News in South Africa 10th November:

1. Restaurants load shedding struggles:

Restaurants roll out generators to fight load shedding – at a cost of R1,000 per hour.

Restaurants load shedding struggles
Image taken by: Pixabay

South Africa’s embattled restaurant industry is being battered by load shedding, turning to petrol and diesel generators to keep the lights on. But record-high fuel prices, following months of strict lockdown restrictions, are making the current situation a lot harder.

Load shedding is draining South Africa’s already hard-hit economy and scaring away potential investors. As Eskom’s aging coal fleet splutters and supply is outweighed by demand, rotational power cuts sweep across the country, plunging businesses into darkness.

Eskom has implemented varying stages of load shedding consistently over the past month, with only a brief reprieve to accommodate the municipal elections at the start of November. Currently at Stage 4, which allows 4,000MW of capacity to be shed with three two-and-a-half hour rotational cuts at intervals throughout the day, restaurants are feeling the pressure.

Load shedding is bad enough, but on the back of a particularly dismal year of fierce lockdown restrictions and soaring fuel prices, these cuts further threaten the financial and operational stability of many restaurants.

“This is a complete nightmare,” Wendy Alberts, the chief executive officer of the Restaurants Association of South Africa (RASA) stated.

Restaurants, like many other businesses, have turned to generators. But it’s not as simple as flipping a switch to diesel or petrol power when Eskom’s load shedding kicks in, according to Alberts.

“There’s an interruption of [at least] 15 minutes, because we need to get the generator started and start-up the kitchen slowly by reintroducing equipment to the generator,” says Alberts.

And while these interruptions delay food service and may deter patrons, the use of generators three times a day also comes at a great financial cost. Alberts estimates that, depending on the size and power needs of a particular restaurant, running a generator costs around R1,000 an hour.

If restaurants are operational throughout the day and suffer up to seven hours of load shedding, the cost of running a generator may be as high as R7,000.

2. Concern over electrical grid stability:

For the first time, there is real concern about the stability of the grid.

Sometime between 6am and 9am on Saturday morning, Eskom rapidly lost 1 000 megawatts (MW) of supply from the Cahora Bassa hydro scheme in Zambia.

Ordinarily, the utility receives around 1 500MW of imported power.

In a statement on Sunday afternoon, it described this as a “major incident in Zambia [which] affected the entire Southern African Power Pool [SAPP]”.

According to publicly available information published by Eskom, the amount of imported power received dropped from:

  • 1 491MW at 6am to
  • 1 045MW at 7am to
  • 729MW at 8am.

Presumably this dropped even further after 8am (Eskom only publishes data as at each hour).

This does not seem all that sudden, but this supply is relatively stable and Eskom banks on this.

By 9am, the amount of power supplied by the scheme had returned to normal (1 498MW). It has remained steady ever since.

How, then, did a temporary loss of imported electricity on Saturday morning plunge the country into Stage 4 load shedding for this entire week?

The reality is the system operator is skating a very fine line when it comes to managing Eskom’s operating reserve.

Eskom requires an operating reserve of 2 200MW. This means it requires 2 200MW more electricity generated than demanded. This buffer allows it to balance the power system when units trip. For instance, a 794MW unit at Medupi which could be generating 700MW at the time could trip and the operating reserve gives Eskom the breathing room to react to the trip – by using pumped storage or open cycle gas turbines (OCGTs) to supplement supply at short notice.

Eskom Group executive for transmission Segomoco Scheepers says a preliminary investigation shows this was a “culmination of a number of small incidents”.

The investigation is being led by the SAPP coordination centre in Harare.

Scheepers noted that Zambia experienced a blackout over the weekend. At this point, it lost 2 000MW of supply. He said “power swings were observed between Zambian and Zimbabwean networks,” resulting in “over-frequency”, which at one point reached 54 Hz in Zambia. This caused generators to trip in Zambia, and the interconnector to trip between Zambia and Zimbabwe.

This then caused “over-frequency” in Zimbabwe, which then impacted the interconnector to South Africa, resulting in the loss of 1000MW of imports.

Scheepers notes that at the point these events happened, Eskom was already load shedding in Stage 2.

Eskom chief executive Andre de Ruyter says that load shedding will be eased heading into the weekend, but that the system remains constrained.

In a virtual media briefing on Tuesday (9 November), de Ruyter said that the country is set to move to stage 3 load shedding at 05h00 on Wednesday, and should move to stage 2 load shedding on Friday. Following this, Eskom is hopeful that load shedding will be completely lifted on Saturday, he said.

New load shedding schedule:

  • Stage 3 load shedding from 05h00 on Wednesday to 05h00 on Friday;
  • Stage 2 load shedding from 05h00 on Friday to 05h00 on Saturday;
  • Load shedding is expected to be lifted from 05h00 on Saturday.

He said that the latest REIPP bid window should assist with this, but that Eskom is in a liquidity-constrained position which makes it difficult to enter into long-term contracts to deal with these power outages.

“A recent new challenge that has reared its head, which is quite unfortunate, is that some municipalities have not played their role in introducing load shedding,” he said.

“During stage 2, some municipalities did not follow the required schedules or only implemented fractional load shedding over the required period – this is what led to the increase in stage 2 load shedding to stage 4.”

3. Gwede against going green:

Minerals and Energy Minister Gwede Mantashe called for “African solidarity” on Tuesday at the start of the Africa Energy Week conference in Cape Town, tapping into an anti-Western backlash that is brewing in some circles over the global drive towards renewable energy to stem the unfolding climate crisis.

“Globally, one summit after the other, certain industrialised countries refuse to jettison their use of fossil fuels. What had been pitted as global agreements lay hollow, as these countries keep postponing the deadlines of when they will shut down their coal mines and oil and gas industries, respectively,” said Mantashe. 

That statement is not false. There have been global pacts to address climate change that have been watered down, or ambitious targets that were not met, or major polluters that have pulled out because of political change. Witness what has happened in the US between alternating Republican and Democratic administrations on the issue. 

“The sad reality of this situation is that there has been preoccupation with Africa. Yet our Africa is the least polluter compared to the other continents. This is a sign of encirclement. Africa is being encircled by the rich and powerful,” he said. 

That statement is more questionable and pretty jarring coming at what is, after all, an investment conference. It suggests a new kind of predatory colonialism is afoot, but this time it comes with a green sheen. 

“Our continent, collectively, and her individual countries, is made to bear the brunt of the heavy polluters. We are being pressured, even compelled (italics added), to move away from all forms of fossil fuels — including resources such as gas, which have been regarded as key resources for industrialisation. Africa must seize the moment. We must, indeed, ‘Position(ing) Africa Oil and Gas at the forefront of global energy growth’,” he said in his prepared remarks. 

It is certainly true that Africa, the world’s poorest continent, is being hard hit by a climate crisis unleashed by the industrialisation of the rich world. But this narrative from a couple of decades ago — that emerging economies should not be subjected to the same emissions-cutting standards as wealthy nations — does not quite stand up the way it did when, say, the Kyoto pact was being negotiated. 

For one thing, the extent of the climate crisis has become even graver, according to the science and the lived experience of most people who spend any amount of time outdoors. 

“South Africa is rich with coal. Other African countries are endowed with oil and gas. Africa must invest in research and development in the exploration of these resources towards a clean environment,” Mantashe said. 

There was no mention of the “resource curse” or how oil has been a fuel for corruption, state dysfunction and larceny on a grand scale in such countries. Perhaps the minister should ask slum dwellers in, say, Luanda, for their view of the oil industry and its role in providing “an African solidarity solution”. 

Mantashe also missed a crucial point: fewer and fewer bankers and investors want to sink capital into fossil fuels. The money is rapidly moving to renewables, and de-carbonised economies and industries are going to be far more competitive in the greener future because other economies and industries will actually want to buy their stuff. 

4. SARS knuckling down on non-compliance:

The South African Revenue Service (SARS) sent a letter to stakeholders this week, warning that it plans to get tougher on non-compliant taxpayers in South Africa.

The revenue collector said that this is part of a strategic objective of making non-compliance difficult and costly and that it is ‘imperative’ that it enhances its ability to impose administrative penalties in a more responsive manner.

“With effect from 1 December 2021, SARS has been empowered to levy a late submission of return penalty where one or more personal income tax returns are outstanding. As a transitional measure for the first year, the one tax return or more rule will only apply to the 2021 tax return,” it said.

“Prior to 1 December 2021, SARS could only levy a late submission of return penalty where two or more outstanding tax returns. This older rule will remain in place for one more year for 2020 and earlier returns.”

SARS has also urged South Africans to ensure that they accept their auto-assessments and meet the deadline for individual non-provisional taxpayers on 23 November 2021.

5. R44.9b in unclaimed pension funds:

South Africa is sitting on R44.9 billion in unclaimed pension funds, owed to 45 million beneficiaries according to the Financial Sector Conduct Authority (FSCA).

That should be free money, to the right people. But claiming it is not always easy.

According to Section 37C of the Pension Funds Act it’s very important to ensure that you have named beneficiaries on pension, provident or retirement annuity funds. Without these named beneficiaries or a valid will money owed to your heirs could end up not being paid out. 

Reporters asked the FSCA what steps beneficiaries need to take if corporates dispute a claim. After several attempts, they still did not receive a response. 

All information sourced from articles posted by: Moneyweb, BusinessTech, Business Insider, and Daily Maverick.

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