‘New Guptas’ Gayton McKenzie and Kenny Kunene in multibillion-rand oil deal

Business Day, 17 September, 2017.

South Africa’s “new Guptas” — former jailbirds Gayton McKenzie and Kenny Kunene — are being lined up to be BEE partners in a multibillion-rand gas deal.

The pair, said to enjoy a cosy relationship with President Jacob Zuma, travelled to Russia three weeks ago to sell themselves to Russian company Rosgeo as possible BEE partners in the R5-billion deal.

With them on the plane to Russia were State Security Minister David Mahlobo and two senior Central Energy Fund officials.

During a stopover in Dubai, McKenzie and Kunene had coffee with the CEF officials while Mahlobo was said to have introduced the pair to Rosgeo CEO Roman Panov.

A senior government official said Mahlobo’s presence was to “strengthen the ex-cons’ credibility” as business people.

• Read the full story on the Sunday Times website

Eskom’s death spiral looms large

Mail and Guardian, Lynley Donnelly, 13 October, 2017.

Eskom is facing a fundamental crisis that is only being exacerbated by allegations of corruption and the leadership vacuum at the state power company.

Almost half of the latest tariff increase Eskom has asked for is aimed at making up for the power utility’s dropping sales.

n its latest tariff application to the National Energy Regulator of South Africa (Nersa), the power utility requested an increase of 19.9% for the 2018-2019 financial year, which will take its standard tariff from about 89c per kilowatt-hour to almost R1.07/kWh.

About 9.4% of this increase is accounted for by what Eskom terms “sales volume rebasing” — or the declines in electricity sales.

This rebasement, as well as a price adjustment of 5.5% because of further increases to cover independent power producer (IPP) costs, comes before some of Eskom’s other major expenses, such as primary energycosts — mainly coal — are even contemplated.

It is also seeking a 27% tariff increase for municipalities.

As tariffs rise, the problem of plummeting sales is only likely to worsen.

Critics have complained that, although a range of factors may have contributed to customers cutting their electricity consumption, this is aggravated by Eskom’s own inefficiencies, which have forced up prices.

Not least of these has been the rapid increases in tariffs to pay for a capital expansion programme that has been dogged by cost overruns and delays.

Eskom’s need to cover for falling sales arguably hints at what has become known globally as the utility death spiral — when customers switch to alternative, off-grid electricity sources that are increasingly competitive, forcing utilities to ask regulators to increase tariffs. In turn, more customers look for cheaper alternatives and utilities must rely on an ever-declining revenue pool.

In its feedback on Eskom’s application to hike tariffs, the treasury also alluded to this looming problem.

Its research found that 26% of residential electricity sales could be off-grid by 2030. This was based on a moderate tariff increase path of 10% a year for the coming five years.

From an analysis of listed companies, the treasury estimated the equivalent of up to 34% of mining, 8% of industrial and 1% of commercial electricity generation sales currently supplied by Eskom could potentially go off-grid by 2040.

These effects would be driven by the mitigation strategies put in place by households — particularly high-income households — and firms in response to rising electricity prices, it noted.

But Eskom’s requested increase has also coincided with a series of corruption scandals and four chief executives since the start of 2017.

Most recently, Eskom all but admitted to paying consultancies McKinsey and Trillian — the latter was previously linked to controversial Gupta family associate Salim Essa — about R1.6‑billion in unlawful payments.

The parastatal has also been plagued by allegations of corrupt coal procurement processes — including preferential treatment for Gupta-linked companies. In its financial results, almost R3‑billion was revealed to have been spent in contravention of the Public Finance Management Act.

Link to the full article.

State Capture Inquiry Day 1: Unpacking looting at Eskom

Fin24,  Matthew le Cordeur, 17 October, 2017.

Parliament’s public enterprises committee has started its first state capture inquiry, starting with allegations of corruption and capture at Eskom.

SA cannot afford new nuclear – Eberhard

South Africa cannot afford to build a new nuclear fleet, Professor Anton Eberhard told Parliament’s state capture inquiry into Eskom on Tuesday.

“From my research, a new nuclear fleet would be extremely difficult to finance with our current fiscus status,” he said.

President Jacob Zuma reshuffled his Cabinet on Tuesday, placing a new minister in the Energy portfolio for the second time this year.

This time, David Mahlobo was made Energy Minister. As State Security Minister, Mahlobo was part of Zuma’s visit to Russia in 2014, where reports alleged he signed a secret nuclear energy deal with Russian President Vladimir Putin.

With Zuma’s future uncertain, analysts believe the president is eager to push through the programme, which had been suspended by a court this year.

Eberhard said there has been a 400% electricity price increase over the last 10 years, which is highly unusual. “This has had a serious impact on the economy,” he said.

“The increases are mostly due to Medupi and Kusile, which has added massively to Eskom’s finance costs. An increase in coal costs are also contributing to this.

“The price should not have been much more than inflation,” he said. “If you look at renewable IPPs, there has been a 78% decrease in solar PV prices in last five years. This points to the fact that Eskom’s price increases are out of synch.”

Here is the link to the full article – and there is lots more!

Zuma announces cabinet reshuffle

Times Live, 17 October, 2017.

In a shock move on Tuesday morning‚ President Jacob Zuma reshuffled his cabinet‚ swapping around six of his ministers.

Most notably‚ South African Communist Party secretary general Blade Nzimande has been axed as minister of higher education‚ and replaced with Prof Hlengiwe Mkhize‚ who was minister of home affairs.

Nzimande’s deputy‚ Mduduzi Manana‚ was replaced by Buti Manamela‚ former deputy minister for planning and monitoring in the Presidency. Manana resigned earlier this year after he admitted to assaulting a woman.

Zuma’s shock move will inevitably place severe strain on relations between the ANC and other members of the tripartite alliance.

The other ministers were all simply shuffled to various portfolios.

Mkhize will be replaced at home affairs by Ayanda Dlodlo‚ whose position as minister of communications will be taken over by Mmamoloko Kubayi.

Kubayi was the minister of energy and will be replaced by former minister of state security David Mahlobo.

Mahlobo makes way for the only new addition to the cabinet‚ Adv Bongani Bongo.

This is the second cabinet reshuffle this year.

In March, Zuma fired five ministers, including then finance minister Pravin Gordhan and his deputy, Mcebisi Jonas. They were replaced by former home affairs minister Malusi Gigaba and Sifiso Buthelezi, respectively, while Fikile Mbalula was given the position of police minister.

This is a developing story.

Conference addresses urgent needs in energy sector

EE Publishers, 16 October, 2017.

In his welcoming address at the 66th convention of the Association of Municipal Electricity Utilities (AMEU), Councillor Athol Trollip, executive mayor of the Nelson Mandela Bay Metropolitan Municipality, said the importance of energy cannot be over-estimated as it drives the economy and creates jobs.

The convention, with the theme, “Technical solutions for our changing business model”, was hosted at Port Elizabeth’s Boardwalk Conference Centre from 8 to 10 October 2017.

Trollip noted that conferences focused on improving electrical infrastructure, curbing electricity costs and development of new technologies are very important as society is acutely aware of the need for sustainable, renewable sources of energy, in the light of ever-increasing tariffs which increase companies’ costs and impact their efficiencies.

Jobs, said Trollip, are only created when businesses and factories keep running cost-effectively. He said corruption also results in inefficiencies, and challenged the delegates to focus on integrity, on doing the right thing all the time, as a first principle in their work.

In his keynote address, Cooperative Government and Traditional Affairs minister David van Rooyen said municipalities must anticipate challenges in the light of the increasing number of installations of rooftop photovoltaic (PV) panels at residential, commercial and industrial properties. The number of these installations, he said, will continue to increase and some form of regulation might become necessary to protect the municipality’s revenues.

Here is the full article