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South Africa’s renewable energy prospects

South Africa’s renewable energy sector has a lot of potential for growth. With load shedding and power cuts Eskom, the national electric power supplier of South African individuals and businesses is turning to renewables to relieve the strain.

Unfortunately, there are many drawbacks to this as the South African infrastructure cannot handle a diversified energy mix as well as decentralized one. Moving towards renewables is supported by city and regional officials as this will help reducing energy cost for consumers and the release of more environmental destructive fumes.

Eskom however, could also be threatened as more people and businesses off the national grip will result in lost revenue and therefore minimizing Eskom operational capacity. The reliability of the South African energy provider will prompt more companies to seek more sustainable options for their own business survival.

The Mining sector is already looking in to renewable energy as an option for more reliable energy supply. According to Fin24 , the pace of investment in renewable energy is expected to accelerate in the coming years as a result of a significant drop in renewable energy prices. 

South Africa is still an ideal location for renewable energy investment. It is a prime location for solar and wind energy. Renewable could lead to South Africa becoming a great location for electrical intensive industries like manufacturing, mining and raw material processing.

 

By Mokgethi Mtezuka

BRICS New Development Bank uses its secure rating to launch rand bonds

The BRICS New Development Bank (NDB) will be using its strong credit rating to launch a rand bond programme which will enable it to provide funding South Africa’s public entities. NDB Africa head, Monale Ratsoma said on an interview last week, that this could be on-lent at a competitive rate.

The BRICS Bank has prolonged a $300 line of credit to the Development Bank of Southern Africa (DBSA), this will be the third loan with a SA public entity.

The DBSA loan according to Spokesperson, Sebolelo Matsotso the loan will be drawn when mandatory.  According to Matsotso, the loan will be used for renewable energy projects and other projects that will aid in reducing the greenhouse gases being released in SA.

Like the BRICS Bank, the DBSA is an infrastructure bank and has lent money to the country’s state-owned entities such as Eskom.

Matsotso’s intention according to Business day was to use the NDB’s strong credit rating at a lower cost than what can be done by South African public entities. Most SA public entities hold the same or lower rating that South African sovereign. Only Moody’s still rates South Africa’s sovereign debt as investment grade at Baa3 while Fitch and S&P have it in noninvestment territory, reports Business day.

“We hope to utilise the rating strength of the NDB to raise money in a more cost-effective way. The DBSA should then be able to competitively on-lend to its clients. We also want to use the rating strength to issue a rand bond. Regulatory processes with the JSE and SA Reserve Bank towards that fairly advanced,” says the spokesperson.

The size of the bond programme is to depend on the need for it in the market, which is still researched.

 

Source: Business Day

Eskom secures R48.8bn for two-thirds of 2019 funding

South African state-owned power utility, Eskom said it has secured about R48.8 billion ($3.4billion) of the funding for the financial year, ending 31 March.

Eskom said in a statement that of the remaining R23.2 billion or 32% of the total, R15 billion will come from structured products.

A further R4.5 billion will come from domestic bonds, including R2.3 billion in less than a year. The balance will come from development finance institutions and export credit agencies.

According to data compiled by Bloomberg, Eskom had amassed R399 billion of debt by the end of March and has been flagged by ratings companies as a key risk to South Africa’s economy.

The cash-strapped utility sold $1.5 billion of Eurobonds earlier this month, tapping international markets for the first time in more than three years.

Last month, Eskom signed a $2.5 billion loan agreement with China’s Development Bank to go towards construction of the Kusile power station.

Source: Bloomberg

South Africa, China deepen relations

The relations between South Africa and China are growing stronger – rafts of economic and political agreements are testament. The strive to deepen relations have been communicated by the media in past years, 2014 was tagged the year of South Africa in China, the following year dubbed China South Africa. South Africa was promoted to diplomatic status of Strategic Comprehensive Partner by the Chinese government in 2010.  

South African president, Cyril Ramaphosa welcomed the secretary general of China Xi Jinping amid preparations for the 10th BRICS Summit, held from today, the 25th July to Friday, 27 July. The meeting held on Tuesday saw SA president signing an investment agreement of R196 billion with the country’s biggest global trade partners since 2010. Agreements included a revision of Visa requirements between the countries and loans for Eskom and Transnet acquired through Chinese bank.

The three major deals signed by the states men, are a signs of a deepening of relations between the two members of the BRICS bloc. China committed to investing almost half a trillion Rands ($14.7 billion) more in the country. This year marks two decades of the China, South Africa diplomatic ties. Jinping showed expressed his excitement for the new era of relations “friendship” between the countries in a statement before visiting the country.

China has become a major investment partner, stimulating development in the country. South Africa has now become the largest investment partner of China in Africa.

 

 

By: Kgothatso Nkanyane

Wage hikes cheaper than Eskom damage

According to South African trade unions, the damage caused during the labour unrest at the power utility two weeks ago ran up to billions of rand, compared to the R1.2bn it would cost to increase the salaries of workers.

The unions believe that Eskom is being short-sighted by not conceding to their demands, because rejecting union proposals could cost the company more.

The National Union of Mineworkers, the National Union of Metalworkers of SA and Solidarity are negotiating on behalf of 37,000 Eskom employees whose wage hikes are determined through the collective bargaining process.

The unions said: “Once again we have called on Eskom to take this process seriously. When you consider the individual demands of the unions since these talks started, we have made major concessions and compromised on our positions.”

Eskom said it would have to cut operating costs to accommodate salary adjustments. It initially proposed no wage hikes, which enraged workers whose protests affected power supply.

The power utility company topped its 4.7% wage offer with a further 0.3% on Wednesday during the fourth round of the critical wage negotiations with unions.

The 5% offer was rejected by the unions, who have demanded 9% increases in 2018 as part of a three-year wage proposal.

Finance Minister Nhlanhla Nene said last week the country could not afford to bail out the utility.

Source: Businesslive