News in South Africa 28th February:
1. Plans for stage 16 load shedding:
Last week, Eskom System Operator GM Isabel Fick admitted that it is working with the National Energy Regulator of South Africa (Nersa) on preparing schedules beyond Stage 8.
This was confirmed later by acting head of generation Thomas Conradie on Saturday, who said guidelines on stages 8 to 16 were being drawn up for approval by Nersa.
Recall that in September, Fick revealed that Eskom does not have load shedding schedules beyond Stage 8. If that happens, the current plan is to issue individual instructions to provinces and municipalities.
This is completely unworkable and would mean complete chaos, something which Eskom seems to have grasped.
So, there’s now a plan to have a plan …
One needs to pause to realise just how terrifyingly huge the still-theoretical Stage 16 would be.
At Stage 8, the average electricity user would be without power for half the day – practically three four-hour blocks each day (technically 3 x 4.5 hours, if one factors in the restoration window).
These schedules already exist, and the existing timetables work on a four-day cycle from the first of every month.
Extrapolating this methodology to additional stages is simple, in theory …
| Number of two-hour slots in four-day cycle | Total hours of load shedding in four-day cycle (96 hours) | |
| Stage 1 | 3 | 6 |
| Stage 2 | 6 | 12 |
| Stage 3 | 9 | 18 |
| Stage 4 | 12 | 24 |
| Stage 5 | 15 (including three four-hour blocks) | 30 |
| Stage 6 | 18 (including six four-hour blocks) | 36 |
| Stage 7 | 21 (including nine four-hour blocks) | 42 |
| Stage 8 | 24 (12 four-hour blocks) | 48 |
| Stage 9? | 27 (including three six-hour blocks) | 54 |
| Stage 10? | 30 (including six six-hour blocks) | 60 |
| Stage 11? | 33 (nine six-hour blocks) | 66 |
| Stage 12? | 36 (16 six-hour blocks) | 72 |
* At this point, stages beyond Stage 8 are purely theoretical.
However by Stage 16, where the frequency of Stage 8 is doubled, the number of hours of load shedding across a four-day cycle is 96 – meaning no electricity at all. This doesn’t exactly make any practical sense.
One way of Eskom getting to a more realistic Stage 16 schedule would be to slow the ramp from Stage 9 or Stage 11 onwards … Perhaps from this point, an additional 500MW of load would be cut per stage versus the existing 1 000MW ratchet?
Eskom has a few additional levers, including load curtailment (to large industrial customers) which runs separately.
The reality is that once schedules pass Stage 8, four-hour blocks of rotational power cuts become six-hour ones. There are not enough hours in the day for any other result. And we know for certain that some higher stage of load shedding will see the timetables of Stage 4 and Stage 8 combined. This is simple maths.
2. New earnings threshold in effect from tomorrow:
South Africa’s new earnings threshold comes into effect from Wednesday (1 March), which will see many employees in the country lose automatic protections under the Basic Conditions of Employment Act (BCEA).
As of 1 March 2023, South Africans will see the implementation of the increased annual earnings threshold determined by the Minister of Employment and Labour. The new threshold is set to R241,110.59 a year, or approximately R20,092 a month.
According to legal experts from Cliffe Dekker Hofmeyr (CDH), in terms of the BCEA, employees earning in excess of the earnings threshold are excluded from the provisions which regulate:
- Ordinary hours of work;
- Overtime;
- Compressed working weeks;
- Averaging of hours of work;
- Meal intervals;
- Daily and weekly rest periods;
- Sunday pay;
- Pay for night work; and
- Pay for work on public holidays.
“This effectively means that there will now be more people who are not protected by the BCEA. Employers and staff should ensure that they understand the impact of this on employees affected by the change as it could have a material influence salary expectations etc – especially in cases where there is a reasonable amount of overtime, night or weekend work,” CDH said.
On top of provisions in the BCEA, the new threshold will also impact other areas of labour law, the legal experts said.
3. Steep petrol price hike:
Petrol prices will jump on Wednesday amid a supply crunch worldwide, the Department of Mineral Resources and Energy announced on Monday night.
The price of both 95 and 93 unleaded petrol will be hiked by R1.27 a litre, while diesel will go up by between 30c and 32c.
Illuminating paraffin will increase by 13c a litre, while the maximum retail price for LP gas will be hiked by R5.22 a kilogram.
In Gauteng, the price of a litre of 95 unleaded petrol will increase to R22.95, while it will increase to R22.30 on the coast. This is still lower than December’s price of R23.45 in Gauteng. A year ago, 95 petrol retailed for R21.60 in Gauteng.
The Gauteng diesel price will reach R21.62 on Wednesday, from R18.87 a year ago.
But as steep as our current petrol price feels, according to a database of global fuel prices it’s a little below what most people pay. The average price of petrol worldwide is currently R23.34 per litre, R2 more than South Africa’s current price.
The average global petrol price only tells a small part of the story, though. Fuel comes at a drastic premium – or steep discount – in many parts of the world.
According to Global Petrol Prices, in Hong Kong, you’ll pay R52.64 per litre of petrol, which is by some margin the most expensive fuel price in the world. Countries next in line, like Iceland, Norway, Monaco, and Denmark, all charge about R40 a litre.
These astronomical prices, mainly in regions where public transport is a viable and affordable alternative, increase the upper averages. But those that charge less than R10 a litre, like Venezuela, Libya, Iran, Angola, Algeria, Kuwait and Egypt, do much the same on the other end of the scale. At last count, there were at least 14 countries in this exclusive cheap-petrol club.
It’s also quite unfair to compare petrol prices around the world. Many governments heavily subsidise fuel, and oil-rich countries have a massive cheap fuel advantage.
But comparing South Africa’s fuel cost, where about one-third of the pump price goes to taxes, to countries in similar situations to ours is intriguing – if only partially academic.
4. Public sector unions threaten strikes:
Eight unions threaten to strike over unresolved salary increases for the last financial year. The government refuses to meet the union’s 10% pay hike demand.
Unions have been mobilising and served the government with a notice last week. The unions also did not attend a Special Council meeting with the government last Friday.
The meeting was meant to start negotiations for the 2023/2024 financial year, but the unions said they will not engage in new wage talks when last year’s problems are not yet resolved.
5. Markets point to Rand’s revival:
South Africa’s rand is on track for a sixth consecutive week of declines versus the dollar — but there are indications the selloff may be about to ease.
One of this year’s worst emerging-market performers, the rand has carried a heavy risk premium amid concerns about the nation’s growth as state-owned power company Eskom Holdings deploys unprecedented rolling blackouts. Anticipation about a government bail-out of the company have also been baked into the rand, which has floundered as peers such as Chile’s peso have surged.
The tide may be turning. Investors largely welcomed Finance Minister Enoch Godongwana’s plan for embattled Eskom, which spurred a brief rally in the rand and the biggest foreign bond inflows in nearly two weeks on Thursday. Traders have also begun to bet that a weaker US dollar will cool some price pressures that have been evident globally — which would support the rand’s prospects.
Bank of America strategists including Mikhail Liluashvili and David Hauner said they had turned bullish on the rand in a global research report published on Friday, forecasting the currency to rise 2% from current levels by the end of March.
The rand is the most undervalued emerging-market currency apart from Russia’s ruble. That’s according to the Big Mac currency valuation — a survey created by The Economist magazine in 1986 to measure purchasing power parity (PPP) between nations, using the price of a McDonald’s Big Mac as the benchmark.
“We continue to see markets biased toward a relief in South Africa risk,” said Luis Costa, global head of sovereign credit at Citigroup, in a note to clients. Despite mounting growth challenges, “markets do not look likely to challenge this for now,” he said.
All information sourced from articles posted by: Moneyweb, BusinessTech, Business Insider, eNCA, and Fin24.
