RE: Is the ESKOM tender a forgone conclusion?4 Aug 2020 15:04
Sanchez - Ok I was a little vague in my comments and you have clearly taken it upon yourself to decide what I mean by that. So let me clarify that to you before you start giving me a hard time.
I have been invested here since late 2016/early 2017 and have done my research, hence I built a sizable position (relatively for me) because I believed in a) that we have to move to a greener world and there was a problem to solve with how that is done in underdeveloped countries without using cheaper fossil fuels (coal etc) and b) a company that was run by a CEO operating impeccably, doing good business and wasn't diluting shareholders to oblivion to move it forward.
Now my point simply was that we are dealing with an entity in ESKOM that has not had the shiniest of pasts in relation to corruption and is pretty much the main reason for SA's sovereign debt problem.
South Africa’s public finances are a mess. Economic growth is low or non-existent, tax revenue collection is repeatedly below forecasts, debt levels have risen rapidly and are now at their highest levels in the post-apartheid era andbthe poor performance of state-owned enterprises is necessitating large-scale government support.
The tabling of the 2019/20 Budget in February 2019 have only made the situation worse. A downgrade of government debt to ‘junk’ by a third ratings agency will lead to an outflow of investment and exacerbate matters further.
"Official" Democracy is fairly new to SA and many other African nations so of course there political risk on any decisions made (albeit small).
So to elaborate for you on my comments Sanchez they aren't lazy outdated stereotypes, there are absolutely economic and political risks when dealing in Africa that are higher than when dealing with developed countries. But I am not saying they don't exist everywhere.
Appreciate it is a different country but look at KIBO's Mbeya MCPP project in Tanzania. Went to tender, were told to make some changes to their submission over a long drawn out period and were "in close contact with he relevant authorities", for them to be told they hadn't won it but no reasons given. Yet the govt were committed to providing a reliable power source to their people.
I don't for a second question FM's ability hence my investment but always best to expect the unexpected.