Murky politics to hit South Africa power utility plans

2015 ◽  
Keyword(s):  
South Africa ◽  
Nuclear Power ◽  
Credit Rating ◽  
Power Supplies ◽  
Bad Faith ◽  
Power Utility ◽  
Content Type ◽  
Fiscal Constraints ◽  
Political Interests ◽  
Enriched Uranium

Significance Tsotsi faces a potential no-confidence vote over his handling of the utility's mounting crises which are imperiling power supplies and recently spurred the utility's second 'junk' credit rating. On March 12, Tsotsi had persuaded the board to suspend the utility's top four executives but it now accuses him of acting in bad faith, possibly under pressure from powerful political interests. Impacts The suspended chief executive's reinstatement is unlikely to improve Eskom's performance given his lack of energy sector experience. Fiscal constraints will keep an expanded nuclear power programme a distant ambition. Governance woes may strengthen US moves on South Africa to increase physical security around its enriched uranium reserves.

South Africa fragility to weigh on interest rate call

2015 ◽  
Keyword(s):  
South Africa ◽  
Interest Rate ◽  
South African ◽  
Credit Rating ◽  
State Intervention ◽  
Power Utility ◽  
Content Type ◽  
Reserve Bank ◽  
Wage Settlement ◽  
Term Energy

Subject South Africa's upcoming credit rating and interest rate decisions. Significance Fitch Ratings yesterday said it would not downgrade South Africa to 'junk' when it conducts its mid-year sovereign credit rating review. This is despite structural weaknesses in the economy, uncertainty over the management of power utility Eskom and possible disruptive strikes. The relatively doveish South African Reserve Bank (SARB) will monitor closely the effects of a strengthening dollar on the wider economy. Impacts The Eskom board's plan to remove controversial chairman Zola Tsotsi could be complicated by his alleged links to President Jacob Zuma. The murky nuclear 'deal' with Russia allows the state to appear to have a long-term energy plan, but raises governance concerns. Frustration over Eskom's mismanagement could expedite legislation allowing greater state intervention, but this could worsen the problem. The fiscal shock of a high public wage settlement could be cushioned by a 'contingency fund', but risks incentivising future high demands.

South Africa urban reforms will weigh on 2016 election

2015 ◽  
Keyword(s):  
South Africa ◽  
Financial Distress ◽  
Urban Governance ◽  
Executive Turnover ◽  
Local Elections ◽  
Power Utility ◽  
Content Type ◽  
Political Interference ◽  
2016 Election ◽  
Public Sector Unions

Subject Urban governance in South Africa. Significance Amid preparations for 2016 local elections, the Treasury has warned that 86 out 278 municipalities are in "financial distress". Urban debt woes are causing fiscal risks elsewhere in the state apparatus, notably for power utility Eskom. Political interference in senior appointments and consequent high executive turnover and skills deficits are partly to blame. However, it is also clear that some municipalities are unviable. Impacts Municipalities in former 'homeland' areas will be hard to reform due to the added layer of government created by traditional chiefs. High wage demands from public sector unions may force municipalities to cut capital or maintenance spending, hurting service delivery. The fortunes of large cities such as Johannesburg will continue to diverge from smaller municipalities.

Uranium price recovery has limited upside

2017 ◽  
Keyword(s):  
South Africa ◽  
Power Plant ◽  
Electricity Generation ◽  
Nuclear Power ◽  
Content Type ◽  
The Uk ◽  
First Time ◽  
Nuclear Group ◽  
Procurement Programme ◽  
The Eu

Subject Uranium prices and nuclear power. Significance The price of uranium breached 25 dollars per pound this month for the first time since last August. Boosted by Kazakhstan, the source of 41% of global uranium supplies, announcing last month that it will reduce production by 10% in 2017, the metal's price has been gradually recovering from last November's twelve-year low of 18 dollars per pound. However, the market remains oversupplied. Impacts Brexit may leave the UK nuclear sector without a regulator and short of fuel (21% of UK electricity generation is nuclear). Vietnam has abandoned its long-delayed plan to build its first nuclear power plant. South Africa has started a procurement programme to add 9.6 gigawatts of nuclear capacity. The EU has approved the 4.5-billion-euro (4.8-billion-dollar) restructuring plan of the French nuclear group Areva.

South Africa power utility probe will hit confidence

2015 ◽  
Keyword(s):  
South Africa ◽  
Power Utility ◽  
Content Type

Headline SOUTH AFRICA: Power utility probe will hit confidence

South Africa's parastatals face growing turmoil

2017 ◽  
Keyword(s):  
South African ◽  
Credit Rating ◽  
Partial Solution ◽  
The State ◽  
Power Utility ◽  
Content Type ◽  
Rating Agencies ◽  
Additional State ◽  
The Government ◽  
State Financing

Significance This comes amid reports that the state-owned airline will shortly receive a 10-billion-rand (760-million-dollar) bailout from the government, with almost 7 billion rand in debts due to lenders by September 30. The performance of South Africa's state-owned enterprises (SOEs) has featured prominently in rating agencies' downgrade assessments; Moody's cut embattled power utility Eskom's credit rating in June. Impacts The dismissal of SOE officials implicated in Gupta-related corruption allegations will prove only a partial solution to institutional rot. Dampened growth of between 0.5-1.0% this year could be further worsened by additional state financing of SOEs. The South African Reserve Bank's recent mandate court victory will only temporarily allay concerns over its institutional independence.

South Africa's credit rating reprieve may be temporary

2016 ◽  
Keyword(s):  
South Africa ◽  
Credit Rating ◽  
Content Type

Headline SOUTH AFRICA: Credit rating reprieve may be temporary

Russia looms large in murky South Africa nuclear plan

2015 ◽  
Keyword(s):  
South Africa ◽  
Nuclear Energy ◽  
Credit Rating ◽  
Power Production ◽  
Power Station ◽  
Content Type ◽  
Strategic Assets ◽  
Term Energy ◽  
Weak Growth

Subject South Africa-Russia cooperation on nuclear energy. Significance Fitch Ratings yesterday warned of a possible credit rating downgrade later in the year, partly due to weak growth linked to power supply woes. President Jacob Zuma outlined the government's long-term energy security plan in his February 12 state of the nation address, though subsequent attention on the details of a nuclear 'deal' with Russia reveal secretive diplomacy and governance problems. Impacts The start of power production at Eskom's long-delayed Medupi power station will begin to ease supply woes -- but slowly. Johannesburg's plan to generate power from biogas could encourage other cities to implement independent programmes. State plans to generate 23 billion rand to help Eskom by selling "non-strategic" assets could be resisted by affected ministries and unions.

Tough South Africa budget may keep downgrade at bay

2019 ◽  
Keyword(s):  
South Africa ◽  
Trade Union ◽  
Early Retirement ◽  
Civil Servants ◽  
Medium Term ◽  
Power Utility ◽  
Wage Bill ◽  
Content Type ◽  
Revenue Collection ◽  
Skilled Staff

Significance The budget framework presented on February 20 provided a record 69-billion-rand (5-billion-dollar) rescue package for ailing power utility Eskom over three years. Despite measures to cut the large public-sector wage bill, growing revenue shortfalls have combined to lift deficit forecasts, while a longstanding expenditure ceiling has been raised. Impacts Plans to cap civil servants pay and perks will face opposition from the ANC’s trade union partners. An early retirement package for civil servants risks a possible exodus of more experienced and skilled staff. Efforts to overhaul SARS should result in improved revenue collection over the medium term but will prove costly in the interim.

Budget will not offset South Africa junk rating risk

2016 ◽  
Keyword(s):  
South Africa ◽  
Industrial Development ◽  
Credit Rating ◽  
Content Type ◽  
Rating Agencies ◽  
Finance Minister ◽  
Downward Pressure ◽  
Containment Measures ◽  
Capital Outflows ◽  
Investment Grade

Subject Fiscal outlook for South Africa. Significance The IMF today welcomed Finance Minister Pravin Gordhan's budget -- which was the most critical in the post-apartheid period, given the threat by rating agencies that South Africa could lose its investment grade credit rating unless it stabilises its finances. The spending plan features moderate tax increases and several cost containment measures, but these could prove insufficient. Impacts The Industrial Development Corporation's initiative to boost employment-intensive sectors will probably fail due to strict labour laws. The Land Bank's special new loan facility will help farmers hurt by the regional drought, enabling them to resume production. A 'junk' sovereign credit rating would drive significant capital outflows, placing downward pressure on the rand.

South Africa mining sector restructuring will hasten

2016 ◽  
Keyword(s):  
South Africa ◽  
Policy Implementation ◽  
Credit Rating ◽  
Court Ruling ◽  
Content Type ◽  
Credit Rating Agency ◽  
Price Hike ◽  
De Beers ◽  
Strong Performance ◽  
Anglo American

Significance The threat of future strikes is a blow to government attempts to address investor unease, which it is seeking to do by soothing tensions between unions and miners, and improving clarity regarding the sector's governing legislation. Impacts The recent court ruling against Zuma regarding tax-funded upgrades to his home will strengthen factions urging his resignation. Credit rating agency concerns that intra-ANC wrangling will hurt policy implementation could hasten a downgrade to 'junk' status. Zimbabwe is likely to pursue stricter HDI ownership requirements than South Africa, driving some investment southwards. De Beers' strong performance following a recent 2% diamond price hike will help to improve returns for parent company Anglo American.

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