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
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