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Dentons report: OUTA calls for probe into Eskom

Feb 13 2017 12:19
Lameez Omarjee

Johannesburg – A commission of inquiry into Eskom is long overdue, according to the Organisation Undoing Tax Abuse (OUTA).

The civil body issued a statement on Sunday in which it commended the National Energy Regulator of South Africa (Nersa) for opposing Eskom’s demand for a higher tariff increase, than the 2.2% allowed under the current Multi-Year Price Determination (MYPD) process. 

“We are appalled that Eskom has sighted current ‘hardships’ as the reason for requesting a much higher increase,” said Ted Blom, OUTA’s portfolio director on energy matters. He added that these hardships are self-inflicted and exist due to poor leadership, as was revealed in the Dentons report released last week.

He added that a probe was necessary to expose evidence of “looting, organised crime and institutionalised fraud”.

“Unless comprehensive action is taken to stop the rot and apprehend the perpetrators within and outside of Eskom, it will not be able to fulfil its role as the nation’s electricity provider,” he said.

Blom explained that Eskom’s financial troubles should not feed through to tariffs that consumers have to pay.

“Eskom’s leadership must change its mindset and realise that it cannot continue to pass its poor productivity, maladministration, expensive contracts and billions lost to corruption, onto the public through tariff hikes,” said Blom.

READ: Eskom Dentons report shows serious breaches

The redacted version of the Dentons report was released last week to those who applied for it under the Promotion of Access to Information Act (PAIA). News24 has obtained a copy of the report.

The report is based on a three month investigation conducted during 2015 by the global law firm. Dentons looked at the state of the business, with the aim to unpack reasons for load shedding and delays in infrastructure build at the time, among other things.

Dentons found that Eskom’s electricity prices had been increasing at a rate higher than that of international prices. Further, coal prices were driven by transport costs. Eskom also did not benefit from the 50% decline in coal prices during 2011 and 2015.

Dentons recommended individual coal contracts to be further investigated to determine the commercial viability of coal prices.

ALSO READ: Eskom's electricity price hikes 'excessive' – Dentons

Fin24 previously reported that  some of the contractors, who benefitted from the nearly R30bn that Eskom spent on diesel for its open cycle gas turbines between 2013 and 2015, were companies that had no footprint in the industry and that may have been set up by Eskom employees themselves.

In a media briefing held at Megawatt Park last week, chairperson Baldwin Ngubane reiterated that the report was not released to the public as initially intended, in an effort not to add "aggravated pressure" on the "already stressed business".

He added that claims that Eskom was intentionally withholding information from public was not true. 

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eskom  |  electricity  |  nersa  |  outa  |  energy  |  tariff hikes  |  dentons report

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