Eskom acting CEO promises 'new culture of accountability'

Cape Town – The Eskom board is serious about instilling a new culture of accountability and consequence management at the power utility, the portfolio committee of public enterprises heard on Wednesday.

Members of Eskom’s board, including deputy chair Sindi Mabaso-Koyana, acting CEO Phakamani Hadebe and acting CFO Calib Cassim briefed the committee on the utility’s annual performance and turnaround plan.

Hadebe tackled concerns over non-compliance in procurement processes at Eskom. He referred specifically to reports on the suspension of an official implicated in granting of an extension of a contract with Gupta-owned Optimum coal mine.

Hadebe said Eskom learnt of this on Friday and acted immediately to discuss the decision. Monday an investigation was launched. "By Monday we had members of an independent company to start working on this. We want to highlight to management these things are not acceptable."

He said that the board is implementing a new culture of accountability and consequence management at the utility. Once the report of the investigation comes, Eskom will take appropriate action, he assured.

Mabaso-Koyana added that Eskom wants to steer clear of companies implicated in state capture.

The company is working on implementing systems of control to pick up situations early enough, "before the horse has bolted", she said.

"Any company implicated during state capture, going forward we would like to stay clear of that." There is a challenge with legacy projects which have to do with ongoing contracts. The board’s "clean-up" project must still happen within the confines of South African law, she explained. This means if there is an ongoing contract it cannot simply be terminated.

"It is important for us as the board to move as far away as possible where there is trouble."

Mabaso-Koyana earlier told the committee that the appointment of a permanent CFO and CEO is expected to be finalised by the end of April.

When it comes to procurement of coal, Cassim told MPs that the audit qualification Eskom received was related to its procurement process and documentation management. Auditors flagged R3bn in financial statements which did not appear to be a true reflection of irregular transactions. Eskom is currently reviewing 6 000 contracts for compliance.

The power utility is working with National Treasury, which is holding Eskom accountable in terms of its procurement processes, Cassim explained. Part of the control processes being implemented is to introduce automation of the value chain to avoid "manual intervention" in processes.

Coal supply

Willy Majola, acting group executive of transmission spoke on the availability of coal supply. Eskom has found its stockpiles are increasingly low and is currently trying to transmit coal between stations which have healthy supply to those with low levels.

“The situation is made worse by Tegeta going into business rescue. Tegeta supplies three stations, (these are) Hendrina, Komati and Majuba.”

At Hendrina there was a situation in August 2017 where coal was paid for, but not delivered, which is essentially a pre-payment issue, he explained. Eskom approached Treasury to approve an urgent procurement. Of the tenders that came through the closed tender process, following Treasury’s approval, some of the contracts have started delivering coal. He assured a recovery process is in place.

Thava Govender, group executive of generation emphasised that coal levels are not where they are expected. "We are trying to get the stockpile at a healthy level as we go into winter. Some plans have not materialised. We are working to see how to get coal procured."

Govender said Eskom could not guarantee there will never be load shedding again, as it is caused by various issues. This includes human issues, plant failures and even weather patterns. However he gave assurance that "every person" employed by Eskom is working to ensure that we never get to the stage of load shedding.

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