News in South Africa 27th February:
1. Greylisting aftermath:
The Financial Action Task Force (FATF) placed South Africa on its grey list on Friday. It was almost inevitable. The global anti-money laundering watchdog first warned the country of this possibility four years ago, in 2019, saying that there were severe deficiencies in our standards to fight corruption and money laundering.
The decision is a massive embarrassment, as South Africa failed to implement the necessary legislation and measures to prevent money laundering and terror financing in four years.
This coincided with hair-raising testimonies of corruption and state capture before the Zondo Commission, and, more recently, allegations of continued rampant corruption at Eskom by the former CEO André de Ruyter, among other things.
In some countries, the minister of finance and the president would resign.
South Africa now joins a club of 25 countries on the grey list – the likes of Albania, Barbados, Burkina Faso, Haiti, Jordan, Nigeria (also added on Friday), Panama, South Sudan, Syria, Turkey and Yemen.
FATF removed Cambodia and Morocco from the list.
“When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving swiftly the identified strategic deficiencies within agreed time frames,” FATF said in a statement on Friday.
After the announcement, the rand saw a benign weakening – which underlined the fact that the greylisting was pretty much a given.
The impact may, therefore, not be as severe as it could have been if it was a surprise, but it will still mean that capital and portfolio flows to the country will continue to decline.
The long-term opportunity cost may be more severe, as many countries will now look to other jurisdictions for long-term investment.
2. De Ruyter deadline to report corruption:
The ANC has threatened to file criminal charges against former Eskom CEO André de Ruyter if he doesn’t report his allegations of corruption at the power utility, backed with evidence, to law enforcement agencies in seven days.
The party said De Ruyter was bound by law because of his former position as the head of the power utility to report acts of corruption.
The ANC is still reeling from De Ruyter’s accusations that corrupt acts were conducted at Eskom, in which he also implied that Cabinet ministers were involved.
Since De Ruyter’s revelations, the party’s senior leaders criticised him for most of last week. ANC secretary-general Fikile Mbalula and Minister in the Presidency Mondli Gungubele labelled him as a “failure and right-wing”.
The ANC was still angered by the comments made by De Ruyter during a television interview on Tuesday, with the party saying on Sunday that it was in consultation with its lawyers about De Ruyter’s comments.
ANC spokesperson Mahlengi Bhengu-Motsiri said on Sunday that the party reiterated its call for De Ruyter to lay criminal charges, supported by verifiable evidence, about the corruption he alleged took place at the power utility.
“We draw attention to the provisions of Section 34 of the Prevention and Combating Corrupt Activities Act, 2004, which make it illegal for any person in authority not to report an act or information or corruption and criminality.
“To date, the ANC is unaware of any action taken by Mr De Ruyter in this respect. The ANC urges Mr De Ruyter to fulfil his constitutional and legal obligations to officially report to the police any act of criminality and illegality he is aware of within the next seven days,” Bhengu-Motsiri said.
The party has threatened to file charges against De Ruyter for contravening Section 34 if the seven days lapse without a case being opened.
3. Risk of total blackout:
President Cyril Ramaphosa and former Eskom chief executive officer Andre de Ruyter have warned that political parties and civil action groups risk collapsing South Africa’s grid if they get their way through court action.
Responding to a court application brought by 19 litigants, including the United Democratic Movement (UDM), Mmusi Maimane’s Build One SA and trade union NUMSA, among others, De Ruyter and Ramaphosa said that what is being asked for by the parties is impossible.
The court action was launched in January 2023 following energy regulator Nersa granting Eskom an 18.65% hike in tariffs for the year.
The collective is seeking an order from South Africa’s apex court blocking the increase, having Eskom publish a detailed recovery plan, as well as ending load shedding for critical facilities and infrastructure in the country. This includes hospitals, police stations, schools and small businesses.
However, in his response to the application, De Ruyter says this is simply not possible.
Repeating the information provided to the public with every load shedding alert, De Ruyter said that rolling blackouts are implemented as a last resort to protect the grid from total collapse.
He argued that if the litigants got their way and Eskom was forced to keep the power on for everyone they desired, the risk of a grid collapse and total blackout would increase significantly.
4. Costs to exclude hospitals from load shedding:
Former Eskom CEO Andre de Ruyter said that it would cost R365 million to exclude all public hospitals from experiencing power cuts.
This is contained in a deposed affidavit by De Ruyter as a result of a court application by the United Democratic Movement (UDM) and 18 others.
The application, among other demands, seeks to compel Eskom to exclude health facilities, schools and small businesses from its load shedding roster.
De Ruyter said that the power utility received a request from the department of health with a list of 213 hospitals to insulate from the rolling blackouts.
The former CEO said that Eskom could only exclude 25 hospitals since they were not embedded into a large distribution network.
He said that Eskom had drawn up a plan for the other hospitals and the necessary infrastructure that would need to be installed would take between 12 to 36 months.
De Ruyter said that Eskom had also received similar requests from private hospitals on the utility’s supply network but it was still investigating possible solutions.
5. Solar panel shortage:
Higher levels of load shedding and new tax incentives for businesses and households are fuelling a surge in demand for solar PV, but the local market is already facing equipment supply shortages, according to the industry body.
Finance Minister Enoch Godongwana announced two tax incentives last week to encourage the rollout of rooftop solar PV.
Businesses will be able to claim tax relief on 125% of the cost of the renewable energy projects as of 1 March 2023. This incentive will apply for two years.
Households will be able to claim tax relief of 25% on solar equipment but not batteries and inverters. This incentive is capped at R15 000 and is only valid for one year from 1 March 2023.
Since the end of the third quarter last year, increasing levels of load shedding – and now the risk of it escalating to Stages 7 and 8 – has seen a “rapid” increase in demand for domestic solar and battery storage installations, said Dr Rethabile Melamu of the South African Photovoltaic Industry Association (Sapvia).
“There are equipment supply shortages in the market, and [this] led to increased installation lead times due to installation labour availability,” said Melamu.
Daniel Haitzler, managing director at solar PV solutions provider at IBC SOLAR South Africa, shared that the company has been experiencing an increasing number of orders over the past few months and with Stage 6 and the possibility of Stage 7, these are growing “exponentially”.
Haitzler also confirmed that there are longer lead times for installations and product supply. “Some would say that we are experiencing a shortage in solar products, which is not the case. We are actually receiving an increasing number of products from our suppliers, but as the supply increases, the demand increases even faster,” said Haitzler. IBC SOLAR’s customers currently have a waiting period of at least four to six weeks.
Given the current stock shortages, Matthew Cruise, head of business intelligence at solar PV marketplace Hohm Energy, expects that prices for solar PV equipment to increase, but gradually.
All information sourced from articles posted by: Moneyweb, News24, BusinessTech, Fin24, and EWN.
