Stealing is ongoing for years – how many of those connections are dangerous but we must pay because they demand it all for free?
Crisis-hit power utility Eskom is expected to publish its financial results on Monday, with analysts expecting the company’s many skeletons to tumble out of the proverbial closet in the numbers. Energy expert, Ted Blom, says South Africans should prepare themselves for the worst, anticipating tens of billions of rands lost to corruption, overspending, over-staffing and overvaluation.
ESKOM het die monopolie om krag te voorsien – alle SOE, wat ESKOM insluit word gemanipuleer om die publiek te melk vir geld en ekstra inkomste
According to Blom, Eskom has, over the past 10 years, perfected the highly lucrative art of “crying wolf” – a tariff raising strategy which has enabled the SOE to fleece the South African economy of some R1.3 trillion.
“For Eskom, this has been highly rewarding gameplay, but finally the public and Nersa have woken to this trick,” he said.
“If the government or president Ramaphosa are serious about slaying corruption, then this is where the investigation needs to begin.”
The energy expert listed 10 things that South Africans should look out for in Eskom’s results:
- Approximately R30 billion in derivative losses emanating from the Gupta capture of Eskom treasury;
- Approximately R50 billion in contractors claims on capital build;
- Approximately R500 billion in asset overvaluation directly attributable to the high tariff regime currently prevailing;
- Overvalued coal stocks and continuing corruption in coal procurement of around R8 billion per annum;
- The overstaffing and capitalised salaries relating to the 30,000 overstaffed employees (although Blom expects several thousand of these to be “ghost workers”);
- Continuation of the questionable Eskom phantom bonus scheme which milks millions of rands annually in favour of already over remunerated senior employees);
- Further breakdowns in plant availability due to poor maintenance and poor quality coal (including Kusile);
- Inflated coal costs resulting from road transport costs from Medupi;
- Increasing burden on Eskom as a direct consequence of corruption;
- Questionable contracts on renewables which force the utility to pay for electricity at a higher rate than Eskom’s costs and which decimate Eskom’s sales (and ability to service debt).
Blom predicted in 2013 that Eskom would collapse in 2018 due to the above ‘skeletons’ which have been hiding in plain view.
He said that a good way to start turning things around would be to clean up Eskom, and bring electricity prices down below 40 cents per kilowatt hour – a 50% reduction.
“This will spearhead the South African economy and job growth. A reduction in the price of energy from an efficient Eskom will bring extensive financial relief to both the state and citizens,” he said.
Govan Mbeki Municipality (GMM) was among the top 10 highest debtors of Eskom which were in the hot seat before the Standing Committee on Public Accounts (Scopa) on Wednesday, 13 June in Parliament.
They were expected to provide reasons why they continually failed to settle their debts to the power utility.
Council was represented by Ms Thandi Ngxonono, executive mayor, and Mr Thisha Mhlanga, acting municipal manager.
They said GMM’s biggest challenge was bulk electricity losses caused by ghost vending and electricity theft.
The municipality recently obtained a court order to prohibit Eskom from implementing bulk power cuts in the municipal area.
Council owes Eskom more than R500 million of which R167 million is the interest.
GMM said they opted to approach the Pretoria High Court regarding the matter because they were dissatisfaction with Eskom’s billing system.
Ms Angel Khanyile, DA Member of Parliament, said the opposition was not satisfied with the excuses brought before Scopa.
She said it is alarming that GMM reported to Scopa that they had approved the budget at a meeting which apparently did not form a quorum.
“Their budget included the purchase of a car for the mayor to the value of R900 000, and a car for the Speaker to the value of R700 000.
“Those monies could be used to offset the Eskom debt.
“Their meeting did not form a quorum, so it was impossible to approve that budget. I am glad that the chairman of Scopa, Mr Themba Godi, requested that they submit an attendance register to that effect.
“They were also requested to open a case and submit a case number for the service provider that was paid R25 million to fix the sewerage in Ext 22 in eMbalenhle and did work that was not up to standard.”
The Eskom debt has caused instability in the area and residents embarked on protests, demanding to buy electricity directly from Eskom.
eMbalenhle municipal offices and Council’s fleet were torched by protesters last year. The Eskom debt was the centre of their dissatisfaction.
Another community march was held at the Risko Fakude Stadium and residents raised the Eskom matter with Cogta.
Mr Bheki Kubheka, the municipal spokesman, said:
“The illegal connection and ghost vending constitute a major portion of the bulk electricity losses that are affecting the municipality as we are not able to collect every Rand that we use to procure electricity from Eskom.
“Thus our continuous appeal that the community should refrain from these illegal activities that we continue to investigate and we will deal with the perpetrators.
“We also encourage those members of the community who are not paying for their services, to come forward to settle their dues as it is the right thing to do.”
The mayors and senior officials of the top defaulting municipalities met with Dr Zweli Mkhize, Minister for Cogta, as the chairman of the Inter-ministerial Task Team (IMTT) on electricity reticulation, distribution, supply and monies owed Eskom, water trading entities and water boards prior to this Scopa meeting.
The IMTT comprises Ministers for CoGTA, National Treasury, Public Enterprises, Water and Sanitation, South African Local Government Association, Water Boards and Eskom.
Mr Mkhize said Government was extremely concerned about the amount of Eskom debt that has now escalated to about R10,7 billion (combined) and on the other hand the culture of non-payment for municipal services.
He said municipalities are owed R139 billion for municipal services currently.
Some of the matters that Government was working on as part of the solution, were:
• Resolving the perceived tension between Eskom and municipalities over the allocation of areas for servicing as both parties supply electricity to different stakeholders within a municipality based on licensing by National Energy Regulator of South Africa.
• Engaging Eskom regarding their credit control policy to curb the further escalation of the debt as there are concerns from municipalities over the interest that the utility charges on the overdue amount.
• Engaging Eskom over the tariffs that they charge municipalities for bulk electricity and the interest charged on municipal debt.
• Improving governance in municipalities to ensure there are efficiency and qualified officials to manage municipal financial functions such as revenue collection.
While Government was looking at the constitutional and legal issues such as the issue of jurisdiction and mandate for the supply of electricity, municipalities and Eskom were making headways in creating a conducive environment to reduce debt in the immediate term.
These relate to:
• reducing penalties charged to municipalities for high electricity usage;
• increase from 15 to 30 days upon which an overdue amount may attract interest;
• changing the model for penalising municipalities for exceeding the allocated bulk electricity;
• putting on hold the discontinuation of electricity supply to municipalities with debt.
Govan Mbeki Munuicipality did not comment at time of going to the press.
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