Red flags after Eskom posts annual results

23 July 2018 - 15:25 By Bongani Fuzile
Eskom Medupi Power Station.
Eskom Medupi Power Station.
Image: Business Times

Poor management skills by Eskom employees have led to a loss of money by the parastatal as no checks and balances were done on debt owed.

That is the view of Suzanne Daniels‚ the now fired head of legal services and compliance at Eskom.

Daniels has been a whistle-blower at the state utility‚ revealing a number of corruption deals. Eskom on Monday reported a loss of R2.3-billion in the past year while R19-billion was reported as irregular expenditure.

“Why is there R19-billion in irregular expenditure while we had external auditors at the entity every now and again since 2012? What were they doing‚ why was this not noticed? There’s a lack of skills from the management‚ they could have picked up these things‚” said Daniels.

Daniels said a lot of blame should be put on the shoulders of those in charge. “They can’t even collect debt from the municipalities‚ there are no plans…there were negotiations with the municipalities but that was done haphazardly‚ hence we find ourselves in this situation‚” she said.

The chairperson of the portfolio committee on public enterprises in Parliament‚ Lungi Mnganga-Gcabashe‚ has expressed concern about the latest report by Eskom.

She said the committee would continue to engage with Eskom to address its challenges and restore public and investor confidence.

“The power utility has in the past months come under scrutiny because of the financial and operational performance it experienced. The committee will make time in its programme to invite Eskom‚ so that members are briefed on the latest financial results‚” she said.

United Democratic Movement leader Bantu Holomisa said Eskom must unpack what happened to the R19-billion. “They want to get sympathy from people; they must first tell us what happened to the R19-billion. Who got what‚ who pocketed the money‚” said Holomisa.

The Democratic Alliance’s Natasha Mazzone said the losses were as a result of the years of corruption‚ mismanagement and a bloated staff complement at the utility.

“Eskom’s latest financials once again reiterate the need for a complete turnaround strategy for South Africa’s energy sector‚” said Mazzone.

Political analyst Dr Somadoda Fikeni said a proper diagnosis of Eskom was needed.

“We can’t keep on changing the management and move them around while they are implicated in allegations of fraud. Eskom’s problems are affecting the country‚ not them. A solution is needed‚ speedily‚” said Fikeni.

The utility is at loggerheads with unions over salary increases. Initially Eskom said they would not pay staff any increases but‚ because of pressure from unions‚ they backtracked and offered an increase of 7.5% for this year‚ and further increases for the next three financial years.

In its defence‚ the utility put the blame on corrupt individuals who have since left the company.

Eskom said in has seen 10 CEOs in 10 years and six boards in the same period. In a statement‚ Eskom said 10 implicated senior executives had exited and finalisation of “outstanding disciplinary hearings relating to senior executives are being accelerated”.

In the report‚ it further said 11 criminal cases had been opened‚ five involving nine senior executives.

“A total of 1‚049 outstanding disciplinary cases since April 2018‚ of which 628 have been finalised‚ resulting in 75 employee exits‚” said Eskom.

The utility said 239 whistle-blowing cases had been investigated‚ 122 of which had been concluded.

“Disciplinary process is under way in respect of 67 confirmed cases and remedial action has been taken against 25 staff doing business with Eskom. Seven of them have exited‚” said Eskom‚ in the report.

Energy Expert Ted Blom‚ a partner at Mining & Energy Advisors‚ said there would be pressure at Eskom until the 2020 financial year.

“Eskom has‚ over the past ten years‚ perfected the highly lucrative art of ‘crying wolf’ - a tariff-raising strategy which has enabled the state-owned entity to fleece the SA economy of some R1.3-trillion. This has been highly rewarding gameplay‚ but finally the public and Nersa have woken to this trick‚” said Blom.

“If the government or President [Cyril] Ramaphosa is serious about slaying corruption‚ then this is where the investigation needs to begin. Ramaphosa has asked for ideas on how to relieve the financial burden on the public. A good start would be to clean up Eskom as doing so would allow energy prices to return to below 40c KWh - a 50% reduction which will spearhead the SA economy and job growth‚” he said.

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