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Cape Town Moves to Set Up Own Electricity Supply

Cape Town wants to set up its own independent power producer office to secure renewable energy, following President Cyril Ramaphosa’s announcement during his Sona address that municipalities in good financial standing will be allowed to procure their own power from IPPs. However, the City says the turnaround could be 2-3 years.

Executive director for energy at the City of Cape Town, Kadri Nassiep says the City has engaged national treasury with a view to setting up its own independent power producer (IPP) office along the lines of the renewable energy independent power producer programme (REIPPP).

He says “we have also engaged CSIR to prepare our mini-IRP that will direct our call for proposals”. Electricity provision in the country is guided by the integrated resource plan (IRP) which sets out what electricity will be sourced and when. Government has used the IPP office, which falls under the department of mineral resources and energy, to procure renewable energy in earlier REIPPs. The IPP office has begun an exercise to source 2,000 to 3,000 megawatts of emergency supply on an urgent basis.

Cape Town’s intention to set up its own IPP office, which will implement its own IRP, would constitute a dramatic re-shaping of the energy landscape. Nassiep says “we still have to refine tariffs, but we are looking at it already”. Budgets need to be realigned, he says, but that’s not a huge issue. “So we are cautiously optimistic, but let’s see what [mineral resources and energy minister] Gwede Mantashe publishes in terms of schedule 2.”

Mantashe announced earlier in February at the Mining Indaba in Cape Town that the government would be gazetting a revised schedule 2 of the Electricity Regulation Act, which will enable self-generation and facilitate “distributed generation” by municipalities.

The City of Cape Town has fought a protracted battle with the minister and regulator Nersa over the right to source its own electricity. The dispute has its origins in 2015 when then Cape Town mayor (Patricia de Lille) asked the then energy minister (Tina Joemat-Pettersson) to allow the City to source renewable energy, but did not even get a reply. The case has been set down to be heard in the high court on 11-12 May. Given the constrained electricity supply, the City of Cape Town had argued for an earlier court date, but has not been able to secure this.

Asked if the court case will still go ahead, Nassiep said: “In my opinion yes. We still need clarification from the court regarding our rights. “For instance, the minister might opt to issue [a] once-off determination in favour of munis and then not again. Or he can opt to keep it later to a cap of 500 megawatts, which might limit us unfairly. So it’s still needed.”

Nassiep says that “unfortunately” there is a likely two- to three-year time horizon for Cape Town’s own sourced power to come on stream because of financial closure issues, environmental impact assessments, power purchase agreements as well as connection charges and ordering of connection and plant equipment. The Centre for Environmental Rights (CER) has joined the Cape Town court action, the CER’s Nicole Loser saying that local government has a constitutional duty to provide clean and healthy electricity, “which does not pollute our air, water, soil, or damage our climate”.

Loser says the Sona remarks were “very vague” on the details of municipal procurement. “Also not clear is if there will be the needed legal reform to address the current uncertainty around municipal procurement of whether Mantashe will simply issue the determination requested by the City.”

Cape Town mayor Dan Plato cautiously welcomed Ramaphosa’s announcement. “However, urgent clarity is required from the national government on the legal and regulatory nuts and bolts of how this must happen. “We need urgent clarity from the government on the roles and responsibilities for municipalities and other stakeholders in terms of the new generation capacity regulations in the Electricity Regulation Act,” said Plato.

He says the City is doing a study to determine how best to overcome energy poverty, through various projects including installing solar kits, solar home systems, increasing free basic electricity and improving access to gas. “Improving access to affordable electricity is a key deliverable that we are investigating at the moment.”

Ramaphosa also announced that “a Section 34 ministerial determination will be issued shortly to give effect to the IRP 2019, enabling the development of additional grid capacity from renewable energy, natural gas, hydropower, battery storage and coal”. “We will initiate the procurement of emergency power from projects that can deliver electricity into the grid within three to 12 months from approval,” he said.

Nersa will continue to register small-scale distributed generation for own use of under one megawatt, for which no licence is required and will ensure that all applications by commercial and industrial users to produce electricity for their own use above one megawatt are processed within the prescribed 120 days, Ramaphosa said. “It should be noted that there is now no limit to installed capacity above one megawatt.”

He said that a bid window for round five of the renewable energy IPP will be opened and that the government will work with producers to accelerate the completion of bid window four projects. “We will negotiate supplementary power purchase agreements to acquire additional capacity from existing wind and solar plants.”

While the electricity generation shortfall the country faces was quantified at the release of the IRP in October at 2,000 megawatts, this has subsequently been revised in later official pronouncements to 3,000 and then 5,000 megawatts. A document issued after the January lekgotla of the ANC’s national executive committee put the shortfall at 5,000 to 7,000 megawatts.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Matthew Henry [1], Arqm Ahmd [2].

Key Points From the 2020 South African State of the Nation Address

President Cyril Ramaphosa has admitted that the country is facing serious challenges but said action was being taken to address them. The President delivered South Africa’s 2020 State of the Nation Address in Parliament, in Cape Town, last night.

Load shedding and Eskom

“The load shedding over the last few months has had a debilitating effect on our economy and our people. At its core, load shedding is the inevitable consequence of Eskom’s inability over many years – due to debt, lack of capacity and state capture – to service its power plants.”

Ramaphosa said that in order for Eskom to undertake the fundamental maintenance necessary to improve the reliability of supply, load shedding will remain a possibility for the immediate future. He said as Eskom works to restore its operational capabilities, government will be implementing measures that will fundamentally change the trajectory of energy generation in our country. These measures include to rapidly and significantly increase generation capacity outside of Eskom.

“We will put in place measures to enable municipalities in good financial standing to procure their own power from independent power producers,” Ramaphosa said. Municipalities such as the City of Cape Town, business leaders and, lately, the ANC, have backed a plan to allow municipalities to be less reliant on Eskom.

“Over the next few months, as Eskom works to restore its operational capabilities, we will be implementing measures that will fundamentally change the trajectory of energy generation in our country,” Ramaphosa said.

As part of Ramaphosa’s planned steps for the state to become less reliant on the troubled power utility, the president said that the Integrated Resource Plan of 2019 with be given effect to allow for the development of additional grid capacity from renewable energy, natural gas, hydro power, battery storage and coal.

“We will initiate the procurement of emergency power from projects that can deliver electricity into the grid within three to 12 months of approval,” Ramaphosa said. He said they will allow more independent power producers to supply energy to the grid.

Land Reform

The expropriation of land without compensation also remained key, said Ramaphosa, adding measures would be taken to implement the decision after Parliament has concluded all the issues. Ramaphosa emphasized that land expropriation would be done with caution as agriculture is one of the industries with the greatest potential for growth.

“Government stands ready – following the completion of the parliamentary process to amend section 25 of the constitution – to table an expropriation bill that outlines the circumstances under which expropriation of land without compensation would be possible. To date, we have released 44 000 hectares of state land for the settlement of land restitution claims, and will this year release around 700 000 hectares of state land for agricultural production,” Ramaphosa said.

The president also announced that this year his government would implement key recommendations of the presidential advisory panel on land reform and agriculture to accelerate land redistribution, expand agricultural production and transform the industry.

“We are prioritizing youth, women, people with disabilities and those who have been farming on communal land and are ready to expand their operations for training and allocation of land. A new beneficiary selection policy includes compulsory training for potential beneficiaries before land can be allocated to them,” he said.

State-owned Enterprises

Ramaphosa said serious action will have to be taken to deal with SOEs who are drowning in debt with the National Treasury providing guarantees of more than R570 billion.
“This year, we are moving from the stabilization of state-owned enterprises to re-purposing these strategic companies to support growth and development.

“After years of state capture, corruption and mismanagement, we are working to ensure that all SOEs are able to fulfill their developmental mandate and be financially sustainable,” the president said. “In consultation with the Presidential SOE Council, we will undertake a process of rationalization of our state-owned enterprises and ensure that they serve strategic economic or developmental purposes.

The extent of capture, corruption and mismanagement in SOEs is best demonstrated at South Africans Airways, which was placed in business rescue late last year. The business rescue practitioners are expected to unveil their plans for restructuring the airline in the next few weeks.”

The train system

Ramaphosa also committed to turning around the Passenger Rail Agency of South Africa to fix the commuter rail network and said a plan for restructuring South African Airways would be unveiled in the next few weeks, and said government’s successes included pushing back against corruption.

Gender-Based Violence

Ramaphosa said they will increase their fight against gender-based violence. “We will amend the Domestic Violence Act to better protect victims in violent domestic relationships and the Sexual Offences Act to broaden the categories of sex offenders whose names must be included in the National Register for Sex Offenders and we will pass a law to tighten bail and sentencing conditioning cases that involve gender-based violence,” said Ramaphosa.

The youth

One per cent of South Africa’s budget would be set aside to assist with youth employment, Ramaphosa said during his State of the Nation Address .
“This will be through top slicing from the budget, which will require that we all tighten our belts and redirect resources to address the national crisis of youth unemployment,” he said. The initiative would be prioritized when Finance Minister Tito Mboweni delivered his medium-term budget policy statement later in the year.

Ramaphosa said the initiative was one of six “priority actions” spanning five years to reduce youth unemployment. The initiative would start immediately he said, under the banner of the Presidential Youth Employment Intervention. Ramaphosa said the six actions would ensure that the capabilities of every young South African was “harnessed”, enabling them to contribute to the growth of the country.

“We are building cutting-edge solutions to reach young people where they are – online, on the phone and in person. This will allow them to receive active support, information and work readiness training to increase their employability and match themselves to opportunities.”

He said that starting this month, government was launching five prototype sites in five province “that will grow to a national network reaching three million young people through multiple channels”. The network would allow young people to receive active support, information and work readiness training to increase their employability and match themselves to opportunities.

“We are fundamentally changing how we prepare young people for the future of work, providing shorter, more flexible courses in specific skills that employers in fast-growing sectors need. We are developing new and innovative ways to support youth entrepreneurship and self-employment,” Ramaphosa said.

“We are scaling up the youth employment service and working with TVET colleges and the private sector to ensure that more learners receive practical experience in the workplace to complete their training. We are establishing the first cohort of a presidential youth service program that will unlock the agency of young people and provide opportunities for them to earn an income while contributing to nation building.”

As part of the intervention, he said, the National Youth Development Agency and the department of small business development would provide grant funding and business support to 1 000 young entrepreneurs in the next 100 days, “starting today”.

Crime

He said that while police statistics showed that violent crime, rapes and murders have not gone down, improved detective methods would be effected through the training of officers. Ramaphosa said: ” Anti-Gang Units will be further strengthened, with priority given to the Western Cape, Eastern Cape, Gauteng and Free State.

“Following the graduation of 5 000 police trainees last year, 7 000 new police trainees have been enlisted this year to strengthen local policing. To improve the quality of general and specialized SAPS investigations, we are establishing a Crime Detection University in Hammanskraal,” the president said.

Cannabis

Ramaphosa also told the nation about his plans for hemp and cannabis. “This year we will open up and regulate the commercial use of hemp products, providing opportunities for small-scale farmers; and formulate a policy on the use of cannabis products for medicinal purposes, to build [the] industry in line with global trends”, Ramaphosa said.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Cheque Limits Reduced to R50,000 in South Africa

Following the recently announced rules from the Payments Association of South Africa (PASA) to reduce the maximum value of cheque limits to R50,000, businesses are urged to adopt electronic banking channels.

The updated rules come into effect in May 2020, with an eight-month grace period to be granted for cheques that are yet to be processed by the due date.

Kenneth Matlhole, FNB Business Spokesperson, said several businesses and public institutions that still have cheques built into their operations will be heavily impacted by the decision. This ranges from schools, churches, scrap metal dealers, agriculture, motor industry, fiduciary services and auctioneers, among others.

Matlhole unpacked important factors for businesses to consider as they reduce their reliance on cheques, prior to the implementation of the new rules:

Act now – depending on the nature of the business or institution, moving away from a traditional payments system may result in cash flow disruptions. Business should allocate enough time for migrating to new payments systems. It is also essential to ensure that staff members are trained accordingly.

Business to business transactions – whether the business is receiving or issuing cheques, it is advisable to communicate and inform business associates and suppliers about the new payment systems/ arrangements and reach a mutual understanding.

Businesses can offer discounts or incentives for suppliers or business associates to adopt electronic banking channels, to help speed up the process.

Moreover, when considering the administration process, storage of physical paper, and the cheques clearance waiting period, migrating to electronic payments which are more efficient will no doubt be an incentive to migrate to electronic payments.

The same guiding principles for alternative payment adoption should be applied to inter-company funds transfer where cheques have been used as a mechanism to allow for money flow between linked franchises and business entities.

Adopt electronic banking channels – once a thorough analysis of how the business uses cheques has been conducted, the next step is to identify the most appropriate and efficient electronic banking channel to use. Furthermore, businesses that are still receiving B2B cheque payments should ensure that their systems are updated and ready to accept electronic payments.

“Given the reduction of cheque limits due to several issues including fraud, it may not be viable for businesses to continue using cheques.

“Regardless of the final decision to be taken by businesses, on thing is clear, the imminent reduction of cheque limits to R50,000, leaves businesses and institutions with no choice but to ultimately reduce their reliance on cheque payments,” Matlhole said.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Matthew Kwong [1], [2].

Finance Minister Tito Mboweni Tries to Keep the South African Reserve Bank from Being Nationalized

Finance Minister Tito Mboweni took to Twitter recently to ask what the ANC wanted to achieve by nationalizing the bank.

The African National Congress (ANC) has cautioned Finance Minister Tito Mboweni to be aware of the implications of his comments about the party’s position to nationalize the South African Reserve Bank.

Mboweni, who is also an NEC member, has tweeted that the ANC adopted the wrong resolution during its policy conference in 2017 by wanting the central bank to be nationalized.

The issue of what purpose the reserve bank should and should not serve has once again played out within the ANC.

Mboweni took to Twitter recently to ask what the ANC wanted to achieve by nationalizing the bank.

“As a long standing member of the ANC and its leadership structures, I know and understand our resolutions. I don’t need lectures on that. But on the SARB, I am convinced that we adopted a wrong resolution. What do we want to achieve? Our Strategic focus: Structural Economic Reforms,” Mboweni said recently.

“As of now, 90% of the SARB profits are handed over to the National Revenue Fund. So? What do we want to achieve? Tell the public. Lets debate. Don’t say internal debates, this is a fundamental National debate. Answer the question. What do you want to achieve by nationalizing the SARB. Don’t tell me about internal debates, NEC, etc. what do you want to achieve? Lets answer that fundamental question. Party spokesperson Pule Mabe said that the leadership of the ANC was expected to be consistent, coherent and united on policy positions. The leadership of the ANC is expected to appreciate the need to articulate a consistent, coherent and unified message on policy positions. Unfortunately, public spats initiated without any provocation feeds into the narrative of lack of policy certainty,” he continued.

ANC leaders counter-attacked each other last year about the mandate of the central bank, with some saying the mandate of the institution should be expanded to include job creation.

The party said that only the ANC national conference had the right and power to change any decisions.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

South Africa Will Embrace Private Power Generation, President Ramaphosa Says

South Africa will embrace efforts by businesses to generate their own electricity, President Cyril Ramaphosa said recently, reacting to growing frustration at red tape throttling private power generation.

Ramaphosa is under pressure over nationwide power cuts that have dented economic output and sapped investor confidence in Africa’s most industrialized economy.

Ailing state-owned utility Eskom generates more than 90% of the country’s electricity but regularly struggles to meet demand because of breakdowns at its coal-fired power plants.

Many power-hungry companies such as mines want to build their own renewable energy plants to reduce their reliance on Eskom but have not been able to secure the necessary regulatory approvals.

“For the first time we are now saying let us have self-generation,” Ramaphosa told an economic conference in Johannesburg. “We have opened up a new era … that says we are now embracing the fact there are those companies and households that want to generate their own energy.”

“We cannot stop technology, we cannot stop the future from arriving,” he added.

South Africa’s mining industry body the Minerals Council on Monday urged the government to act urgently to bring online new power sources and ease licensing rules.

Roger Baxter, chief executive of the Minerals Council, told Reuters last month that miners could build between 500 megawatts (MW) and 1,500 MW of their own generating capacity over the next few years if regulations were eased.

Ramaphosa’s government has been slow to procure more power since the electricity cuts escalated last year.

Some labor unions and members of Ramaphosa’s governing African National Congress party are deeply suspicious of allowing in more independent power producers. A vocal coal lobby has also blamed renewable energy firms for hastening Eskom’s financial decline.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Johanna Montoya [1], [2].