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Judge Jody Kollapen has reserved judgment in Eskom’s application to have the National Energy Regulator of South Africa’s (Nersa’s) rejection of its latest revenue application set aside as irrational and unlawful.

Following a virtual hearing on December 1, Kollapen indicated that he expected to publish a determination, along with his reasons, next week.

In its application, Eskom requested that the ruling be made before December 15 – a date that the utility argues needs to be met to allow sufficient time for Nersa to conclude the public consultations necessary for the implementation of a lawful tariff on April 1, 2022.

Should it be made earlier, Eskom advocate Matthew Chaskalson requested that the judgment include an order directing Nersa to publish Eskom’s application for public comment within two days of the ruling to give the public more time to respond.

Besides public consultations on the allowable revenue, the tariff must also be submitted to Parliament by March 15, 2022, to allow Eskom to implement the revised tariff on municipal customers.

Eskom approached the Gauteng High Court in October for an urgent review of Nersa’s September 30 decision to reject its fifth multiyear price determination (MYPD5) application, which the utility submitted to the regulator in June.

Nersa’s rejection was based on its argument that the methodology used by Eskom to calculate its allowable revenue was applicable for the MYPD4 period, which would end on March 30, 2022, and could not be used for a determination after that date.

Therefore, the regulator said that Eskom’s MYPD5 application, covering the three financial years from 2022/23 to 2024/25, had been made prematurely.

Nersa indicated that the utility should resubmit a one-year application for 2022/23 based on a new, yet-to-be-determined methodology, the principles of which were being canvassed as part of a belated public consultation process.

During Wednesday’s hearing Chaskalson described the situation as “Kafkaesque”, arguing that it was not possible for Eskom to make a new submission based on “amorphous” principles (which had not been communicated to the utility by the time of the court hearing) rather than on the basis of a clear methodology.

Chaskalson described the argument that the methodology had expired as “wrong in law and in fact”, noting that there had, to date, been only three methodologies approved by Nersa, against four allowable revenue determinations.

Eskom also attacked Nersa’s proposed remedy, which was outlined, together with a timetable, in a letter sent to it by the regulator on November 12.

Dubbed Option 4, Nersa proposed that pricing ‘principles’ – to be finalised before the end of November – should be used by the utility to determine trading tariffs for Eskom’s generation, transmission and distribution units, which are in the process of being restructured into separate businesses.

Eskom claimed not to have received the principles by the start of the court hearing, even though Nersa’s legal representative, Advocate Patrick Ellis, said he had been told by the regulator that these had been finalised.

Chaskalson argued that Option 4 would trigger consultations with the National Treasury and the South African Local Government Association (Salga) in line with the stipulations contained in the Municipal Finance Management Act, which would add a further 40-days to the process, making it impossible for a new tariff to be implemented on April 1.

Ellis acknowledged that a “lacuna” had indeed been created by Nersa’s failure to finalise a new methodology ahead of Eskom’s application, but insisted that the remedy outlined in Option 4 provided the only rational and legal solution.

Ellis argued that the option did not envisage any “reinvention of the wheel” and should, thus, not trigger any consultations with the National Treasury and Salga.

Rather, Eskom would be expected only to repackage its application to take account of the new principles, as well as changes under way bot...

The United Nations Conference on Trade and Development (Unctad) forecasts that global trade will reach about $28-trillion this year – an increase of 23% on 2020 levels, after stabilising in the second half of the year.

It notes, however, that the outlook for 2022 is “very uncertain”.

Global trade growth was about 24% in the third quarter – significantly higher than pre-pandemic levels, with an increase of about 13% relative to the third quarter of 2019.

The quarter-on-quarter growth of trade in goods was about 0.7%, while that of services was about 2.5%.

On a year-on-year basis, the trade growth rate for goods (22%) remains substantially higher than for services (6%).

Unctad notes that both the trend of a slower growth for the trade in goods, as well as a more positive trend for services, will probably continue in the fourth quarter of this year. As such, the organisation expects trade in goods to remain constant at about $5.6-trillion in the fourth quarter, while the trade in services will likely continue to slowly recover.

Overall, Unctad states that 2021 is set to be a strong year for international trade, with the value of global trade in goods and services expected to increase by about $5.2-trillion relative to 2020, and by about $2.8-trillion relative to 2019 – the equivalent of an increase of about 23% and 11%, respectively.

Further, trade in goods is projected to reach a record level of $22-trillion this year, while trade in services should be valued about $6-trillion – still slightly below its pre-pandemic level.

The positive trend for international trade this year is largely the result of the strong recovery in demand as a result of subsiding Covid-19 pandemic restrictions, economic stimulus packages and increases in commodity prices.

2022 UNCERTAINTY

Unctad’s forecast for 2022 remains uncertain as a result of several factors, including a slow economic recovery.

In this regard, Unctad reports that the strong economic recovery of the first half of this year slowed during the second half and that, in particular, China's economic growth in the third quarter was below expectations and lower than in previous quarters.

Rising commodity prices and inflationary pressures may also negatively affect economic prospects and international trade flows. In addition, many economies, including those in the European Union, continue to face Covid-19 related disruptions. These disruptions may negatively affect consumer demand and ultimately be reflected in trade statistics for the upcoming quarters, Unctad states.

In addition, 2022 is expected to be influenced by disruptions of logistic networks and increases in shipping costs; after this year was impacted by large and unpredictable swings in demand, which have resulted in an increased stress on supply chains.

Logistic disruptions and high fuel prices have further contributed to supply shortages and spiralling shipping costs. In particular, the backlogs across major supply chain hubs that have characterised most of this year could continue into 2022 and therefore negatively affect trade and reshape trade flows across the world.

Also, an ongoing global semiconductor shortage, if it persists into 2022, could continue to negatively affect production and trade in many manufacturing sectors.

Geopolitical factors and the regionalisation of trade flows could also weigh on trade in 2022, while governmental policies had the probability of affecting international trade.

In this regard, Unctad notes that governments are becoming increasingly supportive of domestic socioeconomic and strategic goals, with efforts towards a more socially and environmentally sustainable economy having the possibility of affecting international trade.

Unctad also notes that the additional borrowing of governments to sustain their economies during the Covid-19 crisis could pose continuous risks of financial instability, especially in the case of global inflationary pressures. As such, rising interest rates and obligat...

Pharmaceutical company Aspen’s wholly-owned South African subsidiary, Aspen SA Operations, has signed a nonbinding term sheet with Janssen Pharmaceuticals and Janssen Pharmaceutica NV, two of the Janssen Pharmaceutical Companies of Johnson & Johnson, that will form the basis for the negotiation of a definitive agreement on the manufacture and sale of an Aspen-branded Covid-19 vaccine throughout Africa.

The agreement will expand the existing technical transfer and manufacturing agreements between the parties to grant Aspen South Africa the rights to manufacture finished SARS-CoV-2 Covid-19 vaccine product from drug substance supplied by Johnson & Johnson; and to sell the finished form vaccine under Aspen branding to public sector markets in Africa through transactions with designated multilateral organisations and with national governments of member States of the African Union.

In addition, Johnson & Johnson is expected to grant Aspen an intellectual property licence for this purpose.

Aspen plans to launch this vaccine under the brand name Aspenovax.

The term of the grant of rights and supply of drug substance, subject to the signing of the definitive agreement, would be until December 31, 2026.

In a webinar on November 30 to discuss this deal, Aspen Pharma Group Strategic Trade group senior executive Stavros Nicolaou said this was “ground breaking” for African manufacturing and a milestone in the fight against Covid-19.

Johnson & Johnson Global Public Health Programs & Policy Global Strategy VP Dr Adrian Thomas added that the agreement would aid in addressing vaccine inequity in Africa and provide quality vaccine for Africa from a company based on the continent.

He highlighted that it comes at a pivotal time, when vaccination rates in the continent are much lower than in some developed countries.

He reiterated the company’s support for an African vaccine manufacturer, as well as its support for Aspen.

Thomas said it was pleasing to have reached an advanced stage of discussion, and is hopeful that once finalised, it would quickly allow Aspen to produce the vaccine with a drug substance from J&J as a first step – “an importance milestone for manufacturing in Africa”.

However, he emphasised that more had to be done, and called on the global community to prioritise a clear plan to scale up investment across Africa, especially in vaccine manufacture that includes local skillsets; with J&J committed to supporting this.

World Health Organisation (WHO) Africa regional director Dr Ngozi Okonjo-Iweala highlighted the that WHO was pleased to have played a role in facilitating this agreement, by providing a platform for collaboration and discussions.

Other speakers reiterated this as an important milestone for the continent, and noted that the deal will make a significant contribution to vaccine manufacture in Africa, and is an important step towards a reality in which the continent manufactures quality Covid-19 and other vaccine products itself, without relying on others.

It was also noted production of the vaccine under licence by Aspen now provides security of supply for Africa, as well as flexibly for the continent.

Aspen Group CE Dr Stephen Saad indicated that this agreement showcases that world class facilities exist in Africa; and dispels myths that Africa cannot be a manufacturing hub.

He said the agreement provided speed of access for IP.

He also thanked all the stakeholders for their efforts in ensuring that the continent could not be ignored and would get a seat at the table.

JSE-listed building materials group PPC has outlined a new decarbonisation strategy that includes firm targets for implementation by 2025 and 2030 and also outlines a long-term aspirational goal of transitioning its operations to net-zero carbon dioxide (CO2) emissions by 2050.

The strategy is contained in the group’s inaugural Task Force on Climate-related Financial Disclosures (TCFD) report and the targets have been set using the 2020 financial year as the base.

During its 2020 financial year, PPC emitted 756 kg of CO2 (kgCO2) to produce a ton of cementitious product, excluding Scope 3 supply-chain-related emissions.

By 2025, the company aims to reduce its Scope 1 and 2 emissions by 10% to 680 kgCO2/t and, by 2030, it is targeting a 27% cumulative reduction to 550 kgCO2/t.

Scope 1 emissions are direct process-related emissions, while Scope 2 are indirectly generated through the purchase of energy from a utility.

CEO Roland van Wijnen tells Engineering News that the focus on Scope 1 and 2 emissions is based on a PPC decision to commit only “to what we can control”.

He says PPC will invest R664-million to achieve the 2025 target, but says it is premature to attribute a value to the investments required to meet the 2030 goal, even though work is already under way on a decarbonisation project pipeline.

The bulk of the capital expenditure will be directed towards the introduction of calcined clay from its Riebeeck mine, in the Western Cape, as a substitute for clinker, to lower the energy intensity of cement production.

Over the period to 2025, the company will also enter into power purchase agreements (PPAs) with independent power producers for 30 MW of renewable-energy production across three facilities in South Africa and Zimbabwe, while also rolling out rooftop solar across its facilities.

The PPAs are expected to lower PPC’s electricity tariffs by up to 25%, even with the inclusion of battery energy storage back-up at its Zimbabwe operation.

“Our short-term focus is on reducing our carbon intensity using proven and ready technical solutions.

“The projects that we have embarked on will reduce our carbon impact but are also value accretive,” Van Wijnen explains, adding that efforts are also being made to replace coal with biomass and waste and using maintenance periods to introduce energy efficient solutions.

In the longer-term, PPC will also assess carbon capture, utilisation and storage opportunities, including the injection of CO2 into concrete, and the possible displacement of coal by green hydrogen.

However, PPC stresses that cement is a recognised hard-to-abate industry and that reaching net-zero will require collaboration across the value-chain and a supportive policy environment, including the possible introduction by South Africa of border tax adjustments on high-carbon cement imports.

“This report represents the first steps of PPC’s net-zero journey.

“It does not provide all of the solutions to the climate change challenges we face, rather, it sets out what we have learned about the impact of climate change on our business and our carbon reduction ambitions in the short, medium and long term.”

The TCFD also lists several opportunities for the group should South Africa and the region pursue greater climate resiliency.

Under a scenario aligned with a pathway that caps the average global temperature increase this century to below 1.5 °C above preindustrial levels, PPC assess the risks to cement demand largely being outweighed by opportunities to increase demand.

“Few alternatives to cement mean that the demand for cement continues despite growing circular economy drivers, energy alternatives, building and design process efficiencies, and aggregate recycling.

“A significant increase in demand is linked to an increase in cement-using renewable energy infrastructure that is needed to produce green hydrogen (a key technology for decarbonisation), and to increase electrification across sectors (transport and industry in p...

Various tourism entities have expressed their concern over the UK’s “knee-jerk” reaction to institute a temporary red list ban on six African countries, including South Africa.

Following announcements on November 25 that a new Covid-19 variant called B1.1.529 has been identified in Botswana, South Africa and Hong Kong, the British government confirmed in the early hours of November 26 it would add several countries to its red list.

The Flight Centre Travel Group went as far as to cancel their Black Friday sale which would be held on November 26, to assist those custumers who are affected by the announcement.

The Southern Africa Tourism Services Association (Satsa) says the rationale behind the decision is exaggerated and punishes countries like South Africa, which has advanced genome sequencing capability for detecting new variants.

“It is far too early to tell what the impact of this new variant will be. By imposing a blanket red list ban on several Southern African countries as a ‘precautionary’ measure, the UK sends a signal to the world that they don’t believe that their vaccination programme will effectively deal with the variant.

“This is particularly concerning when we have seen that Covid-19 vaccines have performed their role to reduce the severity of hospitalisation and death from the virus,” notes Satsa CEO David Frost.

The association further in a release cites infectious disease expert Professor Marc Mendelson explaining that there is nothing at this stage to indicate that the vaccine protection efficacy will change in the face of the latest variant.

“Covid-19 vaccines have proven themselves robust against all Sars-CoV-2 variants to date,” he says.

University of the Witwatersrand Faculty of Health Sciences Dean Shabir Madhi says people need to come to accept that breakthrough infections will remain with the first-generation vaccines. “The sooner we come to accept it, the quicker we can recalibrate how to move forward.”

Madi adds that vaccines are primarily about preventing severe disease. In the case of the new B1.1.529 variant, he believes people should learn from what transpired with the Beta variant, which also showed resistance to vaccine-induced antibodies.

Nevertheless, the vaccine still conferred high protection against severe cases of Covid-19.

The UK’s red list reaction comes at a time when South Africa’s tourism and hospitality sector desperately needed an active December to mitigate against losses experienced in 2020’s festive season, for which the UK is a key inbound market.

The Association of Southern African Travel Agents (Asata) says this is Groundhog Day for the South African travel industry, putting hotels, airlines and travel businesses in a very difficult situation.

“The world will unfortunately need to learn to live with Covid-19 variants for the foreseeable future. While we await more clarity, there is currently no scientific evidence that the new variant is more resistant to the vaccine.

“Covid-19 vaccines are in fact the most effective way to protect yourself against the virus, as they significantly reduce the risk of serious illness and transmissibility,” says Asata CEO Otto de Vries.

The Federated Hospitality Association of Southern Africa (Fedhasa) hopes that the red list and temporary flight ban will be lifted swiftly as scientists unpack the extent to which the Covid-19 vaccines will be effective against the new variant.

The association says new variants are discovered all the time, often without making any major impact and “we hope our advanced scientific capability can find, in this case, that there is little to worry about”.

Fedhasa chairperson Rosemary Anderson points out that, despite the direct impact on tourism from the travel restrictions, these decisions have widespread repercussions, including the possible dissuading of British travellers to visit South Africa and also other key markets following suit with their own restrictions.

She says there is no question that South Afri...

Global glass and metal packaging supplier Ardagh Group intends to acquire 100% of the ordinary shares of South African glass manufacturer Consol Holdings for R10.1-billion.

The transaction will include Consol’s operations in South Africa, Nigeria, Kenya and Ethiopia.

Consol operates four glass production facilities and it serves a range of international, regional and domestic customers, principally in the beer, wine, spirits, food and non-alcoholic beverage sectors.

The glass manufacturer reported revenues of about R9-billion in the financial year ended June 30, with sales in South Africa having contributed about 90% of the overall revenues.

Ardagh expects glass consumption in Consol’s markets to continue increasing on the back of population growth, rising income levels and shifts to premium one-way sustainable glass packaging.

“We are very pleased to expand our European and North America presence in glass packaging into Africa with the acquisition of Consol, a high-quality business led by an excellent management team.

“Consol is a market leader in the region, with great relationships across a diversified domestic and multinational customer base.

“We look forward to welcoming Consol to the Ardagh family and to investing in the long-term growth of the African market, driven by consumer trends and rising sustainability awareness,” Ardagh chairperson Paul Coulson comments.

“The Consol team has built a great business, with an established reputation for delivering quality products to a growing customer base. Ardagh’s long-term presence in, and commitment to, glass packaging, makes it the ideal owner to continue this progress,” adds Consol chairperson Bruce MacRobert.

Completion of the acquisition is subject to certain conditions, including regulatory approvals, which are expected to be obtained by the second quarter of 2022.

Once the transaction is approved, it is said to be “an excellent strategic fit” for Consol that enables continued growth on the African continent by leveraging off Ardagh’s proven glassmaking capabilities, technical expertise and international customer and supplier base.

Barclays acted as exclusive financial adviser to Consol and Citigroup acted as exclusive financial adviser to Ardagh.

In a State of Transport Entities briefing on November 26, Transport Minister Fikile Mbalula confirmed the likelihood of a decision on e-tolls being announced by Finance Minister Enoch Godongwana when he delivers the Budget speech in February next year.

He mentioned that discussions regarding the e-toll matter and whether it would be scrapped were still ongoing in Cabinet.

The delay in this decision has been raised as a concern by the Auditor General (AG) in its yearly evaluation of the Department of Transport (DoT) and its 13 public entities, particularly highlighting the South African National Roads Agency Limited (Sanral) and the Road Traffic Infringement Agency as impacted entities.

Mbalula explained that whether or not e-tolls were scrapped, it would have financial implications and those implications needed to be weighed up, particularly how government could generate revenue otherwise.

In his briefing, Mbalula said revenue generation was particularly relevant in a time when Covid-19 had had a profound impact on the transport sector, with no mode of transport having been spared.

The department’s budget for the current financial year has been R66.7-billion, of which R65-billion constitutes transfers and subsidies to entities, to advance the implementation of the department’s mandate.

Moreover, Mbalula said the AG had also noted improvements across all other transport entities and stated that the DoT had been emphatic in its message of good governance.

The number of entities that have achieved clean audits has increased from four to five, while another five entities achieved “unqualified” audits. The balance of audits were still pending.

Notably, Mbalula said the AG had observed that the entities that were doing well to create stability and drive clean administration were the Cross-Border Road Transport Agency, South African Civil Aviation Authority, the Railway Safety Regulator, the Driving Licence Card Account and the Ports Regulator of South Africa.

Notwithstanding, irregular expenditure remains a source of concern, Mbalula noted. The Passenger Rail Agency of South Africa (PRASA), Airports Company South Africa (ACSA) and Sanral, in particular, were culprits in this regard, the AG had found.

PRASA’s irregular expenditure amounts to R742-million in the current financial year, while Sanral and ACSA have incurred R175-million and R282-million in irregular expenditure, respectively.

In terms of wasteful expenditure, ACSA is the largest contributor to the tune of R75.9-million, followed by PRASA at R15.3-million and the Road Traffic Management Corporation at R7.5-million.

Mbalula acknowledged that strengthened capacity to deliver quality services to South Africans required the DoT and its entities to ensure professionals with requisite skills, qualifications and drive were recruited.

“The board has a responsibility to ensure that labour laws and internal policy are followed to the letter when dealing with incidents of employees.”

He mentioned that a number of key policy developments intended to enhance the department’s service delivery agenda were the Economic Regulation of Transport Bill, which was before Parliament. Its promulgation was expected to transform the face of the industry and make decisive interventions to level the playing field and allow for greater economic participation by small businesses.

The consolidation of economic regulation under a single institutional arrangement would ensure effectiveness, said Mbalula.

He explained that ports and airports regulation, for example, would be among those immediately affected by the promulgation of this Bill.

Moreover, the competitiveness of South Africa’s ports remains a key strategic driver of economic growth that will be given priority by policy direction.

“The monopolies in rail affect competitiveness and stifle efficiencies in both freight and passenger rail. The outstanding issues of access to Transnet and PRASA’s network to each other will be resolved speedily,” M...

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about President Cyril Ramaphosa's answers to sceptical questions from lawmakers in Parliament about the R131-billion just transition financing offer announced on the sidelines of COP 26, about what South Africa should seek to secure during upcoming talks on the proposed financing package and about developments in the green hydrogen space in Namibia and South Africa.

President Cyril Ramaphosa says that government will not allow itself to be “short changed” or lumped with conditions that will undermine its developmental objectives when negotiating the details of a $8.5-billion climate-finance package with developed countries over the coming months.

Responding to questions in Parliament on the issue, including one posed by Economic Freedom Fighters leader Julius Malema, Ramaphosa said that South Africa’s negotiating stance would be premised on ensuring that the eventual transaction took account of South Africa’s social and economic challenges, while affirming “our right to develop our economy in a sustainable and inclusive manner”.

South Africa signed a political declaration with France, Germany, the UK, the US and the European Union on the side-lines of COP26 in early November, opening the way for a financing facility to support South Africa’s ‘just transition’ from coal over a three- to five-year period.

The declaration made provision for the establishment of a task force, comprising representatives from South Africa and the international partners, to finalise the funding mechanism, including the breakdown between grants and concessional loans.

Ramaphosa told lawmakers that South Africa intended pursuing the talks “in the most transparent manner” and would set up a “top class” team of financial advisers to interrogate the offer.

“A number of the key role players in our country have been working with us on this, so I don't really foresee us being short-changed in any way.”

The President also committed to allowing representatives from the trade union movement and civil society to make input on the transaction, as well as on the priority areas that required financing, such as the retraining of workers in the coal value chain.

In addition, South Africa would argue that the transaction provided an opportunity for developed countries – which have contributed disproportionally to the build-up of greenhouse gas emissions in the atmosphere – to honour their commitments to assist developing countries, such as South Africa, to mitigate and adapt to climate change.

Ramaphosa said these countries had been “dilly dallying” in honouring their responsibilities and “we must make sure that they live up to their commitments”.

LOAD-SHEDDING TO REMAIN FOR SOME TIME

The President also faced probing questions on the issues of load-shedding, the competence of the Eskom board and executive team, the utility’s financial position, as well as the role that independent power producers (IPPs) and municipalities should play in stabilising electricity supply.

While acknowledging that load-shedding would “remain a possibility for some time to come” he outlined the various steps that government was taking to diversify sources of supply and reduce the current reliance on Eskom.

He highlighted the revitalisation of renewable procurement programme, which saw 25 more bidders selected to build new wind and solar plants, as well as the much-delayed emergency procurement round.

The reform allowing for the connection of distributed generation plants below 100 MW in size without a licence was also held up as one of the solutions to load-shedding and to addressing the current 4 000 MW to 6 000 MW supply deficit.

Leader of the official opposition John Steenhuisen, who heads the Democratic Alliance, sought a commitment from Ramaphosa that government would not obstruct municipalities from procuring electricity from IPPs as a way of reducing the risk of load-shedding.

The President responded by saying that municipal generation and procurement was part of government plans for improving security of supply and lowering the dependency on Eskom, which remained the “biggest risk our country faces”.

“Be assured that the national government is not going to obstruct the capabilities of local government at all,” Ramaphosa said in direct response to Steenhuisen.

He acknowledged that no solution had yet been found to Eskom’s unsustainable debt, ...

Naamsa | The Automotive Business Council says it welcomes the announcement of the next step in government’s clean fuels programme, set to become effective in September 2023.

The Department Mineral Resources and Energy (DMRE) earlier this year gazetted the introduction of the next phase of the Clean Fuels Programme – CF2 – in South Africa.

“The introduction of low-sulphur petrol and diesel (sub-10 ppm) and other revised fuel parameters nationally is progressive, and in line with the climate change considerations, and will enable vehicle manufacturers to market the latest technology fuel-efficient and low-emission new-motor vehicles in South Africa,” notes Naamsa.

“Once the fuel regulations are implemented, a significant reduction in vehicle emissions in respect of the entire vehicle population can be expected.

“The new measures to improve enforcement relating to mandatory record-keeping of fuel purchases by retailers are also essential for combating the increasing import and sale of grossly sub-specification fuels currently seen in the South African market,” adds Naamsa.

“Furthermore, the progressive move to cleaner fuels supports the South African government commitment to the twenty-sixth Conference of Parties United Nations Framework Convention on Climate Change, where government secured R131-billion to steer the country towards green energy.”

Naamsa says the local automotive industry contributes 4.9% to the country's gross domestic product, accounts for 30.1% of the country's manufacturing output and employs more than 468 502 people across the value chain.

It is the country's fifth-largest exporting sector out of 104 industries and accounts for 13.9% of total domestic exports.