News in South Africa 26th June:

1. Eskom’s smart meter project:

Eskom on Friday announced the beginning of a pilot project that will give consumers more control over load shedding by using smart meters.

Eskom's smart meter project
Photo by Kelly

The utility said selected consumers in Fourways in Gauteng will during Stage 1-4 load shedding get four opportunities to reduce their load from 60/80 Amps to 10 Amps by switching off some appliances.

They will be notified through the interface of their smart meters and cellphones an hour before load shedding starts. This will allow them to keep essential appliances on, but if they don’t respond, the supply to the whole property will be switched off for the duration of load shedding.

The success of this pilot will inform the countrywide roll-out of its demand management programme, says Eskom.

The use of the system, especially on geysers, can be very beneficial, says Dr Adriaan Davidse, a South African living in Canada and director at consulting service Deloitte.

However, Davidse believes it can be done much more efficiently.

He cautions against reverting to the established way of thinking to solve the electricity crisis rather than positioning the country for a rapidly changing electricity supply industry that will look very different in future.

Experts develop device

Davidse has brought together several small businesses – all world leaders in energy management – and believes that jointly they can within 12 weeks provide a device and conclude simulations to end disruptive load shedding as we know it. In addition, this solution will position South Africa for the future where exclusive central control over the power system will be a thing of the past.

This, he says, can be done at a cost equal to what two days of load shedding costs the economy.

2. Petrol price outlook:

South African motorists can expect a slight drop in petrol prices in July, and macroeconomic indicators suggest that the trend may continue.

Fuel prices are largely determined by the cost of importing oil from international producers, including additional costs such as insurance, storage, and transport.

The oil price, in rand, is determined by the international oil price in US Dollars and the local currency’s strength.

Efficient Group chief economist Dawie Roodt said the oil price is trending lower, and the rand is strengthening. It bodes well for local petrol prices.

The decline in the oil price – from $83 a barrel in April to under $70 a barrel this week – surprised many stakeholders.

Earlier this month, Saudi Arabia said it was cutting output by one million barrels per day, as the OPEC+ alliance of major oil-producing countries faces declining oil prices and a looming supply glut.

It did not result in a price increase, as expected. In fact, the oil price dropped to levels last seen in 2021.

Roodt said there are many reasons for the lower oil price.

  • The oil reserves of non-oil-producing countries in the West are much higher than a year ago.
  • A lot of Russian oil is entering the market, which many people are not aware of. There is also a cap on how much you can pay for Russian oil, which forces the international price lower.
  • Many oil producers in the United States have increased production.
  • The new Brazil President, Luiz Inácio Lula da Silva, is friendly with Venezuela’s President, Nicolás Maduro, which can result in Venezuelan oil entering the market.

He added that the OPEC+ alliance is inherently unstable as it incentivises the smaller countries to pump more oil.

“All these factors have resulted in a much lower-than-expected oil price in recent weeks,” Roodt said.

3. Big blow to households:

South Africans will have to find room to accommodate even more financial pressures as municipal rate increases come into effect on 1 July 2023 – with eThekwini residents facing some of the sharpest tariff hikes.

Municipalities tabled their budget proposals earlier this year, laying out their plans for tariff increases for residents – including property rates, electricity, water, sanitation, and refuse removal.

Addressing the reasons for the tariff increases, many municipal mayors said that above-inflation Eskom, water board, and salary increases have made tariff increases inevitable.

Ensure there is enough money for service delivery. The revised tariffs are an effort to cushion the blow, it said.

The table below outlines the updated tariff increases across several major metros from 1 July 2023 to 30 June 2024.

City of Joburg2%14.97%9.3%9.3%7%
City of Cape Town-1.1%17.6%8.6%8.6%5.5%
Buffalo City0%15.1%9.86%5.3%5.3%
Sourced from BusinessTech

4. Private sector to power Eskom:

Electricity Minister Kgosientsho Ramokgopa said that Eskom was working on a plan to have the private sector build new generation capacity for the utility without relinquishing ownership of the national grid.

Ramokgopa said that there was a clear need for more capacity, however, due to Eskom’s financial difficulties it could not carry it out singularly.

He said that government was considering a model which would see the private sector financing, building and operating a project for a short period before transferring it back to government.

“The issues of tariffs are going to be important because you do not want energy to be unaffordable or to be the exclusive domain of the affluent and rich and undermining our ability for universal access of connecting the poor onto the grid, so you can see the complexity of this equation – there are multiple variables that require attention.”

5. Fate of community health workers uncertain:

Most community health workers (CHWs) in South Africa, except those in Gauteng, earn a stipend of around R4 000 per month, without benefits like pension or medical aid, and without the surety of a permanent pay cheque.

They’ve been fighting for better working conditions for almost a decade — with their main goal being to get on the government’s payroll, as their colleagues in Gauteng are, who are classified as level 2 public servants.

At this level, an employee such as a CHW can earn between R9 000 and R10 500, and have benefits like a housing allowancepension and medical aid

The government, though, wants to set up a “sectoral determination” for CHWs instead, whereby the basic conditions of employment for workers in a particular field would be standardised. In the case of CHWs, this would include a set minimum wage, possibly a travel allowance when they have to work outside of their usual communities, and suitable housing for those having to work in remote areas, on farms or at mines.

Currently, CHWs are contract workers who are employed for 12 months at a time, either by provincial governments or nonprofit organisations. (Gauteng is the only exception: here they are permanent government employees.) Although their salaries have been standardised across the country since 2018 following a bargaining council agreement, they don’t have long-term job security and many end up with nothing after years of work. 

To make sure that CHWs have fair working conditions, the National Minimum Wage Commission, who has to advise the government on things like what fair pay would be for workers in South Africa and what their working conditions must be, started looking into how CHWs are employed.

They are currently sifting through responses from the public after the initial announcement in December that the labour department is looking into sectoral determination for CHWs.

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

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