News in South Africa 21st August:
1. SA remains neutral:
Ahead of the 15th Brics Summit in South Africa, President Cyril Ramaphosa told the nation SA would not be drawn into a contest between global powers.
In an address to the nation on Sunday evening, Ramaphosa said the country was committed to a policy of non-alignment.
“We have resisted pressure to align ourselves with any one of the global powers or with influential blocs of nations. During the ‘Cold War’, the stability and sovereignty of many African countries was undermined because of their alignment with the major powers,” he said.
“This experience has convinced us of the need to seek strategic partnerships with other countries rather than be dominated by any other country. While some of our detractors prefer overt support for their political and ideological choices, we will not be drawn into a contest between global powers. Instead, our country strives to work with all countries for global peace and development.
“It is for this reason that SA is a member of the Non-Aligned Movement, a forum of 120 countries that are not formally aligned with or against any major power bloc,” he said.
Ramaphosa said SA’s decision not to align with any of the global powers did not mean the country was neutral on matters of principle and national interest.
“Our non-aligned position exists alongside our active support for the struggles of the oppressed and marginalised in different parts of the world. We have always believed that the freedom we won — and the international solidarity from which we benefited — imposes a duty on us to support the struggles of those who continue to experience colonialism and racial oppression.
“That is why we will continue to support the struggles of the people of Palestine and Western Sahara. We are fully committed to the articles of the UN Charter, including the principle that all members shall settle their international disputes by peaceful means.
“Most recently, we participated in the African initiative to seek peace in the Ukraine-Russia conflict. Through this African Peace Initiative our country continues to be involved in processes to ensure that children who were removed from their homes in Ukraine are returned to their families and that prisoners of war are exchanged. We continue to be involved in the talks regarding the reopening of the Black Sea to facilitate the flow of grain,” he said.
Ramaphosa said SA firmly believed that dialogue, mediation and diplomacy was the only viable path to end conflict and achieve a durable peace.
He said Brics countries could collectively shape global dynamics, and acting together, had the potential to drive significant changes in the world economy and international relations.
“Together, the Brics members have used their collective voice to call for a world that is more equitable, balanced and governed by an inclusive system of global governance. Being a Brics member has created positive opportunities for SA.”
2. Eskom’s ‘virtual wheeling’ move:
Eskom has recently announced plans to launch an innovative new product that is anticipated to enhance electricity supply and increase customer choice.
The product, known as “virtual wheeling”, is currently at an advanced stage of development. Virtual wheeling is expected to enable industrial and commercial customers embedded within both Eskom and municipal networks to become customers of the growing number of electricity traders being licensed by the National Energy Regulator of South Africa (Nersa).
Other developments in Southern Africa’s electricity supply industry signal further increased electricity supply options by establishing electricity markets in the region. With these advances, electricity pricing is expected to become more rational and market-driven. In contrast, diversification and competition in the generation sector are expected to lead to more abundant and reliable electricity supply.
Limitations of traditional wheeling
Up to now, wheeling in South Africa has been a transaction between a single independent power producer (IPP) generating electricity into the Eskom grid and a single customer, or off-taker, also connected to the Eskom grid, but located on a different site. Electricity supply is effected through the existing grid, with Eskom charging for use of its system and crediting the account of the off-taker on a time-of-use basis for the energy supplied into the grid by the IPP.
Traditional one-to-one wheeling agreements typically have tenors of 20 years, which can be an onerous liability for the off-taker, thus inhibiting the uptake of wheeling arrangements. In addition, the electricity supply agreement between Eskom and the off-taker needs to be amended to account for wheeling credits, which can be cumbersome, expensive and potentially time-consuming.
Barring a few exceptions, wheeling to off-takers embedded in municipal distribution networks has not been possible. Municipalities generally do not have the necessary wheeling and use-of-system tariffs in place, nor the essential billing, metering and data processing systems to accommodate time-of-use wheeling transactions across Eskom and municipal networks, to a customer supplied by the municipality.
How virtual wheeling addresses the limitations
At a recent online event hosted by EE Business Intelligence on 17 August 2023, Onicah Rantwane, Eskom’s senior advisor – electricity pricing, announced the impending rollout of virtual wheeling.
Virtual wheeling allows licensed third-party traders to contract with one or more IPPs for part or all of the IPPs’ energy generated into the Eskom grid. The trader then effectively sells parts of its contracted energy from the IPPs to a basket of customers with shorter off-take terms than the trader’s power purchase agreements (PPAs) with the IPPs.
Enabling wheeling from multiple generators to multiple off-takers (i.e. many-to-many wheeling) thus addresses one of the major limitations of traditional wheeling, which could previously only cope with one-to-one wheeling arrangements.
In a virtual wheeling arrangement, the customer gets its normal electricity supply bill as usual from the electricity distributor (Eskom or municipality), and separately gets a rebate (or excess bill) from the trader. The municipal electricity distributor, therefore, experiences no reduction in its revenue stream.
No changes in the customer’s municipal electricity supply contract are required, nor are any changes required to the municipal electricity billing system or the customer’s municipal electricity meter. However, the trader will need to install its own time-of-use (TOU) meter (with data communication capabilities) at their customer’s premises.
All of this decouples wheeling from the normal retail billing process and makes many-to-many wheeling transactions easy to administer.
3. Eskom falls to wayside:
South African businesses and households are cutting their dependence on Eskom for reliable electricity through solar PV and battery storage.
Farming is a sector where power independence is particularly important, and a solar revolution is afoot here.
Theo de Jager, executive director at Southern African Agri Initiative (SAAI) and founder of Son SA, said many farms have facilities which cannot function without reliable electricity.
He said the electricity crisis brought many farmers to their knees and threatened the viability of their businesses.
They discussed the problems with Eskom and the relevant ministers but soon realised that the situation would not improve.
In response, farming and business organisations joined forces to ensure farmers and businesses could function without Eskom power.
De Jager and others realised that solar power was the only solution because diesel generators are too costly to run with extended load-shedding.
They founded Son SA to help farmers and businesses use solar PV and battery backup to become energy independent.
It included partnerships with banks and other financial institutions to make financing available for solar installations.
They also vet service providers to weed out fly-by-night operators to assist farmers in avoiding being fleeced by bad actors.
The results have been encouraging, with many farms and businesses, including mega-farms, going completely off-grid.
He said that just like the South African Post Office, which became irrelevant to most South Africans who no longer require its services, Eskom is also slowly dying.
“It struck me that Eskom is going the same route as the SA Post Office where people are finding alternatives and stop using their service,” he said.
“South Africans are so tired of Eskom’s unreliable service that many have already made a plan which limits their reliance on Eskom.”
He added that those who have not made a plan yet are working to produce their own power and kiss Eskom goodbye.
“It is expensive to invest in a solar PV and battery backup system, but it is even more expensive not to do it and rely on Eskom.”
“We all have a responsibility to become independent of Eskom as there is no concrete plan for fixing the power utility.”
4. Hijack numbers still high:
While South Africa has seen a decrease in hijackings year-on-year, some provinces still experienced a big jump in hijackings – while the month-on-month data shows an upward trend in the number of carjackings.
Presenting the latest quarterly crime statistics for the first quarter of 2023/24 – 1 April to 30 June 2023 – the South African Police Service (SAPS) noted that 5,488 cars were hijacked over the three-month period.
This equates to approximately 60 cars being stolen in the country every day.
While 5,488 hijackings in the first three months of the 2023/24 financial year is a decline of 6.4% compared to the same period in 2022, month-on-month data shows that carjackings increased by 8.9% over the quarter to 1,898 in June from 1,742 in April.
According to the SAPS, one province experienced a notable year-on-year increase (>20%) in hijackings –the North West (27.6%) – while the Mpumalanga toed the line at 17.9%. Limpopo also experienced an uptick in hijackings, recording an increase of 6.2%.
Interestingly, The Northern Cape saw a 28.6% decrease in carjackings, followed by Gauteng (-12.1%), Kwa-Zulu Natal (-8.5%), Eastern Cape (-3%), and the Free State (-5.5%), while the Western Cape saw a meagre decline of 0.7%.
The top five hijacking hotspots for the three most populated provinces are listed below.
Gauteng:
- Olievenhoutbosch
- Protea
- Moroka
- Orange Farms
- Midrand
Kwa-Zulu Natal:
- Umlazi
- Bhekithemba
Western Cape:
- Harare
- Nyanga
- Philippi East
- Lingelethu-West
- Delft
5. Markets sink due to China rate cut:
Most Asian markets fell Monday as China’s decision to cut interest rates again failed to reassure investors, who are growing increasingly worried about the outlook for the world’s number two economy.
Sentiment has been hammered this month by a string of weak data out of Beijing indicating the post-Covid recovery has run off track.
Speculation that the Federal Reserve could tighten monetary policy further and keep rates elevated for some time has added to the gloom as it tries to bring inflation down to its two percent target.
Wall Street provided a tepid lead, while focus turns to a symposium of top central bankers and business leaders at Jackson Hole, Wyoming, later in the week, with dealers hoping for some guidance on rates.
“From recent commentaries, it appears that central bankers will keep the flexibility to hike rates further, while clearly avoiding committing to cut rates soon,” said Redmond Wong at Saxo.
While the Fed and others contemplate more increases, the People’s Bank of China on Monday announced another cut in bid to kickstart the sputtering economy.
The decision to lower the one-year loan prime rate, which serves as a benchmark for corporate loans, comes after a reduction in June and leaves it at a historic low.
However, it stood pat on the five-year LPR, which is used to price mortgages and the reductions were smaller than forecasters had predicted.
The announcement did little to soothe worried investors, who are calling for leaders to unveil more concrete measures to boost growth.
All information sourced from articles posted by: TimesLive, Moneyweb, DailyInvestor, BusinessTech, and Fin24.
