Eskom has lost R5-million worth of furniture meant for its failed multi-million rand Wilge Residential Development project which was supposed to accommodate its staff at Kusile power station.
The struggling power utility which was recently bailed out by the state with a cash injection of R120-billion over the next two years has squandered more than R300-million building flats for construction workers at Kusile power station, the Mail & Guardian revealed last week.
It has now emerged that Eskom, which has been struggling to keep the lights on and is set to burden taxpayers with a R10-billion bill for its troubles over the next six years, had also paid for furniture for the abandoned Wilge project.
The power utility has yet to open a case of theft with the police for the mysterious disappearance of the furniture.
The M&G revealed last week that the state-owned entity has abandoned the project and has allegedly spent more than R1-billion to date on renting accommodation for the same employees it had planned to house in the 336 units in the abandoned Wilge Residential Development project.
“We have appointed attorneys to conduct an investigation into allegations of corruption, fraud and financial irregularities in this project. The outcome of the investigation will inform Eskom’s decisions in terms of recourse from those who are implicated in wrongdoing. The correct procedures will be followed in terms of reporting fruitless and wasteful expenditure,” said Eskom last week responding to the M&G‘s questions.
When approached again this week about the missing furniture and if any action had been taken, Eskom simply said: “Please note that our response remains the same.”
This week Public Enterprises Minister Pravin Gordhan, unveiled a plan to turn things around at the embattled power utility but it was thin on detail for the electricity generation business, and did not clarify how exactly the state-owned entity’s financial crisis would be resolved.
Meanwhile, in his midterm budget speech, Finance Minister Tito Mboweni warned that state-owned entities such as Eskom were a danger to the fiscal framework.
“The SOEs pose very serious risks to the fiscal framework. Funding requests from SAA, SABC, Denel, Eskom and other financially challenged state-owned enterprises have increased, with several requesting state support just to continue operating. Isn’t it about time the country asks the question: do we still need these enterprises? If we do, can we manage them better? If we don’t need them, what should we do?” asked Mboweni.This followed his calls last week that Eskom should be run better and that the right people should be appointed to run it.
Eskom has a debt of R440-billion, and the ongoing construction of Kusile has contributed to its financial woes — estimated at at least R161-billion so far.
In July 2012, Eskom entered into a contract with the Liviero Group to construct the Wilge flats.
The group has since gone under voluntary business rescue, and one of its companies has been liquidated. The flats are incomplete and unused, while workers travel up to 50km a day to work at Kusile.
In response to questions about the Wilge accommodation, Eskom said: “Eskom acknowledges that the development was not completed as per contract, including significant over-expenditure on the project.
“We have terminated the contractor’s obligation to complete the work and decided not to invest further in the project. Due to the fact that the envisaged accommodation was not available, Eskom had to resort to other means to house construction staff.”
The power utility has admitted that the Wilge project is fruitless and wasteful expenditure.
The Liviero Group, which consists of Liviero Building, Liviero Civils, Liviero Mining, Liviero Drill and Blast, Liviero Plant and Liviero Energy, filed for voluntary business rescue in July 2018. The group cited late and non-payment by its government clients as reasons for its financial problems, according to an M&G report in August last year (“State non-payment implodes building company”). The group’s building unit, Liviero Building, filed for liquidation.
In a sworn statement last year in support of the voluntary business rescue, director Luca Liviero said: “Due to the group’s exposure to government projects, Liviero Civils in particular has an amount in excess of R81-million overdue by its government clients. These late and often non-payments have had an adverse effect on the Liviero Group’s ability to recover its group charges such as plant hire and other costs.”
Other factors cited were industrial action and section 54 stoppages in areas where Liviero Mining operates, which were “through no fault of our own”.