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Finance Minister Enoch Godongwana indicated on Thursday that government regarded the revenue windfall that had arisen as a result of higher commodity prices as temporary and confirmed that fiscal consolidation would, thus, be sustained to reduce the Budget deficit and stabilise the national debt.

However, he also announced that, barring any major new shocks or unbudgeted spending commitments, the consolidation would yield a primary fiscal surplus in 2024/25, bringing fiscal consolidation to an end.

But over the coming three years, debt-service costs, which are estimated at R1-trillion for the period on a debt stock of R4-trillion, will be the fastest growing spending item, rising at a yearly nominal average of 10.8%, and crowding out spending on service delivery.

Debt-service costs are expected to rise from R269.2-billion in 2021/22 to R365.8-billion in 2024/25, becoming larger than the health and police budgets.

The easing of Covid lockdown restrictions, together with a spike in commodity prices, allowed Godongwana to present his maiden Medium-Term Budget Policy Statement (MTBPS) against the backdrop of an economy that had recovered more quickly than anticipated, despite the setback of the July riots.

Real gross domestic product (GDP) is now forecast to grow by 5.1% in 2021, up from the February projection of 3.3%, while output is expected to return to pre-pandemic levels in 2022 rather than 2023.

However, growth of only 1.8%, 1.6% and 1.7% is forecast for 2022, 2023 and 2024 respectively, which is short even of market expectations and suggestive of limited scope for the structural reforms to begin having a significant growth impact over the coming three years.

The backdrop to the MTBPS was also buoyed by the recent rebasing exercise undertaken by Statistics South Africa, which raised nominal GDP in level terms, which automatically improved deficit and debt ratios to GDP, despite actual revenue, expenditure and debt stock having not changed. On average, nominal GDP increased by R489.8-billion between 2016/17 and 2020/21, triggering a “mechanical decline” in the debt-to-GDP ratio, from 78.8% to 70.7% in 2020/21.

The MTBPS also indicates that gross loan debt will stabilise at 78.1% of GDP in 2025/26, compared with a 2021 Budget estimate of 80.5% of GDP, while the consolidated deficit will narrow from 7.8% of GDP in 2021/22 to 4.9% in 2024/25.

The surge in commodity prices significantly improved the revenue outlook, with the gross tax revenue estimate for 2021/22 having been revised up by R120.3-billion, to R1.49-trillion, compared with the projection in the 2021 Budget. Corporate taxes, underpinned by higher mining industry profits, will contribute R75.5-billion of that additional R120.3-billion.

Collections remain well below pre-pandemic expectations, with revenue from 2020/21 through 2022/23 forecast to be R284.7-billion below the 2020 Budget projections

SPENDING ADJUSTMENTS & PRESSURES

That windfall had already enabled government to announce a R37.9-billion fiscal package following the July riots, which included the reintroduction of the temporary R350-a-month special Covid-19 social relief of distress grant until the end of March, as well as additional expenditure for insurance claims, security expenses and small business support.

Godongwana acknowledged that calls had been made for the R350 grant to be extended beyond the end of March 2022 and transformed into a basic income grant, which at the current level would add R40-billion to yearly expenditure.

He stressed that should such a choice be made, it could not dislodge the fiscal framework and would, thus, need to be funded either by new revenue sources, or through a reprioritisation of spending within the current envelope.

He added that the call for a basic income grant was not the only spending pressure being faced, with the National Treasury dealing with many other requests outside of the current spending plans, that amounted to about R67-billion.

“Critical to the f...

Eskom CEO Andre de Ruyter reports that the State-owned utility has already taken some initial steps to ensure that the $8.5-billion political declaration signed at COP26 in early November is urgently converted into a practical commercial agreement to support its just transition programme.

Addressing the second of what have become daily briefings on the state of the system, which has once again succumbed to an intensive period of load-shedding, De Ruyter reported that follow-up discussions had been held on Wednesday with one of the multilateral lenders involved in the declaration to assess whether the flow of funds could be accelerated.

On November 2, South Africa, France, Germany, the UK and the US, along with the European Union, announced a ‘Just Energy Transition Partnership’ to support South Africa’s decarbonisation efforts over a three- to five-year period.

A funding commitment of $8.5-billion was announced, which Eskom described as the first step in a partnership that could be extended, particularly given that Eskom alone required R400-billion ($26-billion) to support the generation, transmission and distribution investments required to facilitate a shift from coal to renewables.

While the government-to-government declaration covered not only electricity but also the manufacture of electric vehicles and the development of green hydrogen assets, De Ruyter nevertheless confirmed that the lion’s share of the initial funding would be directed to Eskom.

The utility has developed a pipeline of energy and social upliftment projects, including several that are directly linked to the repowering and repurposing of coal stations that are scheduled for decommissioning in the coming decade.

“There's a lot of urgency also from the lender group to ensure that this does not remain an empty political commitment . . . [and] we now need to translate that into a practicable commercial agreement that will allow us to make use of these funds to start our just energy transition process.

“Earlier today I already had the first engagements with one of the lenders to see how we can accelerate getting that money on the ground and ready to do some good work for South Africa as soon as we can,” De Ruyter said during the briefing.

Rudi Dicks, who is programme management officer in the private office of President Cyril Ramaphosa, has indicated that South Africa will be seeking to negotiate “highly concessional” terms.

“It shouldn’t be equal to or just below the kind of financing that we could secure on the open bond market,” he said during a briefing at COP26 this week.

The declaration makes provision for the establishment of a task force, comprising representatives from South Africa and the international partners, to finalise the funding mechanism.

The task force would negotiate, over the coming six months, the ratio of grants to loans, as well as give greater definition to the nature of the concessional loan terms and their tenure.

De Ruyter said the negotiations would commence “very shortly” to ensure that the funds were released.

The announcement has received a mixed reception locally and some confusion has also arisen about South Africa’s commitment to the deal in light of statements made by both Forestry, Fisheries and the Environment Minister Barbara Creecy and Mineral Resources and Energy Minister Gwede Mantashe.

Creecy confirmed that South Africa had not taken part in a pledge, signed by 40 countries and institutions, to end coal financing, while Mantashe told oil and gas investors that Africa should resist developed-country attempts to pressurise Africa to move away from all forms of fossil fuels.

De Ruyter said that the Just Energy Transition Partnership was a “completely separate issue” from what was being referred to by the two Ministers.

“[Their statements have] got nothing to do with the loan agreement . . . it's got to do with a commitment not to pursue further coal projects,” De Ruyter explained, refusing to be drawn on the policy de...

Information and communications technology (ICT) group Vodacom Group plans to acquire a strategic stake in Community Investment Ventures Holdings’ (CIVHs') fibre assets under a newly formed InfraCo entity.

The InfraCo will hold all material assets currently owned by CIVH subsidiaries carrier-grade dark fibre provider Dark Fibre Africa (DFA) and fibre network operator Vumatel, as well as certain Vodacom-owned fibre assets.

Vodacom Group will hold a co-controlling 30% equity interest, with option to acquire an additional 10% stake in InfraCo to bring its share to 40%.

“Our agreement with CIVH aligns with Vodacom Group’s strategy to build high quality and resilient fixed and mobile networks with and through selected strategic partnerships across the African continent. It also supports Vodacom’s purpose-driven plan to assist the government in rebuilding the economy post-Covid-19,” said Vodacom Group CEO Shameel Joosub.

The deal, subject to regulatory approvals, is expected to transform Vodacom’s South African fibre business and accelerate the purpose-led group’s ambition of connecting people for a better future.

“The transaction will enhance and scale Vodacom’s fixed offerings across both the consumer and business segments and leverage a shared cost model to accelerate the provision of open-access infrastructure in South Africa,” he explained.

“The South African consumer will benefit from the fresh capital injection and shared cost approach as it will significantly scale-up the fibre reach of the InfraCo’s various fibre brands, including smaller towns. This is expected to have a positive impact on both Vodacom’s and the country’s network quality and resilience, which in turn, will help fast-track South Africa’s connectivity rate.”

CIVH Group CEO Raymond Ndlovu said the milestone investment will boost its ambitious fibre roll-out programme across South Africa and assist in narrowing the digital divide by enabling affordable access to connectivity in some of the most vulnerable parts of our society.

“Ultimately, it will result in much needed inclusive economic growth.”

Vumatel, which builds, owns and operates a high-speed fibre-to-the-home (FTTH) network using a wholesale open-access model that passes more than 1.2-million homes, has deployed over 31 000 km of fibre infrastructure across South Africa.

In terms of the agreement, Vumatel’s fibre network will be merged with Vodacom’s FTTH and fibre-to-the-business (FTTB) assets.

DFA specialises in building, installing, and operating a national metropolitan fibre network, which currently spans 13 000 km and 37 000 connected circuits, supplying a range of dark fibre and actively managed fibre products to enterprise customers.

Vodacom will pay for the transaction through a combination of R6-billion cash and the contribution of its FTTH, FTTB and business-to-business transmission access fibre network infrastructure to the InfraCo, at a valuation of R4.2-billion, in return for new shares in InfraCo.

Vodacom will acquire further secondary shares from CIVH sufficient to increase its shareholding to at least 30% in the InfraCo at a pre-agreed formula.

Information and communications technology (ICT) giant Vodacom Group plans to acquire a controlling stake in Vodafone Egypt for R41-billion.

The group, which announced on November 10 that it had agreed terms with Vodafone, will fund the acquisition of a 55% stake in Vodafone Egypt by issuing 242-million new ordinary shares at R135.75 a share and R8.2-billion in cash.

This values the proposed transaction, which remains subject to regulatory and shareholder approvals, at about R41-billion.

“Acquiring a majority stake in Vodafone Egypt would cement Vodacom Group’s position as Africa’s leading techco by advancing our strategic connectivity and financial services ambitions while increasing our total population coverage on the continent to over half a billion people and more than 40% of Africa’s gross domestic product,” said Vodacom CEO Shameel Joosub.

Following the proposed transaction, Vodacom Group will cover a population of more than 500-million across the Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Lesotho, Mozambique, South Africa and Tanzania.

He commented that the proposed deal would provide shareholders a revenue and profitability diversification opportunity that had the potential to accelerate the group’s medium-term operating profit growth potential into double digits.

“Vodafone Egypt is ideally positioned to capture growth in a burgeoning ICT market,” he said, noting that Vodafone Egypt was the largest mobile network operator in Egypt with 43% revenue market share, offering a range of integrated telecommunications services including voice, data and mobile money services to 43-million consumer and enterprise customers.

Vodafone Egypt has a proven track record of consistently delivering strong revenue growth, with a compound annual growth rate of 14% in revenue from 2017 to 2021, as well as generating attractive margins, strong free cash flow and a return on capital employed of 31% for the financial year ended March 31.

Further, Vodafone Egypt is the country’s largest mobile wallet provider through Vodafone Cash, which boasted almost 90% of mobile wallet transactions as at August 2021.

“Vodacom Group shareholders are expected to gain significant value by scaling its multi-product strategy or System of Advantage into Egypt. With more than 80% of Egypt’s 100-million population unbanked, there is a significant opportunity to leverage its financial services platforms, global partnerships and best practices into this largely untapped market,” Joosub added.

Vodacom also believes that there is attractive synergy potential through the combination of Vodafone Egypt’s software factory with Vodacom Group’s existing big data capabilities, closer cooperation in scaling pan-African enterprise and Internet of Things solutions, enabling the proliferation of digital services through a platform approach and talent sharing.

“In 2017 we bought a strategic stake in Safaricom from Vodafone that has proven to be value accretive. We said at the time that we had negotiated an attractive price for Safaricom and we believe this to be the case with Vodafone Egypt,” he said.

As the transaction is third-party related, Vodacom implemented the appropriate governance controls to ensure the transaction was and is negotiated, evaluated and executed on an arm’s length basis.

Vodacom Group appointed PwC to provide a fairness opinion on the proposed transaction, which the group will include in a circular to be distributed to shareholders ahead of a general meeting in January 2022 where minority shareholders will vote on the matter.

Vodafone, which currently holds a 60.5% stake in Vodacom Group, will be precluded from voting on this at the meeting.

“Once all of the conditions precedent are met pertaining to the proposed transaction, the acquisition is expected to conclude before March 31, 2022. On completion of the acquisition, Vodacom Group will simplify its dividend policy to at least 75% of headline earnings,” Joosub noted.

The current policy is ...

Liquidity constraints and procurement problems continue to impede Eskom’s reliability maintenance recovery (RMR) programme, with CEO Andre de Ruyter reporting that South Africa’s public procurement rules have undercut the utility’s efforts to swiftly appoint the competent contractors needed to undertake the programme.

In a briefing hosted during another bout of Stage 4 load-shedding – which is expected to be de-escalated to Stage 3 on Wednesday and then Stage 2 on Friday, before being cancelled entirely over the weekend – De Ruyter said the procurement system “really does not lend itself to this type of maintenance programme”.

The RMR was first unveiled in early 2020 and was punted as the solution to help Eskom stabilise its coal fleet to the point where the risk of load-shedding would be materially reduced, albeit not eliminated, by October this year.

In the event, Eskom will breach 1 000 hours of load-shedding for the first time this year, making it the worst-ever period for the implementation of rotational cuts.

Under the Public Finance Management Act (PFMA), the utility is required to apply to the National Treasury for permission to deviate from the rules, with the average response time currently exceeding 77 days.

“You can imagine that there are a large number of these requests that get made and that it has had a negative impact on our ability to appoint the necessary competent contractors and to do so swiftly . [and] to make sure that those contractors are on site, properly resourced with the right spares and the right skills at their disposal in order to execute on the maintenance programme.”

COO Jan Oberholzer, therefore, confirmed that Eskom was “absolutely not” satisfied with the competence of all the contractors currently performing maintenance at its coal power stations.

Employing incompetent contractors, he indicated, was linked directly to the procurement rules, which “we are actually addressing with Treasury”.

Likening the coal plants to a Mercedes-Benz vehicle, he said it was not always straightforward, owing to the procurement rules, to take the car to a “Mercedes-Benz garage that employed a Mercedes mechanic and used Mercedes spares”.

“In the past, you had to go out on open tender and appoint whoever was the cheapest . . . and this is giving us, in some areas of the business, significant challenges.

“But we are discussing this with our colleagues at National Treasury to have a look at how the PFMA should be applied at Eskom, specifically in the current situation that we find ourselves in.”

Likewise, the RMR had been affected by the group’s liquidity problems, which were resulting in the release of insufficient funding, which was also not always flowing in time for maintenance to be fully planned and executed.

Oberholzer has indicated previously that R11-billion is required yearly to maintain the generation business and that at least 24 months is needed to plan a major outage.

“This financial year, we were given R3-billion in April and only in September were we allowed an additional R3-billion,” Oberholzer said, explaining that the late release of the funding had made it difficult to both plan and execute this year’s maintenance schedule.

In the normal course, finances should be released at least six months prior to the start of an outage to secure the spares and services required, but De Ruyter said that there would have been a risk of default had the cash been released any earlier than it was.

Funding had also not year been secured for the RMR for the next two financial years.

De Ruyter said the liquidity crunch and procurement issues, together with the hard Covid lockdowns of 2020, had delayed the roll-out of the RMR and had also meant that it could not meet its initial target of having stabilised the coal fleet by October.

He once again reiterated that the risk of load-shedding would persist for as long as South Africa did not add the 4 000 MW to 6 000 MW required for system adequacy and to create the t...

If South Africa is unable to secure highly concessional terms from the international partners that have offered $8.5-billion to support the country’s energy transition and to provide social protection for workers and communities associated with the coal value chain, it will not pursue the transaction, an official in The Presidency said on Tuesday.

Speaking at an event hosted on the sidelines of COP26, Rudi Dicks, who is programme management officer in the private office of the President, emphasised that no agreement had yet been concluded and that South Africa could still “walk away if we feel that the conditions are too onerous”.

“[The funding] has to be highly concessional – it has to benefit us.

“It shouldn’t be equal to or just below the kind of financing that we could secure on the open bond market,” he said.

On November 2, South Africa, France, Germany, the UK and the US, along with the European Union, announced a ‘Just Energy Transition Partnership’ to support South Africa’s decarbonisation efforts in line with the country’s updated Nationally Determined Contribution emissions goals.

The announcement has received a mixed reception with some lauding it as an important breakthrough in South Africa’s shift from coal to renewables, and others raising concern that the deal could result in the precipitous closure of coal power stations, with negative consequences for electricity supply and the economy.

The declaration was unveiled against the backdrop of a return to an intensive phase of load-shedding, triggered, yet again, by the deteriorating performance of Eskom’s aging and under-maintained coal fleet, the energy availability factor of which has fallen to below 65%.

Dicks said that the “nuts and bolts” of the deal, including the sources and mix of funding and whether any government guarantees would need to be extended, still had to be negotiated.

The declaration make provision for the establishment of a task force, comprising representatives from South Africa and the international partners, to finalise the funding mechanism.

The task force would negotiate the ratio of grants to loans, as well as give greater definition to the nature of the concessional loan terms and their tenure.

“The devil is in the detail, of course, and that’s the next step,” Dicks said, adding that the initial focus would be on Eskom projects, even though the scope of government’s just transition planning had been extended to the manufacture of electric vehicles and the development of a green hydrogen industry.

Dicks confirmed that any deal would be concluded by government rather than Eskom, given that the facility would be used to support initiatives outside of the electricity sector.

South Africa would be assembling an expert finance team, involving participants from both within and outside of government, “to enter into very tough negotiations over the next six months to secure the offer that has been made”.

The team would assess all the risks, including those relating to South Africa’s volatile exchange rate, which Dicks flagged as a significant risk factor.

Speaking on the same platform, Eskom just transition office head Mandy Rambharos underlined the utility’s stance that it saw the funding as only the first step in a far larger programme that would necessarily involve both Eskom and the private sector.

Eskom’s investment pipeline included a mix of generation, transmission and distribution projects collectively valued at about R400-billion ($26-billion) and the funding would be insufficient, she said, to guarantee long-term security of supply.

On the generation front, Eskom has projects with a combined capacity of only 8.5 GW, while it would be decommissioning 22 GW of coal, which would have to be replaced by a renewables fleet of up to 60 GW.

It also needed to invest about R170-billion to add additional grid capacity, including the building of 8 000 km of transmission lines.

Rambharos said that beside the financing, it was important that the ...

Government has committed to speeding up policy changes in the road-freight sector following recent protests by truck drivers against foreign nationals filling job opportunities they believe should go to local drivers, as well as what they view as the lack of regulation in the road-freight industry.

A subsequent meeting between the aggrieved drivers, as well as the ministers of Employment and Labour, and Home Affairs, the Deputy Minister of Police, officials of the Department of Transport (DoT), and other affected departments, has now seen government commit to “speedily address” some of the issues that had been raised.

These include the employment of foreign nationals, especially undocumented foreign nationals, as well as those who arrive in the country as visitors, but end up securing employment in the sector, which is illegal.

“There are [departments of] Home Affairs and Employment and Labour policy initiatives to address migration and related policy initiatives,” said Minister of Employment and Labour Thulas Nxesi.

“I would like to appeal to those who feel aggrieved to desist from intimidation, road disruptions, and the undermining of existing laws and structures.

“We made a promise to meet the industry and we are committed to ensure that a workable solution is found through legislation and other means. We also encourage that existing forums at national and provincial level take the opportunity to find solutions.”

Minister of Home Affairs Aaron Motsoaledi added that the new Border Management Authority (BMA) is being set up, and that it will soon be engaging the trucking sector.

Home Affairs is to ensure that border management is strengthened “to weed out undocumented drivers”.

“In the next few weeks, there will be far-reaching leadership and policy interventions by the BMA, as well as a number of initiatives that we have been involved in to resolve issues around this matter. South Africans should expect a big difference going forward,” said Motsoaledi.

The DoT’s role in the process is to address issues around cross-border transport relations; the validity of foreign-driver issued licences; fake licences; prosecution of non-complying employers; and the potential discrimination against local drivers by the industry.

Joint inspections to address non-compliance in the freight sector are also set to intensify, with law enforcement, including immigration inspectors and the South African Police Service, to play a “much more active role”.

The government delegation also committed to scan all migration and transport legislation impacting negatively on local drivers.

According to data from WeBuyCars a vehicle is most likely to change ownership five to six times during its lifetime.

“New car owners tend to keep their vehicles for six years, and second-hand car owners for three,” says WeBuyCars executive director Faan van der Walt.

Used-car trader WeBuyCars sells more than 9 000 vehicles a month.

“When looking at buying trends in various provinces over the last few months, Gauteng, Western Cape and KwaZulu-Natal equals to about 83% of all purchases,” says Van der Walt.

“Gauteng accounts for 43%, the Western Cape for 25% and KwaZulu-Natal for 15%. The rest are split between the other provinces.”

WeBuyCars data also shows that a typical KwaZulu-Natal buyer tends to buy and sell more frequently than customers from other provinces, selling a newer vehicle of higher value so that they can trade up.

Western Cape buyers tend to buy with cash, hold onto their cars for longer and maintain their cars’ service histories, while Gauteng buyers tend to be a combination of the two.

“Twenty years ago, when WeBuyCars was established, we did not aim to become such a large business, but a combination of luck, circumstances and a deep understanding of delivering based on what our customers want and need, has allowed us to grow into a significant business with turnover close to R12-billion,” says Van der Walt.

“Over the years we have relied greatly on industry and provincial trends when making business decisions. We need to know where consumers are located and what their needs are so that we can provide them with the best selection that meets their requirements.”

This is especially true for deciding which vehicles will be sold in which province.

Insights have shown that Volkswagen is the most popular WeBuyCars brand in Gauteng, KwaZulu-Natal, the Western Cape, the Eastern Cape and Mpumalanga.

Ford reigns supreme in the Free State and Limpopo, while Toyota takes the lead in the North-West and Northern Cape.

Most of the vehicles bought by WeBuyCars are from people between the ages of 30 and 44. This age group roughly accounts for around 37% of all purchases.

Second in line is the 45 to 59 age group, accounting for 28% of all purchases.

“These age group trends do not differ across the provinces. We also see that the age group we buy the least number of cars from are the 75 to 89 age bin, which roughly accounts for 2.6% of all purchases,” says Van der Walt.

The price bracket in which most WeBuyCars vehicles are purchased is between R40 000 to R80 000, with the R120 000 to R200 000 mark being a strong second.

Aligned with the surge in online purchasing and auction sales, WeBuyCars has seen its Gauteng branches make up more than half of its total online sales.

Midstream is the business’ best performing branch (out of four Gauteng branches) with reference to online vehicle sales, currently accounting for around 25% of sales.

WeBuyCars will soon add another Gauteng branch, with the opening of a facility at the Dome.

Mercedes-Benz Vans South Africa (MBVSA) has taken the conversion of the Sprinter panel van into the Sprinter minibus taxi in-house at its Eastern Cape facility.

“To deepen our commitment to the local taxi industry and in support of the South African economy, our 23-seater Sprinter Inkanyezi vehicles are now being converted locally at our East London conversion facility,” says MBVSA product and marketing head Marinus Venter.

“This means that taxi owners will be able to immediately operate and earn income from the purchased vehicle instead of waiting for a conversion [at a third party].”

The Inkanyezi – isiZulu for The Star – is available at dealers as a long-wheelbase 516 CDI.

The list of added advantages in the new conversion process includes conversion parts that are covered by the manufacturer’s two-year/unlimited kilometre warranty and a more durable conversion, says Venter.

The van’s optional extras, such as parcel shelves, USB ports and tow bar are plug-and-play and can be fitted at dealers nationwide.

Pricing for the Inkanyezi starts at a recommended R945 000 including VAT.

The Inkanyezi’s service intervals are every 20 000 km, and the warranty is a two-year/unlimited kilometre offering.

With South Africa now officially experiencing its worst-ever year of rotational power cuts, there is growing concern about both the level and flow of financing for maintenance, as well as the utility’s capacity to implement.

Initial calculations by Jarrad Wright, formerly of the Council for Scientific and Industrial Research Energy Centre, indicate that 15% of 2021 would have been load-shedding-afflicted once Eskom has fully implemented its latest round of announced load-shedding, which is officially set to continue until Saturday, November 13.

By that date, about 1 100 hours of rotational cuts would have been implemented, resulting in between 1 700 GWh and 1 800 GWh having been shed, with more than a month and a half of 2021 still to go.

In addition, the number of hours during which load-shedding was implemented at Stage 4, representing 4 000 MW of simultaneous cuts, has increased sharply this year, even though most of the cuts were still implemented at Stage 2 (2 000 MW).

“For reference, we shed 1 269 GWh in 2020 and 1 090 GWh in 2019,” Wright says, while stressing that the numbers remain unconfirmed until officially published on Eskom’s data portal package.

This year is also set to be the first ever during which load-shedding will breach the 1 000-hour mark, up from 528 hours in 2019 and 859 hours in 2020.

Only in 2015, did South Africans experience a similar level of load-shedding intensity, when 858 hours were affected and 1 325 GWh shed, mostly at Stage 2.

The intensification of load-shedding is directly proportional to the decline in the performance of the coal fleet, the energy availability factor (EAF) of which has fallen to below 65% for the year-to-date.

The EAF is well below Eskom’s 70% target and is also significantly below the 67.9% reported for the same period to the end of September 2020.

This decline comes despite Eskom’s much-vaunted reliability maintenance recovery (RMR) programme first unveiled as so-called ‘philosophy maintenance’ in early 2020, with a focus on increasing the level of planned outages and using long-duration shutdowns to properly address plant performance.

When announced, the initial objective was to improve the reliability of the under-maintained coal fleet by October this year to a point where the risk of load-shedding would be materially reduced, albeit not eliminated.

Implementation of the programme has hit several snags, however, with mobilisation initially hampered by the introduction of national lockdowns in response to the onset of Covid-19 in South Africa.

Execution problems have since evolved with much of the concern currently centred on the level of financing available for the RMR and what Eskom describes as the “timely release of capital funding”.

In a recent presentation, the utility said it needed the finances to be released at least six months prior to the start of an outage to secure the spares and services required.

It also indicated that funding had not been secured for the RMR for the next two financial years, which was undermining planning, which for a major shutdown needed to begin 24 months ahead of execution.

In a separate briefing COO Jan Oberholzer explained that neither the level of funding nor the release of the funds was in line with what was required under the programme.

“Typically, we need close to R11-billion per annum for the generation business to do proper maintenance on an ongoing basis . . . [and] we also need at least 24 months to plan it adequately.

“This financial year, we were given R3-billion and only a few months ago we were allowed an additional R3-billion, which is still short of what we really need, [while] the late timing of the provision is making it extremely difficult to execute the maintenance within this financial year,” Oberholzer explained.

CEO Andre de Ruyter said that ensuring sufficient liquidity for maintenance involved a careful balancing of the inflow and outflow of funds, which were secured either from loans and equity injection...