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Energy SEZ for Middelburg

Energy SEZ for Middelburg

An inaugural meeting was held to discuss and formulate a way forward to implement an Energy Special Economic Zone for Middelburg on Wednesday 23 August 2023.

Mr Mnisi from the Department of Economic Development and Tourism (DEDET) led the discussions on why and how an SEZ will benefit our town. Representatives from the ESKOM JET office, the Mpumalanga Growth Agency, Mr Mandla Mnguni and other officials from the Steve Tshwete Municipal (STLM), the Mpumalanga Stainless Initiative, the Middelburg Chamber of Commerce and various other government organisations discuss the proposal, and were met with confidence.

Mnisi said a special eMalahleni Renewable Energy Development Zone (REDZ) has been declared, comprising Victor Khanye, Ekandustria, Emalahleni, Steve Tshwete, and Emakhazeni municipalities. Benefits of being part of a special economic zone:

15% corporate tax
Exemption from customs duties and VAT Free for companies in the SEZ
Tax incentives for employment
Accelerated depreciation for buildings

At the meeting on 23 August, a Technical Committee for the STLM SEZ was appointed to fast track the establishment of the zone. Any member interested in more information can contact Anna-Marth Ott for more details: ceo@middelburginfo.com.

Middelburg must take its future into its own hands.

Middelburg must take its future into its own hands.
The executive team of the Middelburg Chamber of Commerce deliberated on how they can use the advantages of the locality to the benefit of the town and its businesses. With the constant load shedding, it was crucial to take charge of the electricity supply in our town.

The Executive and Jan Oberholzer, Eskom’s group chief operating officer, spoke about the issue on 5 April 2023 and MCCI invited the members to participate in the conversation. Following the meeting, we formed a sub-committee to continue the process. The committee will initiate various processes to move forward.

The technical committee will create a plan to start the project. AM Ott can provide you with more information if you are a person or business wanting to join the proposed consortium, cooperative, or other structure that will be established; ceo@middelburginfo.com.

Loadshedding the Last Straw

Loadshedding the Last Straw
The business community in the Highveld region of Mpumalanga has been aware for years of corruption and third-party interference at Eskom that has muddied the economy of Mpumalanga.

Many businesses have been damaged, and many have had to close because of the corrupt activities associated with the two main sectors, coal mining and Eskom, in the province. When Eskom claimed that there was not enough coal to supply Eskom to generate electricity, to awarding complex engineering contracts to an undertaker. Well, whoever awarded that contract was perhaps preparing to bury our economy.

We invite its members to join hands with the organization so that we can put pressure on the various role-players to protect our businesses. MCCI has created MCCI’s Electricity Support Group, +27 78 801 9719, or contact Anna-Marth Ott, at 013 243 2253 or ceo@middelburginfo.com.

People in Ivory Towers have no interest in towns

People in Ivory Towers have no interest in towns

President Cyril Ramaphosa, who has met with business leaders, is hosting a briefing on the energy crisis with Business Unity South Africa, Business Leadership South Africa, and Black Business Council on Monday 16 January 2023.

Where is their mandate to meet on our behalf? Have they spoken to local businesses in different cities to find out about the situation on the ground? No, they do not have our mandate. Yes, they want to do business in our towns, sell us clothes, be our landlords, sell us their TV services, and the list goes on. But no, they do not negotiate with the local business community to find out what is also to our advantage.

The Eskom crisis feels like the municipal strike. No one in power takes action. What have the BUSAs, BLSA, and BBC done to find a workable solution to the current electricity crisis since 16 January? We need concerned local leaders, a united opposition front, and local business leaders to find solutions. We have the owner’s interest, not the big heads sitting in Gauteng. Their only interest is to make money in the Highveld of Mpumalanga.

Another legal victory for Chambers

Another legal victory for Chambers

Municipal electricity price hikes were ‘unlawfully calculated’, says court.

When chamber members work together, business wins. The Pietermaritzburg and Midlands Chamber of Business and the Nelson Mandela Bay Business Chamber took the National Energy Regulator of South Africa (NERSA) to court and won. Eskom supported the chambers’ application.

The Gauteng High Court has found that the NERSA used unlawful methodology in calculating annual electricity price increases for municipalities. It declared its guidelines and benchmarking methodology unconstitutional and gave NERSA one year to change this.

Chambers said that municipalities use electricity tariffs to pass their inefficiency costs to their consumers. They used the electricity income to pay for their management failures, including lack of infrastructure maintenance and rampant electricity and cable theft, to consumers. NERSA has not required municipalities to demonstrate the relationship between their actual costs, the tariffs they have applied for, or the benchmark tariffs.

In her order, Judge Elizabeth Kubushi also said that NERSA does not use the municipalities’ financial information to assess proposed rates for compliance with the law. Instead, it uses a sample of these forms to calculate an average rate of increase.

Steve Tshwete Municipality is one of the few that has calculated its electricity tariffs with integrity. The Middelburg Chamber of Commerce and Industry thanks STLM for doing so. Other towns have not been so lucky, and their businesses have been hurt by the poor financial management of their municipalities. Members interested in the full judgement can contact Anna-Marth Ott at ceo@middelburginfo.com

The Illegality Of The Municipal Tariff Regulations Of Nersa.

The Illegality Of The Municipal Tariff Regulations Of Nersa

The filing period for the annual municipal electricity tariff increases is currently underway. The Middelburg Chamber of Commerce and Industry participates in the Association of Chamber of Commerce (ASAC) submission and subsequent legal action against the municipal tariff provisions. Below you will find a summary of the ASAC submission.

ASAC is, in this case, concerned with representing electricity consumers behind municipal boundaries. Municipalities purchased 42% of their electricity from Eskom in the 2020/21 financial year 1. Municipal industrial users consumed about half of this, or almost 20% of Eskom’s output. Including commercial use, we estimate that the municipal industry consumes up to 26% of Eskom’s power.

For example, the municipal industry includes almost the entire automotive industry (all Original Equipment Manufacturers (OEMs) and almost the entire supply base). A significant proportion of the country’s large-scale industry and almost all of its medium-scale industry is dependent on municipal supply and tariffs. Therefore, the municipal supply function and the setting of tariffs affect a large part of South Africa’s manufacturing economy and the associated jobs in these sectors. The total membership represents almost 1 million employed people.

To reiterate the arguments from previous submissions and relevant to the key issues surrounding the 2022/2023 Consultation Paper, Nersa has not changed its approach to tariff setting. Nersa appears intent on continuing down the path of its historically flawed approaches. Despite the apparent breach of the Electricity Regulation Act (ERA), Nersa allowed the erroneous increase in municipal tariff guidelines and benchmarks to continue for the 2021/2022 financial year.

In its decision, Nersa did not make any credible prediction that this method would not be used in the future. Some ASAC members have taken Nersa’s decision on the 2021/2022 municipal tariffs to court. The businesses were frustrated by the regulator’s unwillingness or inability to make positive changes to the municipal electricity supply Industry (ESI).

Members interested in receiving a copy of the ASAC submission should contact Anna-Marth Ott at ceo@middelburginfo.com.

Review of the Electricity Regulatory Act and related Electricity Pricing Policy.

Review of the Electricity Regulatory Act and related Electricity Pricing Policy.

The Casting, Forging, and Machining Cluster (CFMC) is concerned that industrial users are burdened by municipal tariffs. The EPP promulgated in 2008 is largely ignored and is not seen as a policy directive but rather as a rough guide. The EPP has little relevance in the current process of setting municipal tariffs.

In many municipalities, these tariffs are poorly structured, not cost-reflective, and contain illegal and unrelated subsidies that lead to unjustified increases in production costs. Individual producers are unable to offset these costs through productivity increases alone. These unjustified increases in municipal and industrial tariffs and poor security of supply have led to an increasing loss of competitiveness of South African companies in the global market.

The current structures and pricing processes tax producers upfront for a small profit and serve to destroy the economy. The review document offers little, although the changes are exciting. CFMC believes that local governments need to be encouraged to follow the law and related guidelines. Enforcement of the guidelines is problematic. CFMC cautions that the ideals of a fair and equitable process will be further limited if deviation and non-compliance are allowed. Market corrections in the ESI will not necessarily benefit the industry. There is a risk that free-market outcomes will be compromised. The CFMC is concerned about the lack of controls on municipal electricity bills, which largely offset inefficiencies. And regardless, we do not have sufficient knowledge and information to have a constructive discussion on cost structures, cost drivers and unbundling.

Load curtailment is a valuable tool to encourage industrial users to reduce their load in times of need. CFMC is keen to work with municipalities to facilitate introducing such a programme in industrial areas.

In the past, Steve Tshwete Municipality has provided good support and acceptable (within the legislative framework) tariff increases to industrial areas. Security of supply remains a concern in light of the recent municipal strike and continuous vandalism of municipal infrastructure. The debate between the stakeholders must be held soon; our town needs its industries to remain economically viable.

A copy of the full submission is available to members at the MCCI secretariat; please contact us at info@middelburginfo.com.

Uniform Rules for Digital Trade Transactions (“URDTT”)

Uniform Rules for Digital Trade Transactions (“URDTT”)

The International Chamber of Commerce (“ICC”) has published the Uniform Rules for Digital Trade Transactions (“URDTT”), which constitute the international laws of trade financing practice, and came into force on 1 October 2021. You can read the rules here.

Background

Work on the URDTT began in December 2018 following the realization that there was a lack of rules for digital transactions. The first draft was prepared by the ICC National Committees (“Committees”) at the end of 2019. Since then, the Committees have drafted six different versions of the rules taking into consideration more than 1,500 comments. Finally, the definitive version of the URDTT was published on 1 October 2021.

What is the scope of the new rules?

The URDTT is a comprehensive set of rules designed to cover all parties of digital commerce transactions. Its core mandate is to pave the way for commercial transactions in compliance with the UNCITRAL Model Law. Pursuant to these rules, electronic records will form the basis of commercial transactions rather than any documents or written contracts. Thus, impartiality and uniformity will be ensured in terms of commercial transactions.

The URDTT are intended (i) for a fully digital environment, (ii) to be neutral with regard to technology and messaging standards and, (iii) to extend into the corporate space, including commercial transactions and the growing community of non-bank providers of financial services.[1]

Within the framework of the URDTT, it is possible for importers and exporters to create electronic records for the purchase and sale of goods and services. It will, therefore, provide documents that will prove a buyer’s obligation to pay and a seller’s obligation to sell.

Moreover, the new set of rules also specify how electronic records regarding parties’ obligations are submitted and under which terms and conditions they will be issued.

Conclusion

In today’s world, where digital transactions are becoming more widespread, there is no doubt that the importance of digitalization of the trade industry is one of the most discussed issues in the international dimension. With the new rules, an important step towards adapting to the new world has been taken, providing a standardization of digital transactions and namely, a legal certainty. It is clear that the URDTT rules will be revised according to developing technology, business life and the needs of the markets and thus, new versions could be developed in this regard.

Is a baseline Electrical Municipal Tariffs possible?

Middelburg Chamber of Commerce & Industry (MCCI) is a member of the Association of South African Chambers of Commerce (ASAC), and we met on 6 May 2021.

The Pietermaritzburg and Nelson Mandela Bay Chambers proposed that NERSA establish a national baseline for the industrial electricity users operating within municipalities.

The ASAC Electricity Sub-Committee has been kept very busy by NERSA in recent months. Earlier in the year, a proposal on Draft Notified Maximum Demand Rules were submitted.

After that, several presentations and submissions were made at the Public Hearing to consider the Application of the Vaal Triangle Forum for revocation or amendment of the electricity

distribution license of Emfuleni Local Municipality. The committee supported this critical matter of precedent. We also submitted a document in February 2021 on the Municipal Dysfunction

– A National Disaster. On 25 March 2021, at the NERSA’s Strategic Planning Workshop – A Customer’s View, we gave input on critical issues

regarding electricity supply and how we believe NERSA should respond.

On 9 April 2021 –2021/2022 Municipal Tariff Disaster – we tabled a submission regarding the municipal tariff guideline increase and benchmarks and proposed

timelines for the municipal tariff approval process for the 2021/2022 financial year. ASAC made an initial submission followed by a presentation at the Public Hearing,

and after that, submitted additional comments. We requested a follow-up meeting with the NERSA Chair, which was supposed to have happed at the 6 May 2021 ASAC meeting.

To give you an idea of the different electricity tariffs at the municipal level see the table below:

Tariff Comparison 24/5 3 shift scenario 2020 7MVA: 5800 KWh; 37,288 Mwh/annum	Admin	R/Kwh	NDM	Surcharges
Jhb MV inc 11KV TOU	74 093	1.86	N	Y
Ekhurhuleni Tariff D (11KV+)TOU	58 170	1.58	y	N
STLM Three-phase 1000v TOU	49 252	1.47	y	n
EThekwini 11KV TOU	57 359	1.29	Y	N

The above table is only a summary of the information used; three additional electricity tariff tables’ information is available. However, I used the above examples

to explain the difference in baseline charges at the municipal level throughout South Africa.

At the May ASAC meeting, the members proposed that we submit the EThekwini model as the NERSA baseline for municipal, industrial electricity tariffs.

MCCI supported the proposal. Members interested in further information should contact me at ceo@middelburginfo.com or 013 243 2253.

Bidding for the repurposing of Komatie soon

Bidding for the repurposing of Komatie soon

Since 2017 Middelburg Chamber of Commerce & Industry has been lobbying on all available platforms that there is an economic future for our region in Power Generation.

MCCI is glad to report that Energy Transition Office Head Mandy Rambharos reported last week that the Request for Proposal (RFP) for the repowering and repurposing

Komati Power Station could be released within the next two months as soon as the internal and government governance matters have been settled.

Rambhoras said that the comprehensive social impact reports would be completed for Komati, Hendrina, Grootvlei and Camden to and these reports will be published soon.

Many local Energy Intensive Users and other businesses in the area rely on the Komanti and Henderina Power Stations’ repurposing.

MCCI has been urging that Eskom and the government investigate and promote the stations’ repowering, using renewable energy and storage solutions, or possibly switching their fuel sources to either gas or hydrogen.

Rambhoras said that for the Komati RFP, Eskom would most probably seek repowering proposals involving solar photovoltaic and battery energy storage technologies.

“We are very keen to move quickly towards implementation at Komati this year but have not ruled out parallel processes at the other power stations,” Rambharos said.

“For now, we are focusing on getting Komati off the ground to have that first demonstration project up and running.”

Komati currently has only one operating unit, which is scheduled for closure within two years.

MCCI is eagerly awaiting the implementation of the repurposing of Komati.

Many of our businesses were adversely affected by the Optimum Mine fiasco and want to see our region revitalised with new opportunities and economic growth.