News in South Africa 28th May:
1. Karpowership fights back:
Karpowership SA has fired back at claims that its potential R225-billion power supply deal with Eskom is tainted by corruption.
Explosive allegations were made by DNG Power Holdings, a rival bidder in the government’s Risk Mitigation Independent Power Producer Procurement Programme (RMI4P), in a court application filed last month.
DNG chief executive Aldworth Mbalati alleged that the tender had been manipulated to favour Karpowership, and that he had been the victim of a shakedown by senior government officials and a businessman associated with Minister of Mineral Resources and Energy Gwede Mantashe.
The tender was issued and adjudicated by Mantashe’s department, which selected Karpowership as preferred bidder for the lion’s share of 2 000MW to be supplied to Eskom.
But in a 59-page affidavit filed with the Pretoria high court last week, Karpowership business development director Mehmet Katmer turns the allegations on DNG: “DNG takes the opportunity of repeatedly making utterances of corruption surrounding the tender process … only because it was not appointed a Preferred Bidder. Yet, on its version it was aware of facts pertaining to this alleged corruption as far back as July 2020 — some 10 months ago and did nothing until its bid was disqualified.”
“The apparent implication is that the successful bidders, who were appointed Preferred Bidders, accepted the invitation and unlawfully colluded with corrupt state officials. This implication is false, insofar as it relates to Karpowership.”
DNG said that the bidding process was manipulated to help Karpowership win the deal, and says he was “shaken down” by senior government officials and associates of mineral resources minister Gwede Mantashe. Kapowerships says that if this were the case, DNG would have been aware of the alleged corruption for 10 months and did not act.
2. Eskom on track for unbundling:
It will cost an estimated R500 million to split Eskom into three entities, according to chief financial officer Calib Cassim.
Eskom officials, including CEO Andre De Ruyter and Cassim, on Wednesday briefed Parliament’s select committee on public enterprises and communications on the progress of its unbundling.
The separation of Eskom into three units is expected to open up the generation space to allow the participation of more Independent Power Producers (IPPs). Eskom will then be able to focus on transmission or managing of the national grid, while also still playing a role in distribution or sales of electricity to customers.
De Ruyter said that the Eskom leadership team is working to expedite the process – which requires collaboration with its shareholder – the Department of Public Enterprises – as well as the Department of Mineral Resources and Energy and National Treasury.
So far, the divisional boards of each of the three entities have been established and the “functional separation” has also been concluded. The next pressing step is to complete the legal separation of the entities.
The legal separation of the transmission business is due to be complete by December this year, while that of generation and distribution is due to be complete by December 2022.
3. Ivermectin debate flares up:
The debate around the use of Ivermectin to treat Covid-19 continues to flare up, with some doctors eager to prescribe the medicine to desperate patients – while others are not convinced that the treatment does anything to help.
The scientific and political fight about the approval of the drug for the treatment of Covid-19 is intensifying across the world. And with the third wave on our doorstep in SA and our vaccination programme struggling to take off, groups like AfriForum and I Can Make A Difference (a group of doctors) are demanding that ivermectin be recommended for use against Covid-19 urgently.
Health authorities and several scientists insist that the drug should not be used for the prevention or treatment of Covid-19.
Prof Francois Venter, one of SA’s leading Covid-19 researchers, says proponents of Ivermectin think the drug has near-magical qualities. “They also claim there is an international conspiracy that suppresses their findings. Such preposterous claims need solid evidence, and I have seen very little to convince me,” he says.
The latest study about the drug (it was published in the last week and is still in the preprint stage) found that ivermectin is not a viable option in the treatment of Covid-19 patients. It had no impact on the death toll or length of hospital stay for patients who were mildly ill.
Until there is conclusive proof either way, Venter says the responsible thing to do is to wait.
4. Solar panel controversy:
South Africa’s plans to buy emergency power, already the subject of a court challenge, faces fresh controversy after a local-content requirement for solar-panel frames was scrapped subsequent to the award of the tenders.
The 65% local-content requirement on aluminium frames for photovoltaic panels was waived by the Department of Trade, Industry and Competition on 12 May. That followed an application by ARTsolar, which along with a local unit of China’s Seraphim Solar will be the only beneficiaries of the exemption.
The two companies will now be able to sell panels to some of the winners of contracts to supply emergency power to the national grid. The preferred bidders were named in March and they must conclude funding arrangements and regulatory requirements by the end of July for their contracts to come into force.
The South African Photovoltaic Industry Association or Sapvia, which represents both manufacturers and importers of solar panels, said the exemption disadvantages some of its members who were unaware that the bidding requirements would be changed retrospectively. Some local solar panel plants have had to shut down because of the inconsistency of government demand, according to Wido Schnabel, its chairman.
5. Sars attacks disabled tax relief:
The South African Revenue Service’s (Sars) continued attack on the ability of taxpayers to claim tax relief for the education costs of the disabled has been described as “mean and disrespectful”.
School fees as a qualifying expense have been removed in the recent draft response document on the list of qualifying physical impairment or disability expenditure. This is the latest curveball thrown at parents of disabled children to ostensibly “curb abuse” and prevent discrimination against parents with abled children.
Sars argues in the document that school fees are not in the consequence of a disability but in consequence of education. Therefore, school fees will no longer qualify as a medical expense.
Craig Miller, tax director at Webber Wentzel, says this is a very simplistic way of looking at it. There is a reason for the existence of special needs schools.
Special needs children cannot survive in a mainstream environment and the government has not provided any viable alternatives, he says.
“The special needs school creates the structure from where the different therapies can be administered in order for the children to develop, as mainstream schools typically do not have the infrastructure. These schools often operate on the premise that the school fees cover the therapies offered at the school.”
In terms of the proposed new rules, the parent must separately list the cost of “interventions” at the school “in consequence” of the disability. This includes among others, a care worker assisting a child, a social worker or psychologist, occupational therapist, physiotherapist, or audiologist assisting the learner.
“It (Sars) wants you to itemise every [separate] therapy which is provided at the school. It is really difficult to see how this will work in practice.”
When Sars started with its attack on relief for school fees for disabled or impaired learners it argued that it would be unfair to parents of those children who do not have a disability.
“Parents of disabled children do not simply send their kids to special needs private schools because they think it is a nice thing to do. It is a necessity,” remarks Miller.
Kyle Mandy, tax technical and policy director at PwC, says the reason learners with disabilities go to special needs schools is precisely because they have a disability. The link with the disability is therefore obvious.