News in South Africa 13th December:
1. Flooding disaster:
Disaster management teams in KwaZulu-Natal are on high alert as the province continues to experience heavy rains amid fears that the region could face another flood disaster.
The province was hit by large floods in April and May with damage to infrastructure worth an estimated R25 billion.
Thousands of people were left destitute and around 460 people died because of the floods.
The hardest hit eThekwini is, once again, at risk of being affected by localised flooding.
Since it began raining on Sunday evening many roads that were previously damaged by the flooding were affected again.
Human Settlements Minister Mmamoloko Kubayi said that they were on high alert for possible heavy rains in Tshwane and Ekurhuleni.
Wet weather has engulfed Gauteng for over a week now, with hundreds of people being displaced.
Kubayi said that she believed that the number of affected households could be as high as 2,000 and they were working hard to ensure that most residents were protected.
The Department of Cooperative Governance and Traditional Affairs (CoGTA) warned residents living in areas prone to water-related disasters to take precautions as they stood the risk of being hit by flash floods.
2. Big electricity price hike:
Energy regulator Nersa will make its decision on power utility Eskom’s 32% electricity tariff application this week.
The regulator has published its meeting schedule for the week ahead, noting that the decision for Eskom’s fifth Multi-Year Price Determination (MYPD5) revenue application for the 2023/24 and 2024/25 financial years will be announced on Wednesday, 14 December.
Also on the agenda is Nersa’s decision on Eskom’s fourth Multi-Year Price Determination (MYPD4) Regulatory Clearing Account (RCA) application for the 2020/21 financial year.
The decision on Eskom’s application was initially planned for early November, but it was delayed to later in the month. At that meeting, held on 29 November, the decision was removed from the agenda and pushed back even further to December.
A member of Nersa’s electricity subcommittee, Nhlanhla Gumede, submitted at the beginning of the meeting that the three items regarding Eskom’s multiyear price determination revenue application be withdrawn.
“It has unfortunately been identified that gremlins slipped into the calculations, and we need to make sure that, as a regulator, when we make decisions, we make a decision based on correct numbers,” Gumede said at the time.
The regulator members were expected to rule on whether Eskom is entitled to recover 32% more revenue from South African electricity users next year and, if not, how big an increase it will allow.
The members were also expected to announce the tariff increase in the subsequent year, for which Eskom applied for a further 10% increase.
Eskom has applied for a 32% tariff hike in 2023, which, when added to court-ordered backlogs, could see prices climb by over 38%.
This proposed tariff hike has been rejected by major metropolitan municipalities, civil action groups and even Nersa insiders, who said that consumers cannot afford the hike and should not be the ones to suffer for Eskom’s inefficiencies.
However, court cases over the years have shown that Nersa has acted illegally in blocking Eskom from recovering funds, so now this substantial historic ‘backlog’ of increases is coming out in one go.
“For Eskom, there really is no choice – either it recoups the costs through tariffs, or it recoups through bailouts,” the analyst said. “You can have a zero percent increase, but then Eskom needs a bailout of R80 billion. Clearly, that is not viable.”
“We’re running out of options here, and unfortunately, despite it being very challenging, we’re going to need a very large tariff increase.”
3. Govt agency debt:
At the last available count, until the end of September, government agencies owed 5.7% of all the debt carried by the country’s metros, regular quarterly numbers published by the National Treasury on Monday show, a total of R8.4 billion.
That is a rather dramatic decrease from the R14.6 billion (or 12.8% of the total) such agencies had owed metros just three months before, in the period that ended on 30 June.
The influx of cash that represents should have eased the universal strain on city finances around the country, but it was not enough to make a dent in the broader problem of unpaid rates and taxes. Between them, the metros reported residents had run up debt at a rate of R10 billion per month, which means they are now carrying 17.4% more debt than they were at the same time last year.
Three cities now have more than R20 billion of debt on their books: Johannesburg at R43.9 billion, Ekurhuleni at R27.8 billion, and eThekwini at R21.7 billion.
For in-between secondary cities, aggregate debt levels were effectively flat quarter-on-quarter, but smaller municipalities also saw debts climb, so that consumers now owe South Africa’s municipalities R290 billion – up from R255.4 billion three months earlier.
The National Treasury has some very firm ideas about when municipalities should and should not write off debt, but it tracks what it classifies as “actual realistically collectable” debt, that which is under 90 days old. By that measure, the consumer debt that could be recovered comes to R48.8 billion. Or, put differently, municipal debts old enough to start looking a lot like bad debts have gone from under R220 billion to well over R240 billion in a matter of months.
Five years ago, the total debts owed to municipalities amounted to just R143.6 billion. At that time, Johannesburg was owed R18.8 billion, Ekurhuleni was owed 14.4 billion, and eThekwini R9.3 billion.
4. Construction corruption:
The construction sector has been identified as one of the “hotspots for corruption in the public sector” by Corruption Watch, which lists eight such hotspots in its 2022 Analysis of Corruption Trends report.
The top two spots are held by policing (11% of all corruption) and basic education (9%).
The construction sector, state-owned enterprises (SOEs), and traffic and licensing are in joint third place (6% each), followed by healthcare and higher education (bith at 4%) and housing (3%).
Elsie Snyman, CEO of construction market intelligence firm Industry Insight, says corruption remains rife in the sector, and although there are more and more positive outcomes, prosecution remains slow and infestation widespread.
Biggest issues
The Corruption Watch report says 48% of construction sector corruption complaints relate to procurement irregularities, 18% to maladministration and 18% to misappropriation of resources.
Of 1 037 whistleblower reports received in the six months to end-June, 62% were in the public sector, with 5% emanating from the construction sector.
Procurement irregularities, a major headache in the construction arena, accounted for 15% of the whistleblower reports received. This type of corruption is listed as the most prevalent type experienced in the Eastern Cape, Free State, Mpumalanga and North West, and among the top five types in Limpopo and the Northern Cape.
5. US inflation data rocks stocks:
Asian stock markets slipped after making early gains on Tuesday, as investors waited for U.S. inflation data that many hope will persuade the Federal Reserve and other central banks to step back from aggressive interest rate hikes.
China’s CSI300 Index (.CSI300) and the Shanghai Composite Index (.SSEC) fell 0.33% and 0.21% respectively as a fears of a surge in COVID-19 infections following the dismantling of key parts of government’s zero-COVID policy clouded the outlook for the world’s second biggest economy.
Beyond China, investors’ main focus was on U.S. inflation data due out at 1330 GMT on Tuesday, with core CPI inflation expected to slow from 6.3% to 6.1% and headline inflation dropping to 7.3%.
Treasury Secretary Janet Yellen struck a cautious note on Sunday in saying she expected a substantial slowdown in 2023 inflation, but that the U.S. economy remained prone to shocks.
Later this week, the Fed, European Central Bank and the Bank of England are all expected to raise rates by 50 basis points (bps), rather than the aggressive 75 bps hikes they went with earlier in the year.
“Given the very close proximity (of U.S. CPI data) to the FOMC, it clearly has the ability to change the tone of the message … but is highly unlikely to change the headline 50 bps hike,” Deutsche Bank said in a research note.
The dollar index , which measures the greenback’s value against six major currencies, was flat at 105.01.
Oil prices rose further after jumping on Monday due to supply jitters, with Brent crude futures up 1.17% at $78.90 a barrel and U.S. West Texas Intermediate crude up 1.15% at $73.99 a barrel.
Spot gold hovered around $1,781.50 per ounce, while U.S. gold futures were up 0.01% at $1,792.5.
All information sourced from articles posted by: EWN, BusinessTech, Business Insider, Moneyweb and Reuters.
