainable water strategy across the region. In the context of protracted droughts that have been experienced, water availability should not limit growth and development, hence the need for a paradigm shift from treatment and disposal, to reusing, recycling and recovering.

The implementation of the sustainable water strategy will enable Coega, along with its partners and stakeholders, to effectively respond to continuous water scarcity in the Nelson Mandela Bay Metro and ensure long-term security of water supply, says Coega’s Senior Programme Manager, Maria van Zyl.

For continuous improvement and innovation, Coega’s water projects will see the development and implementation of several water sustainability projects in phases. Central to the implementation of these projects, is the development of socially responsible infrastructure and utilising bespoke solutions for this very important natural resource. Coega’s capabilities in related engineering, sustainability, economic research, and human capital development specialisations have enabled this solution proposal to reach this phase in critical investment decision-making.

The solutions-driven projects aim to pioneer sustainable socio-economic development across the region through repurposing and future-proofing water security in line with the National Water and Sanitation Master Plan, while supporting job creation, skills development, SMME development, and inclusive economic growth to realise the objectives of the South African Economic Reconstruction and Recovery Plan (ERRP). “The implementation of these water sustainability projects not only fosters a competitive advantage and differentiation for the Coega SEZ, as a leading SEZ in Africa, but further strengthens Coega’s transferable capability as a solutions-driven infrastructure implementing agent of choice in South Africa. “We expect these solutions to be of interest to others beyond the Coega SEZ, who can benefit from Coega’s capability and experience,” says Zuko Mqhatu, Coega Programme Director for Property Development and Facilities Maintenance (PDM), the core infrastructure solutions division for the Coega SEZ.

Already in planning, the construction of the Return Effluent (RE) Scheme will include infrastructure upgrades in zones 3, 4, 5 and 6 of the Coega SEZ for wastewater conveyance within the Coega Special Economic Zone, and the construction of a pipeline to convey treated effluent or industrial quality water from the Fishwater Flats Wastewater Treatment Works, to the Coega SEZ. This works through the basic function of wastewater treatment, by removing solids from wastewater and enabling the further purification of water for reuse. The use of industrial quality water will in turn reduce Coega’s reliance on the scarce potable water source for industrial uses. “The co-benefits of the Return Effluent Scheme relating to sustainable development are unquestionable in terms of advancing industrial symbiosis, water security, and circular economy,” says Telly Chauke, Coega Chief Sustainability Officer.

Moreover, the RE Scheme comprises the development of a distribution network within the Coega SEZ, a Wastewater Treatment Works and connection pipelines to the nearby Motherwell township for the collection of the sewerage required to produce the treated effluent according to demand. The potential inflow from Motherwell is estimated at 20 Megalitres per day and would greatly contribute to the objective of obtaining financial closure for the potential investors in Zone 5 of the Coega SEZ. Currently, all sewerage from Motherwell is treated at the Fish Water Flats Wastewater Treatment Works, which is already operating at maximum capacity. The inflow to the Coega Wastewater Treatment Works would alleviate the pressure on the Fish Water Flats Wastewater Treatment Works and create sufficient capacity for future developments such as the planned Nu-Way Housing Development. The Treated Return Effluent will be distributed from the Coega Kop Reservoir to the SEZ via a distribution network to Zones 3 and 5; distribution network to Zones 6 and 9; and the construction of a second 15 Megalitre reservoir at Coega Kop Reservoir to ensure sufficient storage capacity.

The impact on the economy is significant. Here are twelve (12) expected benefits of the Return Effluent Scheme:

• Reduction of potable water usage for industrial purposes in a water insecure region;
• Industrial development and economic growth;
• Approximately 528 formal direct and indirect job opportunities during construction phase;
• When adding the induced effect of the wage income, the economy-wide number of jobs would be around 654 for the Eastern Cape Province;
• Approximately 307 (economy-wide) jobs in the informal sector;
• Investment attraction owing to guaranteed supply of industrial water;
• Achievement of sustainability targets - climate-proof and sustainable development;
• Alleviation of pressure on Fish Water Flats Wastewater Treatment Works, currently operating at maximum capacity;
• Additional capacity for new developments such as the Nu-Way Housing Project;
• Compliance to regulatory requirements with environmental authorisations for projects within the Coega SEZ;
• The total economy-wide tax generation during the construction phase is expected to be around R238.9 million, of which indirect taxes will contribute by R115.7 million, corporate direct taxes by R68.2 million and households’ direct taxes by R48.7 million; and
• Coega SEZ is afforded an opportunity to champion climate change mitigation and provide a proactive solution for developments of Mega Projects in a water scarce region.

CLICK TO WATCH Return Effluent Scheme Benefits Video.

On 19 August 2022, Coega announced it had received a Coastal Waters Discharge Permit which enables the organisation to move forward with proposed coastal-dependent industries, which include not only the approved permit for a 60 megalitres per day desalination plant in Zone 10 of the Coega SEZ but also the two 1000-megawatt (MW) liquefied natural gas (LNG) power stations and a land-based aquaculture development zone (ADZ).

Based on 23 years’ experience in the implementation of mega infrastructure projects in the Coega SEZ and throughout South Africa, these upgrades are solutions-based and reinforced by a sustainability framework. There is thus a need to optimise the water mix, which is currently strongly dominated by surface water, with some groundwater and return flows, to a water mix that includes increased groundwater use and the re-use of effluent from wastewater treatment plants.

These interventions are critical first measures against the backdrop of a region in South Africa that is becoming increasingly water insecure. Coega acknowledges that the water crisis presents sufficient and alarming evidence that all role-players need to act urgently to invest in sustainable solutions to reduce the impact that protracted droughts present into the foreseeable future, adds Chauke. Climate modelling suggests an expected higher degree of variation in rainfall patterns. Trends are pointing towards increased atmospheric and surface temperatures, and an associated increase in drier spells.

CLICK TO WATCH Return Effluent Scheme Sustainability Impact Video.

From a sustainability perspective, Coega understands that water is the country’s most precious natural resource that is vital to life, development, economic growth and as a critical factor that influences investor attraction, as perceptions largely drive investor decisions. Therefore, water projects are inextricably linked on various levels to economic, environmental, and social prosperity, and play an important role as well in the transition to a green economy, as supported by the UN World Water Assessment Programme of UNESCO.

Combining these with the objectives of the World Water Forum to ensure that key decision makers collaborate and make long-term progress to respond to the challenges of water and sanitation, form part of the foundation of Coega’s approach to creating a sustainable investment space that places the preservation of natural resources and unlocking of value in alternative technologies to address the challenges presented by climate change. As a result, creating conditions that improve training, and produce more skilled workers to respond to increasing demands for labour in the water sector contributes to the Coega SEZ’s value proposition and delivers on the Paris Agreement on Climate Change mitigation, adaptation, and finance.

CLICK TO WATCH Coega Return Effluent Skills Video.

In the context of the ongoing Nelson Mandela Bay water crisis, the budget allocation is welcomed to facilitate sustainable and innovative water solutions and continuous development of the Coega Return Effluent Scheme, which is expected to add a much-needed boost to the local economy, concludes van Zyl.

CLICK TO WATCH Coega Return Effluent Scheme Video (full).