News in South Africa 7th December:

1. SA’s economic growth hampered:

Chief economist at Econometrix, Azar Jammine, said that corruption and a lack of infrastructure investment could hamper the country’s economic growth.

SA's economic growth hampered
Photo by Francesco Paggiaro

The economy grew by 1.6% in the third quarter of 2022, after contracting by 0.7% in the second quarter.

But Jammine was worried that the recent improvement in the economy might not be sustainable if government failed to follow through with investment plans.

While economists and political parties have welcomed the positive outlook for the economy, some are worried that it may be short-lived.

The country averted a technical recession in the third quarter of 2022, with Stats SA announcing that the economy was now larger than it was before the COVID-19 pandemic.

The biggest contributors to economic growth included finance, agriculture, transport and manufacturing.

But Jammine said that government could not afford to rest on its laurels.

“It’s good news in the short term, let’s enjoy it but we need to build on it in a big way.”

Jammine said that government interventions must include a strong fight against corruption, restructuring SOEs and encouraging infrastructure investment.

2. Load shedding stage 6:

Power utility Eskom has announced that stage 6 load shedding will hit South Africa on Wednesday (7 December).

This follows an escalation to stage 4 earlier in the day.

“Stage 6 load shedding will be implemented from 12h00 until further notice,” the group said.

“This is due to a high number of breakdowns since midnight, as well as the requirement to strictly preserve the remaining emergency generation reserves. Eskom will publish a full statement in due course.”

This latest update scuppers attempts by the power utility over the last few days to provide South Africans with a stable schedule to follow when it comes to planning their day around rolling blackouts.

The plan was to initially de-escalate load shedding from stage 4 on the weekend to stage 2 by Wednesday, but instability and breakdowns on the grid ended up pushing the group to extend stage 3 load shedding for longer than intended.

Things are also expected to get much worse this week, with Eskom taking down its most reliable energy generator – Koeberg Unit 1 – for maintenance and repairs on Thursday.

Eskom appeal:

Eskom has lodged an appeal against a high court judgment that declared tenders worth about R16 billion for maintenance and outage repair services at its 15 coal-fired power stations unlawful and set aside.

The tenders were awarded to Actom and Steinmuller Africa in October 2021.

In a judgment handed down on 17 November in the High Court in Pretoria, Judge Anthony Millar ordered Eskom to conduct a fresh tender process and suspended the setting aside of the contracts with Actom and Steinmuller Africa until its finalisation.

Eskom on Tuesday lodged its notice of application for leave to appeal the whole judgment and the order handed down by Millar.

The judgment follows Babcock Ntuthuko Engineering lodging an application to review, set aside and declare unlawful the contract awards to Actom and Steinmuller Africa, after it was disqualified from the tender for failing to comply with a requirement in the request for proposals (RFP) to provide an ISO 3834 certificate issued by the South African Institute of Welding.

In terms of the tender award, Steinmuller was awarded eight power stations and Actom seven.

3. Oil prices slump to pre war levels:

Just days after an EU price cap of $60 a barrel price cap for Russian crude kicked in, oil futures slumped to levels not seen before the Ukraine invasion, as jittery traders exit the market ahead of the holiday season.

On Tuesday, US West Texas Intermediate oil futures tanked 3.5% to their lowest settlement price this year at $74.25 a barrel, while international Brent crude futures settled 4% lower at $79.35 a barrel. In early Asian trade on Wednesday, US WTI oil futures were down 0.3% at $74.05 a barrel, while international Brent crude oil futures were 0.1% lower at $79.29 a barrel. 

Data from the Intercontinental Exchange shows traders reducing their net long positions in Brent futures by about one-third in the week to last Tuesday, wrote ING commodity strategists Warren Patterson and Ewa Manthey in a Monday note.

“This is the smallest net long speculators have held since November 2020 and reflects growing demand concerns,” the ING strategists added. 

Oil market sentiment has been on a roller-coaster ride lately. Tuesday’s bearish sentiment contrasted with optimism earlier in the week — oil prices had risen on indications that major oil consumer China is easing its strict COVID-19 restrictions and OPEC stuck to its production cut target.

However, the price cap on Russian crude continues to spark uncertainty in the oil markets. Continued tensions could send prices soaring if Russia can’t find enough “dark ships” — vessels that turn off tracking devices — to export crude covertly.

Another key factor damping market sentiment is the resilient US economy, as it’s raising questions about whether the Fed would actually ease its aggressive interest rate hikes to curb inflation. 

4. R60m in license disk fraud:

The criminal case against the fourteen Mpumalanga licensing officials accused of illicitly assisting vehicle owners in avoiding payment of vehicle license fees has been postponed to February 2023.

The officials appeared at the Mbombela magistrate court this week, and the case was postponed to 21 February next year.

The suspects faced 603 charges of corruption, fraud, theft, and money laundering charges relating to the scam that has cost the state more than R60 million in lost revenue.

They include former administrators who worked at the department of community of safety and liaison help desk and clerks from registering authorities in Mbombela, Mashishing, and Piet Retief. They are out on R1500 bail each.

The allegations are that they conspired with vehicle fleet owners to defraud the state by writing off vehicle license fees and arrears and accepting payment of part of the applicable fees into their personal bank accounts.

Motorists would then receive vehicle discs that showed that they owed nothing to the state.

The officials were nabbed in a joint operation by the National Anti-Corruption Unit of the Road Traffic Management Corporation and the Hawks. Investigations are continuing, and more arrests are expected, the government said.

The number of arrests in the case has more than doubled in the four months since government officials were first nailed for the fraud in July 2021.

5. German funding for wind turbines:

The Cape Penisula University Technology’s campus will receive funding to build a wind turbine on its campus.

The University will receive part of the German development bank KFW’s R180 million grant, which is part of the German government’s commitment to South Africa’s just energy Transition Partnership (JETP).

The wind turbine is designed to give students practical experience.

Part of the funding will also be used to help reskill workers at Eskom’s Grootvlei power station.

All information sourced from articles posted by: EWN, BusinessTech, Moneyweb, Business Insider, and Fin24.

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