Public cannot finance Eskom’s corruption and maladministration 

12 October 2017

AfriForum and AfriBusiness today submitted their written comments regarding Eskom’s electricity increase for the 2018/2019 financial year to the National Energy Regulator of South Africa (NERSA). These organisations argue that the costs of Eskom’s alleged corrupt activities and maladministration should be excluded from the calculation of the increase in the electricity tariff for the coming year.

Eskom has submitted an application for an increase of almost 20% in the 2018/2019 electricity rates for direct clients, and 27,5% for municipal clients.

“Eskom cannot expect the public to fund corruption and maladministration by increasing electricity tariffs. The Daily Maverick just yesterday reported that Willie Mathebula, the National Treasury’s Chief Procurement Officer, indicated that Eskom deviated from the prescribed supply chain management process with R31,3 billion in the 2016/2017 financial year,” says Morné Mostert, AfriForum’s head of local government.

AfriForum and AfriBusiness pointed out several cases where corruption or maladministration probably took place in Eskom:

- The McKinsey/Trillian saga where R1,6bn was alleged to have been illegally paid to these companies;

- The alleged illegal payment of bonuses to certain senior Eskom officials to the value of R5 million;

- The alleged illegal advance payment to the Gupta company Tegeta (R659 million);

- The alleged illegal write-off of a fine of approximately R2 billion imposed on Tegeta;

- Alleged tenders (almost R1 billion) awarded to a company partially owned by Matshelo Koko, daughter of Eskom’s acting CEO;

- The alleged fruitless and wasted expenses and surpluses at the Ingula, Medupi and Kusile power stations;

- The alleged illegal inclusion of provision for payments to independent power providers, although the contracts for the latest “window” have not yet been concluded with the independent power providers.

According to Charles Castle, director of the labour advisory unit at AfriBusiness, private energy providers should be allowed to enter the market. “The large-scale fraud that is currently the order of the day in Eskom provides sufficient evidence that this type of monopoly under state control is detrimental to not only the business sector but also the public at large. The playing field is not equal, and this is due to abuse of power. Eskom’s management and the parliamentary committee tasked with investigating alleged fraud in Eskom must ensure that the responsible parties are brought to book and that the business sector and public at large are not once again victims of tariff increases.”

This submission forms part of a longer-term strategy of AfriForum and AfriBusiness to combat corruption and maladministration in Eskom.

Issued by Morné Mostert, Head: Local Government. AfriForum, 12 October 2017