Taxpayers give Eskom R54bn; SA’s Tencent tourism deal; airline groundings; Pick n Pay; Deloitte

By Jackie Cameron

  • Taxpayers are to fund another R54bn to bail out Eskom. The Special Appropriation Bill will see the government give the troubled power utility R26bn in the year through March and R33bn the following year, according to Bloomberg. Eskom has amassed R450bn in debt and isn’t generating enough cash to cover its costs. The R59bn grant, which was first announced in July, is in addition to a three-year, R69bn bailout that was approved in February.
  • Eskom wants Deloitte to pay back about R200m after it benefitted from corrupt arrangements with the power utility. The state-owned power utility Eskom says the accountancy and advisory firm must return R208m ($14m) that it alleges were overpriced contracts. President Cyril Ramaphosa has also called on citizens to start paying their electricity bills. The Deloitte contracts were awarded during the tenure of former Chief Financial Officer Anoj Singh and ex-senior executive Prish Govender, points out Bloomberg. Both individuals have been tied to corruption probes at the utility. They deny wrongdoing. “Deloitte was granted contracts when their prices were five times higher than those of their competitors,” said Jabu Mabuza, Eskom’s acting chief executive officer, in a statement. Correct procedures were not followed and in some cases proposals were submitted before tenders had been announced, he reportedly said. Deloitte disputed the allegations saying it’s been in talks with Eskom for “some time” over the matter and had explained the processes that were followed.
  • The Democratic Alliance is imploding, political analysts warn, as the election of Helen Zille to a top post sparks the resignation of Johannesburg mayor Herman Mashaba. DA leader Mmusi Maimane appears to be on the brink of leaving, too. An all-white candidate pool for one of the DA’s top posts led to the elevation of a divisive former party leader, and has pitted its senior white and black leaders against each other, reports Bloomberg. The months of infighting erupted into the open just months after the ANC achieved its worst-ever national election result in May, winning 57.5% of the vote, says the news wire. “If the ANC plays its cards right they are going to bounce back out of this,” said Ralph Mathekga, an analyst and author of books on South African politics. “When the DA suffers, the quality of the opposition in South Africa suffers. It will no longer be a guard dog to the ANC.”
  • SAA, Mango, Comair, Kulula and British Airways flights have been the focus of inspections by the regulator. Some flights were grounded, reports Bloomberg. The four airlines operating in South Africa were forced to delay flights and ground some planes after a local regulator ordered checks following inspections of a technical and maintenance provider, it says. The move by South Africa’s Civil Aviation Authority was an act of precaution, according to Transport Minister Fikile Mbalula, who declined to be more specific to Bloomberg journalists.
  • Goldman Sachs Group Inc. sees a silver lining for South Africa: The economy is at its lowest point and the only way is up, says Bloomberg.“ The bad news is we are at 0.6% growth for 2019,” Colin Coleman, a partner and head of sub-Saharan Africa for the New York-based bank, is reported as saying. “The good news is our growth outlook has risk to the upside, there is no risk to the downside, because we are at the bottom.” Goldman Sachs has long been bullish on South Africa’s prospects, with the bank’s economists in May last year predicting an expansion of 2.4% for 2018. The economy expanded 0.8% last year, says Bloomberg.
  • South Africa has signed a two-year agreement with Chinese Internet firm Tencent, which will use its popular WeChat platform to market tourism to millions in China, reports Reuters. South Africa is targeting key untapped tourist markets such as China and India as it promotes tourism as a catalyst to help kick-start its struggling economy, says the news wire service. Travel and tourism, says Reuters, contributed around R426bn ($29bn), just under 9% of GDP, to South Africa’s economy in 2018, making it the largest tourism market on the continent, the World Travel and Tourism Council says.
  • Looking at the JSE, retailer Pick n Pay was the best-performer on the day. Its share price jumped an impressive 10% on the back of news that saw a rise of almost 10% in first-half earnings. Other retailers that performed well on the JSE by the close of trade on Tuesday were Truworths, which gained just over 9%, Mr Price which went up more than 7% and Spar which moved up by more than 5%. Major losers of the day included Sasol, down just over 7%, and Kumba Iron Ore, which was not far behind and shed about 6% of its value on Tuesday.