ONE of the best democratic practices is the right of MPs to question government ministers. The best questions are those that may seem innocent requests for information, but whose answers reveal more than the minister, or civil servants, intended.
Questions regarding Eskom are often like that.
Take a question asked of Lynne Brown, the Minister for Public Enterprises, under which Eskom falls. The IFP MP, N Singh, asked her how many private contractors had received Eskom contracts worth more than R10 million last year.
He also wanted to know what types of specialist work they were contracted to do. Note the word “specialist”.
The answers to both questions are eye-opening. No doubt in the name of black empowerment, Eskom had an extraordinary number of contractors pulling out more than R10m each. There were 378 contractors benefiting from Eskom largess. These 378 were at the top of the heap. Another 222 fortunate service suppliers won Eskom contracts, presumably through correct tender procedures.
What did they all do – those 580?
Brown was refreshingly open in her reply to Singh. Unashamedly, she told Parliament that Eskom needed outside help with fleet services, general services and generation maintenance (87 helpers, but clearly not enough).
Then it needed more help with information technology, commodities, fuel and diesel, professionals of one sort or another, capital spend (sic) other coal (sic) independent power suppliers, and a few others, including two to help with running Koeberg.
Diesel suppliers
Taxpayers (and other electricity consumers) may find this list remarkable in a number of ways. It raises all manner of questions.
For example, what kind of general services do the 188 contractors listed by Brown perform? The list put before Parliament is coy on specifics, but given the ever-increasing numbers of people employed by Eskom in the last two decades, it seems odd that it needs more help. It is also impossible to tell which specific contractors have R10m contracts.
Then there were 48 contracts for professional fees. If that means lawyer’s fees – notoriously high as they are – some may have hit the R10m jackpots, but that is only speculation. What on earth “other coal” refers to is anyone’s guess. Could this be filling the gaps on under delivery from the small suppliers Eskom has been “helping”, or is it a reference to the off-specification dusty stuff that turns to an abrasive mud when it rains?
All this is interesting food for speculation, but the most startling thing about the list supplied by the minister is that 107 outside contractors were tasked with supplying Eskom with “fuel and diesel”. Could these suppliers be the beneficiaries of R10m contracts? They could well be.
Between 2011 and 2012, Eskom bought 231 megalitres for 14 diesel generators. A megalitre is a million litres, so this translates into 231 million litres of diesel bought from 107 contractors. Assuming this largess was divided equally, (it probably was not) and every fuel supplier got an equal share they would, in the vernacular, be sitting in the butter.
Anyone familiar with the oil industry knows that wholesale prices for diesel are highly competitive between the main oil companies – BP, Shell, Total, Engen, Sasol, and PetroSA. When a customer wants to buy 2 million litres, the discounts can be substantial. This is good news for these intermediaries who supply Eskom. They can buy from the major oil companies at a heavily discounted price and sell to Eskom at the list price – pocketing at least R1.50 profit on each litre sold.
Thus, Eskom creates instant millionaires whose overheads may only consist of a telephone and some stationery – not much to deduct from a cash flow of R3m. Does the SA Revenue Service know, one wonders.
Surely, Eskom has its own purchasing department staffed with people who can pick up a telephone or use an e-mail to order diesel from one of the major oil firms – or better still call for tenders.
It would appear not. It seems much more important to create millionaires.
Keith Bryer is a retired communications consultant.