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Mboweni master plan to save SA; Eskom R450bn plant sale; strikes hammer Sibanye; Moyo-Manuel latest
By Jackie Cameron
- Tito Mboweni has unveiled an economic rescue plan for South Africa. Late on Tuesday, the National Treasury released a massive policy document aimed at boosting economic growth by between 2-3% and creating 1 million additional jobs. In a statement along with the release of that document, Minister of Finance Mboweni said he encouraged citizens to make comments on the proposals. The paper, titled ‘Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa’ is available at treasury.gov.za. The National Treasury says the strategy is partly a response to South Africa’s decline in the Global Competitiveness rankings, with a fall from 44th to 67th between 2007 and 2018. “A series of cyclical once-off shocks such as political turmoil, drought and most recently load shedding by Eskom have further exacerbated the depth of the slowdown. Together, these have served to compound and prolong the effect of weaker confidence, leaving us with an economy that has almost 30% unemployment,” says the National Treasury. Among the proposals are to increased competition and small business growth, prioritise labour-intensive growth, for example in agriculture and the services sector.
- Eskom could sell some coal-powered plants to raise R450bn and allow households to sell electricity back into the grid as part of a restructuring of the state-owned power utility. The stations could be sold through a series of auctions and would include related staff contracts, coal-supply contracts and environmental obligations, according to an economic policy paper the National Treasury released for public comment on Tuesday, reports Bloomberg. The stations could be sold through a series of auctions and would include related staff contracts, coal-supply contracts and environmental obligations, according to an economic policy paper the National Treasury released for public comment on Tuesday. So says Bloomberg reporters, who say the plan could raise R450bn ($29bn). The disposal of coal plants would be tied to a power-purchase agreement at a pre-defined, station-specific tariff, according to the paper. Details of the proposal give another glimpse of the many options being considered to get Eskom back onto a sustainable footing and start reversing the damage the indebted company’s finances have brought onto the economy and the nation’s budget. President Cyril Ramaphosa said in February Eskom would be split into transmission, generation and distribution businesses. The utility told senior managers last week that will take long as three to five years. However, as Bloomberg cautions, selling plants may be opposed by labour groups, including the National Union of Mineworkers, that see privatisation as resulting in job losses. “Our thinking as the NUM is that the selling of power stations or whatever will not help Eskom,” Paris Mashego, the union’s energy coordinator, told Bloomberg by phone. Selling the plants to private investors also wouldn’t solve the issue of emissions that it’s trying to reduce, he said.
- Precious metals producer Sibanye-Stillwater said on Tuesday it fell into the red in the first half of the year due to a five-month strike at its South African gold operations. Gold production was hit by the strike over pay and job cuts that ended in April and cost Sibanye more than $100m in lost revenue, reports Reuters. The diversified miner, says Reuters, which is due to release its first-half results on Thursday, said it expects a headline loss of 54 cents per share for the six months to June 30, compared with headline earnings per share of 4 cents in the year ago period. “As a result, it expects to report an attributable loss of R265m ($17m) for the period compared with an attributable profit of R77m during the same period a year ago.”
- Also among the worst performers on Tuesday was Old Mutual, also down nearly 3%. Analysts speculate that a battle between Peter Moyo, the on-again, off-again CEO and the life assurer’s chairman, former finance minister Trevor Manuel, is putting Old Mutual stock under pressure. Fin24 reported late on Tuesday that Moyo had lodged an urgent application for the board of Old Mutual and its chairperson Trevor Manuel to be declared as having deliberately interfered with the functioning of the courts. In a new affidavit, says Fin24, the on-again, off-again Old Mutual head stated that his second axing by the financial services giant on August 22 was “deliberately calculated to undermine the efficacy of the judgment of this court”. “In an open letter published on its website last week, Old Mutual said it took the step to terminate Moyo’s tenure as CEO for a second time “after legal advice and on careful reflection by directors, with proper regard to their fiduciary duties to the company”
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