'Eskom can't manage money'

Cape Town - Serious allegations of mismanagement, including the 'disappearance' of 400 000 tons of coal, were made on Wednesday by DA MP Cobus Schmidt during a sitting of the Parliamentary Portfolio Committee on Energy.

Schmidt quoted from internal Eskom documents which showed that 80 000 tons of coal had disappeared from the Arnot power station and 278 000 tons from the Kriel power station.

During the sitting Schmidt blamed Eskom chief executive Jacob Maroga for the over-hasty purchase of coal during last year's the electricity crisis, which had led to the wastage of millions of rands.

He levelled these accusations after Maroga told the committee that consumers could rest assured that the revenue from high electricity tariffs would not be spent on inefficiencies.

For the second time this week the committee expressed its dissatisfaction with the handling of electricity tariffs by Eskom and Nersa.

Schmidt declared that the "missing" coal had been paid for, although it had not been used.

"No one was held responsible for this," reads one of the internal Eskom letters from which Schmidt quoted.

This coal, which was bought in terms of Eskom's mandate to make emergency purchases during the electricity crisis, cost R250m-odd. An internal document points out that this coal can be bought for about R70m under normal circumstances, depending on where it is sourced.

Schmidt also referred to money "wasted" on consultants, running at R2bn a year, as well as the awarding of bonuses, another R2bn.

He asked whether this money could be paid back as a contribution to Eskom's expansion programme.

Maroga call this a "creative" proposal.

Schmidt also alleged that "payments" of R70.2m had been made, with Eskom paying BHP Billiton for coal of the wrong quality.

It appears that Eskom took no action after the poor-quality coal was received. The inferior quality is cited as one of the reasons for the problems experienced with generation.

The documents show that coal mines that have long-term contracts with Eskom are delivering 20% to 50% less coal than they are contractually obliged to do.

They also show that transporting coal to power stations to make up shortages can cost R60m to R150m a month.

The additional expense of boosting coal reserves from 12 to 41 days can be included in the financial loss. The documents further state that 20 days' reserves would have been adequate, particularly in the tough economic conditions.

The papers further argue that Eskom's directors run the risk of being cited for "gross negligence" in managing the coal reserves.

Eskom recently suffered its largest loss to date, around R9bn.

Maroga however reckons that in the current financial year Eskom could show a profit.

In response to Schmidt's questions Maroga invited the energy committee to visit Eskom's facilities.

Eskom's annual report will be presented to the Portfolio Committee on Public Enterprises next week. The utility's request for further tariff increases will be submitted by the end of September, after which it will be subjected to public discussion.

- Sake24.com

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