News in South Africa 26th April:

1. Joburg loses nearly half its water:

The City of Johannesburg loses nearly half of the water it provides on a daily basis.

Johannesburg Water’s so-called “non-revenue water” (NRW), a bland term municipalities use to measure the portion of water lost due to leaks or non-billing, is now at 44.8%. This is up from an already staggering 39.4% in 2020/21.

Joburg loses nearly half its water
Photo by George Becker

In the 2021/22 financial year, non-revenue water totalled R3 billion – this is equal to a full third of water revenue reported in the year (R8.9 billion).

Basically, it paid its bulk supplier Rand Water for this water, and just never received any revenue for it.

Its target? An impossible 32%, according to the city’s 2021/22 annual report, the most recent data available.

Currently, out of every 1 000 kilolitres (kl) supplied by the city, it does not get revenue for 448 kilolitres. This is among the highest losses across the country’s major metros that has “significantly increased” in recent years, according to the utility.

2. Reserve Bank interest rate hike on the cards:

Most economists and investment specialists expect another interest rate hike from the South African Reserve Bank (SARB) when its Monetary Policy Committee (MPC) meets next month.

Last month, the SARB surprised the market when it hiked the rate by 50 basis points, increasing the repo rate to 7.75% and the prime lending rate to a 14-year high of 11.25%.

Before this increase, many experts believed the SARB’s hiking cycle would end soon, as the March hike marked the ninth consecutive interest rate increase since November 2021.

However, the SARB has remained steadfast in its mission to bring inflation within its target range of 3% to 6% and anchor expectations around the mid-point of this range (4.5%).

Recent consumer price inflation (CPI) data for March showed this goal slipping away, as CPI accelerated to 7.1% and food inflation reached a 14-year high.

Experts are, therefore, slightly less hopeful of a reprieve in their expectations for the May monetary policy committee (MPC) meeting. Many predict a continuation of the hiking cycle and little relief in the rest of 2023.

3. Push for new smart meters to stop load shedding:

Eskom chair Mpho Makwana said that Demand Side Management (DSM) programs would allow for improved management of electricity supply and demand in South Africa.

Speaking at the inaugural National Demand Side Management Indaba in Gauteng, Makwana said that the effective implementation of the DSM programme could create a win-win situation for consumers and energy producers.

He said that it would reduce pressure on the national power system while enabling consumers to save costs by being more energy conscious.

Demand Side Management (DSM) is a measure employed by electricity companies to manage demand by motivating consumers to adjust their electricity consumption level and behaviour.

The power utility has embarked on several initiatives such as energy saving through promoting the use of compact fluorescent lights, energy efficiency, demand response, distributed generation and energy storage.

One of the most notable plans to reduce load shedding is the rollout of smart meters.

Eskom’s chief engineer Edison Makwarela said that the rollout of new meters that can be controlled remotely to manage electricity demand and supply presents a lot of opportunities in the country.

Smart meters are an updated electricity management system for both residential and commercial properties. The meter monitors and measures the amount and time of electricity usage and deducts the consumed energy from a prepaid balance supplied by the customer.

According to Eskom, there is a big push for smart meters to be rolled out as quickly as possible.

4. Eskom theft of R1bn-a-month:

The former head of Eskom said he probably underestimated when he put the amount of money that’s being stolen from the company at R1 billion a month.

Ex-CEO André de Ruyter also said internal resistance to measures he implemented to try and curb corruption at Eskom is hampering the effort. His comments were contained in a written submission to lawmakers, seen by Bloomberg, that he is scheduled to deliver virtually on Wednesday.

De Ruyter stepped down as CEO on February 22 — more than a month before his scheduled March 31 departure date — after censuring the government over corruption at Eskom and accusing senior members of the governing African National Congress of stealing from the utility. The amount that’s being stolen is probably higher than R1 billion, he said.

“This is, if anything, a conservative estimate and is based on my assessment of the losses suffered by Eskom that have come to my attention,” De Ruyter said. He didn’t immediately reply to a call and a text message requesting comment.

Debt-strapped Eskom is currently implementing daily blackouts because its dilapidated power plants are unable to supply enough electricity to meet demand and it doesn’t have the money to invest in capital equipment. It’s been given a R254 billion debt-relief package under strict conditions that the bailout is only used to repay loans and settle interest payments, meaning it has to find money to repair its plants elsewhere.

De Ruyter declined to identify those who he had connected to graft at the utility in the submission, citing constraints including material and documentation that remain in the possession of Eskom. He also said that divulging sources would compromise their identity and safety.

5. Coal investor woes:

Eskom will likely struggle to find private investors willing to revitalise its coal-fired power plants, with many investors, such as banks and asset managers, having already committed to renewable energy projects.

Olga Constantatos from Futuregrowth added that Eskom’s R254 billion debt relief would give the utility some respite but stressed that it needs to address several other challenges, including corruption, a high-cost base, and cash flow difficulties.

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

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