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1. State visit by President Cyril Ramaphosa to China strengthens bilateral ties.
President Cyril Ramaphosa's recent state visit to China from 2 to 5 September 2024 marked a significant strengthening of ties between South Africa and China. The visit coincided with the Forum on China-Africa Cooperation (FOCAC) Summit, where over 50 African leaders gathered to discuss economic collaboration. During his visit, President Ramaphosa and Chinese President Xi Jinping agreed to elevate their bilateral relationship to an “All-Round Strategic Cooperative Partnership in a New Era.” This partnership aims to deepen cooperation in key areas such as trade, infrastructure development, technology transfer and renewable energy. Both nations committed to aligning China’s Belt and Road Initiative with South Africa’s National Development Plan, targeting investments in advanced manufacturing, energy, and infrastructure. To address the trade imbalance between the two countries, China pledged to increase imports of South African manufactured products and to support the growth of South Africa’s industrial capacity. China also announced a $51bn commitment to various African development projects over the next three years, including infrastructure and renewable energy. Overall, the state visit reinforced the strategic partnership between the two countries, with a shared focus on modernising industries, promoting sustainable economic development, and enhancing people-to-people exchanges. Together with other South African ministers and government officials, President Ramaphosa was accompanied by Energy and Electricity Minister Kgosientsho Ramokgopa, and was likely exploring collaboration with China in respect of electric power transmission and distribution, renewable energy, battery energy storage, the electric vehicle ecosystem, data centres, and more.
2. Former Finance, COGTA and Public Enterprises Minister Pravin Gordhan passes away.
After a short battle with cancer, Pravin Gordhan passed away early on 13 September 2024 at age 75. Gordhan was born in 1949 in Durban. From his student days, and decades thereafter, he was an anti-apartheid activist in the United Democratic Front (UDF), where he was jailed several times for his efforts. In 1991, he co-chaired the Convention for a Democratic South Africa (Codesa), which was responsible for negotiating the end of apartheid and the establishment of the new democratic government. From 1999 to 2009, Gordhan was commissioner of the South African Revenue Service (SARS), which he turned in into an effective and respected organisation. In 2010, Gordhan succeeded Trevor Manuel as minister of finance, after which he became minister of cooperative governance and traditional affairs (COGTA) from May 2014 to December 2015. Gordhan then returned as minister of finance in December 2015 to bring stability after Des van Rooyen was sacked just four days into his appointment. Gordhan, seen as the face of resistance against corruption during the “State Capture” years of Zuma's presidency, was then dismissed as finance minister by Zuma in a controversial late-night cabinet reshuffle on 30 March 2017. After Zuma was ousted, Gordhan returned to government as minister of public enterprises in 2018, responsible for oversight of the business of Eskom and other state-owned enterprises. Gordhan announced his retirement ahead of the May 2024 elections. On his passing, President Cyril Ramaphosa paid tribute to Gordhan, describing him as an outstanding leader and a beacon in the fight against corruption. Gordhan is survived by his wife Vanitha and their daughters Anisha and Priyesha.
3. Some progress on R8bn arrear debt by Maluti-A-Phofung Municipality to Eskom.
Financial and administrative arrangements between the Maluti-a-Phofung local municipality and Eskom aimed at settling the municipality’s R8bn arrear debt and restoring the technical and financial sustainability of electricity supply in the area are said to be making progress. Situated in the eastern Free State, Maluti-a-Phofung encompasses the town of Harrismith and almost all of the former "bantustan" of QwaQwa. Most of its population lives below the poverty line. A Distribution Agency Agreement between Eskom and the municipality signed on 31 May 2023 followed an order by the North Gauteng High Court on 8 June 2021 appointing Eskom as the service delivery agent for Maluti-a-Phofung Municipality’s electricity business. This eight-year administrative arrangement, extendable to 15 years, enables Eskom to collect revenue directly from both prepaid and post-paid customers in the area. Post-paid customers will be billed and will make payments directly into Eskom’s bank account, and the first batch of such customers has been linked to the Eskom system for revenue collection. The next step is to migrate prepaid customers to the Eskom vending platform, allowing them to purchase electricity directly from Eskom. The utility is also helping the municipality with the necessary knowledge and skills transfer to operate and maintain the distribution network. Technical teams are assessing network issues, while retail streams are working on enhancing revenue collection and customer interaction. This initiative is seen as establishing a possible model for future agreements between Eskom and a number of other municipalities in default with their arrear debt repayment arrangements.
4. No progress on R8bn arrear debt by Emfuleni Municipality to Eskom.
In stark contrast to the above, there appears to be no collaborative progress on the R8bn arrear debt by Emfuleni Municipality to Eskom. Emfuleni Municipality is located in the industrial heart of the Vaal triangle, with a mix of industrial, urban and township settlements, such as the towns of Vanderbijlpark, Vereeniging, Sebokeng, Evaton and Sharpeville. After initially signing up to National Treasury’s municipal debt relief programme, there were multiple breaches of the conditions of the programme by Emfuleni, and following a notice by Eskom to National Treasury and Emfuleni, the municipality is no longer a beneficiary of the programme. As a result, the Sheriff of the Court has successfully attached Emfuleni’s four bank accounts to ensure that the money collected for electricity is paid directly to Eskom, thus ensuring continued electricity services to the municipality’s customers. Eskom says it has exhausted all legal and mediation avenues to secure payment for services rendered since 2018. Municipal arrear debt is said to be one of Eskom’s biggest challenges, and collecting this debt is a key focus. Emfuleni’s arrear debt represents about 10% of the R82bn billion currently owed to Eskom by municipalities, and places Emfuleni among the top three municipalities in arrears. As of 31 March 2024, the total municipal arrear debt to Eskom stood at around R74.4bn, and this is increasing at over R1bn per month. If Eskom’s electricity price continues to rise in FY 2025/26 and thereafter as expected, it is likely that the monthly increase in municipal arrear debt will accelerate even further.
5. Battle between Nersa and AfriForum over municipal electricity prices proceeds to SCA.
The National Energy Regulator of South Africa (Nersa) will now petition the Supreme Court of Appeal (SCA) directly for leave to appeal a Pretoria High Court judgement on 28 June 2024 declaring that the electricity price hikes on 1 July 2024 by 112 municipal electricity distributors in South Africa were unlawful and set aside. This was announced by Nersa's CEO, Advocate Nomalanga Sithole at a briefing to Parliament's portfolio committee on electricity and energy on 11 September 2024, after an application by Nersa to the Pretoria High Court for leave to appeal the judgement of 28 June 2024 was refused. The initial court action for which leave to appeal is being sought by Nersa was lodged by AfriForum, who argued that the electricity tariff hikes were unlawful because they had not been based on cost-of-supply studies as required by the Electricity Regulation Act and Nersa's own methodology. The Pretoria High Court had ruled in AfriForum's favour. Nersa acknowledged that municipalities faced challenges in respect of inadequate asset registers, skills, capacity and budgets in completing the cost-of-supply studies in time. As a result, in January 2024, Nersa had advised municipalities that instead of the cost-of-supply studies required in law, the Regulator would accept a simplified cost-breakdown, which Nersa would evaluate in its tariff determination. AfriForum responded with indignation to Nersa’s announcement in Parliament. In lodging yet a further application for leave to appeal, Nersa said it would suspend the implementation of the High Court judgement. This would make it ever more difficult to unscramble the egg and revert to the 2023/24 electricity tariffs, and refund customers for the amounts over-charged since the beginning of the financial year on 1 July 2024.
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