News in South Africa 27th November:

1. Eskom hit stage 8 load-shedding:

Energy analyst Chris Yelland said Eskom hit stage 8 power cuts according to the official national code of practice for load shedding.

Eskom hit stage 8 load-shedding
Photo by Pixabay

Speaking to reporters, Yelland said many people, including his family in Craighall Park, are experiencing 12 hours of load-shedding daily.

“If you look at the NRS048-9 specifications, they are consistent with stage 8 load-shedding. It is not stage 6 load-shedding,” Yelland said.

He explained that power cuts of 12 hours or more per day are a problem experienced by people across South Africa.

“The level of load-shedding of ten to twelve hours per day that we are experiencing is stage 8 load-shedding,” he reiterated.

He added that the higher-than-expected power cuts create a lot of cynicism and the belief that South Africans are not being told the truth about the extent of the electricity crisis.

It is not the first time energy experts have raised concerns that Eskom’s official load-shedding stage did not reflect the reality on the ground.

Yelland previously said Eskom’s systems operator is receiving many complaints from people about load-shedding hours longer than what is specified for stage 6.

“I know for a fact there are certain municipalities that are load-shedding certain areas differently to others – you may say in a discriminatory fashion,” Yelland said.

“So, it is happening where some areas experience higher load shedding stages than what is public knowledge,” he said.

Energy expert Adil Nchabeleng said Eskom has most likely decided not to inform the public when it exceeds stage 6 load-shedding.

“Eskom has made a decision to cap its announcements at stage 6 load-shedding, avoiding announcing stage 8 or higher load-shedding,” he said.

“They are giving us the impression that everything is oscillating around stage 6, which is a lie. It is beyond stage 6 when considering the frequency of power cuts.”

2. Rand manipulation effects:

Almost 30 commercial banks are under fire for alleged price fixing involving the Rand.

British multinational bank Standard Chartered — was recently fined almost R42 million by The Competition Commission after it admitted to currency manipulation.

Mbeki says all banks complicit in the scandal should be brought to book.

Mbeki was speaking at the Cape Town Conversation, which wrapped up on Sunday.

Treasury sets the record straight:

The National Treasury has refuted allegations being made – largely from ANC politicians – that the so-called rand manipulation cases being investigated by the Competition Tribunal are the cause of South Africa’s economic woes and the depreciation of the local currency over the years.

The alleged misconduct by the banks involved a handful of traders, who, between 2007 and 2013, assisted each other on risk positions instead of following normal trading patterns on the market.

The recent admission of guilt from SCB – even though it had already admitted guilt in the United States in 2019 – provided the perfect opportunity for politicking and misinformation from officials, however.

Responding to questions about the rand manipulation case, minister in the Presidency Khumbudzo Ntshavheni has used the case to make unfounded claims that the private sector has been engineering the collapse of government and South Africa’s economy.

These allegations were made despite the private sector working closely with the government to try and undo the damage done to key sectors due to self-induced service delivery failures, mismanagement, maladministration and sheer neglect by the state.

Other politicians also jumped on the case and have been falsely claiming – or repeating the false claims – that private banks were making trillions of rands in profit due to the manipulation, destroying the value of the rand.

However, in a statement on Friday (24 November), the National Treasury set the record straight, saying that the rand’s collapse over the years had nothing to do with the Competition Tribunal’s case or the misconduct involved. It said only individual clients were harmed by the activity, not South Africa as a whole.

The department added that the market manipulation being investigated ended in 2013 and that rules and regulations have long been put in place to mitigate and avoid this kind of behaviour.

“The reforms already undertaken since the Standard Chartered misconduct between 2007 and 2013 as well as the additional reforms proposed demonstrate Government’s commitment to fair, transparent, and efficient financial markets and rooting out any misconduct and unfair treatment of customers,” it said.

More importantly, however, “whilst the wrongdoing described by the Competition Tribunal harmed individual clients, it would not have influenced the depreciating trend of the currency since 2013, the
level of which is driven by broader changes in the global and domestic economy.”

“The value of the currency today, which has depreciated against the dollar, and the resulting impact on
prices, should not be attributed to these instances of misconduct between 2007 and 2013.”

3. SA receives R160bil for renewables drive:

The world is trying to transition into renewable energies, and South Africa looks set to benefit from the $8.5 billion (R160 billion) investment.

Global warming is the biggest global economic concern, with 2023 the hottest on record, driving the need for global coordinated action.

Hence, as Business Leadership South Africa CEO Busisiwe Mavuso said, COP28 in Dubai this week is an important event for South Africa.

South Africa is at particular risk of global warming due to our nation’s water scarcity and ecology – but we are still incredibly dependent on coal and other fossil fuels to grow the economy. Mavuso added that the transition must also ensure justice for those whose jobs and livelihoods are at risk.

However, there is global support for South Africa’s energy transition, with the Just Energy Transition Investment Partnership (JET-IP), first tabled at COP26, envisaging $8.5 billion (R160 billion) of investment from some of the world’s largest economies.

“However, we must be careful not to be overly focused on the JET-IP as if it can solve all problems – the $8.5bn is only a small part of the total investment needed,” Mavuso said.

That said, the delegation representing South Africa at COP28 said that $26bn-$41bn is needed annually for Africa alone to implement adaptation actions.

In a parliamentary Q&A, Minister of Forestry, Fisheries, and the Environment Barbara Creecy said that the total financing needed for the JET IP is R1.5 trillion over the next five years.

Despite investments from these wealthy nations for JET IP, the domestic private sector, Multilateral Development Banks, and local and international Development Finance Institutions, Creecy said that South Africa still has an estimated shortfall of roughly R660 billion in tackling global warming.

Apart from consolidating the JET-IP investment, the delegation at COP28 – which is expected to be led by President Cyril Ramaphosa – will also be looking for global commitments to help African countries manage climate risks, such as a loss and damage fund and framework to fund adaption investments.

“The DFFE has done good work to institutionalise our climate transition framework, including the recent Climate Change Bill that will provide a framework for emissions targets across the economy,” Mavuso said.

In addition, as it is mainly responsible for most of the nation’s new renewable energy projects, Mavuso said that the private sector should be kept in mind.

“Our partnership with government to tackle the electricity crisis is seeing massive additional investment by private companies to build generating capacity, almost all of it from renewable sources, saving considerable CO2 emissions,” she said.

“Whatever global funding that can be raised should be used to mobilise private funding if we are to have any hope of getting to the volumes of investment needed. That means channelling global funding appropriately to de-risk projects and ensure they are bankable by the private sector.”

“Official funding can also support the justice elements of the transition, enabling communities that will be negatively affected by the exit from fossil fuel generation to find new opportunities, and ensuring that the economic development spurred by the transition is effective in reducing poverty.”

4. Post Office R9bil in debt:

The business rescue plan for the South African Post Office (Sapo), published late last week, shows a state-owned company that has somehow been allowed to trade to the point that it owes nearly R9 billion to creditors. The revolving door of ministers in the Department of Communications and Digital Technologies has not helped.

By the end of September, accumulated losses totalled R19 billion. It has reported losses for the last 16 years! Equity has been completely wiped out. Assets at the end of March were barely R4.4 billion.

The largest chunk of the R9 billion is R4.6 billion owed to Postbank, which was officially separated from Sapo in September.

The list of creditors is long. There are 1 100 of them, running to 14 pages!

Forget the landlords to which it owes a combined R400 million in unpaid rent. Forget also the group’s retirement fund as well as various medical schemes where contributions have simply not been paid.

It owes the Post Office Retirement Fund R1.22 billion, and Medipos Medical Scheme a further R693 million (plus R25 million to Sizwe Hosmed Medical Scheme, R18 million to Bonitas Medical Fund and R9 million to Discovery Health Medical Scheme).

These contributions impact current and former employees directly. (Quite why it has outstanding amounts to three private medical schemes alongside its own is a mystery.)

These aren’t the most shocking numbers, however.

In the largest 15 creditors – once one removes Postbank, the Post Office Retirement Fund and two medical schemes (including its own, Medipos) – a full seven creditors are government entities or state-owned enterprises.

Top of the list is the South African Revenue Service (Sars), to which it owes R697.7 million. Much of this is reportedly pay-as-you-earn (PAYE) tax. As Daily Maverick summed it up two years ago: “Put differently, the Post Office continues to pay its workers their full salaries and probably deducts their PAYE contributions – but doesn’t hand over the deductions to Sars.”

Besides PAYE, the Post Office also failed to make contributions to the Unemployment Insurance Fund (UIF).

How has it been able to get away with this?

If a large corporation was to not pay Sars, its bank accounts would be seized, and directors would be prosecuted. A small business owner couldn’t even dream of trying this! Yet, the Post Office continues to trade and simply not pay the taxman.

There is a further R115 million that just hasn’t been paid over to the Compensation Fund. This is a fifth instance of a deduction that is being made from employee salaries and not being paid (alongside tax, pension, medical aid, UIF).

 Top Post Office creditors
CreditorDescriptionGroupTotal outstanding
South African Postbank SOC LimitedRelated party (government entity)Related party creditorR4 601 404 292
Post Office Retirement FundPension fundPayroll creditorR1 224 163 127
South African Revenue ServiceGovernment entityStatutory creditorR697 676 547
Medipos Medical SchemeMedical aidPayroll creditorR693 016 747
Telkom SA SOC LimitedGovernment entityTrade creditorR255 573 511
Thamani Technologies & Systems (Pty) LtdSupplierDisputed creditorR194 005 533
Compensation FundGovernment entityPayroll creditorR115 051 436
Zeda Car Leasing Proprietary Limited t/a Avis FleetFleet leasingTrade creditorR48 909 111
The Auditor-General Of South AfricaGovernment entityTrade creditorR39 203 496
Independent Communications Authority Of South Africa (Icasa)Government entityTrade creditorR37 676 834
G4S Cash Solutions (SA) (Pty) LtdSupplierTrade creditorR32 261 737
Airports Company of South Africa LimitedGovernment entityTrade creditorR28 942 951
System Applications Products (South Africa)(Pty) Ltd (SAP)Software (ERP)Trade creditorR25 234 283
Escher GroupGlobal postal software supplierTrade creditorR24 841 112
Sizwe Hosmed Medical SchemeMedical aidPayroll creditorR24 755 101
Oracle Corporation (South Africa) LtdSoftware (ERP)Trade creditorR23 039 649
Special Investigation Unit (SIU)Government entityTrade creditorR20 307 173
Vusela Sanmva Joint Venture (Pty) LtdSupplierTrade creditorR20 201 743
Buhlebodwa Trading EnterpriseSupplierTrade creditorR18 762 279
Bonitas Medical FundMedical aidPayroll creditorR17 914 939
Sourced from Moneyweb

It owes Telkom (which has the same shareholder ministry) over R255 million, presumably for telecommunication and internet services it has provided over the years.

Private shareholders in Telkom ought to apply pressure on the board to ensure the company recovers this debt.

The Auditor-General is owed a total of R39 million, and Icasa another R38 million. One assumes it hasn’t been paying any licence or administration fees to the regulator, which itself relies on government funding (from the same ministry!). For context, Icasa’s annual operating budget is about R500 million.

Bear in mind that the Department of Communications and Digital Technologies has an annual budget of R5.3 billion – R4.3 billion of which is spent on “ICT Enterprise Development and Public Entity Oversight”; in other words bailouts for the Post Office (which received R2.4 billion last year).

The Post Office hasn’t paid its bills at the Airports Company of South Africa either. This totals R29 million. Oh, and it owes the Special Investigating Unit R20 million!

The impacts of all of this money owed to state-owned entities will be relatively limited, given the fairly modest numbers involved. In some cases, though, these are material numbers (think Telkom and Icasa).

What happens when a larger enterprise – say, Transnet – stops paying its bills? Will it be allowed to trade as recklessly as the Post Office clearly has been able to do?

What, if any, sanctions will the (current and former) directors of the Post Office face? The goings on at the Post Office makes SAA’s collapse into business rescue look rather like a picnic in comparison.

5. Less load shedding in December:

Minister of Electricity Kgosientsho Ramokgopa says there will be less load shedding over the December period, adding that some days will be load shedding-free.

Ramokgopa spoke at a media briefing on Sunday, where he gave an update on the state of the national power grid.
This comes as the rolling power cuts are reduced to Stage 3 until Monday afternoon, before Eskom implements Stage 4 load shedding.

After Eskom ramped up load shedding to the highest stage last week, Ramokgopa said there was no need to worry about higher stages of the rolling power cuts over the festive season.

He said implementing Stage 6 was a setback for the utility that was caused by the unanticipated breakdown of multiple generating units.

However, Ramokgopa said with some generating units expected to return to service during the week, there would be more generating capacity, allowing for lower stages of load shedding.

He said during December, electricity demand is expected to be lower, adding that this will make it possible to suspend the rolling power cuts on some days.

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

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