No meat to Ramaphosa’s gristle

Vague, few tangibles, needed more clarity and action, not only talk – these were but some of the comments slung President Cyril Ramaphosa’s way following his State of the Nation Address (Sona) on Thursday, which was widely described as a thinly veiled election speech.

Eskom, Transnet, the National Health Insurance (NHI) Bill and the overall economy were just some of the huge problem areas which needed clearer facts and time lines, say industry experts.

It is a simple formula: electricity drives industry; industry creates jobs up and down the line; people who have jobs spend money; and people spending money helps the economy grow.

Ramaphosa overly ambitious with load shedding

However, Nick Roche, chief product officer at Rubicon Energy and Automation, said Ramaphosa may have been overly ambitious in practically announcing an end to load shedding.

“We are currently in a power crisis and moved to stage 4 load shedding shortly after Sona,” he said. “At stage 4, we are about four gigawatts, or 20%, short of the power we need, so promises of an end to load shedding may simply be wishful thinking.

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“The transmission network has been the Achilles heel of the Independent Power Producer Procurement Programme – people win the bids, go to implement, and they can’t because the grid is congested.”

Money availabe to Eskom not ‘extremely successful’

The head of the energy secretariat at the SA National Energy Development Institute, Prof Sampson Mamphweli, said the money made available to Eskom through the Energy Action Plan had “not been extremely successful” in terms of fixing its coalfired power stations.

“Government has to ensure [Eskom has liquidity] to sort out the coal fleet,” he said.

“The biggest problem with the energy crisis is the coal fleet is not operating at the required energy availability factor, which should be around 70%, instead of below 60%.”

Even with some mines moving to in-house power generation, they still need to move their goods to port for export, which is where Transnet Freight Rail comes in.

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With the current conflict in the Middle East affecting shipping traffic through the Suez Canal, Ramaphosa said “South Africa is well positioned to offer bunkering services for ships that will be rerouted via our shores”.

Some believe that ship may have already sailed, with the Port of Durban so badly clogged, bulk carriers are skipping SA altogether.

Transnet’s efficiency is improving and may surprise

However, Transnet chief strategy and planning officer Andrew Shaw told Moneyweb Transnet’s efficiency is improving and may surprise this year.

“I think from our standpoint, we probably still seem to have a long way to go, but what we do feel is that we’ve turned the corner in terms of a very, very substantial focus on recovery in the past five to six months,” said Shaw.

“That is given the conditions we have on the network, which are still challenging, and given the challenges we still have around equipment, rolling stock and crane equipment.”

Ramaphosa said Transnet had appointed an international operator to help expand and improve its largest terminal at the Port of Durban.

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“And we are overhauling the freight rail system by allowing private rail operators to access the rail network,” he said.

According to Shaw, this might start taking place as soon as September.

“I think what people seldom realise is that if we draw some of these operators in and they pay a track access charge, we actually get the revenue stream from that,” said Shaw.

NHI Bill implementation

Ramaphosa also announced government would gradually implement the NHI Bill.

Jürgen Eckmann, franchise principal and financial adviser at Consult by Momentum, said he had hoped for more detail on how NHI might be funded.

“Can we expect an increase in VAT, personal income tax rates? This was skimmed over, with the president coyly mentioning the Bill was on his desk for signature, while he was ‘looking for a pen’.”

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Business groups Business Unity SA and Business for SA called on Ramaphosa to adhere to his commitment in November to test the constitutionality of the Bill and not sign it as it is.

The groups said the NHI Bill had numerous substantive and procedural constitutional flaws and they believed Ramaphosa should refer it back to parliament for reconsideration and amendment before he signed it into law.

Additional reporting by Ina Opperman