Singh’s R25 billion Chinese loan for Eskom could be tip of iceberg

5 February 2019

Today, I have been attending the State Capture Inquiry which is looking into Eskom and the grand scale corruption and maladministration within the entity. The revelations in this commission prove that the ANC has singlehandedly plunged Eskom into financial crisis which South Africans will have to pay for.

Eskom, as is well-known by now, is struggling under a massive debt burden of R419 billion, declining revenue, aging plants and maintenance backlogs.

The inquiry into state capture this week has revealed how Eskom contravened its own internal processes when it accepted a dubious $2bn loan agreement from Chinese-based business Huarong Energy Africa.

The whole situation points to a shroud of secrecy that has covered the terms and conditions that were linked to the commercial loans within Eskom. We have asked parliamentary questions and submitted PAIAs to lift this veil of secrecy, with little success to date. This revelation proves to us that Singh’s attempt to slip through the R25 billion contract could be the tip of the iceberg.

The DA will continue to fight for transparency and will not accept clandestine loan agreement with China. This enchanting debt trap has allegedly already trapped other countries like Zambia.

We need immediate action to reform the energy sector in South Africa before it’s too late. In this light, the DA proposes the following interventions which are immediately available to the President:

- Instruct Eskom to immediately freeze the build on the last two outstanding units at Kusile, and instead look to bring on more IPPs to provide power. Eskom’s debt is spiralling due to cost overruns on the two big coal builds, while the units are not running at full capacity due to design and build flaws.

- Ensure Eskom’s coal procurement policy is immediately changed to allow Eskom to procure coal from any source;

- Reaffirm Eskom’s engineering and maintenance employees as an “essential service” that cannot enter into strike action;

- Immediately review all Eskom’s diesel contracts to ensure the cheapest diesel is sourced from professional and reliable sources; and

- Instruct PetroSA to supply Eskom with diesel at tax-free cost prices to avert a crisis in the short-term.

The ANC government has appointed a technical team of experts, set to report back within four weeks, which will do an operations audit and assess the extent of malfunction at Eskom’s power stations.

While we welcome the intervention at Eskom, it is yet another committee or team appointed that will do little to revive the entity the debt trap. Just this week, South Africans could be subject to an electricity hike which can be squarely blamed on the ANC government for its mismanagement and theft.

The DA has led the charge on ways to fix Eskom over the last year, with the introduction of the Independent Systems Market Operator (ISMO) Bill or “cheaper electricity bill”. The bill seeks to break Eskom into two separate entities - a generation and transmission/distribution entity. Our offer would see the generation entity privatized in an effort to break Eskom’s monopoly on production of energy, allowing independent power producers to compete on an equal footing in the generation sector. This bill has been gazetted in parliament for public comment.

The DA will continue to fight for a stable, efficient and transparent energy sector that offers cheap electricity to the benefit of all South Africans.

Issued by Natasha Mazzone, DA Team One SA Spokesperson on State Capture, 5 March 2019