SAPO vows to deliver R1.5bn profit by 2029
JOHANNESBURG - The Post Office is hoping its bold five-year turnaround plan will deliver profits.
It aims to deliver a R1.5-billion profit by 2029.
But massive losses, public distrust, and reliance on bailouts may stamp out those aims.
Parliament's oversight committee says the plan is vague, lacks investor confidence, and continues to lean heavily on taxpayer bailouts.
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Daily Maverick
2 hours ago
- Daily Maverick
The hidden cost of Eskom's electricity deals with smelters
Eskom, Nersa and the Ministry of Energy & Electricity must explain why energy-intensive smelters deserve these deals – and why other commercial, industrial, manufacturing and mining customers, and ordinary consumers, should foot the bill. A fierce debate has erupted over the preferential electricity pricing deals – known as Negotiated Pricing Agreements (NPAs) – that Eskom has struck with major industrial users like South32's Hillside aluminium smelter and ferrochrome producers. Government insists these deals are vital to protect jobs and exports, but critics say they lack transparency, impose costs on other customers and ordinary consumers, and contradict the principles of a fair and competitive electricity market. Hillside: South Africa's 'congealed electricity' South32's Hillside Aluminium smelter in Richards Bay is one of the largest of its kind globally, and a cornerstone of South Africa's aluminium industry. With no local bauxite reserves, Hillside relies on imported feedstock and vast amounts of electricity – 10.3 TWh per year, around 5.6% of Eskom's total sales. Under the 10-year NPA approved by Nersa in 2021, Hillside pays a discounted rate for electricity that currently amounts to around R10-billion per year less than it would pay on Eskom's standard Megaflex tariff for mines and large industry. The effective discount over the life of the agreement is about 50%. Interruptability vs affordability Eskom justifies this discount by pointing to Hillside's role in stabilising the grid. The smelter's operations can be interrupted briefly during supply shortfalls, providing a form of demand-side flexibility that Eskom can use instead of reserve generation. But according to a recent and critical analysis by Meridian Economics, this function could be replicated – more cheaply – using 1.2 GW of two-hour battery energy storage. Using current battery procurement prices from the IPP Office, such a solution would cost less than R3-billion per year, suggesting a net discount of R7-billion annually to Hillside. The case for socioeconomic value Supporters of the NPA argue it helps preserve jobs and downstream aluminium beneficiation. Hillside employs about 1,800 workers directly and supplies 27% of its output domestically. But critics say this argument is based on false binaries – that without the NPA, the smelter would close and jobs would vanish. Instead, the electricity used at Hillside could be reallocated to smaller businesses, potentially yielding broader and more resilient economic benefits. The real question, then, is not whether Hillside provides value, but whether that value exceeds what other sectors could generate with the same power. Nersa and the fog of regulation The National Energy Regulator of South Africa (Nersa) approved the Hillside NPA in 2021, but the process was opaque. The decision lacked detailed economic modelling, failed to evaluate alternatives like battery storage, and made no attempt to compare Hillside's benefit to that of alternative electricity uses. It would further appear that no other party in South Africa has done a proper economic analysis and calculation of the real socioeconomic benefits of the Hillside NPA. Furthermore, key economic inputs – like the pricing escalation clause and aluminium price 'upside' mechanisms – were based on unclear rationale. Although the NPA was touted as free of embedded derivatives, Meridian Economics argues that a call-option structure remains embedded in the deal. Cabinet's broader move — more NPAs are coming In a related development, the Cabinet has just approved a framework to extend NPAs to South Africa's ferrochrome and alloys smelters – long-time industrial electricity users struggling with soaring electricity tariffs. According to Energy and Electricity Minister Kgosientsho Ramokgopa, the aim is to protect energy-intensive exporters and maintain South Africa's industrial base. But this raises more questions than answers: Are these deals being driven by sound economic analysis and proper power planning, or by ad hoc industrial policy dressed up as regulation? A system at odds with reform Eskom is in financial distress. Other customers – particularly households and SMEs – are paying ever-higher prices for less reliable power. Load shedding, grid instability and rising tariffs have become hallmarks of the crisis. And yet, one of Eskom's biggest customers pays half-price for electricity – a situation kept under wraps until civil society group Open Secrets forced publication of the full Hillside NPA. That it took four years for civil society to scrutinise the deal signals how deeply broken the oversight processes are. Towards a transparent future The principle of cross-subsidisation can be legitimate, but only when clearly justified. Preferential electricity pricing must be scrutinised like any public subsidy: through open modelling, public hearings and clear metrics of cost-benefit. Right now, that is not happening. Eskom, Nersa and the Ministry of Energy & Electricity must explain why energy-intensive smelters deserve these deals – and why other commercial, industrial, manufacturing and mining customers, and ordinary consumers, should foot the bill. Without that, NPAs risk entrenching elite privilege at the expense of national equity, economic dynamism and the future of South Africa's energy system. DM
eNCA
11 hours ago
- eNCA
SAPO vows to deliver R1.5bn profit by 2029
JOHANNESBURG - The Post Office is hoping its bold five-year turnaround plan will deliver profits. It aims to deliver a R1.5-billion profit by 2029. But massive losses, public distrust, and reliance on bailouts may stamp out those aims. Parliament's oversight committee says the plan is vague, lacks investor confidence, and continues to lean heavily on taxpayer bailouts.
The Citizen
17 hours ago
- The Citizen
Big Docrra AGM turnout points to growing civic momentum
More than 200 residents rallied at the Salt Rock Country Club last week seeking a stronger voice in local governance. The event, hosted by the Dolphin Coast Residents and Ratepayers Association (Docrra), underscored growing civic momentum on the North Coast, with residents increasingly engaged in shaping the future of their communities. Docrra chairman Deon Viljoen reported an 85% increase in revenue, with about R500 000 in reserves, although expenses had also risen by 50%. The re-election of all committee members was uncontested. He highlighted growing membership, increasing public engagement and Docrra's continued efforts to address municipal governance, infrastructure and financial accountability. The organisation grew from 23 to 34 estate members in the past year, and with individual homeowners included, now represents nearly 7 000 members. Viljoen was critical of KwaDukuza mayor Ali Ngidi, accusing him of disrespecting residents and undermining the rule of law. He suggested leadership changes at KwaDukuza municipality (KDM) could be coming, citing a R35.7-million fraud and embezzlement case currently under investigation by the Saps Hawks, opened in January. 'We know a leadership change is imminent at KDM. We don't have to wait until 2026, something is going to happen before then,' said Viljoen. He said Docrra's approach was to apply pressure on the municipality, but with the aim of co-governance is a way to engage constructively,' he said. Viljoen also noted that R2-billion of KDM's R3-billion budget comes from Docrra-aligned estates and organisations. 'When the penny drops with the municipality oversight organisations, they give us the time and listen to us,' he said. COO Mary Kassam hosted a panel discussion featuring Viljoen and subcommittee chairs Brian Pottinger (environment) and Flip Helberg (electricity), who addressed environmental concerns and the National Energy Regulator's audit of KDM. The evening's keynote address was delivered by KwaDukuza Residents Forum chairman Warwick Chapman, who urged residents to vote strategically in upcoming elections, especially in Ballito's Ward 6 and 30. 'Real change is within our grasp,' Chapman said. 'Changing voting patterns is not simple, but it's essential. It's okay to change your vote to get the right kind of government.' Stay in the loop with The North Coast Courier on Facebook, X, Instagram & YouTube for the latest news. Mobile users can join our WhatsApp Broadcast Service here or if you're on desktop, scan the QR code below. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
