News in South Africa 18th April:

1. Load shedding vs blackout hours:

It’s only halfway through April 2023, and South Africa has already experienced as much load shedding (hours) as almost the entirety of 2022 – and the number of hours of blackouts you experience is worse than ever before.

Load shedding vs blackout hours
Photo by George Becker

These are some of the latest findings from independent energy analyst Pieter Jordaan in his weekly National Blackout Statistics for South Africa.

The current data around load shedding is already a horror show of numbers: the country has experienced load shedding for all but one day of the year so far, totalling 106 days. This is quickly eating up the estimated 250 days expected by the South African Reserve Bank, and more than half the 207 days of load shedding experienced in 2022.

In total hours, load shedding has been in effect for 2,442 hours of the year so far, quickly chasing down the 3,776 hours recorded in 2022, according to EskomSePush.

According to Jordaan, however, while the metrics used to track load shedding point to the country on the way to beating records set in 2022, the reality of the situation is already far worse.

The analyst noted that the actual hours of load shedding outages experienced – which he terms ‘blackout hours per day’ – have already far surpassed those in 2022.

Because the country has been in a near-permanent stage of load shedding all year, the rotation time – the active hours of load shedding, not necessarily blackouts – is also close to the 24-hour mark.

Jordaan’s data shows that load-shedding rotations have been in effect for an average of 22.9 hours every day so far in 2023. However, the actual blackout time South Africans have experienced is around 6.2 hours of every day.

This is compared to the 2.3 hours of blackouts experienced in 2022, against the rotational time of 10.4 hours each day.

Put another way, more than a quarter (26%) of each day in 2023 has been spent without any power this year so far, compared to just 10% in 2022, and 2.1% in 2021.

2. Eskom received half a trillion rand since 2008:

Eskom will have received close to half a trillion rand in state support almost two decades since it started imposing debilitating nationwide blackouts in 2008. 

The series of cash injections and a planned takeover of a portion of Eskom’s loan portfolio will amount to R495.6 billion in the fiscal year through March 2026, the National Treasury said in response to emailed questions. The figure includes Finance Minister Enoch Godongwana’s R254 billion relief package for Eskom, which was announced in February and hinges on the debt-laden company meeting pre-determined performance targets meant to wean it off its reliance on public finances.

Godongwana on Friday ruled out any further cash injections for the company that’s struggling to produce enough power to meet demand. That’s despite calls from the newly appointed Electricity Minister Kgosientsho Ramokgopa for more fiscal support to ease outages, known locally as load shedding. 

Straying from the latest debt-relief plan would test the credibility of South Africa’s fiscal framework and budget processes in a country with a full house of junk credit ratings. It would also rattle investors who have placed a premium on the currency because of the slow pace of economic reforms, severe power rationing and logistics-network constraints that are eroding the nation’s growth prospects. 

3. Tshwane to sell off assets:

Tshwane executive mayor Cilliers Brink said the municipality would be selling its underutilised assets to create more revenue.

Brink said municipal-owned buildings and unused land that weren’t deriving any revenue for the city would be put up for sale.

He said the municipality would have to make hard decisions over the next few years to become financially viable again.

Brink said he had been given a conservative estimate that the city could generate at least R100 million from selling its unused assets.

The executive mayor said the city was losing a lot of money on the upkeep and security of empty municipal buildings and unoccupied land.

He said the municipality should focus more on collecting revenue for services instead of investments.

“Everything not related to water, electricity, sewerage, parks, roads, safety, and public lighting will have to be reconsidered. We must get back to the basic functions.”

4. Rand volatility limits economic growth:

The rand is one of the world’s most volatile currencies, which limits the country’s growth by preventing local firms from engaging in long-term investments and scaring away foreign investors.

This is according to a report by the International Monetary Fund (IMF) and Pieter Faber, a senior executive at the South African Institute of Chartered Accountants. 

South Africa’s rand is traded in large volumes globally and is seen as a proxy for emerging market investment. It makes the currency highly exposed to external shocks and, thus, highly volatile. 

According to the IMF, the rand is one of the most volatile currencies globally compared to advanced economies and emerging market peers. 

Only the Russian rouble and Argentinian peso have been more volatile in the last decade.

The South African Reserve Bank (SARB) tried to absorb the external shocks to the currency and prevent them from affecting the local economy. 

It does this by tightly regulating the financial sector to ensure it is sound and well-capitalised, while the National Treasury minimises the effect of these shocks by ensuring the majority of South Africa’s debt is rand-denominated. 

However, the SARB and Treasury cannot counteract the effect of South Africa’s poor economic performance on the currency and the effect of policy uncertainty. 

5. Drama for Sun International:

JSE-listed hotel and resort group Sun International’s long term objective to wholly-own both SunWest International and Sun Slots has become slightly more complicated.

This follows GMB Liquidity Corporation becoming the majority shareholder of JSE-listed Grand Parade Investments (GPI).

SunWest International owns 100% of casino and entertainment destination GrandWest and the Table Bay Hotel at the V&A Waterfront, both in Cape Town.

Sun Slots is a leading limited payout machine operator.

GPI has a 15% stake in SunWest and 30% interest in Sun Slots.

Sun International CEO Anthony Leeming said Sun International owned the majority of the shareholding in SunWest and 70% of Sun Slots, and its long term ambition is to wholly-own these assets.

At the end of 2022, Sun International (South Africa) Limited (SISA), a wholly owned subsidiary of Sun International, acquired 22.6% of the issued share capital, equivalent to 24.7% of the issued share capital net of accounting treasury shares in GPI.

Sun International did not sell any of its shareholding in GPI to GMB.

Apart from its shareholding in SunWest International and Sun Slots, GPI’s portfolio assets also comprise:

  • A 15.1% shareholding in Golden Valley Casino and hotel situated in the Breede River Valley in the Western Cape;
  • A 26% shareholding in Infiniti Gaming Africa, a supplier of integrated, scaleable casino management and jackpot system solutions;
  • An A-grade office block in Heerengracht Street in Cape Town’s city centre; and
  • A B-grade industrial/warehouse building with offices in Epping in Cape Town.

Sun International last month reported 44% growth in income to R11.3 billion in the year to end-December 2022.

All information sourced from articles posted by: BusinessTech, Fin24, EWN, DailyInvestor, and Moneyweb.

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