Food and liquor retailer Spar Group Ltd. estimates its outlets spent more than 700 million rand ($35 million) on diesel to run generators in the six months through March.
(Bloomberg) — Food and liquor retailer Spar Group Ltd. estimates its outlets spent more than 700 million rand ($35 million) on diesel to run generators in the six months through March.
Spar’s fuel costs to run generators more than tripled when measured against the prior comparative period, though the amount was “nowhere near” the costs borne its retailers, the company said in a trading statement on Wednesday. While the group’s distribution centers have solar installations that help the company manage energy costs, that’s insufficient to deal with the full impact of so-called loadshedding, Spar said.
“Our retailers have experienced a significant increase in operating costs, primarily driven by the increased cost of diesel required to run generators during the higher levels of loadshedding, coupled with higher repairs and maintenance costs and product wastage, as generators occasionally fail under extended periods of usage,” Spar said. “This had a direct impact on the trading performance and profitability.”
Spar and its retailers are among a growing number of businesses that are being forced to produce their own electricity because state power utility Eskom Holdings SOC Ltd. implements daily blackouts.
Read More: Spar Shares Slump by Record; Sees Drop in Six-Month Earnings (1)
Eskom ‘Encouraged’ by Fitch Ratings Affirmation (June 1, 9:53 a.m.)
The decision by Fitch Ratings Ltd. to affirm Eskom’s long-term local-currency issuer default rating at B, with a stable outlook, is “an encouragement in the cooperative and ongoing efforts” to restore financial stability, improve performance and ensure long-term sustainability, the state-owned utility said.
The affirmation reflects Eskom’s strong links with the government, supported by a debt-relief plan announced in February, Fitch said in a statement on May 30. However, the utility’s standalone credit profile remains weak, as a poor and worsening operating performance offsets improving tariffs and the government’s plan to reduce its debt, the ratings company said.
“Liquidity remains dependent on government support and the spread of Eskom’s debt relief over four years implies any material improvement in financial sustainability will take time to be visible,” Fitch said.
Read More: Eskom Holdings Outlook Remains Stable by Fitch
Private Firms to Add 4 Gigawatts to Grid by End-2024 (May 31, 1:05 p.m.)
South Africa expects private companies to add more than 4 gigawatts of electricity generation capacity to the grid by the end of 2024.
Presentations released on May 30 by Operation Vulindlela, a unit run by the presidency and the National Treasury that aims to remove blockages to investment, showed the measures the state is taking in a bid to compensate for the deteriorating performances of state-run companies.
“The primary focus is on addressing the electricity crisis and improving the efficiency of freight rail, both of which are weighing heavily on economic growth,” Khumbudzo Ntshavheni, South Africa’s minister in the presidency, said in a statement.
Read More: South Africa Says Private Firms to Add 4 GW to Grid by End-2024
Details About Debt Takeover Not Made Public Yet (May 31, 12 p.m.)
Details about the government’s plan to take over 70 billion rand of Eskom’s debt in 2025-26 will only be made public closer to the time, due to the sensitive nature of the transaction, the National Treasury said in a presentation to lawmakers on Wednesday.
Restrictions on new capital expenditure investment are to strengthen the utility’s balance sheet and focus on the maintenance of its power plants to ensure that its fleet becomes reliable, according to the presentation. Eskom may only implement pay increases that do not negatively affect its overall financial position and sustainability to so that company is financially self-sufficient, the Treasury said.
Power Purchases From Mozambique (May 30, 11:47 a.m.)
South Africa is in talks to buy more than 1,000 megawatts of electricity from Mozambique, South African Electricity Minister Kgosientsho Ramokgopa said.
“In the short term, Mozambique can provide 80 megawatts to South Africa and a further 1,000 megawatts upon agreement of stipulated terms,” the minister said on Twitter, following a meeting with his Mozambican counterpart.
Read More: South Africa Seeks More Than 1,000 MW of Power From Mozambique
–With assistance from Paul Burkhardt and Antony Sguazzin.
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