South African power utility Eskom needs a cash injection by April to survive, the country's public enterprises ministry warned in a presentation on Wednesday, although it later changed its wording to say the firm was "facing liquidity challenges".
State-owned Eskom, which supplies more than 90 percent of the power in Africa's most industrialised economy, cut electricity for a fourth straight day on Wednesday.
Eskom is laden with more than $30 billion (23 billion pounds) of debt and is battling a shortage of capacity that threatens to derail government plans to lift the sluggish economy.
President Cyril Ramaphosa said last week that the government would support Eskom's balance sheet but said details would be announced in a budget speech by the finance minister on Feb. 20.
The department of public enterprises, which oversees Eskom, said in a presentation to parliament that Eskom was technically insolvent and would "cease to exist" at the current trajectory by April, unless it gets a bailout.
The ministry later sent a version of the same presentation to journalists which it said had been corrected, which removed the timeframe and in which it substituted the words "will cease to exist" with "is facing liquidity challenges". A ministry spokesman did not answer calls seeking an explanation.
Analysts say Eskom no longer generates enough cashflow or earnings to meet its debt-servicing costs, putting it at risk of default.
Public Enterprises Minister Pravin Gordhan, however, ruled out privatisation of the utility.
Fears over Eskom's financial viability drove the rand 1.5 percent weaker against the U.S. dollar.
The yield on the benchmark government bond, which moves inversely to its price, was up 2.5 basis points as investors fretted about the economic impact of a crisis which could see South Africa lose its remaining investment grade credit rating.
"With Eskom in the midst of trying to find a solution to its financing needs, investors are more nervous as to what this means to (rating agency) Moody's," Citi economist Gina Schoeman said in a note.
"Markets are highly sensitive to even a negative outlook decision because of how close this places South Africa to a WGBI-exit and inevitable ZAR depreciation and increased vulnerabilities," she added, referring to the World Government Bond Index (WGBI).
Moody's, the only one of the "big three" agencies to rate South Africa at investment grade, is scheduled to review the sovereign on March 29.
South Africa is rated "junk" by S&P Global Ratings and Fitch and if Moody's joins them, the country will be booted out of the WGBI, which may prompt investors to dump its assets.
The public enterprises department said on Wednesday that Eskom was struggling to keep its mainly coal-fired plants running due to coal shortages and poor maintenance, with 40 percent of breakdowns a result of human error.
The cash-strapped company said it would cut 3,000 megawatts (MW) of power from the national grid from 0600 GMT on Wednesday, likely until 2100 GMT. This follows a similar cut on Tuesday and 4,000 MW on Monday in the worst power cuts seen in several years that drove the rand currency down on Monday.
The power cuts have led to frustration among ordinary South Africans with traffic gridlock in major cities during rush hours as traffic lights stop working and some mothers struggling to feed their children.
"I have a baby, so making her bottles was a challenge because I had nowhere to boil water, which resulted in me having to go to a restaurant that has a generator just to get boiling water," 28-year old Anazi Zote, mother of a 10 month-old daughter, told Reuters.
Business owners with no access to backup power sources have also been hit.
"From work to home to everywhere. At the moment the lights are off and we are using the stairs because the elevator isn't working, and I'm on the 11th floor … it's frustrating," Leroy Erasmus, 25, a risk and surveying consultant, told Reuters.
Firms in the mining sector, the backbone of the country's economy, are looking at alternatives to reduce their dependence on Eskom and monitoring the situation closely.
"Extended load-shedding (power cuts) would have a severe impact on the viability of mines, particularly deep-level gold and platinum mines," said Charmane Russell, a spokeswoman for South Africa's mining body.
Harmony Gold said on Tuesday that it was in talks to build a 30 MW solar plant to supply power to some of its assets, in an effort to cut its electricity costs and dependence on Eskom.
Gordhan said the government was worried about the impact the power outages could have.
"The Eskom board is taking steps to ensure that load shedding (power cuts) doesn't become a permanent feature of South Africa this year," he said.
Twitter might just make it a little easier to silence unwanted attention from strangers -- or to forge a new friendship. It's testing profile previews in its iOS app that show more about a user without taking you away from your timeline.
If you're included in the test, tapping on a user's @ handle in a tweet will show a card with their basic details and give you an option to follow or mute them. You can either return to your usual browsing or view their full profile if you need more details.
The company's safety team elaborated on just why it's experimenting with these previews: they make it that much easier to figure out who's involved with an account. You may have a better sense of who's a bot or creep and deal with them accordingly. This could add an extra step to viewing full profiles, but it could also encourage more people to check profiles before they respond to unfamiliar people.
Zimbabwean gold miner RioZim said it had suspended production at its three mines for the second time in four months because the central bank had failed to pay it in U.S. dollars for part of its gold deliveries.
Gold producers in the southern African country sell their output to central bank subsidiary Fidelity Printers and Refiners and are supposed to be paid 55 percent of their earnings in U.S. dollars. The remainder is paid via electronic dollars into their bank accounts.
RioZim, which is 95-percent owned by local shareholders, is Zimbabwe’s second biggest gold producer and last October threatened legal action to force the Reserve Bank to pay it more dollars for part of its output.
The gold miner said since December, it had experienced “significant and persistent” delays in dollar payments, affecting its viability.
“Consequently, the company has recently been forced, once again, to involuntarily suspend production across all its three gold mines pending full payment of its foreign exchange proceeds,” RioZim said in a statement.
The company said it continued to engage the Reserve Bank but if negotiations failed, it would shut its mines indefinitely.
Central bank Governor John Mangudya did not respond to calls for a comment.
Zibmabwe adopted the U.S. dollar in 2009 to tame hyperinflation, but is facing acute dollar shortages and that has sent prices of basic goods spiralling and inflation rising to double digits.
Mines Minister Winston Chitando said on Monday Mangudya would soon introduce a monetary policy tool to alleviate the foreign currency shortages that have affected miners.
Gold is the country’s single largest export earner and production reached an all time high of 33 tonnes in 2018 from 27 tonnes the year before, official data shows, driven by record output from small scale producers.
Big mining companies say the acute shortage of dollars, which has also sapped supplies of fuel and medicines, hampers their ability to expand production and start new projects.
Nigeria is preparing for its general election. But will it be credible? Nigerian voters are well aware that the elections will not be won solely by votes or popular consensus. There are several other variables that influence election results.
These include the incumbent’s control of state security apparatuses, grassroots structures, and control of institutions such as market traders associations, and the National Union for Road Transport Workers.
The road transport workers’ union, which acts as a canopy for bus drivers, conductors, and motor park touts in Southwestern Nigeria, has a history of providing foot soldiers for employment as election thugs with skills in ballot box snatching and voter intimidation tactics.
In addition, the possibility that the election could be rigged cannot be ignored.
Questions around the credibility of elections in post-independence Nigeria can be traced as far back as the “First Republic” which lasted from 1960 - 1966. After allegations of massive rigging in the 1965 elections the country’s western region was engulfed in the infamous “Operation Wet-ie” riots.
The riots pitted rival political groups against each other leading to Nigeria’s first military coup in 1966. From then on the country experienced a series of coups. Between 1966 and 1999, when the country made a decisive break with military politics, Nigeria experienced eight military coups. In that same time period three general elections were conducted.
The years outside of military rule were comparatively brief and arguably overshadowed by the spectre of the military. When elections did happen they were plagued by strong allegations of electoral fraud. Since 1999, when the country broke with military rule, five elections have been conducted all of which have been tainted by controversy.
It’s clear to see that Nigeria has survived a tumultuous political history. Going into this next election, questions still remain about the credibility of the country’s electoral system, and the viability of it’s governance structures. Looking back things have often gone wrong, but are there instances where things have worked out well for the electorate?
I would argue that there have at least two instances when voters got what they asked for. One is the June 1993 presidential election, which is considered to have been relatively free and fair in its conduct, its eventual annulment notwithstanding. Another is the presidential election of May 2015 when the incumbent Goodluck Jonathan, gracefully accepted defeat by conceding to President Muhammadu Buhari.
Yet I still feel that Nigeria’s electoral system needs a complete overhaul if it’s to perform its functions with as little external interference as possible.
Shadow of military rule
The country has been ruled by military administrators more than it has by democratically elected leaders. For 29 years of Nigeria’s independent history military dictators have had a grip on its leadership. This is compared to just 20 years of democracy. The result has been that electoral rigging and malpractice are rife within Nigeria’s electoral process.
Since 1999, Olusegun Obasanjo and Muhammadu Buhari, both of whom were previously military dictators spent a combined 12 years in power. President Buhari is now seeking a second term. As a result, there are still those who argue that the country’s transition from military rule to democracy is not quite complete.
The executive arm, for example, still maintains certain authoritarian characteristics that are reminiscent of the military era. One of these is the use of the armed forces to manipulate election processes. For instance, during the recent gubernatorial elections in Ekiti and Osun states voter intimidation by the security forces was rife. This was done to scare away opposition voters and give the ruling All Progressives Congress an edge.
The electoral commission
Another factor to consider is the supposed independence and impartiality of the Independent National Electoral Commission which is in charge of running the elections. Critics point to the fact that the commission chairperson and others in the commission are nominated by the president. This calls into question the credibility of the entire electoral commission.
Further, Buhari has just appointed Amina Zakari as the new collation officer. Zakari will oversee the committee responsible for the national collation centre from where results of the presidential election will be announced. But Zakari has been alleged to have a family relationship with the president. This has raised suspicion within opposition circles that the government intends to rig the polls.
To make matters worse, the behaviour of the electoral commission in previous elections hasn’t always been above reproach. This has lent credence to the criticisms bout the body’s impartiality. In the run up to the 2007 general for example, the Supreme Court ruled that the commission had no power to disqualify candidates in the eleventh hour as it had purported to do in the case of opposition candidate Atiku Abubakar.
The opaque nature in which recent gubernatorial elections have been held has also added to the fears of a rigged presidential poll. The September 2018 gubernatorial election in Osun, for example, was panned by election observers as being riddled with voting irregularities like voter harassment, and interference by “inappropriate persons”. These irregularities were reinforced by the high number of security officers deployed to the state during the election period.
The involvement of the security apparatus in tilting this tightly contested election in favour of the ruling All Progressives Congress is considered to be an indicator of how things could pan out in the general election.
Role of outsiders
Observers like the European Union and the US also exert a measure of influence on Nigerian elections. By ramping up the rhetoric on the importance of free and fair elections they play into the hands of the opposition who have historically appealed to foreign powers to umpire the electoral process.
Incumbent governments, on the other hand, have typically been on the other side of the argument. Nigerian governments have often cited what they call the “neo-imperialism” of countries like the UK and the US and decried their interference in Nigeria’s sovereignty. This resistance to foreign interference was most recently evidenced in comments made by Kaduna State governor, Nasir El-Rufai, who threatened foreign observers with death if they engaged with local politicians.
Former president Goodluck Jonathan also trotted out the “foreign interference” trope when he claimed in his recently published memoir that the US played a hand in ensuring that he lost the 2015 election.
And a few weeks ago the ruling All Progressives Congress joined the bandwagon when they issued a statement telling the EU to not undermine Nigeria’s sovereignty.
Not all grim
Despite all of the above, it’s not all grim. There are some positive precedents that can be built on.
For example, despite predictions that there would election violence during the 2015 poll, Jonathan did the honourable thing by conceding defeat to Buhari.
His concession reinforced the notion that elections need not be a “do or die” affair. This peaceful transition after just one presidential term in office also set a positive trend for elections across Africa.
But with the slim margin between the incumbent, Buhari, and his main contender Abubakar of the People’s Democratic Party – this narrative might need to be reinforced when Nigeria goes to the polls again on February 16.