News in South Africa 6th February:
1. Eskom – state of disaster:
The call by the ANC for a state of disaster to be declared over the energy crisis has alarmed many across society. Organised business was also surprised by the announcement, given that only a few months ago the president said a state of disaster had been considered but that legal advice was that it could not be implemented.
A state of disaster triggers emergency powers that can limit constitutional rights. The relevant legislation provides reasons to declare a state of disaster, particularly to assist and protect the public, provide relief, protect property and prevent and combat corruption.
Under a state of disaster, the executive can issue regulations that limit rights but only if in doing so they achieve the objectives of the state of disaster.
Our electricity crisis is, however, certainly a crisis. It demands an extraordinary response. But many question whether a state of disaster is necessary to deliver that extraordinary response. And moreover, would a state of disaster create new problems that may cost more than any benefits?
According to Business Leadership South Africa CEO, Busi Mavuso, aside from the risks posed by a repeat of the Covid disaster, a new state of disaster so soon after the last one ended creates an unstable and unpredictable economic environment – which most investors shy away from.
Mavuso said that business depends on the predictable and fair application of the laws of the country, something which is at risk under a state of disaster.
“Investment decisions are made with a view to many years in the future. If business loses confidence that the environment is predictable, the risks to any investment are much greater and fewer investments will be made,” she said.
“A state of disaster is a clear example of removing certainty over the rule of law and equipping the executive with a great deal of discretion.”
However, the debate over a state of disaster does not remove the immediate risk and threat that load shedding and the energy crisis poses, Mavuso said.
“A state of disaster may well be optimal if the consequences of the disaster it is addressing really will be reduced by it. From a business perspective, this does reduce the risks that flow from the disasters themselves. But it is critical that there genuinely be such a reduction in consequences,” she said.
If a state of disaster is declared, she said that the government will have to explain why, in great detail. It will also have to clearly lay out which regulations will be made to end the crisis, and how the various risks – like looting and corruption – will be managed, and how citizens’ rights will be protected.
Ultimately, the BLSA CEO said that a state of disaster over load shedding likely won’t do much to help the situation, as the country already has a robust process in the National Energy Crisis Committee (Necom).
2. Crypto hacks stole record R65 billion in 2022:
Last year was the worst on record for cryptocurrency heists, with hackers stealing as much as $3.8 billion (R65 billion), led by attackers linked to North Korea who netted more than ever before, a U.S.-based blockchain analytics firm said in a report on Wednesday.
The report by Chainalysis found hacking activity that “ebbed and flowed” throughout the year, with “huge spikes” in March and October. October was the biggest single month ever for cryptocurrency hacking, with $775.7 million stolen in 32 separate attacks, the report said.
The cryptocurrency market floundered in 2022, as risk appetite diminished and various crypto firms collapsed. Investors were left with large losses and regulators stepped up calls for more consumer protection.
At the time, Chainalysis and other firms confirmed to Reuters that North Korean-related accounts had lost millions of dollars in value.
But that did not deter hackers.
North Korea-linked hackers such as those in the cybercriminal syndicate Lazarus Group have been by far the most prolific cryptocurrency hackers, stealing an estimated $1.7 billion worth of in multiple attacks last year, the report said.
“In 2022, they shattered their own records for theft,” it said.
North Korea has denied allegations of hacking or other cyberattacks.
According to a panel of experts monitoring United Nations sanctions, North Korea has increasingly relied on hacking to fund its missile and nuclear weapons programmes, particularly as publicly declared trade dwindled under sanctions and COVID-19 lockdowns.
“It isn’t a stretch to say that cryptocurrency hacking is a sizable chunk of the nation’s economy,” Chainalysis said.
For the first time last year, U.S. law enforcement seized $30 million in stolen funds from North Korea-linked hackers.
“These hacks will get harder and less fruitful with each passing year,” Chainalysis predicted.
3. SA looking to renew Koeberg nuclear deal:
South Africa is in talks with the US about renewing a nuclear-cooperation agreement that lapsed in December and resulted in the suspension of a license for supplies of the fuel to a key power plant.
Talks about a new pact are “ongoing, and the parties have resolved to expedite the process,” the Department of Mineral Resources and Energy said in a statement on Friday.
While the fuel for the Koeberg nuclear facility isn’t planned for delivery until early 2024, “urgent resolution is needed to allow Westinghouse Electric Co.” to resume supply, the department said.
Westinghouse lost its license from the US Nuclear Regulatory Commission after the agreement for cooperation in Peaceful Uses of Nuclear Energy between Washington and South Africa ended on Dec. 4.
US President Joe Biden was poised in August to extend the existing agreement, before it was allowed to expire.
The talks on renewing the accord come at a time when South Africa’s Eskom, which owns and operates the Koeberg facility, is struggling to meet demand, mainly because of unreliable coal-fired plants, resulting in nationwide electricity outages.
The energy department said it’s working with government counterparts “to expedite the negotiations” to re-establish the agreement.
4. Weak rand to spike fuel price:
A positive move in global oil markets for local drivers is being undermined by a weaker rand, economists say, setting the stage for a higher petrol price in March if conditions persist.
The latest data from the Central Energy Fund for the first week of February shows a major under-recovery in local fuel prices, with petrol set to be hiked by over R1.20 per litre and diesel by 70 cents per litre.
While it is too early in the month to predict the final outcome for March – as February showed, as prices can swing wildly from the start of the month to the end of the month – economists at the Bureau for Economic Research (BER) have flagged a volatile oil and currency market for the weeks ahead.
Local fuel prices are impacted by two key factors – the USD/ZAR exchange rate, and global oil prices, which affect the costs of international petroleum products.
According to the BER, the first week of February saw a softer oil market but a weaker rand, setting local fuel prices on a rocky path.
5. Joburg property values not justified:
Real estate companies in Johannesburg are refuting the city’s general valuation roll for 2023, which states the property base increased by 12% to R1.59 trillion in the last five years.
The companies said that it was impossible for a rise of that size to occur due to the prevailing market and economic conditions.
There are suggestions that the city is inflating property values to make up for revenue shortfalls.
All information sourced from articles posted by: Moneyweb, Fin24, Daily Investor, BusinessTech, and BusinessLive.
