Latest news with #R3-billion
The Citizen
11 hours ago
- Business
- The Citizen
Metro's financial crisis is growing
The DA has raised alarms over the city's escalating deficit, which has now grown by a staggering R859-million. This is according to Jacqui Uys, the party's spokesperson on finance in the metro. This growing deficit is a stark contrast to the claims of the ANC's deputy mayor, Eugene Modise, who insisted at a city council budget approval meeting that the city's financial woes are over. Uys, however, argues that the situation is far from resolved and that the current government's handling of finances is putting the city's future at risk. The most immediate concern, according to Uys, is the rapid growth of the metro's deficit. 'The greatest risk for the city to continue to deliver quality services to residents is financial decline,' Uys explained. 'We are already seeing that the city is struggling to deliver key services like keeping the lights on, repairing potholes, maintaining streetlights, and fixing water leaks.' She said when the DA was in control of the city, a comprehensive financial recovery plan was adopted, targeting a R3-billion deficit. By the end of September 2024, the plan showed some success, improving the city's revenue collection by R315-million. 'Unfortunately, this positive momentum appears to have reversed under the current leadership, with the city's collection rate showing a decline of more than R850-million by April this year, a 19% shortfall from the target. Uys points out that the city's current administration is not prioritising debt collection in the way it should be. She believes this lack of focus on debt collection has compounded the city's financial troubles. As of March, Tshwane had outstanding debt amounting to R5.7-billion. Given these arrears, Uys is sceptical of the current administration's ability to maintain a funded budget for the upcoming 2025/26 financial year as promised by the ruling government. 'If the city is collecting under target, with R5.7-billion in unpaid debtors, they will not balance their books by June 30,' she said. 'This means they will start the new financial year with a deficit, and will not have enough income to cover their expenses.' The current administration, led by the ANC and its allies, has claimed that the city has a 'funded' budget for the upcoming financial year. However, Uys is not convinced. According to her, this notion of a funded budget is based on overly optimistic assumptions about the city's revenue collection. 'The city's ability to balance its books will be severely hampered if it continues to miss its revenue targets,' Uys argued. 'They are essentially trying to tax their way out of financial trouble, but residents are already burdened with high rates. Increasing taxes and introducing new levies, like the newly introduced waste levy, will make it harder for residents to pay their bills, which makes the 93% revenue collection target set for 2025/26 unrealistic.' While the new waste levy and increased income from a revised property valuation roll are expected to generate more revenue, Uys warned that this approach risks overburdening residents, who are already stretched thin by escalating costs. In an attempt to address the city's mounting debt, the coalition government has introduced debt relief schemes and incentive programmes. However, Uys is highly critical of these initiatives. 'The debt relief scheme was structured in a way that benefits the wealthy, who can afford to pay but choose not to,' she said. 'It did not benefit the average household, which may want to pay their bills but is unable to do so due to financial constraints.' One of the key measures that the DA introduced during its time in power was the Mayoral Charter for financial recovery, adopted in June 2024. Uys strongly believes that this plan is the key to the metro's financial health and has called on the current administration to implement it. The Deputy Mayor has been approached for comment, but none was received at the time of publication. Do you have more information about the story? Please send us an email to bennittb@ or phone us on 083 625 4114. For free breaking and community news, visit Rekord's websites: Rekord East For more news and interesting articles, like Rekord on Facebook, follow us on Twitter or Instagram or TikTok. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading! Stay in the know. Download the Caxton Local News Network App Stay in the know. Download the Caxton Local News Network App here
Daily Maverick
06-06-2025
- Automotive
- Daily Maverick
New rules mandate energy-efficient motors — a win for SA's strained power grid
As of June 2025, South Africa has activated mandatory regulations that affect a R3-billion industry and will result in annual energy savings of 840 gigawatt hours — enough to power a city the size of Polokwane or approximately 140,000 households for a year. Electric motors might not sound exciting — but they're everywhere. They power conveyor belts in factories, water pumps on farms, fans in cooling systems, and crushers in mines. And as of June 2025, every new motor sold in South Africa will have to meet higher energy efficiency standards. That's because South Africa has officially implemented its Minimum Energy Performance Standards (Meps) for electric motors, bringing the country in line with global standards. The change affects a R3-billion industry, with the goal of saving up to 10% of energy per low voltage motor — which is significant in a country where demand exceeds supply. The new rule requires that most three-phase, low-voltage electric motors sold in South Africa meet IE3 (International Efficiency) standards. Less efficient IE1 and IE2 motors will be phased out over time, as old ones reach their end of life. Regulated by the National Regulator for Compulsory Specifications, this shift applies to motors rated between 0.75 kW and 375 kW with two, four, six, or eight poles — the kind you'd find in factories, farms, and commercial buildings. According to the International Energy Agency, electric motors and motor systems are responsible for about 53% of the world's total electricity consumption. And standards like MEPs offer the potential to reduce the energy demand of motor systems by 20 to 30% with short payback periods. Fanie Steyn, Executive of the Electric Motor Division at WEG Africa, a leading motor manufacturer, said that about 250,000 IE1 motors were imported into South Africa each year, representing a R3-billion value chain. Currently, there's a 3:1 ratio of IE1 to IE3 motors entering the country. 'From now, that's all about to change,' said Steyn. Those motors now need to be replaced with IE3 models, which are typically 4 to 10% more efficient. This might not sound like much — but considering that all electric motors account for around 65% of industrial energy use, and industry accounts for about 60% of the country's total energy demand, these efficiency gains are not negligent. 'Electric motors are the prime mover for all industry — almost everything that moves is driven by an electric motor. 'If you go to where a cold drink is bottled, the pump that pumps it, the conveyor that moves the bottles, where bread is made, or where mielies are crushed to make flour — it's all powered by motors,' he said. 'Almost everything that moves is by a motor.' Efficiency standard So starting this year, the new rules will require that all new motors meet the IE3 efficiency standard, which means they use electricity more efficiently and last longer. While the rules don't force businesses to replace existing motors immediately, over time, as older motors wear out, they will be replaced with these more efficient models. Dr Theo Covary, the lead researcher of the cost benefit analysis undertaken to inform these new regulations, estimates that this change will save South Africa 474 gigawatt hours (GWh) of electricity in the first year alone — enough to power about 44,000 homes for a year. Over the next decade, the savings will add up to 5,763 GWh, roughly the annual electricity use of a major South African city. 'The new IE3 regulation is expected to reduce electricity demand by approximately 0.25% in year one, which is reducing electricity by 0.25% in one year, 'which may seem small and insignificant but is material given the high net economic benefit to the economy', said Covary. The total cumulative energy savings of 5,763 GWh after 10 years is equivalent to the electricity used by Nelson Mandela Bay in one year. This is because as more and more older, less efficient motors reach their end of life and get replaced by more efficient models, the savings increase. In addition to energy savings, this reduction would prevent about 5 million tons of CO₂ emissions. To put this in perspective, offsetting that amount of carbon would require planting spekboom — an indigenous South African plant known for its carbon sequestration ability — over an area of approximately 3,333 square kilometres, which is about twice the size of the Western Cape's Garden Route District. Energy efficiency adds up If you consider that Eskom generated about 200 terawatt-hours (TWh) of electricity in the financial year ending March 2024, the estimated 840 GWh saved (or 0.84 TWh) from this new standard represents 0.25% of the power the country uses in a year. ' It might not sound like much, but believe me — 0.25% is a lot, and it all adds up,' said Chris Yellend, an electrical engineer and energy analyst from Business EE Intelligence. 'It's good that South Africa is following suit and becoming more energy efficient.' He added that energy efficiency measures like this offer the best returns in terms of cost. 'Instead of spending billions on new generation infrastructure, the economy can invest in efficiency — it's a no-brainer. Improving energy efficiency is the most cost-effective way of 'building' new electricity supply. It's not as insignificant as it might seem.' Steyn echoed these sentiments, saying: 'What do you do if you don't have energy? You have to build more power stations, maybe solar or wind farms — but all those options are massive projects with huge capital outlay. And it takes time and long periods of investment and installations before you can do that. 'We have an energy crisis, so in the short term one of the quickest or easiest ways to overcome that is to increase efficiency of products.' Steyn added: 'South Africa has done a phenomenal job over the years with labelling programmes — for fridges, TVs, lights. But now, finally, we're targeting the big energy consumers: electric motors.' According to a 2022 cost-benefit analysis by Covary and economist Linton Reddy of DNA Economics — which informed the regulation — these seemingly small savings are actually substantial, especially given the poor performance of Eskom's generation fleet. Despite the modest efficiency improvements, the long operating hours of motors translate into significant overall savings. To put it into context, Yelland said: 'If you value electricity at around R2.00 per kilowatt-hour, that's a saving — or a reduction in revenue to Eskom — of about R1.68-billion.' Tax breaks and rebates for motor upgrades Companies that upgrade to the new IE3 motors can tap into financial incentives. Zadok Olinga, a former president of the Southern Africa Energy Efficiency Confederation and director of resource management consultancy Oelinga, said the new minimum standards aligned with South Africa's broader push for energy efficiency — and opened the door to claiming Section 12L tax deductions and Eskom rebates. Under Section 12L, businesses can claim 95 cents per kilowatt-hour of verified energy saved as a tax deduction. Eskom also offers a 41c/kWh rebate for projects that cut electricity use — including motor upgrades — as long as minimum savings and demand reduction targets are met. Phase in Manufacturers and Original Equipment Manufacturers can still sell off their existing IE1 and IE2 stock until May 2026. End-users — such as factories or farms — aren't required to immediately replace older motors, but must buy energy-efficient ones when they do. 'Motors are built to last around 20 years,' said Van Niekerk from WEG.'But in reality, many reach end-of-life within seven to 10 years, especially in demanding environments.' For businesses that run motors 24/7, the higher upfront cost of an IE3 motor is often recovered in a matter of months through lower electricity bills. For others — say, a bakery or a workshop that runs motors eight hours a day — the payback period might be two to three years. DM
Mail & Guardian
04-05-2025
- Business
- Mail & Guardian
Trade commission protects legacy steel giant from competitive imports
The International Trade Administration Commission of South Africa (Itac) has imposed a 9% tariff on imported hot-rolled steel to protect domestic producers, in particular the legacy steelmaker ArcelorMittal South Africa (Amsa). The decision follows an application by the South African Iron and Steel Institute (Saisi) on behalf of Amsa for remedial action. The tariff applies to all countries except listed developing countries which collectively account for less than 10% of imports. Itac announced the final determination on Friday, citing a 105% surge in steel imports between 2020 and 2023—almost half of which originated from China, 22% from the E.U and 6.7% from the U.S—as the Saisi requested protection against a flood of imports, which Itac agreed to by imposing the annual 9% tariff on hot-rolled steel for the next three years. Hot-rolled steel, which is processed above 972°C for strength and flexibility, is used in mining and earth-moving equipment, pipes, tubes and water tanks. Domestic merchants largely import this product due to pricing for machinery and construction equipment. In its investigation, Itac found that 'unforeseen developments' such as global oversupply had harmed producers in the Southern African Customs Union (Sacu), which comprises South Africa, Namibia, Botswana, Lesotho and Eswatini. While the commission acknowledged that overwhelming competition in itself is not inherently unfair, it concluded there is a clear 'causal link' between the surge in imports and In its submission to the commission, the Botswana government reported that it had conducted a similar analysis between 2020 and 2024, which confirmed that imports had the same impact on its local industry. Critics argue instead that Amsa's outdated production methods and high prices make it uncompetitive in the current global market, thus necessitating protective measures. Once the continent's leading producer of steel products such as rods, bars and rails, Amsa has received three bailouts since 2024 amounting to R3-billion in an effort to stave off downsizing. In addition to the new bailout, the department of trade, industry and competition (dtic) previously imposed a 9% tariff on long steel and a 52% anti-dumping duty on steel imports at the behest of Amsa. Speaking to the Mail & Guardian, Itac commissioner Ayabonga Cawe said domestic production was in crisis and required urgent intervention. However, he added that local demand remains worryingly weak. According to the Steel and Engineering Industries Federation of Southern Africa (Seifsa), the country's per capita steel consumption dropped by 37% — from 92 kilograms in 2013 to just 67 kilograms in 2024 — far below the global average of 230 kilograms. 'We need a hybrid production model that accommodates both traditional iron ore beneficiation and modern electric arc furnaces that use scrap metal,' Cawe said. 'India is scrambling to import scrap, while we sit with both scrap metal and iron ore. There has been an effort to turn the country into a construction site, and we have to be honest it is taking very long to kick off.' National Employers' Association of South Africa chair Gerhard Papenfus said that the government's continued support for Amsa is 'just delaying the inevitable' and 'denying the reality' of the company's inability to compete. 'The bottom line is that the mill is uncompetitive and running on 50% production. That is why they want protection, lowered electricity prices and subsidies on iron ore,' said Papenfus, adding 'Everyone is paying to keep this old mill alive.' Following its announcement to shut down operations at its Newcastle and Vereeniging plants — Amsa maintains that it cannot delay the closures beyond August without further state support, including import duties on foreign steel and an end to subsidised scrap-based steelmaking. In February, Gauteng Premier Panyaza Lesufi announced that a BRICS partner will take over steel production after Amsa's wind down in Vereeniging, already investing R2.5 million to preserve 100 jobs. The International Development Corporation (IDC) and China's Hubei Iron and Steel Group (HBIS) signed a multi-phase R82.7-billion memorandum of understanding in September to establish a local low-cost iron and steel facility. The latest Amsa bailout includes a six-month due diligence review by the IDC, which will determine whether to increase its 7% stake or exit entirely. Asked about the review's objectives, IDC head of corporate affairs Tshepo Ramodibe told the M&G that the corporation 'can't pre-empt outcomes or the next course of action'. 'The due diligence will inform the nature and extent of our support to the business,' he said. 'Transitioning Amsa's processes to scrap-based steel production is one of the questions the review seeks to interrogate.' The company, Dtic spokesperson Yamkela Fanini added that Amsa remains the country's sole producer of hot-rolled and long steel products and that the 'While the government cannot dictate production technologies, decarbonisation and diversification are central to South Africa's industrial policy. This includes decarbonising steel production and promoting green methods for both flat and long steel,' Fanini said. Cawe acknowledged a persistent misalignment between upstream and downstream players in the steel industry — something that the government's While downstream manufacturers want to import cheaper and climate compliant steel to lower input costs, upstream producers such as Amsa want protection from international competition, creating uncertainty across the sector. Despite Amsa's determination to remain a central player, downstream industries increasingly favour competitive imports. In its report Seifsa said the metal industry, which accounts for 25.5% of the manufacturing sector, has not recovered since its 2007 peak. It contracted by 12.2% at the start of the Covid-19 pandemic and declined by a further 1.4% in 2024. The federation states the industry has shed over 200 000 jobs since the global recession from employing 570 000 in 2008 to a little over 360 000 in 2025 and continues to see an annual 0.7% decline in fixed capital investment. It warns that the prolonged weakness in production may become structural. Steel-related goods such as fabricated metals and machinery, accounting for 43% production, experienced a combined 15% decline in output last year. 'Post-Covid deterioration is most notable in capacity utilisation, with all steel subsectors operating below the optimal 85% level,' the federation said. Seifsa also noted a R188-billion trade deficit on steel imports from China, while South Africa's steel exports to China amounted to just R43-billion. On behalf of Amsa the steel institute argued that China's state-subsidised economy creates unfair advantages, flooding the global market and depressing domestic demand in emerging economies. 'Given the nature of the steel industry excess capacity in one region can potentially displace production in other regions, harming producers in those markets,' Saisi said in its submission to Itac. However, the UK government, submitting as a concerned party, expressed doubts about the commission's claim that unforeseen global developments directly harmed local producers. While the UK acknowledged that Chinese subsidies contribute to overcapacity, it said the commission failed to consider the full extent of local preference for cheaper foreign steel. Japan's Mills Steel Corporation also questioned the scope of the investigation, arguing that the data window of 2020 to 2023 shows a misleading increase trend narrative, as imports had declined pre-pandemic and fluctuated during the post-pandemic recovery period. The company argued Amsa The commission stressed that the 9% tariff will remain in place for 200 days to allow domestic producers time to adjust. It is yet to be seen if Amsa will improve its competitiveness and whether the country will ever rebuild its status as a construction hub given the government's continued support for the legacy steel giant.
Daily Maverick
21-04-2025
- Health
- Daily Maverick
Inside SA Medical Research Council's race to rescue health research amid US aid cuts
Health research in South Africa has been plunged into crisis with the abrupt termination of several large research grants from the US, with more grant terminations expected in the coming days and weeks. Professor Ntobeko Ntusi, head of the South African Medical Research Council, tells Spotlight about efforts to find alternative funding and to preserve the country's health research capacity. Health research in South Africa is facing an unprecedented crisis due to the termination of funding from the US government. Though exact figures are hard to pin down, indications are that more than half of the country's research funding has in recent years been coming from the US. Many health research units and researchers that receive funding from the US National Institutes of Health (NIH) have in recent weeks been notified that their grants have been terminated. This funding is being slashed as part of the efforts by President Donald Trump's administration to reduce overall federal spending and end spending that does not align with its political priorities. Specifically, the administration has sought to end spending supporting LGBTQ+ populations and diversity, as well as equity and inclusion. Since many grants for HIV research have indicators of race, gender and sexual orientation in their target populations and descriptions, this area of research has been particularly hard hit by the cuts. There have also been indications that certain countries, including South Africa and China, would specifically be targeted with NIH cuts. On 7 February, Trump issued an executive order saying the US would stop providing assistance to South Africa in part because it passed a law that allowed for the expropriation of land without compensation, and separately because the South African government took Israel to the International Court of Justice on charges of genocide in Gaza. Before the NIH cuts some local research funded through other US entities, such as the US Agency for International Development and the Centers for Disease Control and Prevention, were also terminated. How much money is at risk? 'In many ways the South African health research landscape has been a victim of its own success, because for decades we have been the largest recipients of both [official development assistance] funding from the US for research [and] also the largest recipients of NIH funding outside of the US,' says the president and CEO of the SAMRC, Professor Ntobeko Ntusi. Determining the exact amount of research funds we get from the US is challenging. This is because funding has come from several different US government entities and distributed across various health research organisations. But the bulk of US research funding in South Africa clearly came from the NIH, which is also the largest funder of global health research. According to Ntusi, in previous years the NIH invested on average $150-million – or almost R3-billion – into health research in South Africa every year. By comparison, the SAMRC's current annual allocation from the government is just under R2-billion, according to Ntusi. 'Our baseline funding, which is what the National Treasury reflects [about R850-million], is what flows to us from the [Department of Health],' he says, adding that they also have 'huge allocations' from the Department of Science, Technology and Innovation. (Spotlight reporting has quoted the R850-million figure from Treasury's budget documents, and did not take the additional funds into account.) How is the SAMRC tracking US funding terminations Ntusi and his colleagues have been trying to get a clearer picture of the exact extent and potential impacts of the cuts. While some US funding given to research units in South Africa flows through the SAMRC, the bulk goes directly to research units from international research networks, larger studies and direct grants. Keeping track of all this is not straightforward, but Ntusi says the SAMRC has quite up-to-date information on all the terminations of US research awards and grants. 'I've been communicating almost daily with the deputy vice-chancellors for research in all the universities, and they send me almost daily updates,' says Ntusi. Heads of research units were also keeping him informed. According to him, of the about $150-million in annual NIH funding, 'about 40%… goes to investigator-led studies with South Africans either as [principal investigators] or as sub-awardees and then the other 60% [comes from] network studies that have mostly sub-awards in South Africa'. Figures that Ntusi shared with Spotlight show that large tertiary institutions, like the University of the Witwatersrand, the University of Cape Town and the University of Stellenbosch, could in a worst-case scenario lose more than R200-million each, while leading research units, like the Desmond Tutu Health Foundation and the Centre for the Aids Programme of Research in South Africa, could each lose tens of millions. The SAMRC figures indicate that while many grants have already been terminated, there are also a substantial number that have not. Where will new money come from? Ntusi says the SAMRC is coordinating efforts to secure new funding to address the crisis. 'We have been leading a significant fundraising effort, which… is not for the SAMRC, but for the universities who are most affected [and] also other independent research groups,' he says. 'As the custodian of health research in the country, we are looking for solutions not just for the SAMRC but for the entire health research ecosystem.' Ntusi explains that strategically it made more sense to have a coordinated fundraising approach rather than repeating what happened during Covid-19 when various groups competed against each other and approached the same funders. 'Even though the SAMRC is leading much of this effort, there's collective input from many stakeholders around the country,' he says, noting that his team is in regular communication with the scientific community, the Department of Health and Department of Science, Technology and Innovation. The SAMRC is also asking the Independent Philanthropic Association of South Africa and large international philanthropies for new funding. He says some individuals and philanthropies have already reached out to the SAMRC to find out how they can anonymously support research endeavours affected by the cuts. Can the government provide additional funds? Ntusi says the SAMRC is in discussions with Treasury about providing additional funds to support health researchers through the funding crisis. The editors of Spotlight and GroundUp recently called on Treasury to commit an extra R1-billion a year to the SAMRC to prevent the devastation of health research capacity in the country. They argued that much larger allocations have previously been made to bail out struggling state-owned entities. The government has over the past decade spent R520-billion bailing out state-owned entities and other state organs. How will funds raised by the SAMRC be allocated? One dilemma is that it is unlikely that all the lost funding could be replaced. This means tough decisions might have to be made about which projects are supported. Ntusi says the SAMRC has identified four key areas in need of support. The first is support for postgraduate students. 'There's a large number of postgraduate students… who are on these grants' and 'it's going to be catastrophic if they all lose the opportunity to complete their PhDs,' he says. Second is supporting young researchers who may have received their first NIH grant and rely entirely on that funding for their work and income. This group is 'really vulnerable [to funding terminations] and we are prioritising [their] support… to ensure that we continue to support the next generation of scientific leadership coming out of this country.' A third priority is supporting large research groups that are losing many sources of funding. These groups need short-term help to finish ongoing projects and to stay afloat while they apply for new grants – usually needing about nine to 12 months of support, Ntusi explains. The fourth priority, he says, is to raise funding to ethically end clinical and interventional studies that have lost their funding, and to make sure participants are connected to appropriate healthcare. Protecting participants is an important focus of the fundraising efforts, says Ntusi, especially since many people involved in large HIV and TB studies come from underprivileged communities. Ultimately, he says they hope to protect health research capacity in the country to enable South African health researchers to continue to play a meaningful and leading role in their fields. 'If you reflect on what I consider to be one of the greatest successes of this country, it's been this generation of high-calibre scientists who lead absolutely seminal work, and we do it across the entire value chain of research,' says Ntusi. 'I would like to see… South Africa [continue to] make those meaningful and leading pioneering contributions.' DM
