JOHANNESBURG (Reuters) - South Africa's ruling ANC party dismissed on Wednesday a furore over its investment wing's stake in a multi-billion rand government energy project, denying any conflict of interest.
The ANC's investment company Chancellor House owns a 25 percent stake in Hitachi Power Africa, a subsidiary of Japanese manufacturer Hitachi, which won a contract to supply boilers to two new coal-fired power stations, Kusile and Medupi.
But ANC Secretary-General Gwede Mantashe rejected opposition allegations of cronyism in the project, which is part of a drive to boost electricity output after the national grid almost collapsed two years ago.
"Hitachi won the contract because it is a global company (with the skills) ... not because it has a minority shareholder which is called the ANC," Mantashe told Reuters. Such deals between the ANC's investment wing and companies helped the party to "sustain" itself and fund its activities, he added.
"There is nothing wrong with investing in public companies and the Chancellor House has done nothing wrong," Mantashe said.
The deal was signed in 2008 but controversy has resurfaced due to a request by state-owned power utility Eskom for huge electricity price increases, angering consumers.
The National Energy Regulator of South Africa began a series of public hearings last week on the request by Eskom. The utility says power prices need to rise 35 percent a year for the next three years to help pay for the multi-billion dollar programme to expand generating capacity.
The ANC has defended its stake in Hitachi Power Africa, insisting that it was not illegal or corrupt. But opposition parties accused the ANC of cashing in on state deals.
"If the ANC can own shares in companies that provide services to parastatals, then the government's so-called developmental state model boils down to naked cronyism," said Sej Motau of the main opposition Democratic Alliance.
A smaller opposition party, the Independent Democrats, said that when the deal was signed in 2008 Chancellor House stood to receive about 5.7 billion rand but this had now more than doubled.
Hitachi Power Africa spokeswoman Pam Radebe confirmed that Chancellor House, which the ANC set up in 2003 as an in-house investment firm, had a 25 percent stake in the company.
The company's chief financial officer Robin Duff said Hitachi Power Africa and Eskom were in the second year of a seven year programme and declined to say how much the ANC's investment company stood to benefit.
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