'There is evidence that Eskom gave diesel contracts at inflated prices to companies that clearly had no prior experience and acted merely as intermediaries'
A group of academics released a “reference booklet” this week to assist members of Parliament’s public enterprises committee in their anticipated inquiry into state capture allegations at the largest state-owned companies.
The document focuses on Eskom and, say its authors, is intended to give an “independent, accessible, concise and fact-based” account of the web of alleged governance failures and corrupt activities.
It sets out nine areas in which Eskom controls appear to have been usurped, or corruption has occurred, in favour of powerful interests, with a number of instances linked to the Gupta family.
These include the erosion of governance, which began with changes to Eskom’s board under the former and present ministers of public enterprises, Malusi Gigaba and Lynne Brown, as well as the acquisition of lucrative coal contracts by Gupta-linked companies.
In addition, the document highlights areas that have not yet been investigated and could reveal further corruption.
These include allegations that former acting chief executive Matshela Koko colluded with the Coal Transportation Forum and trade unions to protest against the possible closure of coal mines and the inroads being made by independent power producers into the electricity market.
“Misleading information” was provided to the forum and the unions about Eskom’s plans to shut old coal power stations and on the relative costs of coal versus renewable energy, the document says.
The misinformation resulted in a number of protests, including the centre of Pretoria being shut down by 100 coal trucks in March. “The facts need to emerge and sensible policies need to be developed to manage these tensions,” the booklet said.
The document also argued that construction contracts on Eskom’s new power plants, Medupi and Kusile, which are several years behind schedule and about 200% over budget, need to be interrogated.
“Some evidence has been uncovered of awards to favoured parties … but the full scale of contractors and sub-contractor work should be examined,” the document said.
It also highlights problematic diesel procurement for Eskom’s gas-fired peaking power plants Ankerlig and Gourikwa, which were run at very high cost to keep the country’s lights on.
“There is evidence that Eskom gave diesel contracts at inflated prices to companies that clearly had no prior experience and acted merely as intermediaries.”
According to Professor Anton Eberhard and Catrina Godinho of the University of Cape Town’s Graduate School of Business, it is hoped that the booklet will assist the MPs in their inquiry, as well as the public.
The parliamentary inquiry offers an opportunity “to force implicated individuals to answer, under oath and publicly, to widely publicised incidents of administrative and financial malfeasance, and blatant corruption”, the document said.
The inquiry would also need to recommend prosecution and provide the details to the national prosecuting authorities, it said.
Although the reform of the power sector is likely to be beyond the committee remit, unbundling Eskom “will accelerate private investment in the sector and spark competition”, it argued. It will also make it more difficult to “extract economic rents”, add costs to electricity prices or threaten the viability of the electricity sector.
Eskom’s annual revenue is three times that of Transnet, and six times that of SAA, with annual operating expenditure of R140-billion, the report said, which “made the utility vulnerable to corrupt interests”.