ESKOM SKELETONS TO BE REVEALED ON MONDAY- How many will be slain?
With Eskom set to release its Annual Results on Monday 23 July 2018 (provided there is no further political interference), SA electricity consumers are beginning to prepare themselves for the worst.
Eskom has, over the past ten years, perfected the highly lucrative art of “crying wolf” – a tariff raising strategy which has enabled the State Owned Entity to fleece the SA economy of some R1.3 trillion.
“For Eskom, this has been highly rewarding gameplay, but finally the public and Nersa have woken to this trick” states Energy Expert Ted Blom, a partner at Mining & Energy Advisors.
“If the Government or President Ramaphosa are serious about slaying corruption, then this is where the investigation needs to begin” states Blom – echoing his previous comments addressed to members of parliament, including Pravin Gordhan, during two Parliamentary enquiries into the source and scale of corruption within Eskom.
Blom notes that sadly, no political party appears to have the guts to tackle the monster which has directly crippled the SA economy by inducing hundreds of business closures and the many consequential job losses.
Skeletons that still remain in Eskom’s cupboard and which may surface in Monday’s results are :
- the approximately R30bn in derivative losses emanating from the Gupta capture of Eskom treasury;
- the approximately R50bn in Contractors claims on capital build;
- the approximately R500bn in asset overvaluation directly attributable to the high tariff regime currently prevailing;
- the overvalued coal stocks and continuing corruption in coal procurement of around R8bn pa;
- the overstaffing and capitalised salaries relating to the 30 000 overstaffed employees (although Blom expects several thousand of these to be “ghost workers”)
- continuation of the questionable Eskom phantom bonus scheme which milks millions of rands annually in favour of already over remunerated senior employees;
- further breakdowns in plant availability due to poor maintenance and poor quality coal (including Kusile);
- inflated coal costs resulting from road transport costs from Medupi;
- increasing burden on Eskom as a direct consequence of corruption;
- questionable contracts on renewables which force the utility to pay for electricity at a higher rate than Eskom’s costs and which decimate Eskom’s sales (and ability to service debt).
Blom forecast in 2013 that Eskom would collapse by 2018 and with all the above skeletons still in hiding, he might very well be proven correct.
“President Ramaphosa has asked for ideas on how to relieve the financial burden on the public. A good start would be to clean up Eskom as doing so would allow energy prices to return to below 40c KWh – a 50% reduction which will spearhead the SA economy and job growth, as it did between 1960 and 1990,” states Blom. “A reduction in the price of energy from an efficient Eskom will bring extensive financial relief to both the state and SA citizens.”