No profit: Eskom allegedly lost money on its Kusile housing project (above). Eskom boss André de Ruyter (left) has said its property portfolio is worth R10-billion. (Paul Botes & Waldo Swiegers/Bloomberg/Getty Images)
Eskom is selling off property at discount prices all over the country. Sources have confirmed that the power utility is getting rid of land at a steal, especially that which it does not wish to own before the unbundling process begins.
The separate sources — inside Eskom and involved with one of the sales — said Eskom had embarked on a “garbage sale” of its property portfolio, which chief executive André de Ruyter has said is worth R10-billion.
“The problem is we have lost a lot of money in the properties we tried to sell, including the Kusile [power station] housing project, so we need the properties to be sold so Eskom can have revenue to keep its business running,” one Eskom source said.
One of the sales is about 40ha of land in the village of Redan, south of Gauteng, with 138 residential houses on it. Eskom sold the Kookfontein land for R14-million when the parastatal generated more than R3-million a year in rental income from it.
Lease agreements from tenants show, before Eskom sold the property in April 2018 according to the deed of sale, the utility earned a monthly rental income of R1 925 from Redan residents. This gave it an expected annual rental income of about R3.1-million.
In documents seen by the Mail & Guardian, the state-owned power utility admits it did not own the 40ha of land in Redan and instead had a 99-year lease agreement.
Internal Eskom documents showing that, in September 2018, Barnabas Dube —director of DBVest Properties, which was trading as Builders One Stop Centre at the time — sent Eskom an offer to purchase Kookfontein, although he knew the land was not registered in Eskom’s name.
There are discrepancies as to when Eskom actually sold the land because Redan residents were informed in an official letter that the parastatal had “ceded” its rights to Dube in December 2020.
One internal note, dated January 2019 and titled “Mandate to Dispose”, stated Eskom’s real estate division initially rejected Dube’s September 2018 offer because the utility was “not the registered land owner and therefore cannot transfer the property to the purchaser”.
In an affidavit deposed in a court case launched last year by Redan residents to fight their eviction after the property sale to Dube, De Ruyter acknowledged “portions” of Kookfontein were not owned by the parastatal but by the estate of the late Donald McKay.
De Ruyter added in his affidavit that Dube was prepared to “indemnify Eskom of any claim that may arise in relation to the registration of the unregistered portions of the farm”.
“The properties in issue presented a serious financial liability on Eskom’s part and [Dube’s] offer received would relieve Eskom from the said liability,” De Ruyter stated.
Dube’s offer followed an appraisal by the firm DCC Rademan which, in September 2017, valued the Kookfontein property at R13.5‑million. Dube had offered R14‑million for the land.
On Wednesday, Dube denied knowledge of decreased prices, saying he had acquired the property from Eskom at a price that was listed.
“I bought the property in December 2020 and, when I got the property, there were tenants who were renting from Eskom. Some of them left but some are still there.
“The property was supposed to be run down, which meant that there was quite a lot of work to be done on our side in the form of maintaining it.”
He added the property came with controversy and difficulties because of resistance from tenants.
“When I took over the place, it was occupied by white people. They formed a movement against me called the patriotic movement, people joined, then they did all sorts of things to sabotage me.
“They defamed my name by making all sorts of accusations on YouTube, which reached as far as Australia, but it was a race issue only because the building would be owned by a black person.”
In a December 2020 interview with BizNews, De Ruyter said Eskom would begin selling 7 000 non-core properties he said were valued at a combined R10-billion. Despite De Ruyter publicly saying the sale of land would be done through the treasury, the Kookfontein transaction was not.
One insider said: “Eskom has been backed into a corner. As we all know, the utility is in debt so, to survive, they have been selling the properties. If you remember, they announced in 2020 that they will be selling land to help them make money. However, there has been really slow traction to that plan.”
The source added that Eskom had not been able to negotiate the price value of the property because of a poor turnout of bidders. This is recorded in official documents showing Dube was allegedly the only person who bid for Kookfontein, when Eskom said it had held an open tender in February 2019.
One source said the alleged slow uptake of Eskom land had resulted in properties being sold at a low price.
Another source said the power utility was intentionally undervaluing its property to avoid the treasury’s scrutiny. This was because of the government’s June 2008 non-core property disposal policy for state entities stating that transactions not exceeding R50-million need not go through the treasury.
Meanwhile, a letter sent to Eskom staff, dated 29 July, said Eskom was marketing its properties for sale.
The letter added that although the public enterprises department did not allow Eskom employees to purchase properties, the utility had asked for permission for staff members to do so.
“Eskom has requested permission from [public enterprises] to allow Eskom employees to participate in the programme, even those without a valid lease, since the sale of properties to Eskom employees would provide them with an opportunity to live closer to work,” the letter reads.
Eskom and the treasury acknowledged the questions sent to them but had not responded at the time of going to print.
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