Former Eskom chief executive Andre de Ruyter. (Brenton Geach/Gallo Images)
His belief that Eskom lost R1 billion a month to corruption was a conservative assessment, former Eskom chief executive Andre de Ruyter has said in an affidavit to parliament’s watchdog standing committee on public accounts (Scopa).
“I have publicly made the statement on a number of occasions that an estimated R1 billion per month is stolen from Eskom,” he said. “This is, if anything, a conservative estimate and is based on my assessment of the losses suffered by Eskom that have come to my attention.”
He said his calculation was based in part on the vast savings that the power utility registered when additional security controls were implemented at power stations.
In one such instance, fuel costs at Tutuka power station decreased by about R100 million a month after he became suspicious about excessive usage and security was tightened.
“Soon thereafter, fuel oil consumption increased significantly at Grootvlei and Majuba power stations.
“It would therefore appear that there is significant fuel oil theft taking place at Eskom, possibly with the involvement of organised crime cartels.”
Given that there are 14 other coal-fired power stations, the opportunity for theft of fuel oil “remains very considerable”, he said in the affidavit submitted ahead of his appearance before Scopa on Wednesday.
De Ruyter added that the sums that had to be written on procurement fraud in the 2020 and 2021 financial years — R1.3 billion and R800 million respectively — translated into about R100 million a month.
Added to these losses caused by crime, was about R2 billion resulting from infrastructure theft and sabotage. Electricity theft accounted for another R200 million a month.
De Ruyter said coal theft added substantially to the company’s losses but was hard to quantify.
“Estimating the total impact of coal theft is very difficult, as acceptable quality coal is replaced with discard coal, or the weight manipulated by the addition of rocks, water or heavy items such as steel. This takes place at so-called black sites, where good quality coal is replaced with poor quality.”
He had been informed by company security that the police had raided three such sites, and placed another 30 under surveillance.
“Given that Eskom spends about R132 bn per annum on buying primary energy, the bulk of which is coal, even a 5% loss factor on coal would equate to some R500m per month.”
De Ruyter said an intelligence-driven operation into organised crime targeting Eskom, particularly in Mpumalanga, has yielded results and the findings have been given to senior police officers.
“There are allegedly at least four, probably more, cartels operating in Mpumalanga, each with their own identities: the Presidential Cartel, with a number of companies to its name, focusing mainly on Matla [power station].
“The MeshKings Cartel operates out of Witbank, with Duvha [power station] as its main area of control, and also has its own favoured corporate entities to funnel money out of Eskom. The Legendaries Cartel, which has Tutuka [power station] as its focus, is based in Standerton, where it operates guest houses with contracts with Eskom, suppliers and local structures.”
The Chief Cartel operates out of Newcastle, and regards Majuba power station as its fiefdom, “with a focus on coal supply by road”.
De Ruyter added that there are more cartels operating elsewhere, who had allegedly carved out their territories.
He said he could not name the sources he has relied on to convey information to the police and intelligence agencies for fear of endangering their lives.
“I am therefore not able to divulge the names of sources or intelligence operatives, as doing so will undoubtedly compromise their identities and their safety. To the extent that these are known to the Directorate for Priority Crimes Investigation, also known as the Hawks, I respectfully direct the committee to direct enquiries to the officers investigating these cases.”
De Ruyter resigned from Eskom at the end of 2022. He was relieved of his duties one month short of the end of his notice period at Eskom after he revealed the same information in an explosive television interview.
In the interview, he said he would agree with the suggestion, put to him by the interviewer, that Eskom served as a “feeding trough” for the ANC. He said he had informed ministers that a senior ANC politician was implicated in corruption at the entity.
Although De Ruyter did not name the politician, opposition leader John Steenhuisen later used parliamentary privilege to tell the National Assembly he was referring to then deputy president David Mabuza.