News in South Africa 23rd August:
1. Petrol price spike:
Vehicle finance group WesBank says that a weaker rand and rising oil prices are converging to deliver a blow to motorists in September.
“As September approaches, the convergence of oil prices and the rand/dollar exchange rate assumes paramount significance in shaping local fuel prices,” the group said.
“With both factors aligned against motorists, the impending month threatens to bring about heightened challenges at the fuel pumps.”
The impending petrol and diesel price hikes are reflected in the latest data from the Central Energy Fund, which shows a massive hike on the way for diesel – up to R2.70 per litre – and a significant jump for petrol of up to R1.60 per litre.
Both the weaker rand and rising oil prices are contributing to a significant under-recovery in prices as of 21 August 2023, with little to no hope that these trends will be reversed by the end of the month.
While the rand has strengthened against the dollar this week – moving back below R19 to the dollar – it remains a prisoner to global market movements which have not favoured riskier assets and emerging markets.
The oil price, meanwhile, has dropped from highs around $88 a barrel, but is not showing any signs of dropping to the levels of $75 a barrel last seen in June/July.
Oil prices remain within the range of $85 a barrel on tighter global supplies, but prices are softer.
According to Bloomberg analysis, a rally in crude that started in recent months has faltered over the last couple of weeks, with futures back to where they were at the start of the year.
2. Call to reform global financial institutions:
Global financial institutions must be required to stage a reform if they are to be responsive to the challenges borne by developing countries, president of the host nation of the 15th annual Brics Summit, Cyril Ramaphosa, said on Tuesday.
“We require a fundamental reform of the global financial institutions so that they can be more agile and responsive to the challenges facing developing economies,” he said.
Ramaphosa was speaking in a leader’s address alongside other Brics heads of state at the summit, themed ‘Brics and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism’.
Global financial institutions such as the European-backed World Bank and the International Monetary Fund (IMF) have often come to the aid of developing countries, but often at a steep cost and with complex conditions attached.
“In this respect, the New Development Bank, established by Brics countries in 2015, is leading the way,” Ramaphosa said.
‘Mobilising resources’
Ramaphosa said that since its formation, the New Development Bank (NDB) or the official Brics bank, has displayed an ability to mobilise resources for infrastructure and sustainable development in emerging economies and without conditionalities.
The bank has been in existence for nearly a decade. It was formed with the intention of providing financing to developing nations for much-needed infrastructure projects that in turn stoke economic growth. It has been viewed as an alternative to the likes of the IMF.
Ramaphosa also emphasised that economic growth must be underpinned by inclusiveness.
3. R319b gas infrastructure plan backed:
A southern African bloc of nations backed a $17 billion (R319 billion) natural gas infrastructure plan to bolster energy supplies on a continent where almost half of the population lacks access to power.
The 16-member Southern African Development Community approved the blueprint to invest in infrastructure such as pipelines and terminals for local and imported supplies.
While not yet a major source of gas, the bloc is home to some significant discoveries with projects in various stages in Mozambique, Tanzania and South Africa.
The SADC endorsed the 15-year plan to coordinate resources, it said last week after a meeting between heads of state in Luanda, Angola’s capital. It focuses on the use of gas from northern Mozambique and southern Namibia, as well as import terminals in southern Mozambique and South Africa.
With new coal projects unlikely, nuclear power considered costly and climate change threatening hydroelectric generation, “this leaves few options,” according to the plan.
The plan still requires funding at a time when the financing of fossil-fuel supplies grows increasingly challenging due to environmental concerns and a global shift to cleaner sources of energy.
Project delays could also present an obstacle, as demonstrated by liquefied natural gas projects by TotalEnergies SE and Shell Plc in the region that have fallen years behind their initial target to start production.
“SADC member states have growing populations and an urgent need to drive inclusive economic growth, reduce poverty and income inequality, and create prosperity and wellbeing for all,” the group said.
Gas can provide a complementary source of energy, “expediting the development of the power grid in renewable resource-rich areas,” it said.
The plan allocates more than $9 billion (R169 billion) of investment in Mozambique that’s needed to build power projects and infrastructure, leveraging discoveries offshore the north of the country.
4. China donates millions to help with load shedding:
South Africa aims to enhance its energy collaboration with China, focusing on aligning the two countries’ shared dedication to environmentally friendly, low-carbon and climate-resilient development.
President Cyril Ramaphosa on Tuesday hosted his Chinese counterpart, President Xi Jinping, on a State Visit in Tshwane, as eminent world leaders converge in Johannesburg for the 15th BRICS Summit in Sandton, Gauteng. Collaboration across a range of fields took centre stage as the two leaders met.
President Ramaphosa extended his heartfelt gratitude to President Xi for China’s acts of generosity and solidarity towards South Africa.
“South Africa deeply appreciates China’s support in addressing our current energy challenges. This includes the donation of emergency power equipment worth R167 million and availing a grant of approximately R500 million as development assistance,” the President said.
“Energy cooperation with China is a recent development that we look to deepen, particularly in line with our respective commitments to low-carbon, climate-resilient development.”
China has been a valued friend and developmental partner of South Africa throughout the course of rebuilding South Africa from the “ruins of apartheid”.
“I wish to make special mention of China’s support during the COVID-19 pandemic through the provision of personal protective equipment, vaccines and other essential items to South Africa and other African countries. This support extended to the cancellation of the debt of a number of African countries,” Ramaphosa said.
The President told his counterpart that Chinese companies, encouraged by his government, responded with enthusiasm to SA’s investment drive, which has raised more than R1.5 trillion in investment commitments over the last five years.
Building on this firm foundation, President Ramaphosa said the two countries should continue to provide each other with mutual support.
5. Tackling the construction mafia:
The government is setting up a call centre for the “speedy reporting” of disruptions at construction sites, said Public Works and Infrastructure Minister Sihle Zikalala.
The minister was speaking at a briefing on Sunday, where he provided an update on the progress of key infrastructure projects as well as measures to tackle disruptions at construction sites, instigated by the construction mafia.
It was previously reported on how the construction mafia – which grew out of two militant groups in KwaZulu-Natal and has since spread to all provinces – terrorise building sites, demanding a 30% stake in projects. They often rock up at these sites, armed and presenting themselves as business forums.
But on Sunday, Zikalala said that law enforcement agencies were prioritising these crimes. “There is a glimmer of hope that eventually we will win the war against those involved in extortion, hijacking and disruption of construction sites,” he said.
“To assist the construction sector, we are establishing a call centre for speedy reporting of construction disruptions, and this will support the assigned law enforcement units to this priority crime,” said Zikalala.
He said the call centre would ensure that information would be received as quickly as possible and those who reported disruptions, as well as contractors and their families, would be protected.
In July, Zikalala said that at least 605 suspects linked to the construction mafia had been arrested, City Press reported.
All information sourced from articles posted by: BusinessTech, Moneyweb, DailyInvestor, and Fin24.
