Loadshedding is here to stay

Source: MyBroadband 

South Africa should prepare for “years of gloom” and citizens must start stockpiling candles and torches, thanks to what lies ahead at Eskom.

According to a report in the Sunday Times, Eskom’s load-shedding and financial problems “could drag the country into a death spiral”.

Eskom needs to spend billions of rand on maintenance in 2019 and has promised that load-shedding will subside by March, but the report quoted energy analyst Ted Blom who said coal shortages will continue until 2025.

“About 80% of Eskom power generation relies on coal,” said the report.

Eskom has been described as being at a “coal cliff”, where there are not enough coal mines to supply its needs, and that new mines will take years to develop.

Eskom has made headlines in recent weeks for its coal shortages, and in November 10 of its power stations had less than 10 days of coal supply left.

With coal shortages comes more load-shedding, and while this is a severe problem for people who want to go about their daily lives, it can be a death sentence for businesses and the economy.

Continued load-shedding may even force the ratings agencies to downgrade SA to junk status due to all the local investments which would disappear.

Econometrix chief economist Azar Jammine stated in the report that this has led South Africa’s growth rate to drop to the second-worst among the G20 countries.

Economist Mike Schussler described this as “a nightmare for SA”, and said we are “at the edge of a cliff”.

Eskom technically bankrupt
The Organisation Undoing Tax Abuse (Outa) recently said Eskom’s financial results indicate a company that “is technically bankrupt”.

While presenting its 2018/2019 interim results, Eskom revealed that its 2007 debt of R40 billion has swelled to R419 billion and is estimated to exceed R600 billion in the foreseeable future.

In addition, Eskom’s huge staff complement including fixed-term contractors has increased to 48,628 in 2018 from 47,658 in 2017, costing South Africans R29.5 billion in March 2018.

Eskom’s dire financial situation is set to get even worse as its full year loss is set to grow to R15 billion – up from the expected R11.2 billion.

Outa said Eskom does not have a sustainable business model or a comprehensive financial plan to claw itself out of the debt hole it is currently in.

“If Eskom was a private company, it would either be under business rescue or in liquidation,” said Ronald Chauke, Outa’s energy portfolio manager.

He said the appointment of Calib Cassim as Eskom’s permanent chief financial officer may offer some stability and comfort that the rot will stop.

However, Outa said, it’s the power utilities’ declining revenues which inhibit it from turning into profitability or controlling its ever-increasing operational costs.

Eskom moves turnaround strategy to 2019
Eskom has also said that it only expects to launch its turnaround strategy in 2019 after at least two delays of its much-anticipated recovery plan.

The power company’s long-term strategy has been approved by the board, but the plan is seen as being implemented “in the new year”.

This news come after a third day of scheduled power outages on Saturday due to inadequate energy availability.

Financial constraints limited maintenance amid unplanned outages from an aging fleet of power stations, making matters worse.

Edcon may run out of money in 2019

According to a report by the Financial Mail, Edgars may “effectively run out capital towards the end of 2019”.

After Bain Capital paid R25-billion for the company, the retailer’s balance sheet saw debt of R17.3-billion – an amount that nearly sank the company as the 2008 financial crisis hit.

Since 2012, Edcon has lost an estimated 22% of its clothing and footwear market share where it once held more than 50% of the sector, according to Financial Mail.

Edcon still owes an estimated R7-billion to its lenders.

On a positive note, Stats SA reported that retail sales grew 2.5% for the year to August — almost twice the 1.4% annualised growth reported in July.

The problem is, says the Financial Mail, that Edcon is making a loss, and “someone has to fund the loss”. This falls to the shareholders and the problem under discussion is “how long will they fund these losses”?

Edcon’s most recent set of accounts, for the year to March 2018, saw sales down 4.8% to R24.1-billion. Trading losses ballooned to R1.36-billion from R373-million in 2017. Even though R20-billion in debt was written off in 2016, Edcon incurred R1.53-billion in “financing costs” to repay remaining debt. The three months to June were no better: sales were down 8.8%, and the quarter saw trading losses of R225-million.

The lack of customers are evident at even flagship Edgars stores. “At Melrose Arch, most of the initial space Edgars occupied is boarded up, reinforcing the impression of a gradually disintegrating department store,” reports Financial Mail.

As many as one in five South Africans used to shop at one of the 1 350 stores owned by Edcon. Despite the downward trend, Edgars has remained SA’s largest nonfood retailer, accounting for nearly a third of the clothing and footwear market.

The company employs more than 27 000 staff members, with an indirect effect on a further 100 000 people.

Democrats take the House from Trump

By Alana Abramson for Time; Rozina Sabur for The Telegraph  

Democrats took control of the U.S. House of Representatives but lost ground in the Senate following a contentious campaign that President Donald Trump worked to make all about him.

Democrats picked up at least 23 House seats in tallies early Wednesday, putting them within reach of the 218 seats needed to take control from Republicans, the Associated Press projected.

However, Democrats’ hopes of an overwhelming “Blue Wave” in both chambers of Congress and in governors races was dimmed as losses in at least three key Senate races — including Beto O’Rourke in Texas — meant Republicans would have control of the Senate with an even bigger majority.

Republicans also won the Florida governor’s mansion, with Ron DeSantis overtaking Andrew Gillum. In Georgia, Democrat Stacey Abrams trailed Brian Kemp early Wednesday, but the race was still too close to call. In total, however, Democrats flipped 5 governorships – including in deep red Kansas where Laura Kelly defeated right-wing darling Kris Kobach.

What does this mean for Trump?
The Democrats have taken control of the House of Representatives in the midterm elections, delivering a bitter blow for Donald Trump after a campaign that became a referendum on his leadership.

The Republican Party went into Tuesday’s elections in control of the chamber with a 43-seat majority. However, Democrats rode a wave of dissatisfaction with the US President to gain the 23 seats needed to win control of the House.

The lower chamber of the US Congress, the House is made up of 435 seats. The number of seats each US state receives depends on its population size. California, the most populous state, has 53 representatives while seven states – Alaska, Delaware, Montana, North Dakota, South Dakota, Vermont and Wyoming – have just one representative.

“Thanks to you, tomorrow will be a new day in America,” Democratic House leader Nancy Pelosi told cheering Democrats at a Washington victory party, saying House Democrats would be a check on Mr Trump.

“We will have a responsibility to find our common ground where we can, stand our ground where we can’t,” Ms Pelosi said.

Now the Democrats have won the House, they get to decide which bills come to the floor – meaning President Donald Trump’s domestic agenda will struggle to make its way into law.

The party with a majority in the chamber also controls its committee chairmanships and has the power to issue subpoenas – so a Democrat-controlled House could enforce aggressive oversight of investigations of the president’s administration, including alleged Russian collusion, Mr Trump’s business dealings and sexual assault allegations against him.

Pundits predict Democrats will launch controversial investigations into things like Mr Trump’s tax returns and his previous business dealings. They may also seek public hearings with members of the Trump family, including his son Donald Jr who appears to be a key figure in the Russia investigation.

They also could force Trump to scale back his legislative ambitions, possibly dooming his promises to fund a border wall with Mexico, pass a second major tax-cut package or carry out his hardline policies on trade.

A simple House majority would be enough to impeach Trump if evidence surfaces that he obstructed justice or that his 2016 campaign colluded with Russia. But Congress could not remove him from office without a conviction by a two-thirds majority in the Republican-controlled Senate.

House Democrats could be banking on launching an investigation using the results of US Special Counsel Robert Mueller’s already 18-month-old probe of allegations of Russian interference on Trump’s behalf in the 2016 presidential election. Moscow denies meddling and Trump denies any collusion.

Democrats on the House oversight committee, the chamber’s main investigative panel, had already suggested they were prepared to issue subpoenas if they gain control.

Representative Elijah Cummings, the ranking Democrat on the oversight committee, said: “If Democrats win the majority in November, we would finally do what Republicans have refused to do, and that is conduct independent, fact-based, and credible investigations of the Trump administration”.

Mr Cummings said their investigations would “address issues like the security clearance process, conflicts of interest, the numerous attempts by Republicans to strip away healthcare from millions of Americans, postal service reforms, prescription drug pricing, and voting rights”.

Republicans have, however, held on to the Senate, meaning they will continue to approve Mr Trump’s cabinet nominees and appoint conservative judges to US courtrooms.

First e-toll case heads to court

Source: MyBroadband, Netwerk24 

According to a report by Netwerk24, the first e-toll test case will be heard in the North Gauteng High Court in Pretoria.

The report states that the test case will involve the transport company Thandanani Packers & Hauliers, which owes R400 000 in e-toll bills.

The company has stated that it cannot afford e-tolls, and if they were forced to pay this money the business will need to close.

Outa said the case will focus on the overall legality of the e-tolls system and will be used for the main dispute of the overall “legality challenges” to the e-tolls system itself.

The legal team for the supporters of Outa wanted Sanral to suspend enforcement of all other e-toll legal claims against motorists, but Sanral’s team would not agree to this.

“Sanral’s lawyers said a general stay could not be agreed whilst road users were being encouraged not to pay e-tolls,” Outa said.

Sanral added that it would continue to issue a significant number of summonses and proceed with e-toll claims.

Source: MyBroadband

Telkom, the partly state-owned South African telecommunications company, is billing the national police service for two contracts that cover virtually the same work, five people familiar with the situation said.

The Pretoria-based company secured a contract to work on the service’s switching centers, which allow the South African Police Service to communicate with staff and stations across the country, and started work in mid 2016 using Netxcom ICT Solutions (Pty) Ltd. as a subcontractor, the people said, declining to be identified because they aren’t authorized to speak to the press.

While Netxcom is continuing to do the work, Telkom has withheld some of the payments it owes to the subcontractor even though it has continued to receive money from the police, the people said. It is now in a legal dispute with Netxcom, which has sued to get the money it believes it is owed. Telkom said it did withhold some payments to subcontractors because of contractual “inadequacies” without naming Netxcom.

A few months after Netxcom started work, Telkom signed a separate R497-million ($34 million) contract, which will run for five years, with the police to do the same work on the same switching centers with a few minor additions. That agreement, which has been seen by Bloomberg, includes another subcontractor known as AppCentrix (Pty) Ltd. as a participant. It was not put through a competitive bidding process, as is mandatory for all government contracts over 1 million rand unless the requirement is waived by the National Treasury.

Treasury unaware
The Treasury says that it is unaware of the contract. The State Information Technology Agency, or SITA, which procures all of government’s information technology, was not consulted by the police on this contract as is also mandatory, the people said, declining to be identified because the information isn’t public.

Telkom spokeswoman Nomalungelo Faku cited confidentiality clauses when asked why a tender for the new contract had not been held. The police and SITA didn’t respond to queries. Netxcom and AppCentrix declined to comment.

“As a principle, Telkom does not withhold payment to its vendors,” Faku said by email, saying she was commenting on behalf of George Candiotes, Telkom’s executive for legal services. “However, during 2017 Telkom conducted a supplier review. Based on this certain actions were taken between Telkom and suppliers including the withholding of payments where certain inadequacies in the contractual arrangements were identified.”

Wasteful spending
Emails between senior officials of of Telkom’s BCX unit seen by Bloomberg said that the failure to pay Netxcom was souring Telkom’s relationship with the police and that Netxcom was still doing work for the police.

Telkom hasn’t answered questions on how the two contracts with the police differ.

The revelations come as Cyril Ramaphosa, who took over as president in February, is overseeing a drive to stem irregular and wasteful spending that’s led to the termination of boards of state companies.

Internal email communication, seen by Bloomberg, between Telkom staff including its chief executive officer, Sipho Maseko, and Candiotes corroborated what the people said about the non-payment of fees to NetXcom.

The South African Police Service “has not indicated any direct issues with the vendors or the work and we are receiving payment,” Candiotes said in an April email to Maseko. “Our view is that we are currently exposed in the instance where we cannot show why we cannot make payment, despite our contentions we have terminated the agreement.”

Telkom, which is 41% owned by the government, is trying to terminate the relationship with Netxcom in favor of its newer contract, the people said.

By Jillian D’Onfro for CNBC

In response to the European Union’s $5 billion antitrust ruling in July, Google will change how it bundles its apps on Android phones and charge a licensing fee for phone makers that want to pre-install apps like Gmail, Maps and YouTube in the EU.

Google will also end restrictions on phone makers selling modified or “forked” versions of the mobile operating system.

Previously, Google tied together a suite of 11 different apps that phone makers would have to pre-install if they wanted to license its app store, Play. In July, the EU ruled that this bundling was anti-competitive — pushing consumers toward Google’s search engine and weakening rival app makers — though it only specifically called for Google to separate Chrome and Search from Play.

In response, Google said in a blog post on Tuesday that it will start offering separate licenses for Search and Chrome, as well as a license for its suite of apps like Maps, Gmail and Docs. That means that if phone makers want to pre-install those apps, they will have to pay a fee, though the amount was not specified. Google says the new licensing fee will offset revenue lost through compliance efforts that it uses to fund the development of Android, which it offers as a free, open source platform. The licenses for Search and Chrome will not have a fee.

Although Google doesn’t make money from Android directly, it generates advertising revenue through search as well as Chrome, Maps and Gmail, serving ads within those apps and using data it collects from users to better target ads across its platforms.

“Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the EEA [European Economic Area],” wrote Hiroshi Lockheimer, Google’s vice president of platforms.

Google’s previous agreements with phone makers also prevented them from selling modified versions of Android if they wanted to use its suite of apps, but the company will now allow manufacturers to build forked smartphones and tablets for the EEA.

Overall, Google’s Android powers more than 80 percent of the world’s smartphones. These changes, which will come into effect on Oct. 29, will only affect phones for the EEA, a group consisting of 28 EU countries, plus Iceland, Liechtenstein and Norway.

By Peter Bright for ARS Technica 

Last week, Microsoft started distributing the Windows 10 October 2018 Update, version 1809, to Windows users who manually checked for updates. The company has now halted that rollout after many reports that installing the update is causing serious data loss: specifically, deleting the Documents, and perhaps Pictures, folders. Microsoft is also advising anyone who has downloaded the update but not yet installed it to not install it at all.

The exact circumstances causing data loss aren’t clear; the handful of reports on Microsoft’s forums and Reddit don’t have any obvious commonalities, and people report seeing only one affected system among many when upgraded. There will need to be some amount of investigation before a fix can be developed.

This will be too late for anyone that’s suffered data loss; although file recovery/undelete tools might be able to salvage the deleted files, the only reliable way of recovering them is to restore from a backup.

A data-loss bug is bad. Data-loss bugs are the worst kind of bug that Microsoft could ship; for rarely backed-up home users, at least, they’re worse even than a security flaw—who needs hackers and malware to destroy your data when the operating system does it for you? This bug is sure to raise new doubts about Microsoft’s testing, pace of delivering updates, and dependence on the Insider Program to find and report such problems.

Making this worse is that the bug does appear to have been reported. Numerous reports in Feedback Hub, Microsoft’s bug-reporting tool for Windows 10, complain of data deletion after installing preview releases. None of the bug reports appears to have many upvotes, and the reports generally lack in detail. So just as with the more recent reports, they make it hard to pin down the root cause. But it’s obvious that, at the very least, something was going wrong and that it was important enough that it should have been investigated and addressed.

Compounding this issue is that Microsoft’s rollout of version 1809 was already unusual. For reasons unknown, Microsoft didn’t release this update to the Release Preview ring, so the most realistic installation scenario—someone going from version 1803 to 1809—didn’t receive much testing anyway. And all this is against the longer-term concern that Microsoft laid off many dedicated testers without really replacing the testing that those testers were doing.

Microsoft issues a fix

Microsoft has fixed a bug in its latest Windows 10 October 2018 update that deleted files en masse for some users.

The software giant was forced to pull the update over the weekend due to the data deletion issues.

Now, the update is back online, but Microsoft says it is only releasing it to members of the Windows Insider program before making it available to the general public.

 

By Sam Mkokeli, Mike Cohen, Paul Vecchiatto and Amogelang Mbatha for Fin24/Bloomberg 

South African President Cyril Ramaphosa appointed former central bank Governor Tito Mboweni as his finance minister on Tuesday, replacing Nhlanhla Nene, who lied about his meetings with the Guptas.

Mboweni, the nation’s fifth finance chief in less than three years, will have to oversee an economy that’s fallen into recession and help Ramaphosa rebuild confidence battered by almost nine years of mismanagement under former President Jacob Zuma. He must also reassure investors and credit-rating companies of credible plans to stabilise debt and revive growth in the mid-term budget on October 24.

“In the wake of Mr. Nene’s resignation, I have decided to appoint Mr. Tito Mboweni as minister of finance with immediate effect,” Ramaphosa said. “Mr. Mboweni takes on this responsibility at a very critical time for our economy.”

Mboweni, who trained as an economist, served as head of the South African Reserve Bank for a decade until 2009 and for four years as labor minister in former President Nelson Mandela’s cabinet. His major achievement at the central bank was building the nation’s foreign-exchange reserves to almost $40 billion from less than $10 billion.

The rand gained 0.6% to R14.76/$ by 16:51 in Johannesburg, reversing an earlier decline of as much as 1.4%. Yields on benchmark 2026 government bonds fell six basis points to 9.22%.

By Kgomotso Modise for EWN

The Gauteng government says while it would like to see e-tolls scrapped, it’s not up to the province to make the call.

Last week, while answering to Parliament, Transport Minister Blade Nzimande revealed that over 15 000 motorists have been issued with summonses for outstanding debt.

In July, the provincial ANC announced plans to do away with the disastrous system with Premier David Makhura conceding that it has failed.

Gauteng government spokesperson Thabo Masebe says the e-toll system was introduced by the national government so the province has no power to scrap it.

“The Gauteng government has made its position clear. But we don’t run or operate the e-toll system. This is a national government project and can only be scrapped by them.”

Masebe also says Gauteng has no say in who gets summonsed by roads agency Sanral.

“I can’t talk about Sanral’s fees and the operation of the e-tolls. That must be directed to the national government.”

He says Makhura and President Cyril Ramaphosa agree that something has to be done, but no plan has been finalised.

By Luke Daniel for The South African 

Embattled state owned enterprises (SOEs) are South Africa’s biggest and most dangerous economic stumbling blocks.

This is according to the international rating agency, Moody’s, which points to Eskom’s major failings as a cause for national concern.

State owned enterprises all performing dismally
While speaking at the Investor Service’s conference on Thursday, the agency’s senior credit officer for infrastructure finance, Helen Francis, outlined the dire position most SOEs find themselves in.

The massive financial drain perpetuated by failing SOEs has been well documented. Eskom, in particular, has reported over R19bn in irregular expenditure and continues to rely on government bailouts to stay afloat.

Worrying, Eskom is undoubtedly the largest and most vital SOE – supplying 90% of South Africa with electricity.

Yet, the embattled national power supplier just can’t seem to get back on its feet, following Gupta interference involving former company boss, Brian Molefe. Recently, the company issued an ominous statement, bemoaning the fact that its coal reserves were dwindling as a result of dodgy tenders.

Looking across the entire SOE spectrum paints a dismal picture. It’s not just Eskom that is dying, and in that way draining the already unsteady economy of vital funds. Transnet, South African Airways (SAA), the South African Broadcasting Corporation, and many more national companies are failing to make ends meet.

Corruption still plaguing SOEs
Speaking to Fin24, Futuregrowth Asset Management’s, Olga Constantatos, said that turning the situation around would not be easy and that much more needs to be done.

Constantatos commented on the disease of corruption and gross mismanagement which afflicts both Eskom and Transnet, saying:

“Much more needs to happen. The latest results at Transnet and Eskom point to the circumventing of controls – with Eskom’s R20 billion in irregular expenditure and Transnet’s R8bn. We need to see prosecutions. We need to see arrests of people who were stealing money essentially from you and me.”

Constantatos added that there needs to be stiffer repercussion for SOEs which flout due process, and as such, essentially, steal from the taxpayer and investors, saying:

“As bond investors, we are custodians of the nation’s pension funds. We should not be allocating capital to institutions where there is malfeasance, or lend blindly to companies that are not responsible.”

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