HARARE (Reuters) &#8211; Zimbabwe’s commercial banks started trading the RTGS dollar on Monday, but authorities offered no indication as to how ordinary citizens would interact with the country’s new transitional currency five days after it was introduced. 



Zimbabwe ditched a dollar peg for its surrogate bond notes and electronic dollars on Wednesday, merging them into the RTGS dollar in an effort to revive a crippled economy and address a cash crunch that has undermined President Emmerson Mnangagwa’s efforts attract foreign investment.



The central bank sold U.S. dollars to banks at 2.5 RTGS dollars on Friday morning, and on Monday lenders began trading the currency with corporate customers and on an interbank market.



There had been indications that ordinary Zimbabweans would be able to buy U.S. dollars with bond notes or electronic dollars from Monday.



But a Standard Chartered bank teller in Harare said her branch was not selling dollars to individuals yet, and downtown bank queues were no longer than normal as people made their way to work.



Kudakwashe Mukora, an electrician who had just come out of the branch, said: “At the moment we’re just shooting in the dark. The government isn’t addressing the fundamental issue which is that the black market is in charge.”



On Monday one U.S. dollar was being sold on the black market for four electronic dollars &#8211; which have been locked in individuals’ accounts for months due to the chronic cash shortages &#8211; compared to 4.20 on Friday, currency traders said.



An employee at a Stanbic branch said the bank was offering U.S. dollars to corporate clients at 2.5625 RTGS dollars and buying dollars at 2.4 RTGS. She said the idea was that individuals would be able to buy and sell dollars at a later date, but she wasn’t sure when.



The central bank has promised a “managed float” of the RTGS &#8211; which stands for the real-time gross settlement system banks use to transfer money &#8211; but it is not clear how it will control the currency’s movements given that it does not have significant foreign exchange reserves.



“The big players are holding onto their money, that is what is holding rates at the moment. In the next week or two, it should be clear whether the interbank is working or not,” one trader at Harare’s Eastgate shopping centre said.



Zimbabwe’s currency problems date back to the hyperinflation era of post-independence leader Robert Mugabe, who Mnangagwa replaced after an army coup in November 2017.



International attitudes to Mnangagwa’s government have hardened since a violent security crackdown last summer on post-election protests and on demonstrations last month against a major fuel hike.



Reporting by Alexander Winning, Alfonce Mbizwo and MacDonald Dzirutwe; editing by John Stonestreet

Zimbabwe banks start trading new currency, what you need to know

By Kopano Gumbi, CNBC Africa&#8217;s markets reporter 



South Africa’s Minister of Energy, Jeff Radebe believes
the process of awarding of contracts to Independent Power Producers (IPPs) has
been fair and without corruption. Despite nearly three years of delays in
signing off IPP contracts, the minister today said the IPP process has
&#8220;earned world acclaim.&#8221;



Presently, South Africa receives just over 3,776 MW of
power into the grid from renewable producers, which is less than 5 percent of
the total energy sold to consumers.



The minister acknowledged that the initial cost of
introducing IPPs was high but that the price has fallen through subsequent bids.
IPPs have now become cost neutral to Eskom, as the cost is passed to the
consumer.



After months of consistent power, Eskom has had to
reintroduce load shedding in December and again in February, after seven
generating units went down. Minister Radebe however, said that without IPPs,
load shedding would have been worse.

SA’s Minister of Energy Jeff Radebe argues the case for Independent Power Producers

HARARE (Reuters) &#8211; Zimbabwe’s new currency is expected to begin trading at around 2.5 to the U.S. dollar, Central Bank Governor John Mangudya said on Friday, a significant devaluation as the regulator attempts to stem chronic cash shortages.



The Reserve Bank of Zimbabwe (RBZ) on Wednesday said it would scrap a peg between its quasi-currency bond notes and the U.S. dollar, creating a new currency from the bond notes and notional electronic dollars known as RTGS dollars.



Trading on the Interbank market was due to begin on Monday, although Mangudya mentioned trading had started on Friday morning.



Reporting by Alfonce Mbizwo; Writing by Joe Brock; Editing by Alexandra Zavis

How much will Zimbabwe’s new currency trade against the U.S. dollar ?

JOHANNESBURG (Reuters) &#8211; Precious metal miner Sibanye-Stillwater posted a full-year attributable loss of 2.5 billion rand ($178.10 million) on Thursday, hit by multiple disruptions at its South African gold operations and a deferred tax charge.



The company posted a headline loss per share of 1 cents for the year ended Dec. 31, 2018, compared with a loss of 12 cents per share in the previous year. In 2017, it made an attributable loss of 4.437 billion rand.



Overall 2018 was a mixed year, said Chief Executive Neal Froneman, when safety incidents, unanticipated operational disruptions and a strike saw gold production in South Africa decrease by 2,345 kg (75,390oz) to 1,176,600 ounces.



The Association of Mineworkers and Construction Union has been on strike at the company’s gold mining operations since mid-November over a wage dispute.



Group adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 8 percent to 8.369 billion rand. EBITDA for its gold operations fell to 1.362 billion rand from 5.309 billion rand in 2017.



Losses were limited by the strong performance of the company’s U.S. and South African platinum group metals (PGM) operations. About half of the 2018 group adjusted EBITDA came from the company’s U.S PGM operations.



Sibanye-Stillwater said it would buy SFA (Oxford), which provides market intelligence on battery materials and precious metals, to leverage off knowledge for future power train requirements to the market.



($1 = 14.0372 rand)



Reporting by Tanisha Heiberg; Editing by Subhranshu Sahu

What you need to know about South Africa’s Sibanye-Stillwater FY attributable loss of $178 million

LUSAKA (Reuters) &#8211; Debt servicing costs are putting pressure on Zambia’s central bank reserves, Bank of Zambia Governor Denny Kalyalya said during a monetary policy committee briefing on Wednesday, after announcing it would keep interest rates unchanged.



The International Monetary Fund has raised concerns over high levels of government debt in Africa’s second largest copper producer, and rejected the state’s borrowing plans last February, saying they risked making its debt load harder to sustain.



Reporting by Chris Mfula; writing by Emma Rumney; Editing by Alison Williams

Debt servicing costs putting pressure on Zambia’s central bank reserves, what you need to know

JOHANNESBURG (Reuters) &#8211; South Africa’s Tiger Brands on Wednesday reported a one percent rise in group revenue from continuing operations for the four months to January 31 on Wednesday helped by overall price inflation and volume growth. 



South Africa’s leading food producer had reported a 5 percent fall in revenue in the corresponding period last year.



Excluding its Value Added Meat Products (VAMP) unit, which produces cold meat such as polony, group revenue rose 8 percent, driven by overall price inflation of 2 percent and volume growth of 6 percent, it said.



For most of 2018, production at its VAMP business was halted after the source of the world’s largest ever listeriosis outbreak was traced in March to a factory owned by Tiger Brands’ Enterprise Foods unit, prompting the health department to recall tonnes of processed meat products.



In December authorities gave the food maker permission to re-open the Polokwane processing facility, a few months after production restarted at other facilities.



“The re-launch of the VAMP business has been well received by customers and consumers, however challenges in managing the factory start-ups have resulted in an inability to fully meet demand in this period,” the group said.



This had a significant negative impact on that business’ operating performance, it added.



It saw good volume in wheat, maize, groceries, snacks and treats, beverages, baby and in particular, home and personal care.



Tiger Brands has had to cope with intense competition in a low-growth, value-driven consumer environment, coupled with price deflation in some soft commodities.



“With the exception of sorghum-based products, pasta, maize and rice, all categories recorded selling price inflation although price increases were not sufficient to fully recover cost increases, resulting in gross margin compression,” it said.



The company said it has not received a summons from class action lawyers representing victims of listeriosis, which claimed more than 200 lives in the country.



A South African court in December granted a class action certificate to the victims, paving the way for them to make claims against Tiger Brands.



The company said it has product liability insurance cover appropriate for a business of its scale, which will be used in the event that the company is held liable.



“Coverage has been confirmed by the insurers, subject to the terms and limits of the policy,” it said.



Reporting by Nqobile Dludla; editing by Jason Neely

Tiger Brands reports a one percent rise in group revenue, what you need to know

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 There’s no painless way for South Africans to deal with the power utility crisis.
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By <a href="https://theconversation.com/profiles/rod-crompton-309956">Rod Crompton</a>, <a href="http://theconversation.com/institutions/university-of-the-witwatersrand-894">University of the Witwatersrand</a>

Eskom is by far the largest of South Africa’s many state owned companies. This near monopoly power utility is in crisis. It’s the <a href="https://businesstech.co.za/news/finance/255015/eskom-is-the-single-biggest-risk-to-south-africas-economy/">single largest threat</a> to South Africa’s economy, according to a former minister of finance. The Conversation Africa spoke to Adjunct Professor Rod Crompton about why this is the case and what can be done. 

<h2>How is power generated and distributed in South Africa?</h2>

Electricity markets in most countries consist of three parts: generation, transmission and distribution. Most electricity is generated by using heat to boil water to create steam which in turn spins a turbine that generates electricity.

South Africa’s cheap and abundant coal resources made coal generated electricity an obvious choice for many years. Initially, power stations were owned by municipalities and large mining and industrial concerns. But as the costs of recapitalisation emerged, government was persuaded to take over responsibility for power. 

Eskom is <a href="http://www.dpe.gov.za/soc/Pages/Eskom.aspx">among the biggest</a> power utilities <a href="http://www.engineeringnews.co.za/article/how-power-utility-eskom-is-hobbling-south-africas-economy-2018-12-05">in the world</a>, famous for its ability to handle vast tonnages of low grade coal. Eskom accounts for <a href="http://www.dpe.gov.za/soc/Pages/Eskom.aspx">over 90% of power generating</a> capacity. Its power plants are mostly coal with one nuclear station and some pumped storage (water). Only a few minor power generators have remained outside Eskom’s fold. 

More recently, international climate change pressure caused government to introduce renewable power generation through <a href="http://www.engineeringnews.co.za/article/south-africa-to-release-new-look-renewables-bid-window-in-november-2018-06-01">bidding rounds</a>. These private investors were given 20 year price guarantees underwritten by government – some at exorbitant prices. Nevertheless, as these technologies became more globally popular, some of them – solar (photo voltaic) and wind power – emerged as the lowest cost generators. 

All power generation is tied into Eskom’s national transmission grid that moves electricity from generation stations to demand areas. Transmission is a natural monopoly. If you want to use the transmission grid you need Eskom’s permission. 

Transmission lines end where high voltage power is stepped down to distribution networks until it reaches residential customers – at 220 volts. In many areas Eskom sells to municipal distributors.

So, Eskom is a vertically integrated near monopoly responsible for generation, transmission and distribution.

<h2>Is this monopoly situation unusual in the 21st century?</h2>

In many countries competition between power generators has been encouraged to drive down prices. Transmission, being a natural monopoly, remains just that; but like toll roads they are open to all who obey the “road rules” and pay the toll. The same goes for distribution to a lesser extent.

<h2>What’s the trouble with Eskom?</h2>

Eskom has two major problems. Its operating costs are too high and it can’t pay its debt. It owes over <a href="https://www.moneyweb.co.za/news/south-africa/eskom-needs-a-bailout/">R400 billion</a> and does not generate enough cash to pay even the interest on its debt. It’s reached the end of the road. 

Eskom has been getting steep tariff increases in recent years but these have driven some customers off-grid and shut others down. Eskom’s sales have been declining by about 1% per <a href="https://www.biznews.com/briefs/2018/07/23/eskom-loss-power-sales-drop-debt-slumps">annum</a>. The less it sells, the higher the tariff it wants, and the less it sells – the utility death spiral.

<h2>How did it get here?</h2>

The main cause of its troubles is its decision to build two of the biggest coal fired generating plants in the world, (<a href="http://www.eskom.co.za/Whatweredoing/NewBuild/MedupiPowerStation/Documents/NB_0002MedupiFactSheetSept2013.pdf">Medupi</a> and <a href="http://www.eskom.co.za/Whatweredoing/NewBuild/Pages/Kusile_Power_Station.aspx">Kusile</a>). These plants are running way behind schedule, they’re over budget and the bits that are complete don’t work properly. They are <a href="https://www.businesslive.co.za/bd/opinion/editorials/2018-06-20-editorial-keep-an-open-mind-on--energy/">probably</a> the single largest disaster in South Africa’s economic history.

“State capture” (patronage networks), corruption and poor management have led to over staffing and neglected maintenance, resulting in <a href="https://www.fin24.com/Economy/Eskom/corruption-state-capture-behind-eskoms-downfall-nersa-hears-20190114-2">constant breakdowns</a>. Electricity theft, a culture of non-payment and defaulting municipalities have deepened the <a href="https://www.fin24.com/Economy/how-eskoms-looming-death-spiral-is-menacing-sa-economy-20181206">crisis</a>. Eskom is owed over <a href="https://businesstech.co.za/news/energy/293980/why-youre-going-to-pay-more-for-eskoms-mistakes/">R30 billion</a>.

<h2>What are the answers?</h2>

Eskom needs to simultaneously reduce operating costs, increase tariffs and shed a big chunk of its debt. There is no painless way for South Africans to deal with their Eskom crisis. And it can’t wait until the national elections on 8 May 2019.

President Cyril Ramaphosa appointed a team of advisers and has announced that Eskom is to be split into three subsidiaries: generation, transmission and distribution. This has been a government policy since 1998. This should increase cost and debt transparency and may lead to increased efficiencies, especially if competition is allowed.

<hr>

 
 
 Read more:
 <a href="http://theconversation.com/why-south-africas-latest-plan-for-state-owned-power-giant-could-work-111480">Why South Africa&#8217;s latest plan for state-owned power giant could work</a>
 
 

<hr>


Ramaphosa hinted that Eskom will be allowed to invest in renewables, possibly to absorb surplus staff and avoid retrenchments that have been so <a href="https://www.moneyweb.co.za/news-fast-news/num-union-tells-ramaphosa-to-scrap-eskom-split-plan/">vehemently opposed</a> by the unions. Some think this is too little too late. He passed the debt hot potato to the minister of finance’s budget speech on 20 February 2018. 

Energy Minister Jeff Radebe <a href="http://www.engineeringnews.co.za/article/prepare-for-greater-power-generation-competition-radebe-tells-eskom-2018-06-04">said</a> Eskom must prepare for increased competition, presumably in generation. The transmission network needs to be opened to allow this. The courts <a href="https://www.news24.com/SouthAfrica/News/court-prevents-eskom-from-cutting-off-musinas-electricity-20181120">have stopped</a> Eskom from switching off defaulting municipalities. Esokm’s crisis gets worse every day. Government will have to sort out municipal non-payment or allow towns and cities to go dark or let Eskom collapse. 

Until the President’s statement, government seemed paralysed. Will words turn into the effective action that’s needed to save South Africa from its power utility?<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/111510/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" />

<a href="https://theconversation.com/profiles/rod-crompton-309956">Rod Crompton</a>, Adjunct professor African Energy Leadership Centre Wits Business School, <a href="http://theconversation.com/institutions/university-of-the-witwatersrand-894">University of the Witwatersrand</a>

This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/explainer-why-south-africas-energy-generator-is-in-so-much-trouble-111510">original article</a>.

Explainer: South Africa’s energy generator is in trouble, here’s why

JOHANNESBURG (Reuters) &#8211; South Africa’s struggling state-owned airline is to break into three business units as part of a restructuring plan, its Chief Executive Vuyani Jarana said on Monday.



Jarani said the firm &#8211; which has not made a profit since 2011 and was given a 5 billion rand bailout last year to shore up its balance sheet &#8211; will be split into domestic, regional and international business units, each with their own management.



Reporting by Olivia Kumwenda and Tiisetso Motsoeneng; writing by Emma Rumney; Editing by Kirsten Donovan

SAA to split into three – CEO

JOHANNESBURG (Reuters) &#8211; South African firm Bosasa has applied for voluntary liquidation after its lenders said they would close its accounts due to reputational risk, the firm said in a statement on Monday.



“The extensive reputational damage in the past few months, occasioned by negative media reports, has resulted in financial institutions determination that the&#8230; group poses a reputational risk for them as clients,” it said.



A former executive of Bosasa, now called African Global Operations, was arrested earlier this month alongside five others after testifying at a judicial inquiry that he bribed politicians and bureaucrats to secure government contracts for the company.



Reporting by Emma Rumney; Editing by Kirsten Donovan

South African firm Bosasa applies for liquidation after banks close accounts,what you need to know…

By Jared Jeffery, Political analyst, NKC African Economists



The
CEO of South African multinational telecommunications company MTN in Uganda,
Wim Vanhelleput, was deported on Thursday evening, February 14. 



He
becomes the fourth employee of the company to be deported in the last month as
the government piles pressure on MTN to list on the local bourse and
renegotiates its operating licence after 20 years. 



Authorities
have not given clear reasons for the deportations. 



Prior
to markets opening in Johannesburg on Friday, February 15, MTN issued a
statement saying it had not been notified of the grounds for the move. 



The
company’s group CEO, Rob Shuter, met with President Yoweri Museveni on the
sidelines of the World Economic Forum in Davos in January. Not much was
revealed about what they spoke about, but The East African quoted the president
as having said: “It is important that you float shares on the local stock
exchange to allow for local ownership now that the licence has been renewed.” 



The
newspaper also reports that the presidency issued a statement on January 23
stating that the dispute over the renewal of the licence had been resolved and
MTN had agreed to “spread its ownership to more Ugandans through a share
placement with the National Social Security Fund”. However, this statement was
not available on the State House website to confirm it and matters have clearly
not been resolved. 



It
appears Mr Museveni is taking a leaf out of Tanzanian President John Magufuli’s
book by forcing international companies to list on the stock exchange and
playing hardball with the renegotiation of agreements. However, the rhetoric
around events in Uganda is distinct from what we have seen in Tanzania. 



MTN
has been characterised as a ‘security threat’ whereas in Tanzania
multinationals are characterised as greedy companies that hinder development. 



These
different narratives speak to the sources of legitimacy for the leaders in each
country – in Tanzania Mr Magufuli gets his legitimacy from being clean and
bringing development, so his enemies must be greedy and hinder that aim. 



In
Uganda, Mr Museveni draws his legitimacy from having brought stability and
security, so his enemies must want incitement to violence and instability. 



In
July last year, MTN’s data centre was raided, reportedly by intelligence
services, an employee was taken and held for four hours and four of its servers
were disconnected. MTN subsequently laid a case of illegal intrusion against
those involved, but there has been no news of the case since. 



In
a letter on the incident, MTN wrote: “We are yet to determine the extent of
interruption to our network activities and the financial impact. It is also
possible that some data have been tempered with or illegally accessed and taken
from the premise (sic). The intrusion into the data was properly captured by
our closed-circuit television (CCTV cameras),” – so it seems they would have
solid evidence to support their case. 



Local
newspaper The Observer reported that one of the recent deportees, Italian Elsa
Mussolini (former general manager for mobile finance services), stated that she
was ejected from the country for inciting violence and funding opposition
member of Parliament (MP) Robert Kyagulanyi (Bobi Wine). The funding reportedly
took place during the campaign against the proposed social media tax that the
MP led. 



There
is clearly a lot going on between MTN and the Ugandan government: licence
renewals, stock exchange listings, data centre raids, opposition politician
funding, incitement to violence allegations, social media and mobile money
taxes, and possibly access to data on citizens. 



Aggressive
moves against multinationals on the continent are not a new phenomenon – MTN
has had its fair share of difficulties lately in Nigeria too. 



Taking
on international companies makes leaders look good, at least in the eyes of
some local citizens, but we also may be seeing a more regional phenomenon with
Mr Magufuli’s approach emboldening his neighbours. 



The
events do not bode well. With Mr Museveni facing mounting challenges to his
over three-decade rule in the run-up to elections in 2021, we could see more
erratic policies and fiery rhetoric over the next couple years.

MTN Uganda CEO deported, what you need to know

JOHANNESBURG (Reuters) &#8211; South Africa’s struggling state power firm Eskom suspended electricity cuts on Friday but said the power system remained vulnerable, after five days of rolling outages which weakened the rand and hurt businesses across the country. 



Eskom supplies over 90 percent of the power in Africa’s most industrialised economy but has been grappling with power station breakdowns and diesel shortages which have curbed its ability to run backup power sources.



President Cyril Ramaphosa, who faces a parliamentary election in May, has pledged to reform the utility by splitting it up and providing financial support but has ruled out privatisation.



The rand was on course for a loss of more than 3 percent against the dollar this week, largely because of Eskom’s woes, which risk derailing a sluggish economic recovery.



“Due to further improvement in generation performance and the notable strides made in replenishing water and diesel reserves, Eskom is not likely to implement load-shedding on Friday,” Eskom said in a statement, using a local term for power cuts.



Eskom started the power cuts on Sunday and intensified them to 4,000 megawatts (MW) of cuts on Monday in the worst outages South Africa has seen since 2014/15. The power cuts had been reduced to 2,000 MW by Thursday.



The power crisis has caused traffic gridlock in major cities as traffic lights stop working and frustration for ordinary South Africans.



Businesses like miner Harmony Gold are exploring strategies to reduce their dependence on Eskom.



The government has promised more details about how it will support Eskom’s balance sheet on Feb. 20, when the finance minister will deliver a budget speech in parliament. One of Eskom’s major issues is its unsustainable debt mountain of around 419 billion rand ($30 billion).



($1 = 14.1358 rand)



Reporting by Alexander Winning; Editing by Sherry Jacob-Phillips

After five days of #Loadshedding, South Africa’s Eskom suspends power cuts, here’s why

JOHANNESBURG (Reuters) &#8211; Struggling state-run power firm Eskom subjected South Africa to the worst power cuts in several years this week, after a decade of missteps when electricity sales stagnated and costs soared.



The outages expose the risks to Africa’s most industrialised economy from Eskom’s virtual monopoly and the failure of successive governments to take on labour unions and leftists in the ruling African National Congress (ANC) who oppose change.



President Cyril Ramaphosa appointed a new board at Eskom in 2018 and plans to split the utility, which expects to lose about 20 billion rand ($1.5 billion) this year and next. It doesn’t even earn enough to service its mountain of debt.



Analysts say bolder steps, not just a break up, are needed to rescue a firm that supplies 90 percent of the nation’s power.



But South African officials have ruled out selling Eskom and more borrowing will only bury the company deeper in debt, which leaves it up to the government to step in with a bailout.



Below are the challenges Eskom faces and possible solutions.



<h3 class="wp-block-heading">WHY ARE THE LIGHTS GOING OUT NOW?</h3>



Eskom’s power station performance has deteriorated steeply in part because of delays to critical maintenance work.



This week, around a third of Eskom’s 45,000 megawatt (MW) installed capacity was out of service because of plant-related problems, diesel shortages and planned maintenance.



Eskom has a plan to improve performance, such as overhauling units that have been shut down for long periods and fixing design flaws at two major power projects, Medupi and Kusile.



The aim is to lift the Energy Availability Factor, or the level at which capacity can be used, to 77 percent by late 2020 from below 70 percent now.



But long-term neglect means there are no quick fixes. “It will take years to sort out the problems that have built up,” said Chris Yelland, a Johannesburg-based energy analyst.



<h3 class="wp-block-heading">HOW CAN ESKOM FIX ITS COAL PROBLEMS?</h3>



More than 80 percent of Eskom’s power is produced from coal dug from South African mines. But spending on primary energy, mostly coal, has more than quadrupled in the past decade, reaching 85.2 billion rand in the year to March 2018. It has also faced supply shortages.



“Eskom’s coal procurement needs to be sorted out, with people brought in who understand mines and the quality of coal. Bribe-taking is still a big problem,” said Xavier Prevost, a senior analyst at XMP Consulting.



Eskom’s new management acknowledges its finances have been hurt by fraud and corruption and says it has investigated hundreds of instances of alleged wrongdoing.



Eskom’s supply problems were compounded by its decision to reduce investment in “cost-plus” mines, where it contributes to costs and receives a guaranteed volume and quality of coal.



Eskom’s new management has reversed that policy, pledging to invest up to 12 billion rand in cost-plus mines in the next five years. It has also signed more than 40 coal supply contracts.



<h3 class="wp-block-heading">IS IT TIME TO CUT THE WORKFORCE?</h3>



Eskom employs 48,000 people, after hiring about 12,000 additional employees in the past decade. A World Bank research report published in 2016 said two-thirds of employees weren’t needed.



Cutting jobs will be politically difficult for Ramaphosa before this year’s election, when he will have to rely on unions allied to the ANC if he wants to a decisive mandate.



But analysts say it is a case of when, not if, jobs will go.



Eskom has trimmed its executive management from 21 people to nine by combining roles. Eskom executives have also told investors they hope to gradually reduce staff numbers by a third, one investor has told Reuters.



<h3 class="wp-block-heading">WHAT ABOUT ESKOM’S DEBT MOUNTAIN?</h3>



Eskom’s debt pile, which stood at 419 billion rand at the end of September, is perhaps its greatest challenge. Eskom has been assigned a credit rating from S&amp;P Global of CCC+, deep into “junk” territory.



The debt was largely racked up to build Medupi and Kusile, two of the largest coal-fired power stations in the world which have suffered massive cost overruns.



Analysts say Eskom needs a bailout, a tough call for the government when its sovereign credit ratings are under pressure.



Last year, Eskom Chairman Jabu Mabuza urged the government to take on 100 billion rand of the utility’s debt.



Ramaphosa was initially cool on the idea but has since said the government would unveil measures to support Eskom’s balance sheet in a budget speech on Feb. 20.



Nedbank CIB analysts estimate a bailout of 150 billion rand would be required to cover Eskom’s liquidity shortfall, while 190 billion rand would put it on a more sustainable path.



<h3 class="wp-block-heading">WHY NOT JUST RAISE ELECTRICITY PRICES?</h3>



Eskom has eroded its capital base by selling power for many years below production costs. That remains the case even though average power prices have risen about fourfold since 2007.



The World Bank’s 2016 report found South Africa had some of the lowest electricity tariffs on the continent.



Eskom has applied to energy regulator Nersa for tariff increases of 17.1 percent in 2019/20, 15.4 percent in 2020/21 and 15.5 percent in 2021/22. But Nersa tends to grant much smaller increases than Eskom demands.



Nersa will respond to the latest requests by mid-March.



<h3 class="wp-block-heading">WILL SPLITTING UP ESKOM HELP?</h3>



Ramaphosa wants to split Eskom into entities responsible for generation, transmission and distribution, although they would still operate under the same Eskom holding company.



Analysts say that doesn’t go far enough.



“Separating within Eskom means the incentive issues and monopoly mindset will remain, and any upside from internal capital allocation being more transparent within entities may be limited,” said Peter Attard Montalto, head of capital markets research at Intellidex.



One option would be to remove the holding structure and make the public enterprises ministry the shareholder of all three, making each unit function more independently.



Another would be to break up the generation business into several smaller companies owning a mix of old and new power stations, which would compete with independent power producers to supply the cheapest electricity to the grid.



<h3 class="wp-block-heading">HOW TANGLED IS THE DISTRIBUTION NETWORK?</h3>



Eskom is responsible for distribution in some areas of South Africa, while municipal distributors are responsible in others. And all of them face problems collecting payments.



Eskom is owed more than 30 billion rand by municipalities and customers in the sprawling Soweto township on the outskirts of Johannesburg, a debt which continues to grow.



“Municipalities are dragging Eskom down,” analyst Yelland said. “The distribution sector needs to be rationalised into a much smaller set of efficient, viable businesses.”



($1 = 13.7369 rand)



Additional reporting by Sisipho Skweyiya in Johannesburg, Geert de Clercq in Paris and Karin Strohecker in London; Editing by Edmund Blair

How can South Africa’s struggling power utility Eskom turn the lights back on?

GoCompare has researched 31 OECD member countries (and South Africa) and ranked their varying costs of driving fines (with no added surcharges) based on:



<ul class="wp-block-list"><li>Speeding 21km/h (approx 13mph) over the limit </li><li>Using a mobile phone while driving</li><li>Driving a red light</li></ul>



Speeding



Based on the amount of money, in Rand, Poland is the cheapest country and Norway is the most expensive. South Africa is the 8th cheapest place to get a fine for speeding.



<ol class="wp-block-list"><li>Poland R 356,65</li><li>Lithuania R 463,72</li><li>Czech Republic R 607,63</li><li>Latvia R 618,23</li><li>Luxembourg R 757,28</li><li>Austria R 772,75</li><li>Portugal R 927,26</li><li>South Africa R1 000,00</li><li>Slovak Republic R1 081,77</li><li>Germany R1 081,77</li></ol>



However, if figures are based on percentage of earnings,
South Africa is rated just outside of the top 10 most expensive countries:



<ol class="wp-block-list"><li>Estonia, 31.75% (of average monthly salary)</li><li>Norway, 14.11%</li><li>United Kingdom, 11.53%</li><li>Hungary, 10.49%</li><li>Iceland, 9.91%</li><li>Sweden, 8.23%</li><li>Italy, 6.94%</li><li>Greece, 6.92%</li><li>Slovak Republic, 6.36%</li><li>Australia, 5.90%</li></ol>



&nbsp; &nbsp; &nbsp;12. South
Africa, 5.09% 
 
Note: 



<ul class="wp-block-list"><li>The following data was calculated based on that the
 motorist committed the offence on a highway or motorway by driving 21 km/h
 above the maximum speed limit</li><li>The monthly average salary of a person in South Africa
 is R19 633</li><li>In South Africa, the average person would have to work
 1.49 days to pay back a speeding fine</li></ul>



 
Using a mobile phone while driving 
 
The fine for using a mobile phone in driving is particularly cheap &#8211; in value &#8211;
for South Africa, with the country being in the 10 cheapest countries to
receive this fine.



<ol class="wp-block-list"><li>Latvia, R 386,37</li><li>Hungary, R 475,54</li><li>Czech Republic, R 607,63</li><li>New Zealand, R 697,49</li><li>Poland, R 713,30</li><li>Austria, R 772,75</li><li>Slovak Republic, R 927,26</li><li>Ireland, R 927,26</li><li>South Africa, R 927,26</li><li>Estonia, R1 236,46</li></ol>



When basing the figures on
monthly average salaries, South Africa place in the middle of the rankings.



<ol class="wp-block-list"><li>Spain, 8.55%</li><li>Portugal, 8.45%</li><li>Lithuania, 8.10%</li><li>Israel, 7.87%</li><li>Greece, 6.92%</li><li>United Kingdom, 6.83%</li><li>Canada, 6.80%</li><li>Italy, 6.57%</li><li>Estonia, 6.35%</li><li>Slovenia, 6.08%</li></ol>



&nbsp; &nbsp; &nbsp;14.&nbsp;South
Africa, 5.09% 
 
Note:



<ul class="wp-block-list"><li>In South Africa the average person would have to work
 1.55 days to pay back the above fine</li></ul>



Driving through a red light 
 
South Africa falls just outside the cheapest ten countries for a fine for
driving through a red light.



<ol class="wp-block-list"><li>Poland, R 356,65</li><li>Latvia, R 463,72</li><li>Lithuania, R 927,43</li><li>Finland, R1 012,25</li><li>Austria, R1 081,77</li><li>Portugal, R1 156,34</li><li>Ireland, R1 236,46</li><li>New Zealand, R1 307,72</li><li>United States, R1 320, 93</li><li>Germany, R1 390,98</li><li>South Africa, R1 500</li></ol>



 
South Africa again sit in the middle of the rankings when using monthly average
salary as a metric for measuring how much driver&#8217;s are out of pocket in each
country.



<ol class="wp-block-list"><li>Greece, 48.45%</li><li>Hungary, 17.48%</li><li>Estonia, 15.88%</li><li>Slovenia, 15.19%</li><li>Norway, 15.00%</li><li>Slovak Republic, 13.64%</li><li>Israel, 11.80%</li><li>Sweden, 8.81%</li><li>Spain, 8.55%</li><li>Czech Republic, 8.34%</li></ol>



&nbsp; &nbsp; &nbsp;12.&nbsp;South
Africa, 7.64% 
 
How we worked out the data:



<ul class="wp-block-list"><li>For countries with fines relative to the offender’s income, it is assumed that the offender earned the country’s average monthly salary</li><li>A full list of sources is available <a href="https://docs.google.com/spreadsheets/u/1/d/1qH-BLokurz3fg5hDJXuxAsdQcvBmvBJNpZhl2tG3vE4/edit?usp=sharing">here</a></li><li>Average annual and monthly salary data was sourced from the <a href="https://stats.oecd.org/Index.aspx?DataSetCode=AV_AN_WAGE">OECD</a> (National Currency Units for 2017)</li><li>The data represented in the analyses for Australia, Canada and the United States are samples based on fines incurred in the state of New South Wales (Australia), the province of British Columbia (Canada), and the city of Los Angeles (USA)</li><li></li></ul>



This content was provided by GoCompare. You can explore the full data-set here >> https://www.gocompare.com/car-insurance/harsher-penalties/#/

How do South African driving fines compare to the world?

CAPE TOWN (Reuters) &#8211; South Africa is not planning to privatise embattled power utility Eskom after the firm is split into three separate entities of generation, transmission and distribution, Public Enterprises Minister Pravin Gordhan said on Wednesday.



“At no stage has the president said, or the government indicated, that there would be privatisation of any of these entities or that this is the motivation for the separation into three entities,” Gordhan told a parliamentary committee.



President Cyril Ramaphosa announced the plan to split Eskom into three entities last week, in an effort to make the company more efficient.



Reporting by Wendell Roelf; Writing by Olivia Kumwenda-Mtambo; Editing by Kirsten Donovan

Is South Africa planning to privatise embattled power utility Eskom?

Press release



Key points:



» The
electricity system is currently under extreme pressure and the reserve margin
is likely to remain tight until at least the mid-2020s



» The country
will remain dependent on Eskom Holdings SOC Ltd (Eskom &#8211; B2 negative) for the
foreseeable future, although its importance could gradually diminish



» Further growth in renewables, embedded generation and new capacity in gas from the mid-2020s, could ease system pressure



For the full report read: http://cnbc.africa/wp-content/uploads/2019/02/Moodys-South-Africs-energy-market-report-12-Feb.pdf 



By Helen Francis, a Moody’s Vice President – Senior Credit Officer. 



Content provided by Moody&#8217;s

Moody’s warn that Eskom’s problems could persist till 2020

HARARE (Reuters) &#8211; Zimbabwean Vice President Constantino Chiwenga is being treated in India for a minor ailment, a government deputy minister has said, days after a local news website reported that the retired general had gone to that country due to failing health.



The health of Chiwenga, 62, is closely followed in Zimbabwe because he is widely seen as the power behind President Emmerson Mnangagwa and the front-runner to succeed him. He led the coup that ousted long-time ruler Robert Mugabe in 2017.



A gaunt-looking Chiwenga was last seen in public last Tuesday, when he told state television he was not dying but gave no details about his condition. Since last year, Chiwenga’s hands have been visibly swollen with discoloured skin patches.



Information deputy minister Energy Mutodi said on Twitter Chiwenga “is recovering well from some minor abdominal ailment in Delhi, India.” He declined to make further comment.



His tweet was ridiculed by citizens in a country where government officials routinely seek medical help abroad while the public health system has collapsed and hospitals struggle to provide medicines to patients.



ZimLive.com, an online news agency, reported last Thursday that Chiwenga had been flown to India for treatment but did not say what he was suffering from.



Days earlier, a private daily newspaper had reported that Chiwenga had travelled to Cape Town, South Africa, for treatment, his second visit in four months.



Mnangagwa has dismissed rumours of a rift with Chiwenga. These gathered momentum after Mnangagawa promised action in response to a brutal security crackdown carried out against protesters last month while the president was abroad. Chiwenga was acting president at that time.



Reporting by MacDonald Dzirutwe

Here’s why Zimbabwean Vice President Constantino Chiwenga is receiving treatment in India

By <a href="https://theconversation.com/profiles/lauren-hermanus-403160">Lauren Hermanus</a>, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a> and <a href="https://theconversation.com/profiles/catrina-godinho-686367">Catrina Godinho</a>, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>


South African President Cyril Ramaphosa has unveiled a new plan for the country’s beleaguered state owned power utility, Eskom. During his <a href="https://www.gov.za/speeches/president-cyril-ramaphosa-2019-state-nation-address-7-feb-2019-0000">State of the Nation Address</a> on 7 February, Ramaphosa announced that Eskom would be unbundled into “three separate entities – generation, transmission and distribution”. These would all be established “under Eskom Holdings”. 

This announcement has been a long time coming. It was first proposed and formalised 20 years ago in the country’s <a href="http://www.energy.gov.za/files/policies/whitepaper_energypolicy_1998.pdf">1998 White Paper on Energy Policy</a>. Among other things, the policy sought to break Eskom into distinct smaller entities.

Ramaphosa’s speech was the seventh State of the Nation Address in which a president committed to structural reforms in the electricity sector. Former Presidents <a href="https://www.sahistory.org.za/archive/2001-president-mbeki-state-nation-address-9-february-2001">Thabo Mbeki</a> and <a href="https://www.sahistory.org.za/archive/2010-president-zuma-state-nation-address-11-february-2010-0">Jacob Zuma</a> made similar promises. Given that they never followed through, Ramaphosa’s announcement may sound all too familiar – and hollow – to some.

But we believe the unbundling will have far reaching consequences for South Africa’s energy sector. Ramaphosa offered a comprehensive outline of the plan. His commitment also comes at a time when <a href="https://www.parliament.gov.za/storage/app/media/Links/2018/November%202018/28-11-2018/Final%20Report%20-%20Eskom%20Inquiry%2028%20NOV.pdf">Eskom is mired in financial, operational and governance crises</a>. This time, it seems, an electricity reform may really be on the horizon.

<h2>Unbundling explained</h2>

<a href="https://www.powerfutures.org/updates/2019/2/6/what-is-unbundling-understanding-electricity-sector-unbundling-in-sa">Unbundling</a> is a type of structural reform. In the electricity sector, vertical unbundling refers to the separation of a utility’s generation, transmission, distribution and (sometimes) retail functions. Horizontal unbundling refers to the creation or entry of multiple players into each of these functions. The players may compete against each other to deliver the same service. 

South Africa is certainly not the first country to undergo this type of reform. It can learn from examples of similar processes in countries like <a href="https://elibrary.worldbank.org/doi/abs/10.1596/9780821395561_CH19">Kenya</a> and <a href="https://www.era.or.ug/index.php/sector-overview/uganda-electricity-sector">Uganda</a>. 

There are a number of benefits associated with unbundling. These include: 

<ul>
<li>more efficiency, resilience and sustainability through a tighter focus and clearer incentives within each functional area; </li>
<li>More competition and diversification of players; </li>
<li>Clarity in costs and functions of unbundled entities, which increases accountability for the purposes of governance and oversight; and,</li>
<li>Low-cost procurement driven by effective planning, competition and transparency.</li>
</ul>

Eskom currently operates as a vertically integrated monopoly. This means it performs the generation, transmission, distribution and retail functions. Its current structure and governance systems were cemented by apartheid’s internationally isolated security state. This outdated structure, which is characterised by a lack of transparency and accountability, has continued to shape the utility in the years since democracy.

There is a narrow window for municipalities and the private sector to play a role in distribution and retail, and generation, respectively. 

But Eskom still generates approximately <a href="http://www.eskom.co.za/Whatweredoing/SupplyStatus/Pages/SupplyStatusT.aspx">95% of the country’s electricity</a>. It exercises tremendous power in controlling access to the national grid. It has used its dominance to oppose national energy policy by, for example, <a href="https://www.iol.co.za/business-report/energy/disagreement-over-benefit-of-ipp-projects-for-sa-14277850">refusing to sign power purchase agreements</a> with independent power producers.

<h2>South Africa is lagging behind</h2>

This kind of monopolistic structure is unusual by international standards, in both developed and developing countries. And it often comes with operational inefficiencies, bloated costs and poor governance. 

Eskom has experienced all of these maladies. This has been demonstrated by its conduct with independent power producers, its role in the <a href="https://www.fin24.com/Economy/Eskom/eskom-powers-ahead-with-nuclear-plans-report-shows-20171117">controversial nuclear deal</a>, which has now been put on ice, and endemic corruption exposed by the portfolio <a href="https://www.parliament.gov.za/storage/app/media/Links/2018/November%202018/28-11-2018/Final%20Report%20-%20Eskom%20Inquiry%2028%20NOV.pdf">committee on public enterprises’ inquiry</a> into allegations of state capture at the utility.

These challenges are not unique to South Africa. But the country is behind the curve when it comes to addressing the structural factors and ensuring that its energy sector is well positioned to benefit from technological developments and shifting investment trends.

<h2>What Ramaphosa’s announcement means</h2>

President Ramaphosa has committed to the full vertical unbundling of Eskom. Generation, transmission and distribution companies will have their own boards and executive structures. This process will take time to implement, probably in the region of <a href="https://www.powerfutures.org/updates/2019/2/6/what-is-unbundling-understanding-electricity-sector-unbundling-in-sa">five years</a>.

It will require legislative and possibly policy reform. Due to the urgent need for transformation in the sector, the president said immediate attention should be given to the establishment of an independent, state owned transmission grid company. 

A good starting point for the unbundling process would be the establishment of an Eskom subsidiary with its own board. This subsidiary would oversee the migration of relevant assets and personnel. The intention would be to combine the transmission, system operation, power planning, procurement and buying functions. This separation is intended to leave the grid company free to contract independent power producers and Eskom generation without the conflict of interest that currently exists. As it stands, Eskom transmission is incentivised to give its own generation plants preference, blocking new technology and new entrants to bolster its own operations. 

It’s not only the president’s explicit commitment to a comprehensive reform plan that makes this announcement different from those that came before. The sector is in a fundamentally different situation compared to the early 2000s and early 2010s. 

Eskom is in the midst of extreme financial, operational and governance crises which it will not be able to solve alone, especially within the context of the complex <a href="https://irena.org/publications/2018/Apr/Global-Energy-Transition-A-Roadmap-to-2050">global energy transition</a>. 

But, to ensure this plan doesn’t go the way of its predecessors, Ramaphosa must ensure meaningful consultation and dialogue with all key stakeholders, as well as credible and sustainable plans to address the needs of all those who may be affected. Without this, the president’s announcement will meet the same fate as previous South African energy policy reform pronouncements. Reform is a complex social and technical process. It is not without risk and costs. This time, however, failure of implementation is not something the country can afford.<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/111480/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" />

<a href="https://theconversation.com/profiles/lauren-hermanus-403160">Lauren Hermanus</a>, Research associate, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a> and <a href="https://theconversation.com/profiles/catrina-godinho-686367">Catrina Godinho</a>, Research associate, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>

This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/why-south-africas-latest-plan-for-state-owned-power-giant-could-work-111480">original article</a>.

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