Eskom dodges question on company that got R5bn overpayment

Eskom has refused to name the contractor that got a R5 billion overpayment from the cash-strapped national power utility in a transaction that Parliament’s standing committee on appropriations described as too astronomical to just be explained away as an accounting error.
Eskom has refused to name the contractor that got a R5 billion overpayment from the cash-strapped national power utility in a transaction that Parliament’s standing committee on appropriations described as too astronomical to just be explained away as an accounting error.

Power utility remains mum on company, while touting only three days of load shedding in winter.

Eskom has refused to name the contractor that got a R5 billion overpayment from the cash-strapped national power utility in a transaction that Parliament’s standing committee on appropriations described as too astronomical to just be explained away as an accounting error.

Eskom said on Thursday that it had not yet taken measures to recover the R5 billion.

To avoid a public spectacle that might compromise the chances of a positive outcome, it would not disclose the details of the company that benefited from the transaction.

“This matter is confidential and is the subject of a process, the airing of which in the media would be detrimental to a positive outcome for Eskom,” spokesperson Sikonathi Mantshantsha told City Press.

The standing committee on appropriations heard last year during a visit to Eskom that a contractor had been overpaid by R5 billion and there was “an agreement that it was an error”.

Imagine if you read through the media that Eskom will be recovering money from your company. Surely the starting point is to formally make contact with the company in question and avoid an unnecessary public spectre
Sikonathi Mantshantsha, Eskom spokesperson

Sfiso Buthelezi, committee chairperson, said this week at a briefing with the department of public enterprises and its entities, including Eskom, that the committee did not buy the error argument and the matter should not be taken lightly.

“Who is the lucky contractor? And it cannot be the only one. Who else?”

Mantshantsha told City Press that Parliament was the place where such questions would be answered on the record but “outside of that we first have to engage with the companies, either by issuing a letter of demand or summons to recover the money”.

“Only at that point does the matter become public. Imagine if you read through the media that Eskom will be recovering money from your company. Surely the starting point is to formally make contact with the company in question and avoid an unnecessary public spectre,” he said.

Coal contracts

He would not disclose the names of seven companies which Eskom was paying for coal at way above the market price, saying “the contracts are confidential commercial documents that Eskom cannot reveal”.

“Each coal supply contract is negotiated on its own merit and the prices agreed upon are a function of that process.

“Renegotiating with them will be done in the same manner; the merits of each contract will determine the outcome,” he said.

Coal contracts constitute the highest cost at Eskom, accounting for 54% of the budget, followed by operations and maintenance at 20%, labour at 10%, levies and taxes at 10% and material at 6%, the appropriations committee heard.

Read: Eskom passes the electricity tariff buck

Buthelezi said Eskom was paying up to double the market price for coal, adding that the committee wanted to know exactly how much the people of South Africa were paying, compared with what could have been saved.

He said Eskom’s explanation that it was renegotiating the contracts was unsatisfactory and that more questions needed to be cleared, including: “How did we get here and who benefits?”

Eskom CEO André de Ruyter told the committee that seven coal suppliers had been identified for charging Eskom too much and that the contracts were being negotiated.

De Ruyter said Eskom was making “good progress” and an update would follow in due course.

State capture

He said Eskom was working with various law enforcement agencies to recover money linked to state capture allegations, including R600 million from Trillian and a R5 billion claim against Gupta-linked Tegeta Exploration and Resources. But the full amount from Tegeta, which was bankrupt, was unlikely to be recovered, he said.

He said there was also a R171 million settlement with Deloitte on the cards, and a letter of demand had been sent to another consulting company, which he would not name.

De Ruyter said municipalities owed Eskom R28 billion and 16 of the top 20 municipalities that made up 81.25% of the arrears could not have their supply cut because of a court interdict.

Eskom was like “the spoilt brat of the family”, owing to widespread sentiments in government that it was too important to be allowed to fail
Dipuo Peters

He said Eskom had taken advantage of the Covid-19 coronavirus lockdown and had conducted corrective maintenance, which was not long term.

As a result, he said, Eskom estimated that there would be only three days of stage 1 load shedding this winter.

At the peak on Wednesday night, demand was 31 000 megawatts, which was higher than the norm, but Eskom had 44 000MW available to service the demand.

Appropriations committee member Dipuo Peters, also the former minister of energy, said Eskom was like “the spoilt brat of the family”, owing to widespread sentiments in government that it was “too important to be allowed to fail”.

Peters said private companies that owed Eskom money were treated with kid gloves, “especially those companies that are doing business with Eskom but are not paying”.

She said the Covid-19 lockdown period had saved Eskom from incidents of load shedding because economic activity was minimised.


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July 2020

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