Connect with us

Economy

Power Crisis Looms: South Africa Braces for Record-Breaking Winter Blackouts

Published

on

Power - Investors King

As winter descends upon South Africa, the nation finds itself on the precipice of an unprecedented power crisis. Eskom Holdings SOC Ltd., the state electricity company, is struggling to meet the surging demand, and the country is bracing for an alarming wave of record-breaking blackouts.

With 3,000 megawatts less capacity than the previous year, Eskom’s acting CEO, Calib Cassim, delivered a sobering message to reporters: South Africa is heading into a “difficult winter.” In a worst-case scenario, the utility may be forced to implement loadshedding on a massive scale, cutting a staggering 8,000 megawatts from the electricity grid. This would translate into 16 hours of outages during a 32-hour cycle, pushing the nation’s resilience to the brink.

Already burdened by power rationing, South Africa has experienced its most severe bout of outages in recent memory. Eskom’s inability to keep up with demand, largely due to aging and poorly maintained power plants, has dealt a blow to the nation’s economic growth rate. The central bank estimates that the power crisis will shave off a substantial 2 percentage points from South Africa’s already struggling economy this year.

The consequences of the ongoing blackouts extend beyond the economic sphere, as investor sentiment takes a hit. The South African rand, the national currency, has witnessed a sharp decline of 12% this year, marking it as the worst-performing major currency among those monitored by Bloomberg. This stark decline sets South Africa apart from its emerging-market peers, who have managed to make strides against the US dollar.

Analysts are sounding the alarm, with headlines dominated by the intensification of loadshedding and its grim implications for the country. Although South Africa has implemented several measures to stabilize the power supply, progress has been limited. President Cyril Ramaphosa’s plans to expand the procurement of renewable energy have been hindered by a lack of grid capacity, hampering efforts to transition to cleaner and more sustainable sources.

In a bid to address the crisis, Ramaphosa appointed Kgosientsho Ramokgopa as the electricity minister. However, the absence of clearly defined powers has impeded his ability to effectively resolve the dire situation, leaving South Africa in a precarious position.

Eskom’s recent efforts to improve its performance have been plagued by setbacks. Maintenance at the Koeberg nuclear facility has fallen behind schedule, and repairs are required at the Kusile coal-fired plant. The energy availability factor, a crucial metric that measures usable generation capacity, has plummeted to 52%, well below the targeted 60%, according to Cassim.

Adding to Eskom’s woes, former CEO Andre de Ruyter’s memoir has exposed dysfunctionality within the company’s plants, instances of improper conduct by officials, and persistent political interference. These revelations have further eroded trust and cast a shadow of uncertainty over Eskom’s ability to navigate the power crisis.

Crime and sabotage have compounded the challenges faced by Eskom. Incidents are under investigation, diverting attention and resources away from essential plant operations. Eskom emphasizes the need to concentrate on running the facilities efficiently and calls on the public to reduce electricity consumption, especially during peak periods.

South Africa finds itself at a critical juncture as it confronts an imminent power crisis of unprecedented magnitude. The outcome of this challenge will determine the nation’s economic stability, investor confidence, and its ability to secure a sustainable energy future. As winter approaches, the need for swift and effective solutions has never been more urgent. Failure to address this crisis could plunge South Africa into darkness, both literally and metaphorically.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

Published

on

Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

Continue Reading

Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

Published

on

Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

Continue Reading

Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

Published

on

Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending