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Tuesday, August 16, 2022

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In defence of my tenure at Eskom: paradox of state capture

Matshela Koko

Matshela Koko

Published May 18, 2022



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Insofar as Chief Justice Raymond Zondo has posited a deterioration of the finances and performance of SOE’s as a characteristic of state capture, nothing of the sort happened at Eskom during the period of time that he concludes that state capture existed at the power utility.

This is, accordingly, an obstacle that stands in the way of the state capture report part IV.

The period of time at Eskom that I claim credit (although not sole credit) for, is the period reflected in Eskom’s audited financial statements from April 1, 2015 to March 31, 2018.

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This is the time defined in the state capture report part IV as the period of state capture at Eskom.

In this period, Eskom’s improved performance, through my and Mr Brian Molefe’s (former Eskom CEO) efforts, are reflected in Eskom’s audited financial statements.

Pages 130 and 131 of the Eskom Integrated Report of March 31, 2021 comprise technical key performance indicators (KPIs) for the 10 year period from 2011 to 2021. Pages 132 and 134 provide the non-technical KPIs.

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These KPIs reflect the best improvement in operational performance during 2016, 2017 and 2018, the Molefe/Koko era which is considered to be the peak of state capture.

The KPIs also show a marked deterioration of operational performance in the financial periods from March 1, 2018, with 2021 being the worst year ever in the 99 years of Eskom’s history.

A 12 months moving average for the energy availability factor for the period from December 2000, when it was at its height, to August 2018 shows a marked improvement in Eskom’s operational performance during the state capture era as defined by Chief Justice Zondo and a marked decline after the state capture era allegedly came to an end.

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On October 25, 2021, News 24 published that the official Eskom statistics in the audited annual financial statements were manipulated during my tenure to show good performance and that normal breakdowns suddenly ceased at the beginning of my tenure and, after my departure, started happening regularly.

Eskom denied that its official statistics in the audited financial statements were manipulated.

News24 and others like Professor Anton Eberhard lacked the humility and the aptitude to accept that the improvements in the energy availability factor was a reflection of sound management and sound performance programmes introduced during my era at Eskom.

News24 was forced to publish a corrective statement by the Appeals Committee of the Press Council of SA.

On April 4, 2022, Judge Bernard Ngoepe ordered News24 to issue a corrective statement, which had to “firstly contain clarification that the statement in its article of October 25, 2021 that an increase in planned maintenance in 2015 was not sustained during Mr Matshela Koko’s tenure at Eskom was not based on the audited financial statements of Eskom and that the increase was, according to Eskom’s audited financial statements, sustained; secondly, state that to the extent that the above article gave the impression that the continuing Eskom’s breakdowns are attributable to Mr Matshela Koko, such statement is not justified and is unfair and is retracted”.

The corrective statement was published on April 14, 2022. This effectively put paid to the allegations that Eskom failed to execute maintenance during my tenure and that I cooked the Eskom books to show good performance.

The emerging reality is that my tenure at Eskom can no longer be blamed ad infinitum for the current problems at Eskom. The audited financial statements of Eskom tell a very good story of what happened during my tenure.

The nonsensical theories only start when critiques ignore what is in Eskom’s audited financial statements.

The historical percentage increase, year on year, of the average coal price per tonne of coal purchased by Eskom is an interesting case study.

Eskom’s audited financial statements show that for the periods from 2006 to 2015, Eskom year on year agreed with its coal suppliers to coal price increases of higher than 15% per year, much higher than CPI.

The Eskom audited financial statements also show that 2016 and 2017, the years considered to be the peak of the “state capture era”, were the only times since 2006 that Eskom achieved an agreement with coal suppliers for increases below CPI.

The utilisation of emergency diesel generators is even more telling.

The diesel spend is a ready indicator of how the coal fired power stations are operated.

The higher the diesel costs, the less effective the operations of Eskom’s non-diesel generation assets.

The lower the diesel spend, the more effectively Eskom is operating its non-diesel fleet.

I point out that the spend on diesel in 2014 was more than R12.1 billion, in 2015 nearly R9.9bn and in 2016 just short of R11.5bn.

In 2017 and 2018, during the peak of the “state capture” era, the diesel spend dropped to R220.2million and R715.2m respectively.

After my departure and presumably after the “state capture enablers” were flushed out of the system, the diesel spend shot up again to more than R4.6bn and R7.5bn in 2019 and 2020 respectively.

Eskom spent R7bn on diesel in 2021.

On April 21, 2022, CEO André de Ruyter published that Eskom spent R626m on diesel in the first three weeks of April month.

This was about 48.5 million litres in three weeks compared to the 10 million litres in 12 months in 2017.

Notably, 2017 is considered the peak of state capture at Eskom by Chief Justice Zondo.

In his statement at the state capture commission before Chief Justice Zondo, President Cyril Ramaphosa testified that Eskom was too big for Tshediso Matona and because of that he recommended to Jacob Zuma that Molefe be appointed as CEO of Eskom.

Molefe was subsequently appointed as CEO on March 20, 2015. It was in the middle of load shedding that had started in November 2014 after the collapse of the coal silo at Majuba power station.

This load shedding was heroically stopped on August 8, 2015 until I left Eskom in February 2018.

After 2018 it went downhill.

In 2019 there were 32 days of load shedding, 2020 experienced 46 days of load shedding, 2021 saw 47 days of load shedding and 2022 experienced 64 days.

Eskom is projecting over 100 days of load shedding for 2023.

The state capture report part IV leads to a conclusion that seems logically unacceptable or self-contradictory.

The conclusion is that state capture at Eskom as defined by Chief Justice Zondo brought about the best operational improvements since the year 2000.

This, I leave it to the academics to deal with.

There may well be that there was no state capture at Eskom but rather common acts of corruption (of which I was not part of) that must be dealt with without fear or favour.

Koko is the managing director of Matshela Energy.

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