Eskom’s highly paid consultants failed to keep the lights on

2014-12-21 15:00

Eskom has paid consultants an enormous amount of money to prevent the “unforeseen technical problems” it claims have caused the lights to go out.

Since November 2, the power utility has blamed these unanticipated technical problems – and sometimes depleted water and diesel reserves – for its inability to keep the lights on.

But it paid consultant Accenture millions to build a remote monitoring and diagnostic centre to keep an eye on power plants, and one of its features is an early warning system for “emerging issues”. The last phase of this project went live in September 2010.

Accenture spokesperson Zweli Mnisi confirmed Eskom was a client, but declined to answer City Press’ questions about the centre. “We suggest you speak directly to Eskom,” he said.

But Accenture is not the only consulting company that has failed to help the utility deliver on its services. As Eskom’s spending on consultants grew over the years, its performance has markedly deteriorated.

In 2007, the year before McKinsey & Company came on board as a strategic consultant ahead of its new build programme, Eskom had spent R839?million on “managerial, technical and other fees” – its line item for recording spending on consultants. That year, it achieved 12 out of the 13 targets contained in its contract with its shareholder, the department of public enterprises.

In 2008, this dropped to eight out of 17 targets, while the consulting bill grew to R1.2?billion. Last year, as the bill hit R2.9?billion, Eskom met only 19 out of 33 targets.

A spokesperson for McKinsey said it was company policy not to discuss any client matters because these were confidential. It was also difficult to gauge how often Eskom heeded its recommendations.

Adding to the secrecy around its consulting contracts, acting Eskom spokesperson Khulu Phasiwe declined to respond to detailed questions about its database of consultants, what they were paid, or their performance.

“This information is contractually sensitive and, as a result, we will not be commenting,” he said.

Deloitte Consulting, which runs Eskom’s solar rebate programme and provides other services, is rumoured to make more than R100?million from the utility each year.

“Deloitte directors always pride themselves on having this big client. I will call it a ‘cash cow’ because Eskom is the number one client for Deloitte SA,” said a source who has done subcontracting work for the company. “They bill over R100?million in fees annually, and this number continues to grow each year.”

Mike Comber, Deloitte’s deputy chairperson, declined to confirm the figure, but said Eskom had been a long-standing client and Deloitte served as one of its auditors until 2003.

“Together with a wide range of other local and global firms, we currently provide a number of advisory and consulting services based on our global and local expertise, the needs of the client and following the normal procurement processes,” he said. “We are unable to provide further information, in accordance with our confidentiality agreements with the client.”

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