Tag: Eskom

Source: MyBroadband

Many poor South African municipalities are drowning in debt to Eskom due to a culture of nonpayment by consumers, according to a report in the Sunday Times.

Maluti-a-Phofung, one of the poorest municipalities in the country situated in the foothills of the Drakensberg in the Free State, owes Eskom close to R3-billion, the report stated.

Co-operative governance minister Zweli Mkhize said the municipality was the worst electricity payments defaulter in the country, criticising the lack of payment by consumers and problems with ageing infrastructure.

Mkhize said that political instability in poor municipalities paired with a failure to perform basic legislative responsibilities has lead to the collapse of service delivery.

“Municipalities which enjoy political stability tend to be characterised by a more settled and mature political and administrative leadership,” his report stated.

Uplifting poor municipalities
In his presentation to the ANC’s national executive committee, Mkhize said he had appointed an advisory panel to find a solution to the growing debt of these poor municipalities.

Recommendations included a strong provision of basic services and a concerted effort to promote payment among residents in these areas.

Mkhize’s report also raised concerns of inadequate skills and political infighting within municipal councils, which he said weakens the ability to perform legislative tasks and creates an environment in which it becomes easier to commit fraud.

Following the loss of R1.5 billion in municipal funds invested in VBS Mutual Bank, Mkhize said municipalities should be transparent about planned capital projects and find alternatives to preserve financial stability.

The total debt owed to Eskom by South African municipalities has reached R14 billion, with delivery of services such as sewage and water also suffering in affected municipalities.

The energy regulator recently announced that Eskom plans to recoup the vast amounts of money lost in unbudgeted costs incurred in the 2014-2017 financial years.

The utility is able to raise power prices by 4.4% to regain the expenses through its regulatory clearing account, with standard tariff customers bearing the brunt of the R32.7 billion it aims to recover.

Eskom is also said to be affected by a coal crisis, where at least four of Eskom’s 15 coal-fired power stations had less than 10 days of coal on hand in September.

By Luke Daniel for The South African 

Embattled state owned enterprises (SOEs) are South Africa’s biggest and most dangerous economic stumbling blocks.

This is according to the international rating agency, Moody’s, which points to Eskom’s major failings as a cause for national concern.

State owned enterprises all performing dismally
While speaking at the Investor Service’s conference on Thursday, the agency’s senior credit officer for infrastructure finance, Helen Francis, outlined the dire position most SOEs find themselves in.

The massive financial drain perpetuated by failing SOEs has been well documented. Eskom, in particular, has reported over R19bn in irregular expenditure and continues to rely on government bailouts to stay afloat.

Worrying, Eskom is undoubtedly the largest and most vital SOE – supplying 90% of South Africa with electricity.

Yet, the embattled national power supplier just can’t seem to get back on its feet, following Gupta interference involving former company boss, Brian Molefe. Recently, the company issued an ominous statement, bemoaning the fact that its coal reserves were dwindling as a result of dodgy tenders.

Looking across the entire SOE spectrum paints a dismal picture. It’s not just Eskom that is dying, and in that way draining the already unsteady economy of vital funds. Transnet, South African Airways (SAA), the South African Broadcasting Corporation, and many more national companies are failing to make ends meet.

Corruption still plaguing SOEs
Speaking to Fin24, Futuregrowth Asset Management’s, Olga Constantatos, said that turning the situation around would not be easy and that much more needs to be done.

Constantatos commented on the disease of corruption and gross mismanagement which afflicts both Eskom and Transnet, saying:

“Much more needs to happen. The latest results at Transnet and Eskom point to the circumventing of controls – with Eskom’s R20 billion in irregular expenditure and Transnet’s R8bn. We need to see prosecutions. We need to see arrests of people who were stealing money essentially from you and me.”

Constantatos added that there needs to be stiffer repercussion for SOEs which flout due process, and as such, essentially, steal from the taxpayer and investors, saying:

“As bond investors, we are custodians of the nation’s pension funds. We should not be allocating capital to institutions where there is malfeasance, or lend blindly to companies that are not responsible.”

Plan for further load shedding, warns Eskom

Source: News24

While consumers were spared load shedding on Monday, the power utility has cautioned South Africans to remain on the alert for further power cuts.

In a statement on Monday evening, Eskom warned that the power system continues to be constrained.

“Customers are advised to keep checking their load shedding schedules on the Eskom and their municipal websites, and plan on the assumption that load shedding will take place,” it said.

“We thank all customers for using electricity sparingly during this period, assisting us to pull through the evening peak.”

The country has since last Thursday experienced routine blackouts, as Eskom battles to restore supply challenges created by workers’ demonstrations at power plants.

The power utility has reported a significant increase in plant outages and bottlenecks in routine maintenance, because of a lack of resources to operate plants optimally.

Eskom said that blackouts can be expected for the next 10 days.

Workers had left their work posts because of intimidation and violence by fellow employees, who are demanding salary increases.

Load shedding schedules are available on the Eskom website loadshedding.eskom.co.za. Customers can also contact the customer contact centre at 0860 037 566.

Meanwhile, Eskom spokesperson Khulu Phasiwe in a tweet reminded Johannesburg City Power consumers that planned maintenance will take place in certain areas “after the Tunisia vs England match”.

Caxton Central / Southern Courier

The National Union of Mineworkers (NUM) is planning a total electricity shut down on Thursday 14 June to protest against the 0% salary increases of Eskom employees. Here’s what you need to know.

South Africans might experience a day of no power because of strike action set to take place against Eskom for not increasing the salaries of their workers this year.

1. Eskom announced 0% salary increases for their staff
In January this year, troubled state utility company Eskom appointed a new board of directors to help resolve their leadership crisis. President Cyril Ramaphosa appointed former Finance Minister Pravin Gordhan as Public Enterprises Minister in February to be in charge of state enterprises like Eskom. This week the power utility announced a 0% increase in wages and earmarked 10 000 jobs to be slashed.

Allan Gray has pointed out the real problem at Eskom – a productivity meltdown. In 2003 #Eskom employed 32,000 people. Today that number stands at around 47600, up almost 50%. Eskom’s electricity production is roughly the same as it was in 2003. So 50% more people, a massive wage bill and the same amount of output.

2. NUM released a statement calling for a national shutdown
NUM released a statement saying that they were “disgusted by the brutal arrogance shown by the black majority led by Eskom”. They called for a national shutdown of electricity supply. The action is set to occur on national, regional and branch level. NUM and National Union of Metalworkers of South Africa (NUMSA) held a joint briefing earlier today to this effect.

3. NUM launched a response to Eskom in a series of tweets
One of the questions raised was “why should workers’ pay for the sins of management? It’s a fact that Eskom managers drove the SOE to the brink of financial ruin through rampant looting, corruption and mismanagement.” They said Eskom senior managers are responsible for the financial crisis at the SOE – “if jobs are to be cut they should start by cutting down the BLOATED executive which is made up of approx 500 people!”.

4. Eskom has contingency measures against Thursday’s strike
Eskom released a statement that they have measures in place to mitigate against the planned industrial action. They assured people that they will ensure the security of power supply should the strike happen.

5. People have taken to their social media to respond to the announcement
There’s been a generally mixed response to the Eskom announcement with some people claiming it is wrong to not increase the staff salaries in the wake of VAT increases and rising petrol prices. Others, however, believe Eskom workers have unrealistic demands.

By Siseko Njobeni for Business Report; by Carin Smith for Fin24

The Congress of South African Trade Unions yesterday urged the National Energy Regulator of South Africa (Nersa) to reject Eskom’s application to recoup R666,6-billion, saying such a move was unaffordable, unreasonable and unjustifiable.

If the Regulatory Clearing Account (RCA) application – which covers the 2014/15, 2015/16 and 2016/17 financial years – is approved, Eskom would claw back the billions of rand through higher tariffs.

According to various organisations, the R66bn could lead to a 30% increase in tariffs.

South African consumers have reached a price ceiling in terms of electricity tariff hikes, according to the Southern African Faith Communities’ Environment Institute (Safcei). Kim Kruvshaar, an independent sustainability auditor, represented Safcei at public hearings by the National Energy Regulator of South Africa (Nersa) in Cape Town on Tuesday.
“We don’t believe Eskom is an efficient electricity provider. Its business model is out of sync with global trends,” Kruvshaar told the Nersa panel.

Public hearings

The RCA is a backward-looking mechanism that seeks to reconcile what Nersa awarded Eskom on the basis of what was forecast in the Multi-Year Price Determination (MYPD) and what materialised, as reflected in the utility’s financial statements.

In a presentation at Nersa’s public hearings on the application in Cape Town yesterday, Cosatu said higher tariffs were not the solution to Eskom’s problems. It said higher tariffs affected key sectors such as mining, inflation and economic competitiveness. It said Eskom had failed to come clean on state capture and to take serious action against maladministration and corruption.

The trade union federation said Eskom should institute comprehensive forensic and criminal investigation “with dismissals, arrests, asset seizures and prosecutions”.

Speaking at the hearing, Eskom interim chief executive Phakamani Hadebe said Eskom’s sustainability depended on a sound regulatory environment that was aligned with existing Nersa rules and other legislative requirements.

“We therefore rely on Nersa to review our application in line with the MYPD3 methodology, which is a globally accepted regulatory principle that reconciles variances between the
projected and actual revenue and costs that Eskom incurred for certain elements. “It is also worth noting that we based our application on the decision already taken by Nersa on our first RCA application for 2013/14.

“We have spent the money in the implementation of our mandate of providing electricity to South Africans by raising debt as it was not included in the revenue decision and need to repay those loans accordingly in order to ensure credibility with our lenders.”

Hadebe said Eskom’s application only covered costs that were incurred efficiently and prudently.

Recovery

He said Eskom was on a path of recovery on governance. The Eskom board – appointed in January – was preoccupied with the power utility’s operational and financial stability. “Continued focus and effort will be placed in combating corruption and pursuing justice within the legal framework. We also welcome various investigative interventions that are under way to get to the bottom of recent acts of fraud and corruption, and we are in the process of claiming back money owing to Eskom, including money that was fraudulently paid to McKinsey and Trillian,” said Hadebe.

Agri Western Cape said electricity costs had risen significantly since 2008. The federation of farming organisations said Eskom’s RCA should be vetted by auditors.

New Public Enterprises Minister Pravin Gordhan on Tuesday revealed that his immediate focus would be on revitalising state-owned entities (SOEs) and reversing the tide of state capture that has gripped key sectors of the economy.

The appointment of new boards at several public entities, including operational changes, was expected in the next three weeks, Gordhan told members of the Federation of Unions of South Africa (Fedusa) at a conference in Pretoria.

“It won’t be an easy task, nonetheless it is not impossible,” he said, adding that change was expected in state power utility Eskom following the appointment of a new board.

“There is a huge need to restructure the state entities to function in the public interest, not just to serve a few people,” said Gordhan.

The financial management of public enterprises such as Eskom, South African Airways and rail agency PRASA has been blamed for putting pressure on the fiscus, with billions of rands in guarantees extended to the entities to help them stay afloat.

“A good team at Eskom needs to assure South Africans that they would work to keep costs under control,” he said. “Given 3 to 6 months, we will begin to see some positive signs.”

‘Tough ride’

Gordhan, who was named public enterprises minister on February 26, stressed that rooting out corruption and transforming state-owned enterprises was going to be a “tough ride”.

Treasury has issued R350bn in government guarantees to Eskom, of which over R200bn has been utilised, as the troubled state power utility has battled to rein in bulging operating costs.

The poor state of Eskom’s financial affairs has seen its long-term corporate rating downgraded by Moody’s in November to Ba3, a third notch below non-investment grade.

The ratings agency placed Eskom on review for a further downgrade.

Late last month rival ratings agency S&P downgraded Eskom’s long-term debt to ‘CCC+’, the seventh rung of non-investment grade, with a negative outlook.

Gordhan said he anticipated that those involved in state capture would try to “sabotage” efforts of reversing the damage and transforming the state.

“The damage is not something that happened overnight […] we are on a good wave in South Africa and it is possible to re-capture the state and re-orientate these institutions,” he said.

By Sibongile Khumalo for News24

Is this loadshedding, revisted?

Eskom has been dogged by allegations of corruption and mismanagement, and this is showing in its expected financial results over the short and medium term. In addition, two of Eskom’s suppliers of coal – namely, two Gupta mines – have stopped operations due to an inability to pay staff.

As the embattled parastatal’s bills mount, questions surround whether or not there will be enough coal to keep power on this winter.

Eskom’s problems far worse than expected

The Rapport reported that Eskom expects a loss of R8.1-billion in the short term, which is set to balloon to R26,5-billion in the medium term.

These projected losses are the highest a state-owned enterprise has ever experienced in South Africa.

The National Treasury described Eskom’s financial problems as the single biggest risk to the South African economy and public finances.

This echoed the views of finance minister Malusi Gigaba, who said in January that Eskom’s financial woes could collapse the economy.

“There would be no currency, and no economy for the country if Eskom went belly-up,” said Gigaba.

To address the mismanagement at Eskom, Gigaba said in his recent budget speech that the government has strengthened Eskom’s board and management with “highly-capable, ethical, and credible leadership”.

Further allegations of mismanagement
In related news, the Sunday Times reported that former Eskom executive Matshela Koko’s wife has received millions of rand from the power utility.

“Documents in the possession of state capture investigators suggest the money flowed to companies where Koko’s wife, Mosima, is a director,” said the Sunday Times.

The report stated that the money was “channelled through Eskom service provider Impulse International, where Mosima’s 27-year-old daughter, Koketso Choma, was a non-executive director”.

In March last year, the Sunday Times reported that Koko’s stepdaughter received contracts for her company worth R1 billion from Eskom.

The report stated that Choma was appointed as a director at Impulse International in April 2016, after which it received eight contracts from the division of Eskom which Koko headed up.

Third Gupta-owned mine fails to pay workers’ salaries

An employee at Shiva Uranium mine‚ a Gupta-owned company based in Klerksdorp‚ North-West‚ says they have been left in the lurch after the company failed to pay them their salaries last week.

“We have not been paid February salaries. We were told that we would be paid on the 28th. This is very frustrating as most of us live far from work and are struggling to get money for transport‚” said the employee‚ who asked not to be named.

She said the company told them on Friday that the payments were delayed because it does not have a bank. “They also told us that they have an international bank and the funds have to be converted from dollars into rands and that the process takes long.”

Koornfontein coal mine is the second Gupta-affiliated mine not to pay salaries to its workers.

They were also told that the delay was due to Eskom not paying the company.

The country’s commercial banks have cut ties with Gupta-owned companies – citing reputational risk – while the only bank which services the companies‚ Bank of Baroda‚ is to exit South Africa at the end of March.

“We know there is trouble brewing there. They are just not telling us the truth.”

She said most workers have since Friday taken leave because they either do not have money to take public transport or put fuel in their cars.

“I do not know what I would have done had it not been for my partner‚ who has helped out with the kids’ school fees and other household expenses‚” the woman said.

She said the company has denied that it is under business rescue as the workers have heard from media reports.

“We have asked them if they are under distress and they said no. They don’t want us to take action against them and have threatened us with our jobs‚” she said.

Shiva Uranium is the third Gupta-owned company to not pay its employees. Optimum and Koornfontein coal mines have also failed to pay workers their salaries this month.

Workers at Optimum downed tools on Wednesday last week‚ saying they wanted to know whether the mine would be sold following reports that the mine’s owners‚ the Gupta family‚ could no longer be found.

Koornfontein supplies coal to Komati power station‚ Optimum supplies coal to Hendrina power station and Brakfontein supplies coal to Majuba power station.

https://mybroadband.co.za
By NOMAHLUBI JORDAAN for https://www.timeslive.co.za

The Public Service Association (PSA) has reacted furiously to the Public Investment Corporation’s (PIC) R5bn loan to Eskom calling it an “illegal transaction” which the union feel has “betrayed” workers.

“The PSA in the meantime is consulting with its attorneys to urgently look at declaring the whole PIC board illegally constituted after the due date of the 12 February 2018 given to the PIC to prove its board’s legitimacy,” the union, said in a statement on Monday afternoon.

The union, which represents around 200 000 civil servants has written to the PIC to complain that none of the unions sit on the PIC’s board, which they claim contradicts the PIC Act.

“If we are able to prove the appointment of the board was illegal… it will be only right that all the decisions they took are [also] null and void,” PSA deputy general manager Tahir Moapa told Fin24 by phone.

The PIC Act of 2004 states: “The Minister [of finance] must, when appointing the board, have due regard to the nominations submitted to him or her by the depositors.”

The PSA said that all parties agreed in principle not to use the R1.9 trillion in the public servants pension fund, to bail out state owned companies (SOCs), until there’s agreement that governance has improved.

“It is now clear, we cannot trust both boards to look after our members’ pension,” the union said.

Cosatu supports lifeline

The Congress of South African Trade Unions (Cosatu) differs with the PSA and supports the R5bn lifeline to Eskom, but with conditions.

“We agree to it but with the understanding that no jobs will be touched [at Eskom], Cosatu spokesperson Sizwe Pamla commented to Fin24.

Pamla added that newly appointed Eskom chairperson Jabu Mabzua cut jobs as part of a restructuring process at Telkom, when he took over as chair of the board.

He said that workers’ pensions should be used to ensure SOCs aren’t privatised, in particular the power utility as this would lead to electricity price hikes.

“We have to look at the bigger picture, the interest pf public servants should reconcile with workers broadly”, he said.

Cosatu represents around 800 000 employees in the public sector.

Pamla said they will continue with the process of trying to have worker representation on the board of the PIC itself, instead of just at the Government Employee Pension Fund (GEPF) level.

Both Cosatu and the PSA , in September 2017, objected to reports that the PIC would bail out the flailing South African Airways (SAA) and demanded that the level of union representation on the board, be improved.

The PIC on behalf of the GEPF, advanced the R5bn bridging facility to Eskom for one month. The loan will fund the company’s operations during the month of February 2018. But three other South African banks will also have to help Eskom out, the PIC stated.

Following Eskom request for assistance with its liquidity challenges, the PIC said it conducted its own due diligence and obtained approval in line with its mandate and corporate governance requirements.

By Tehillah Niselow for Fin24

Ex-Eskom bosses grilled over R1bn IT tender

The “overpriced” R1 billion information technology tender that Eskom awarded to outsourcing giant T-Systems two years ago is still haunting the under-fire power utility.

The Portfolio Committee on Public Enterprises yesterday continued its inquiry on Eskom into the mismanagement of state funds in state-owned enterprises.

According to Business Report, the Eskom board came under fire over “how it axed former executives and pushed through a tender deal of R1 billion for information technology and maintenance at power stations”.
Two witnesses appeared before the committee – former Eskom CEO Tshediso Matona and Eskom’s former group executive for enterprise development, Erica Johnson.

Briefing the committee, Matona said that by the time he arrived at Eskom in October 2014, there was significant turmoil within the board and there was fighting over a range of governance issues. The most pertinent matter was around procurement.

He was suspended by the board five months after his appointment.

German-based multinational T-Systems first secured the deal in December 2010, when it purchased state-owned ICT service provider arivia.kom, which came with the five-year, R500 million per annum Eskom deal – at the time described as one of the biggest outsourcing transactions in SA’s history.

However, it is understood excessive pricing was the main driver for Eskom wanting to shop around for a new service
provider.

In May 2012, Eskom, nonetheless, said it would retain the services of outsourcing giant T-Systems SA for another two years, after it announced the previous month that it was scrapping its tender for the provision of outsourcing IT infrastructure services. The tender was reportedly “overpriced”.

Responding to questions over the tender, Matona said: “There was infighting about whether T-Systems should get the tender or somebody else.”

He indicated the issues at Eskom rendered the board dysfunctional in many ways. That could be one of the reasons shareholders decided to change the board in December 2014.

When questioned around his suspension, Matona said the suspension came as a complete shock, “by a board that had just taken office and a board that was still familiarising itself with issues of the company”.

He said: “I expressed my disagreement of a new investigation, an investigation of my removal without any basis of why I had to be removed. At the time I did not know that the same was being proposed for other executives; I was handed a letter of suspension. I believe the action was wrong and I went to the Labour Court and sought urgent relief to indicate that my suspension was unfair and that I should be reinstated.”

Responding to questions around governance at Eskom, Matona said the challenge of governance and what confronted Eskom was financial performance of the company.

“The books were not balancing and there were a number of factors, revenue was under pressure and this was as a result of the economic slowdown at the time. The economic slowdown was becoming apparent at that time. The issue of tariff – as to whether it was sufficient to sustain the balance sheet, the issue of debt with municipalities which was escalating. The long and short of it is that Eskom was in serious financial trouble,” he said.

By Admire Moyo for ITWeb

Finance Minister Malusi Gigaba said on Tuesday that power utility Eskom’s application for a 19.9% electricity tariff hike next year is “unjustified”.

Gigaba was addressing a business breakfast in Umhlanga, north of Durban, organised by the Durban Chamber of Commerce and Industry.

“To ask South Africans to pay more … when the economy is subdued and the mid-term outlook is as subdued as it is and we have the types of financial and leadership challenges that Eskom is now experiencing, I think that will serve as a perverse incentive,” he said. “We’ve got to be careful what we do.”

Eskom has asked National Energy Regulator (Nersa) to allow it to implement a 19.9% tariff hike for the 2018/19 year. Nersa is currently conducting public hearings into the feasibility of the increase.

Gigaba also called on the power utility to stabilise its finances, saying that public officials needed to be “circumspect” about how they manage public resources.

“All public officials needed to be conscious of the need to fight corruption, irregularities and inefficiencies to ensure that state-owned companies perform well,” said Gigaba.

“That’s why I think that the Eskom application for a higher tariff is unjustified, given the fact that on the other hand we have excess electricity.”

The finance minister told the business breakfast that Eskom must “incentivise” South Africans by improving its governance and employing what he termed “properly qualified executive leaders from CFOs (chief financial officers) to CEOs (chief executive officers) and all other executive directors”.

Mini budget

Gigaba criticised those who said his mid-term budget painted a bleak picture of SA’s economy and failed to boost confidence.

He delivered his maiden mini budget to Parliament in Cape Town last Wednesday.

The minister told the business breakfast that he had to present facts about the state of SA’s economy as they stand. “We gave an honest view of the challenges facing our country. We couldn’t go and spin ourselves to the country knowing all is not well. We couldn’t just go to Parliament and stand before the nation and lie.

“All the things that we said in terms of the country’s economic outlook for the medium-term budget were facts, as they stood before us, when we presented the statement,” he said.

“No minister of finance, worth their soul, would have presented anything different; they would have stated the facts as they are.”

Pay your taxes

Gigaba said everyone needs to pay their taxes, given that SA faces a R50.8-billion tax revenue shortfall.

And with National Treasury expecting GDP growth of only 0.7% this year, Gigaba said that “little social and economic transformation” could be expected without stronger economic growth.

He urged the private sector to join hands with government to boost the economy.

“Economic growth and transformation must become neutrally reinforcing principles. Government is doing its share and will continue doing so,” he said, mirroring what he said in his budget address.

“The private sector must bring something to the table, it must be a give and give situation,” he said.

Speaking of the state’s mounting debt, the finance minister said government doesn’t want to leave future SA generations facing a debt hole they won’t be able to manage.

“We need to give them a growing economy with less debt so that they could begin developing wealth for themselves and grow [the] economy of those who will come after them,” he said.

By Mxolisi Mngadi for Fin24

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