News in South Africa 24th January:
1. Drivers licence crisis:
South Africa’s growing driver licence backlog has led to concerns from motorists about what happens when their licence expires and they are not able to receive a new card.
Driving licence cards in South Africa are produced by the Driving Licence Card Account (DLCA) – a national entity that produces these driving licence cards for Driving Licence Testing Centres around the country.
The machine used in the production of the cards broke down in late November and is currently abroad for repairs, with approximately half a million South African motorists now stuck with expired driving licence cards.
Transport minister Fikile Mbalula has indicated that the machine will be repaired by March and that his department will be announcing new temporary measures to assist those affected by the backlog.
In response to concerns around expired licences, the City of Cape Town has published a brief explainer on the protocols for expired licences and what to do if you cannot get a replacement.
It noted that this is a national issue and advises motorists to continue applying to renew their driving licence cards, in spite of the continued uncertainty around the production of the cards.
“In terms of the National Road Traffic Act, an expired driving licence card will remain valid for a period of three months from the date of expiry, if a renewal application was made before the expiry date. The condition for this is that the holder of the licence must be in possession of the expired card and proof of payment,” it said.
If the situation is not resolved within three months, an application can be made for a temporary licence, which is valid for six months, or until the new/replacement driving licence card is issued, the city said.
It added that the renewal of a driving licence card after its expiry date will automatically require a temporary licence.
2. Extension of R350 grant:
The African National Congress says it is considering having government extend the R350 COVID-19 grant that is aimed at alleviating the plight of the poor and unemployed South Africans. This was announced following deliberations at the party’s NEC and alliance partners this weekend.
The social relief grant was first instituted in May 2020 to mitigate the effects of the COVID-19 pandemic and is due to be stopped in March 2022.
ANC President Cyril Ramaphosa says, “The Lekgotla noted that this grant has had a significant positive impact on the lives of the poor but most particularly the unemployed. The government must examine the feasibility and affordability for providing some form of income support for the poor and unemployed going forward.”
In September last year, Ramaphosa gave a strong signal that the R350 Social Relief of Distress Grant will be extended beyond March. Addressing the Congress of South Africa Trade Union’s (Cosatu) three-day Central Committee gathering, Ramaphosa said the level of unemployment in the country is beyond a crisis.
He said there is a need to extend more support to the unemployed and the poor. The R350 Social Relief of Distress Grant was first introduced in April last year to give relief to people who lost their jobs following the outbreak of the COVID-19 pandemic.
It was meant to be a short-term measure and was stopped in October 2020 after running for six months. President Ramaphosa decided to reinstate it following widespread riots and looting in KwaZulu-Natal and Gauteng in July last year.
Since then, Cosatu, together with many other civil society organisations and political parties have called on the government to increase the grant substantially and make it permanent.
3. Electricity increase by 20.5%:
ESKOM’S chief financial officer, Calib Cassim, on Friday made an impassioned plea to the National Energy Regulator of South Africa (Nersa) to objectively consider the utility’s application for a 20.5 percent tariff increase because any shortfalls in revenue generation still have to be covered by the government as a major shareholder and ultimately, consumers.
On the last day of the public hearings, Cassim said previous Nersa decisions had been fraught with mistakes which were repeated in subsequent times, for example, in 2019 when the regulator corrected the employee benefit determination after the high court found that the approach used had been based on incorrect criteria.
“If we cannot, as Eskom, recover the money through the tariff that is an electricity consumer base which is far bigger than the tax base, Eskom has only the shareholder to go back to because there will be a shortfall in the cash flow.
“We would have to go back to the government, effectively the National Treasury, and say Eskom is short of X billion rand, you need to foot that bill. So where is the shareholder going to get that money from? They will have to charge the taxpayer,” Cassim said.
The two organisations were in court as well late last year, after Nersa rejected Eskom’s MYPD5 application because it had been based on methodology from 2016.
He argued against the utility being granted only an inflationary increase, saying the utility would not be able to cover its costs but only IPP-related increases which made up 5.85 percent of the 20.5 percent being sought, leaving no revenue to cover Eskom’s cost adjustments or the carbon tax.
Eskom’s application in the main comprises R68.3bn for depreciation; R66.7bn for operating expenses; R5.7bn for arrears debt; R4.6bn for international purchases; R7bn for the environmental levy; R2.7bn for the carbon tax and R14.4bn in previously approved regulatory clearing account-related revenue.
4. Maize and meat price hike:
Recent rain damage to maize fields in some parts of the country may have a knock-on effect on prices, but it is still too early to tell.
In a recent report by Grain SA, about 22% of grain farmers in South Africa said they expect more than 60% of their white maize area to be negatively affected by excessive rain.
The report draws from a survey conducted by Grain SA assessing the extent of the damage to maize and other grains caused by excessive rain this summer. The survey polled 434 farmers across the country, some of which have already suffered large-scale losses.
If a normal season prevails, farmers expect to harvest 32% white maize in below-average conditions and 31% in an average state. They expect that 20% will be in a very poor condition.
According to the report, the Northern Cape, and western and eastern Free State were the most affected grain-growing regions.
Yellow maize has also been affected, with 14% of the farmers saying that they expect more than 60% of the yellow maize area will be affected. However, 10% said less than 20% would be damaged.
Although the summer crops are highly affected, it is difficult to conclude whether South Africa will face a potential shortage of maize and the impact on maize prices, said Dirk Strydom, Grain SA Marketing, Nampo and Research Coordination lead said.
“It is very early and therefore difficult to say what the impact on the crop is at this point. [We] would only be able to estimate by February, with the first official crop estimate,” Strydom said.
However, Shereen Tromp, senior consultant at Euromonitor International, said the recent flooding events that destroyed some crops might result in a supply scarcity, which will result in rising prices.
“The recent flooding in KwaZulu-Natal and Free State and the destruction of maize crops will result in rising prices of both meat and maize meal; as yellow maize is used as animal feed and white maize is used to make maize meal,” Tromp said.
5. Renewables affected by inflation:
The era of ever-cheaper clean power is over, giving a fresh jolt of uncertainty to global energy markets battered by one supply crisis after another.
Relentless price declines over the past decade made renewables the cheapest sources of electricity in much of the world. In the past year, though, prices for solar panels have surged more than 50%. Wind turbines are up 13%, and battery prices are rising for the first time ever.
As pandemic-induced supply delays ensnare everything from cars to salads, green energy’s price hikes may not come as a surprise. But shipping backlogs and commodities shortages are coming at a particularly vulnerable moment for wind and solar. After years of rapid-fire advances in technology and manufacturing, there are fewer opportunities left to cut costs without sacrificing profits. Instead of perpetually falling, prices will now ebb and flow based on the cost of raw materials and other market forces.
For energy markets grappling with blackouts and extreme price volatility in the green transition, clean-power inflation is another wild card. Policy makers, accused of adding wind and solar so rapidly that electric grids have become unstable, are under pressure to ensure the entire system is more reliable — by pairing solar with batteries, for example, or keeping aging nuclear plants running for longer.
“From now on, what’s going to make the difference around the expansion of solar and wind is not going to be costs — how low can you go? — but value,” said Edurne Zoco, executive director of clean technology and renewables at research firm IHS Markit.
Higher interest rates are also threatening to increase costs for wind and solar projects as central banks weigh tighter monetary policy to curb inflation, said Julien Dumoulin-Smith, an analyst with Bank of America Corp.
“One of the single most important inputs that go into these highly levered projects are rates,” he said. “Interest rates have only gone down for a straight decade.”
Climate hawks need not fear renewable-energy inflation, however. Even with the recent rise in costs, wind and solar have evolved from expensive, niche sources of electricity to become competitive with fossil fuels. Renewables remain cheaper on a relative basis than fossil fuels in much of the world, and prices for oil and natural gas have surged over the past year. Over the long term, prices for wind and solar will continue to decline, albeit at a slower pace. That means clean-energy installations are expected to keep growing rapidly in the coming years.
Still, the industry is wrestling with the immediate effects of supply-chain snarls. Burlington, Vermont-based solar developer Encore Renewable Energy LLC is paying about 35 cents a watt for panels, up from 30 cents in mid-2020, according to Chief Executive Officer Chad Farrell.