The smoking gun: ANC will clearly benefit from Eskom price hikes
The array of information available now in the public domain provides compelling reasons to believe that the ANC will benefit from higher Eskom tariff hikes.
Firstly, as has been widely discussed in the press, the ANC's investment arm holds a 25% stake in Hitachi - a stake that Mathews Phosa said would be disinvested, but which the ANC still holds. This presents an untenable situation where, on the one hand, we have the state's crucial goals of social and economic development, and, on the other hand, we have a ruling party that stands to benefit from increasing electricity tariffs.
Secondly, and crucially, Hitachi Power Africa was established in late 2005, with Chancellor House obtaining a 25% share. This was just prior to the start of the tender process for Medupi in 2006.
Thirdly, several documents are now available publicly that demonstrate that the Hitachi tender was flawed. Last year, for instance, we released a confidential Eskom memo detailing, amongst other things, how Hitachi's submission was "relatively less applicable than the Alstom submission based on the opinion across various parameters". Likewise, the Eskom letter leaked in 2008, entitled "Summary of the Medupi Tender Process", demonstrates that the award of the R20-billion Medupi boiler contract should have been granted to the Alstom Steinmüller consortium and not to the Hitachi consortium.
Fourthly, Eskom adopted a fleet strategy to the tender process after the Medupi tender was finalised - which means that Hitachi no longer has to compete with other suppliers. As a consequence, for every coal power plant that is now constructed, Hitachi's shareholders - including the ANC - are ensured greater revenues.
Fifthly, the ANC is not making a public submission to Nersa, but will rather do so privately. One can only imagine that this is because, while the ANC says in public it is concerned about price hikes, behind closed doors it is actually in favour of them.
It is looking increasingly likely that the overarching goal remains to get as much money to Luthuli House; again, the implication is that the so-called ‘developmental state' model is nothing but a way to channel funds to the ANC.
These revelations must call into question the bid to raise electricity tariffs by 35%. We have already seen submissions by business and labour representatives that demonstrate how such a move would be disastrous for the South African economy. The only people who appear to stand to benefit are the ANC. The only way they can demonstrate that this is not the case is by disinvesting from the firm that stands to gain from these power hikes.
Mr Mantashe's claim that there is nothing wrong with the ANC's interest in the company shows his disregard for the interests of a democratic society and the constitutional principles of accountability and transparency.
The fact is that, under the present state of affairs, there is no incentive for the ANC government to save money. On the contrary, as South Africans pay more money to parastatals such as the SABC and Eskom, the ANC only stands to make more money.
The Democratic Alliance (DA) will be taking this matter further with the Minister of Energy to ensure that the crisis at the electricity utility be resolved to the benefit of all South Africans and not to the benefit of those responsible for it in the first place.
Statement issued by Sejamothopo Motau, MP, Democratic Alliance shadow minister of energy, January 21 2010
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