Confidential Eskom memo shows rampant mismanagement
A leaked confidential internal Eskom memo in the possession of the Democratic Alliance (DA) reveals gross mismanagement of funds during the procurement of capital and management of coal supplies. Given the seriousness of the allegations made in this memo, it is clearly now incumbent upon the Minister of Energy to take action against the gross mismanagement of the coal procurement process at Eskom.
The document, which has been made available to the DA, is entitled "Forensic Investigation: Claims against Suppliers", and deals with irregularities in the supply of coal to Eskom, demonstrating glaring oversight failures on the part of Eskom.
The total claims for damages suffered amounts to more than R100-million, but Eskom has yet to take any action against these suppliers.
The memo refers to an investigation carried out by Deloitte & Touche, which revealed that gross irregularities amounting to unlawful, and probably illegal, conduct had taken place on a massive scale over a period of several years. The memo also shows how Eskom has been negligent in its failure to verify laboratory results.
In sum, Eskom appears to be entirely incapable of managing the procurement of coal, leading to enormous losses, which ultimately come at the taxpayers' expense.
Eskom now has to look seriously at its own cost effectiveness and see where they can cut costs before they submit their Multi Year Price Determination (MYPD), which, according to information supplied before the Portfolio Committee on Energy yesterday, will be submitted to Nersa by the end of this month. And, of course, they need to explain why they have yet to litigate on the over R100-million of damages highlighted in this report.
The DA will now submit parliamentary questions to the Minister of Energy to establish why Eskom has not litigated against these suppliers, and to ascertain what action is being taken to rectify the problems within Eskom's coal procurement process.
Statement issued by Democratic Alliance shadow deputy minister of energy, September 10 2009
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