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good evening good morning good afternoon everybody today we've got quite a long video to make and we now looking at projections that were made in the past so we've looked at where we came from and how we got to this point and now we have to look at what did s com tell us what did utility tell us that we were going to do in 2008 and where are we now in over here somewhere 2019 2020 2021 2022 so in 2022. so escond told us in 2008 that they would deliver cordflay and they told us they would deliver quote flay in 2008 but actually it happened in 2010 so it means that all of this gap here is the potential electricity that was lost then in about 2008 s-con the utility told us that in 2012 they would start bringing madupi and kusile and ingula online so you've got over here the first point where you've got two units on hadoop for one and a half gigawatts and one unit of angular pump storage for 388 megawatts that's 2013. actually nothing came online then we have a year later 2014 madupi one unit comes online kusile another coal power station two units come online and in ghula three units come online and what actually happened nothing a year later 2015 we told that madoopi another two units will come online could see lay one unit will come online what actually happened one unit came online but as we know from past experience with escom started finding problems and then we're going to look at a slide which shows what s-com problems what they found in 2013. i don't want to get into it now but even though one unit of 800 megawatts came online because of the problems they've been having they're only at about 40 efficiency which means under half of this 800 megawatts about 350 megawatts is online and it's not online all the time that's why we're load shedding but now that's 2015. 2016 we told that one unit of madupi will come online two units of casino will come online okay what actually came online one year tomodopi that's from there in ghula three units came online and that's palm storage and that was in 2016 and angular should have been coming online 2014. saying gullah was 12 was two years late and then we have um the last crusader by here by 2016 madoop is complete and by 2017 kosile is complete according to the baseline that was set in 2008. now unfortunately escom moved the baseline so you'll see that they say in 2016 they say we brought the two units online as per the baseline but they don't tell you that the original baseline when they produced the project in 2008 after spending about five years on the drawing board and they said it's going to cost 79 billion rand and then when they produce it it's 250 billion rand so now if i come to you and i say to you i'm gonna sell you something for seven thousand rand okay and when you pay for it it's twenty five thousand rand you're not going to be happy suppose i tell you something's gonna be seven thousand dollars okay and i delivered you three years late and it's 25 000 you're not going to be happy okay so here we are so now we have actual so now you can see that theoretically and this i did in 2019 it's a bit out of date but you can see as at this date we expected everything to be complete by 2022 as it is now we're expecting everything to be complete by 2025. so then what i did is i took this information this is the baseline the red line blue line sorry the blue line is the baseline and the orange line is the actual and i said what's the value of this gap so let's go and look at how i calculated the value of the gap let's go and just look at the value of the gap first over here the value of the gap is 40 trillion rand so this is a thousand that's a million that's a billion that's a trillion 39 million million or 39 trillion rand and that's the v80 okay so now i'm going to show you how i produce this now this is conservative and it's only based on the dupian kosile what was meant to be delivered on time and there was also meant to be something by now called coal three so madoopi cole won kusile cole 2 cole 3 whatever they were going to quote it they haven't given it a name yet plus a whole bunch of other stuff was meant to come online gas was meant to come online renewable energy was meant to come online 30 percent of the grid was meant to be in private ownership by 2010 we're now in 2022 that hasn't happened let's go and see how i got this number so if this is conservative and it's 40 trillion then my my budget says that it should actually be 100 trillion now you imagine that the the economy is 100 trillion rand behind where it should be 100 trillion rand over the past 10 years is a lot of money if we go and look for example at let's go and search here south africa gdp long term okay let's go say trillion grand you'll see we get data trading economics okay and we're looking at these numbers it's got 10 years okay we've got 10 years so these are not being very helpful but here we go so 301 us dollar billion multiply by 16 5 trillion now we go back to this and we see here that
we're talking about potentially 10 billion year loss imagine if south africa's economy was three times as big as it is now and the reason that it's not three times bigger is because of late delivery of power stations and late delivery of power stations means late delivery of water and late delivery of water means late delivery of food and late delivery of water and electricity means late delivery of transport fuel
or no delivery means people are stealing railway tracks because they want to eat but we need the railroad tracks to transport goods around but people are so fixated on what they're going to eat tonight they're stealing railway tracks they're sitting infrastructure and this is because of the failure of our government and unfortunately and this is maybe a horrible thing to say but i'm going to say it in any case and people can blast me whatever you want to do that the south african government has given blacks a bad name because they employ they're doing nepotism and they're employing black people who are incompetent but who are brothers and sisters and calling in favors but i mean i've met very competent i work with ninety percent of people that i work with are coloreds blacks indians asians other people who are formerly disadvantaged who all competent capable wonderful people
and you look at the government the south african government employing imbeciles and you know giving blacks a bad name but blacks are good people they're competent they're capable i was lucky to be on a train from new york to toronto one year 1987
and i met a i was sitting in economy next to a black man across the table from when we started talking and it turned out that he was a director of kodak kodak was the world's biggest photographic company at the time they actually invented the digital camera but then didn't do anything with it we can talk about that as a different story and i spoke to him about black people and my what happened with me in south africa and my experience and he said to me that there are so many competent people but because of nepotism and because of politics so many incompetent people are put into power and they give black people a bad name and we need to fix that black people need to fix it white people need to fix it we need to put the right people in the job we need mentoring we need transfer we need knowledge transfer i want to show you the spreadsheet that makes this so what did i say i said in 2006 okay the baseline we were expecting 800 megawatts 2007.80 megawatts 208 that's the same 800 megawatts okay and not additional and then in 2010 we were expecting another 800 megawatts oh sorry no this sorry this is the baseline this is the actual and then baseline in 2013 we're expecting two seven two six megawatts we still on 800. 2014 6134 we start on 800. 2015-8522 and so on until we get to 2022 we're expecting 11 and a half gigawatts and we've got 9 300. so the graph is not up to date but you get the idea then what i said is that a normal call power station runs at 92 percent efficiency that's what it's meant to be but for this graph i said let's make this 50 let's make actual efficiency 50 and we could change this to 76 percent which is what the overall system efficiency should be according to south africa so that s com long term has managed to achieve 76 percent it's never managed to achieve 92 not in the last 30 years in any case okay but in a first world country you know china and so on brics countries you would expect the coal power station to be running at 92 percent efficiency 92 percent uptime and i'm saying let's assume that it's at 50 so based on kilowatt hours we take 800 megawatts we multiply by a thousand to get kilowatts we multiply by efficiency okay in this case i'm doing 92 which is what we should have and then i'm multiplying by 24 and 365 which gives us kilowatt hours per annum then i'm saying s com selling price in 2009 rans okay and that's com actual selling price and i'm getting potential rans which i'm saying is that number times one round two so escom should have made 1000 million 6.5 billion rand and because they were expecting 800 megawatts and at zero the lost income or 6.5 billion rand so now if the cost of unserved energy is 65 000 which is also conservative so this means for every kilowatt hour that s com make and sell for one rand there's 65 random economic benefits in the economy some people say it's much higher than that but i took 65 to be conservative again and i said okay we multiply
the baseline by the economic value and we get 419 billion rand that's lost economic income lost vat and we get the totals and we do it the next year we have the same the next year the same the next year the same now we get some actuals so now what i did is i said okay we've got 6.5 billion we meant to have we've got 3.3 coming in we have lost income of 3.2 we have total lost income of 29 billion and we add those together and we get actual 200 then we add everything together we get 1.8 trillion lost and we get 244 billion lost v80 and then we extrapolate that all the way to the end where we hit in 2022 40 trillion and if we extrapolate that further to when we expect the power stations we finished in 2025 we even hear 2028 i've got that as expected completion by then we're at close to 60 trillion round of lost economic activity and 7.7 bill trillion rand of lost vat and this is conservative so in actual fact take the 60 trillion and multiply it by three okay and for the 15 years since jacob zubin came into power and since this whole wrecking ball started south african economy has lost potentially 200 trillion rand like i said before that's not just 10 trillion a year anymore that's closer to 12 or 13 trillion which means for the south african economy could be four times bigger than it is now and if you want to know where the rest of the economy is well we export coal we export call to china and israel and europe and other parts of it so they've got power stations running then we export uranium we export titanium we export southern africa exports copper we export diamonds and we report them we don't have enough benefit we don't have enough smelters to take our raw materials iron ore we export massive amounts of iron ore a lot of it goes to australia where it gets made into finished products and we get the metal coming back but on the west coast we've got our own foundry which is meant to be producing rolls of pig iron for local and consumption and export and then it's meant to be carted around south africa on railways but unfortunately railways have been stolen one could call the current generation in south africa the stolen generation but you can imagine according to statistics the anc government have stolen one trillion rand over the past 12 or 13 years but if they had done their jobs and they'd employed competent people the south african economy would have produced another 200 trillion rand possibly another 20 or 30 trillion round of v80 and we would have full employment and in fact we would be importing people from all over africa maybe the world because we'd be growing we'd be one of the fastest growing countries in the world possibly growing as fast as china at 15 to 20 per annum and at the moment our gdp we've actually been in a recession for the past 12 years because our gdp growth has been less than our population growth so you can think with inflation gdp growth is always going to be positive it's very unusual that gdp growth will be negative but gdp growth is positive and but if population growth is faster than gdp growth then gdp per capita is coming down that's why we feel poorer that's why it feels like when i was i'm 58 now it felt like when i was 35 i had a lot more money i earned a lot less than i did now do now but my cost of living was was a lot less and although the government says inflation's five percent per annum my inflation and maybe your inflation is closer to fifteen to twenty percent per annum if electricity is going up by fifteen percent and water is going up by fifteen percent and food's going up by fifteen percent and transport going up by fifteen percent then my inflation's fifteen percent everybody's inflation is different if you don't if you're one of 30 40 billion people in south africa who don't have income and you get grants and you get a lot of freebies like free education free housing in many cases free transport or subsidized transport free medicine free health which i'm which taxpayers are paying for it's all free then your inflation is zero and that's why in south africa's inflation is only five percent but my inflation between 15 and 20 for 20 years and that means that i've had to find a new way of working because i can't increase my pay by 20 per hour it's impossible the only way i can do it is to be invested in bitcoin or something outrageous and as you've seen over the past few years we've had something called the south sea bubble go look up the south sea bubble i'll write it here for you let's go here
south sea bubble go read up about the south sea bubble in a when a graph goes vertical you can stay in if you want to but get out
people got greedy and they invested and some people have lost a lot of money some people have made a lot of money my long-term projection for bitcoin let's go and look at that quickly and then we can end let's go and say let's go to luno okay and you go and look at here we're at 338 000 rand okay and if we go look at the last week you'll see that um we started over here at 360 355 000 and now we're here and if we look at month it's going down we look at eur it's going down we look at all time look at this it's trending slowly slowly slowly up and by the time we get here 35 000 rand then it goes quickly up and down 2018 and then there's the stratospheric here and stratospheric term to the million okay and now we're back down here and everybody's crying because it came down but look at the long-term trend the long-term trend where is it for me i put the long-term trend at five thousand dollars sixteen times five eighty thousand rand i put the price at eighty thousand rand so i'm expecting the price to come down at least another fifty percent before it starts stabilizing and i'm not a market commentator and i'm not a banker and i'm not in bitcoin at the moment because i've i got out when it started doing this it's too much for me i'm not i'm not buying and selling i'm not doing this harder thing hodl have you heard of that
there's this new thing there used to be hold and then they created h-o-d-o and i thought it was a mistake if you go and look up hodl h-o-d-l holding
model
hold on for dear life i mean really hold on to dear life suppose you bought it a million it took your life savings they bought one bitcoin at a 983 000 okay and you're holding one for dear life and it's not 400 000 and you could have sold for 800 000 when it came down 20 and lost 200 000 of your income but now you've lost 600 000 and how long is it going to take to get back to a million look it could happen tomorrow but remember my opinion is that the price should be 100 000 rand now and yes bitcoin will keep going up keep going up but now it's not going up it's going down so this whole thing is what i call the south sea bubble and you can go and look at another website called kitko
and you can scroll down in kitko
here's exchange rates let's just go to crypto yeah bitcoin dollars
okay
you can see this is the short term but we can make the graph and change the graph to let's say three months look at the graph started there now here so over three months it looks really terrible over six months looks really terrible you're at a date looks really terrible one year wow it started there 35 000 and now it's 20 000 so in a year it came down from 35 to 20 15 000 over 35 how much is that half but it went from thirty thousand to sixty five thousand so if you bought here and you sold there you you doubled your money of course if you bought one it was a thousand rand which was say a hundred dollars and you sold when it was 70 000 from 100 to 70 000 is a massive increase but if you bought over here at 51 and then it went to 17 you're holding on for dear life and it's now here maybe you should have sold when it got here at the same price you paid and not hold for dear life i i fundamentally disagree with that and then let's just look at all okay so you can see that where we are i've got this funny graph i don't know how to change it i'm not quite sure about how the graph works but you can see that it started down here and it went up and now it's coming down but the long term trend is this curve here and if i take the long term trend here you can see i'm at that 175 000. that's what i believe the price should be that's my own opinion it's not financial advice
i wonder if we can find out one more thing here so tech share price
if we've got a salt tech share price history graph okay it's not right now but if we can find it share price history
okay we'd have to get it for the whole long term but like it's only showing five years but soltec was a company that went from like two rand a share to 75 rand a share and i bought your grenades 40 vandershed went to 75 and a share wow it's great and then it came down to 60 and then i sold so i made a little bit i did i'm not a big investor maybe 5 000 rent maybe made 2 000 rand but the share price dropped out of existence and if you're holding for dear life and you bought it 40 and you could have sold at 60 after the share price dropped 20 you know then you made some money but if you if you held it till now you lost your whole investment
i know that there's this thing about you want to save money you want to save tax and so on because if you buy and sell you can be seen to be a trader but if you buy for the long term and the share price goes up up and then it drops 20 and then you sell and then you wait for it to stabilize for a year or two and then you buy again you can't be seen to be a trader it's not like you're doing hourly trades or daily trades or weekly trades you're not doing that you're just protecting your investment and if you buy at 40 and it drops to 20 and you sell and you lose that bid in the middle then okay you lost a little bit you lost 50 of your investment you didn't wait until the bottom dropped out and lost everything
and everybody's trying to be like warren buffett which is nice but warren buffett is a different kind of investor because warren buffett is buying the whole company
just trying to go back there
present let's go there there let's go back to here so warren buffett is buying the whole company he's got control over the entire company so he's in for the long term you can't compare yourself you buying a milli percent of a company you're taking a thousand rand or a thousand dollars and you're buying apple you've got no control but if warren buffett buys into apple or whatever he will buy a controlling stake that's who he is and he controls what they do and he gets the financials at 8 o'clock every morning and he looks at them and he's got a team of people that you don't even know about he's probably got 10 000 people working for him looking specifically at how the company is doing that he's invested in where they're going giving him feedback you know maybe he lives in his little house in omaha and he's got his persona and he's a long-term investor but he's investing in a different kind of way when he bought boxer atherway which was a textile factory and that started him off he started off saying i'm buying boxer hathaway and i'm going to be a long-term investor i'm going to hold it forever but he hasn't boxed hathaway it's not the same textile company that he bought 50 years ago and all the other thousands of companies that he's bought along the way are not the same companies anymore because he makes sure that they have the best directors the best people the best resources the best pay and by doing that he gets the reward it's like crystal visa when he had wadi basson working for him i'll end with this christopher included this guy why'd he burst on and um he let's go to here
christopher employed widely by swan and there was a period when wadi bazoon made like half a billion rand bonus and people said to krista what's going on how can you pay the ceo of shoprite etc a half a billion round bonus and christo said well you know he made me five billion this year and i gave him a bonus so that's because crystal visa owned the whole company or the majority shareholding and his share value went up and he personally maybe sold a billion of shares and gave half to whitey and yes of course he made mistakes because you know about steinoff that everybody makes mistakes even geniuses or maybe especially geniuses because the thing about people like christo and me and other people is we're always looking at possibilities always starting startups always trying new things always prepared to take risks and see where we go so my cat's just saying hello joey and it's a good time to end i hope you've enjoyed tonight's show and i hope you understand that if you employ and if you if you have nepotism look you can have nepotism because you employ your family look at the look at the queen of england her family has been ruling for a thousand years so there's nothing wrong with families ruling if they're competent i mean the queen of england and the royal family they send their kids to the best schools they send them to the best universities they also go to the military and get a military education which means they get nice rank and beautiful uniforms you know so they can be commanders and generals admirals and so on we can admire them
so they get the best possible education and therefore they geared and and and brought up to be in that position able to do those things maybe you and i didn't have that kind of education but some people do i know someone is a taxi driver he owns a taxi he owns 120 tax he started off as a taxi driver he sent his kids to bishops to the top school and that means that those kids got a fantastic education and they're all doing incredibly well one of them works for him and helps him in his business you see you have these opportunities and if you look at the long term then you can do incredible things thank you and bless you and good
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