News in South Africa 5th May:

1. Lights out for over a month:

The latest National Blackout Statistics for South Africa report shows that the average resident has spent 31.6 days in total darkness.

Lights out for over a month
Photo by Pixabay

The statistics, compiled by independent energy analyst Pieter Jordaan, show that South Africans currently sit in full blackout for 6.33 hours every day.

Load shedding has been in effect for almost the entire year so far, with only one day of full suspension and some days with partial suspension.

Jordaan’s data shows that load shedding has been in effect for an average of 23 hours every day, with 16.7 hours spent in “rotation time”, where households and businesses are waiting for the blackouts.

Sourced from BusinessTech

Cumulatively, South Africans have spent just over 758 hours in the dark in 2023 so far, which is equal to a full month. Given that the data is to the end of April, this would be a quarter of the year so far.

To illustrate exactly how bad this is, Jordaan noted that it took the country almost an entire year to hit a similar level of blackouts, with 2023 expected to surpass 2022’s total soon.

Not only are South Africans experiencing blackout hours more frequently, they are happening for longer (4 hour blocks at stage 6). The average stage of load shedding is still at stage 4, but increasing ever higher as stage 6 load shedding persists and becomes more frequent.

2. UIF ‘dismal performance’:

MPs accuse the Compensation Fund (CF) and the Unemployment Insurance fund (UIF) of deliberately letting down South African workers through their dismal performance, inability to process claims on time and failure to account to Parliament.

Employment and labour portfolio committee members also agreed that Minister Thulas Nxesi, as the political head of the department, must answer for the inefficiency and lack of accountability to Parliament by the two entities – which both previously received qualified audits from the Auditor-General – given that the two organisations are collectively managing close to R200 billion in public funds.

Both entities have failed to respond to Parliament’s calls for the submission of their annual performance plans ahead of the budget votes to be tabled this month.

“We must observe as the committee that both the Compensation fund and the UIF have failed the workers of South Africa. We have hundreds of complaints and should make some observation. You have raised this many times in the committee in front of the UIF and the Compensation Fund,” said committee member, Michael Bagraim.

Another MP, Michael Cardo, agreed that it was important for the committee to record the UIF and Compensation Fund as “problematic entities”.

“We have not had the report from the CF and UIF and we need to observe this and how serious it is, so that future readers of this report see that these are two problematic entities. The committee observed with serious concern that the Compensation Fund did not table the 2023/24 Annual Performance Plan in Parliament,” said Cardo.

Two entities didn’t submit their reports for presentation. That is quite disturbing. But, obviously, at an appropriate time, they will come and account on a number of things. At the end of the day, the buck stops with the office of the minister. The minister must explain the real state of the Compensation Fund and the state that their interventions are yielding in the effective running of the fund.

3. Joburg power issues:

Johannesburg’s City Power is at breaking point. At the end of September, its overdraft stood at R9.1 billion, an increase of nearly R2.4 billion from the end of June.

On practically every measure, its financial position is dire. Collections are far below what was anticipated. Sales were R500 million – or 10% – lower in the three months. Given near-constant load shedding, this is unsurprising. The figures for later quarters of this fiscal are going to be worse.

Residents are bearing the brunt of this entity that has all but collapsed.

In recent weeks, the Rosebank grid has been under severe strain. It is understood that a main line from Parkhurst to Saxonwold, Parkwood and Parktown North failed, meaning that these areas had to be ‘backfed’ from Forest Town. This overloaded the Forest Town substation resulting in continuous trips.

To resolve this, a decision was taken to rather ‘backfeed’ from Rosebank, essentially shifting the problem.

A similar situation exists in Boskruin/Sundowner/North Riding, and there are several other pockets in the metro where grids are overloaded due to ‘backfeeding’.

Continuous load shedding places more strain on equipment, with faults only able to be worked on when the network is not scheduled to be out.

This means residents sometimes wait for between six and 60 hours for power to be restored if there is a trip after load shedding.

Overall, though, maintenance across the electricity distribution network has been neglected, and distribution infrastructure has not kept pace with residential and commercial development. One need only compare the state of the physical infrastructure in areas that Eskom supplies directly (greater Sandton) with those supplied by City Power.

4. Cut power to consumers that don’t pay:

Defaulting municipalities that want their Eskom debt scrapped will have to collect electricity revenue from consumers and play hardball by cutting them off when they default if they are to benefit from the National Treasury’s municipal debt relief initiative. 

These are steps that many municipalities have been reluctant to take over the past 25 years, making it difficult to establish “a culture of payment” in many communities. They are one of 14 conditions that municipalities must meet if they are to benefit from the programme. 

Treasury’s municipal debt-relief initiative is part of Finance Minister Enoch Godongwana’s plan to restore financial sustainability to Eskom. As at 31 March, Eskom was owed R57 billion by municipalities. Along with debt relief to Eskom itself, Godongwana hopes these measures will end transfers from the fiscus to support Eskom. 

The debt-relief solution will apply only to municipal-supplied areas and does not include areas directly supplied by Eskom, which includes many of the township suburbs.

At a workshop with media on Wednesday, Treasury officials outlined the conditions. 

If all conditions are met, municipalities will have a third of their debt scrapped for each of three successive financial years. But to qualify for the relief, the municipality must meet all the conditions for consecutive 12, 24, and 36 months respectively. 

Aside from the several administrative conditions listed by Treasury, among the more substantive conditions is that municipalities will have to pay their Eskom current account within 30 days. They will also have to table a funded budget and will not be allowed to table a deficit or use accounting mechanisms, such as depreciation, to hide an operating deficit. 

5. Treasury clamps down on finance sector:

South Africa is set to adopt a raft of legislative changes over the next three to five years to modernize the regulatory framework for financial institutions and bring it into line with international norms.

The country has been slow to implement new rules and regulations and has fallen out of step with its peers, undermining its attractiveness as an investment destination, according to Astrid Ludin, deputy commissioner at the Financial Sector Conduct Authority.

The National Treasury is finalizing a Conduct of Financial Institutions Bill to present to parliament that seeks to streamline the licensing of financial institutions and enhance disclosure requirements to provide greater visibility into their business practices, she said.

The Financial Markets Act is also being reviewed and changes are expected to be submitted to lawmakers by the end of the year.

They include enhanced controls over short selling and securities financing transactions and additional disclosure requirements of pre- and post-trading data to improve market surveillance.

The amendments are needed to ensure “that the South African regulatory framework is appropriate for the environment that we are in, that we keep abreast of the changes that have happened internationally,” Ludin said in an interview.

“There is quite a big regulatory agenda over the next three to five years” and it will need to be carefully managed to “balance the impact on the industry, our global competitiveness as a market and the impact on our investors,” she said.

All information sourced from articles posted by: BusinessTech, CityPress, Moneyweb, Fin24, and DailyInvestor.

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