News in South Africa 29th January:
1. Eskom to collect R6 billion from customers:
Eskom has announced that the price of electricity in South Africa will increase from 1 April 2021.
This is as a result of three decisions made by the National Energy Regulator of South Africa (Nersa), which Eskom said will bring electricity prices more in line with the cost of producing energy.
“The National Energy Regulator of South Africa has made three decisions that are envisaged to increase the average price of electricity from 1 April 2021,” said Eskom general manager for regulation Hasha Tlhotlhalemaje.
“These decisions all refer to efficient costs as has been determined by NERSA incurred as far back as 2014.”
The regulator announced that it will allow Eskom to recover an extra R6 billion following the review of previous decisions on electricity tariffs.
This amount will be recovered through price increases effected in April this year.
“The extent of the increase is yet to be determined by NERSA and it is hoped that this will happen by the end of February 2021,” Tlhotlhalemaje said.
The decisions made by Nersa are as follows:
- The implementation of the FY 2019 regulatory clearing account (RCA) decision
- The decision on Eskom’s FY 2019 supplementary application made in accordance with the High Court judgement and order.
- The reviewed decision made on Eskom’s FY 2015 to 2017 RCA decision in accordance with the High Court judgement and order.
2. IRBA disbanded by Tito Mboweni:
Finance Minister Tito Mboweni has dissolved the board of South Africa’s auditing watchdog following a series of resignation of board members since the new CEO was installed.
In a statement issued on Thursday afternoon, the finance ministry said Mboweni met with the Independent Regulatory Board for Auditors’ (IRBA) board on Tuesday to discuss the resignation of a number of board members.
After giving all board members the opportunity to express their views on the matter, he saw that it was best to dissolve the current board, which has been in place since July last year.
“After careful consideration and, amongst others, taking into account the resignation of a number of board members and challenges in the functioning of the board, the Minister dissolved the BoD, in line with section 12(5) of the Auditing Profession Act (APA),” read the statement issued.
“This decision was taken in the best interest of the institution and the auditing profession,” it added.
3. Novax vaccine effective on new strains:
New local studies on the Novavax Covid-19 vaccine show that it is effective against new variants of the virus discovered in the UK and South Africa.
Just over 4,400 participants were enrolled in South Africa’s Phase 2b study that started in August last year.
Data shows the vaccine has a 60% efficacy for the prevention of mild, moderate and severe COVID-19 in 92% of the cohort that was HIV-negative.
Madhi, who’s the lead investigator in the trial, said that the ability of COVID-19 vaccines to impact the pandemic would depend on the product, its efficacy, and how quickly we could scale up coverage of the vaccine.
“In the study itself, after 4,400 points, we managed to do sequencing, 93% of all of the cases ended up being the 501Y.V2 variant. So all of the efficacy results is speaking to efficacy in relation to this dominant, mutated virus.”
Meanwhile, the UK variant of the virus has been detected in KZN – although virologists note that it is not spreading rapidly among the population. More variants should be expected over time.
4. By-to-let industry suffering:
The fourth quarter Vacancy Survey from credit bureau TPN makes for sombre reading. Overall vacancies have rocketed to 12.91% nationally, from 8.97% in the fourth quarter (Q4) of 2019. This means that more than one in 10 rental properties is currently vacant. The survey points to its market strength index of 43 in Q4, which clearly indicates excess rental stock.
Vacancies are elevated at the low- as well as the luxury end of the market. In the sub-R4 500 a month range, vacancies are as high as 16%.
Vacancies in the affordable and mid-market rental segments (between R7 000 and R25 000) are between 10% and 11%, below the national average.
The worst-performing area in the survey is the Atlantic Seaboard, where 24.4% of properties are vacant. This is double the number from Q3. Dickens says this is “not surprising” as this luxury end of the market “has been affected by limited international travel and affordability”.
Not faring much better is (greater) Sandton, with a vacancy rate of 22.4%. This is a deterioration of 17% (or 3.2 percentage points) from Q3. Dickens says this is also “hardly unexpected as tenants continue to downscale looking for more affordable rentals”.
5. Sasol and Anglo profits up, Musica closing:
This morning, Sasol said its headline profit for the six months to end-December may have doubled thanks to cost control – and despite continued weakness in the prices of oil and chemical products, and lost production due to hurricanes in the US Gulf Coast. But its Ebitda – a profit measure before the impact of interest, tax, depreciation and amortisation – may fall by as much as 10%.
Anglo American’s share price jumped almost 4% yesterday after the company released a production update for the fourth quarter of 2020. Thermal coal production was down a third compared to the same quarter in the previous year, with diamonds down 14% – but copper increased. Anglo-controlled iron-ore miner Kumba saw its total production fall by 13% last year, with total sales down 5%. South African sales were down 84%.
Clicks has announced the end of its entertainment retailer Musica, with all of its 59 stores closing their doors by end May. Separately, in a trading update, Clicks said its retail health and beauty sales, including Clicks, The Body Shop, GNC and Claire’s, increased by 8% in the past 21 weeks.