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    Rand tumbles to 19-month low as Eskom’s unable to keep power on amid illegal strike


    July 1, 2022 - Siphelele Dludla

     

      The rand fell to its lowest in 19 months yesterday while stocks at the JSE slipped into a one-week low as the markets closed in the red after Eskom extended its severe power cuts amid fears of global recession.

      By 5pm the rand was bid at R16.37 to the dollar, 13 cents weaker than the prior day at the same time.

      Eskom yesterday implemented Stage 6 loadshedding for the third day in a row following multiple plant breakdowns due to labour protests over wages.

      The struggling power utility said loadshedding would also be implemented at Stage 6 today, while a minimum of Stage 4 would be required continuously over the weekend.

      Eskom spokesperson Sikonathi Mantshantsha said that they were still unable to return some generators to service due to the unlawful and unprotected strike, which has caused widespread disruption to Eskom’s power plants, Eskom is .

      Mantshantsha said Eskom was compelled to take this unprecedented step to conserve emergency generation capacity to safeguard the power system.

      “The high levels of staff absenteeism and intimidation of working employees in some of the power stations is still rife,” he said.

      “This has made it difficult to conduct routine maintenance and other operational requirements, which will further impact the reliability of generation units.”

      Following this announcement, the rand plunged 0.95 percent to R16.40 against the dollar, the lowest since October 2020, pressured by severe power cuts in the country.

      The JSE All Share Index also fell 2.1 percent to 66 284 points, its lowest since June 23, as investors continued to assess the global economic outlook and South Africa’s economic growth concerns amid widespread power cuts.

      The all share index later closed 2.25 percent lower at 66 223.31 points.

      Commodity-linked sectors were the main drag on the bourse, followed by retailers, industrials and financials.

      The JSE is on track to slip more than 7 percent in June, its biggest decline since March 2020, as stocks continued extending losses yesterday.

      Investors assess the global economic outlook on the negative amid the prospect of aggressive monetary tightening while Eskom's loadshedding has threatened the domestic economic recovery.

      Addressing the media after a meeting of the Southern African Customs Union in Botswana, President Cyril Ramaphosa said Eskom’s performance had been a challenge for a number of years.

      Ramaphosa said while there were no quick fixes to the country's energy crisis, the current industrial action has worsened the already-precarious situation.

      He said the recently approved self-generation of up to 100MW without a licence was going to help a great deal.

      "The increase in self-generation is going to help a great deal, we already have 6800MW that are generated from renewables, but at any given time from solar and wind, they do not generate sufficient energy as to be able to put onto the grid."

      There has been growing calls for Minister of Mineral Resources Gwede Mantashe to step down on the back of Eskom’s electricity crisis.

      However, energy economist Lungile Mashele said that debate was misdirected and that Public Enterprises Minister Pravin Gordhan was the one who should take blame for Eskom’s failures.

      “I don't understand the criticism levelled against the minister of Department of Mineral Resources and Energy (DMRE) Eskom reports to a shareholder, which is the Department of Public Enterprises (DPE),” Mashele said

      “The DPE receives monthly reports from Eskom on their operational and financial performance. Is the shareholder happy with what they see?

      The DMRE is responsible for policy. The DMRE has over the last 3 years issued RFPs for round 5, RMIPPP and round 6. There have been delays in procurement but not in large due to DMRE.

      “There are numerous backlogs in procurement due to a number of moving parts such as environmental authorisations, cost estimate letters, licensing, adjudication of bids, resources.

      “We also can't procure in an unabated fashion because for each megawatts Eskom procures, South Africans need to pay for it.”

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