CORRECTION – Eskom fails to fully meet conditions for R49 billion cash bailout
(SUBS/NEDS: CORRECTED TO FIX AMOUNT TO R49 BILLION AND NOT R59 MILLION AS PREVIOUSLY REPORTED)
PARLIAMENT, September 2 (ANA) – Eskom has failed to timeously meet the conditions imposed by National Treasury for the release of a R49 billion bailout to help it cover its debt payments, parliament’s standing committee on appropriations heard on Wednesday.
National Treasury’s director for oversight of state-owned enterprises, Ravesh Rajlal, said the utility had not complied with two conditions, the first being the disposal of the Eskom Finance Company.
“There were two conditions that were not complied with, which is the condition number six which is the disposal the target date of the end of March, but they are now in a new bidding process and the target date is now end of March ,” Rajlal said.
Eskom has struggled to find a suitable buyer for the entity, which provides financial services to its employees, and was deemed non-essential by Finance Minister Tito Mboweni when he negotiated financial support for the company.
The utility also failed to meet condition 16, which relates to remuneration standards it must implement, Rajlal added.
In this instance, the company was waiting for the department of public enterprises to approve the draft policy.
The requirements were special appropriation conditions tied to the disbursement of the recapitalisation in the last financial year, which went ahead nonetheless.
“Despite Eskom not complying with two conditions, the information submitted and the weekly progress updates provided were sufficient to allow the disbursement of the approved equity allocation of R49 billion for 2019/20,” treasury said.
Three of the pre-conditions attached to the state funding were partially met. These included the required assurances in “terms of the cost and timing of completion of Kusile and Medupi”, the two mega power plants that doubled in cost as delays and design faults accumulated.
The company also failed to provide a full breakdown of all the defects that plagued these new build projects.
“That information now has been provided in the June report,” he said.
Eskom revealed on Wednesday that its debt has now reached R488 billion.
CEO Andre de Ruyter confirmed that the cost of Medupi went from an initial R68 billion to R145 billion, while that of Kusile ballooned to R161 billion.
The quality of work provided by contractors fell short of standard, with the specialised welding on boilers proving of “poor quality” and requiring costly corrections.
He also conceded that it was far from ideal to kickstart the two projects before the final design was complete.
Medupi and Kusile contributed considerably to Eskom’s growing debt burden while delays, including work stoppages totalling some 24 months, left the country with a generation capacity shortfall that on Wednesday forced a return to stage 4 loadshedding.
The committee heard on Wednesday that Eskom had flagged 39 projects contracts more than R1 billion and where the cost escalated by 200 percent or more for forensic investigation as part of efforts to claw back money wastefully spent. The contracts will be sent to Eskom’s audit and forensic department to determine whether they were lawful.
– African News Agency (ANA), Editing by Devereaux Morkel
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