Engineering and contracting group Murray & Roberts (M&R) says its Southern Africa-focused business platform, which has shrunk materially and has been lossmaking for a number of years, is at the point of a “breakthrough”, underpinned by South African renewables and transmission activities that are starting to gain momentum.

Known as the power, industrial and water platform, the unit is the smallest of the JSE-listed group’s three platforms by far and is also the only one leveraged entirely to project activity in M&R’s home market of South Africa and to the Southern Africa region.

The platform’s order book of only R400-million is dwarfed by the R37.2-billion backlog of M&R’s energy, resources and infrastructure platform, which operates under the Australian Clough brand. It is also insignificant relative to the mining platform, which has a R21.9-billion order book.

M&R has faced persistent questions about the platform’s ongoing relevance, particularly as it struggled in recent years to replenish its order book as construction activities at Eskom’s Medupi and Kusilecoal-fired power station projects tapered, and losses began mounting.

However, CEO Henry Laas is optimistic that the platform, which reported a R155-million loss in 2022, could finally return to profitability during the 2023 financial year, particularly if projects associated with South Africa’s disrupted and delayed renewables procurement programme reach financial close.

M&R has secured several contracts related to Bid Window 5 of the Renewable Energy Independent Power Producer Procurement Programme, which were initially scheduled to reach financial close in April, but which had the deadline postponed after preferred bidders experienced delays in receiving grid connection budget quotes from Eskom.

Platform CEO Steve Harrison says there is an expectation that at least some of the 25 preferred bidders will reach financial close during this month and reports that the company has already started with early works for three wind farms and at a substation linked to the programme.

The contracts are not yet reflected in the platform’s order book but are represented in what it describes as near orders worth R1.9-billion.

Harrison reports that it is also receiving enquiries weekly with regard to distributed renewables projects, interest in which has increased significantly after President Cyril Ramaphosa lifted the licence-exemption cap. The cap was initially raised from 1 MW to 100 MW, but has since been lifted entirely.

He also expects orders to begin to flow in light of the increasingly urgent need to strengthen the Eskom transmission grid, particularly in the Cape provinces, where South Africa’s best wind and solar resources can be found.

The platform is also eyeing a major public-private partnership in the area of water treatment, a market where significant pent-up demand has also developed.

Overall, however, the group’s prospects are leveraged primarily to the fortunes of its mining and its energy, resources and infrastructure platforms, whose activities are focused mostly in markets outside of Southern Africa.

In fact, only 17% of M&R’s R59.5-billion order book is located in Southern Africa, with all of the energy, resources and infrastructure platform’s R37-billion backlog located in international markets.

In addition, most of its revenue and earnings will continue to arise from outside Southern Africa. In 2022, the group’s revenue increased to R29.9-billion, from R21.9-billion, and Laas said it would continue to rise and that he expected revenue to increase to about R40-billion.

Nevertheless, Laas described the investments in developing utility-scale renewables as an opportunity in South Africa “which we haven’t had for a long period of time”.