Flash Briefing: Eskom warns of Ukraine wars’ impact on electricity; SA cannabis industry nearing; OUTA

  • Russia’s invasion of Ukraine and its impact on the global economy will have a knock-on effect on Eskom and electricity supply in South Africa, the power utility’s executives said in a media briefing on Tuesday (8 March). Chief financial officer Calib Cassim said the invasion had led to an escalation in oil and gas prices which still needs to be factored in by Eskom. Eskom regularly makes use of Open Cycle Gas Turbines (OCGTs) and burns through diesel to supplement energy supply. Cassim cautioned, however, that from a ‘bottom-line point of view’, the power utility can only afford to pay so much for fuel. Cassim said Eskom was now looking to hedge some of these prices, but if the price of oil is to double as is forecast, then it will impact the amount of energy that Eskom can produce going forward.  He added that Eskom cannot absorb these additional costs by itself. 
  • Changes to South Africa’s proposed cannabis laws have been tabled in parliament, which will enable the government to push ahead with its plan to establish a new industrial sector valued at R28bn a year. Lawmakers hope to pass the amendments to the Cannabis for Private Purposes bill by the end of April. The move follows an announcement by President Cyril Ramaphosa in the latest State of the Nation address that the government was ready to push toward the legalisation and regulation of the commercial cannabis industry, which he said could create 130,000 jobs.
  • With the grace period for the renewal of driving licences expiring at the end of March, hundreds of thousands of motorists are set to be without a valid driving licence card. The minister of transport said that the current backlog of driving licence renewals as of 25 February was 534,807. As a result, the Organisation Undoing Tax Abuse (Outa) has requested the minister to extend the deadline and adjust regulations covering all driving licence cards to extend the renewal dates to 10 years. The group said failing to do so would lead to an even more significant backlog, leading to more motorists driving around with invalid licence cards. 
  • Embattled ANC Women’s’ League president Bathabile Dlamini has been found guilty of perjury. Dlamini stood accused of lying under oath during a 2017 inquiry into the social grants debacle at the South African Social Security Agency (Sassa) that saw millions of grant beneficiaries unsure if they would receive their money. Magistrate Betty Khumalo found that the prosecution had proved its case beyond a reasonable doubt and that the former minister had lied under oath. 

In the financial news:

  • South African business confidence climbed in the first quarter as the negative impact of the coronavirus pandemic, power cuts and a three-week strike in the steel and engineering industry began to wane. The respite may be temporary because of supply shocks caused by the war in Ukraine. 
  • SA Reserve Bank (SARB) governor Lesetja Kganyago has appointed his deputy, Fundi Tshazibana, as CEO of the central bank’s financial institution regulator, the Prudential Authority. Tshazibana previously worked for National Treasury, the National Energy Regulator of SA and the IMF before joining the SARB. She is also a part of the bank’s Monetary Policy Committee. Her appointment formed part of a “rotation” of three deputy governors into different portfolios, with effect from 1 April. Deputy governor and current Prudential Authority CEO Kuben Naidoo will take over the Financial Stability and Currency Cluster from fellow deputy governor Rashad Cassim.
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