Cape Town - President Cyril Ramaphosa was expected on Thursday to announce plans to save Eskom. The Department of Public Enterprises had told Parliament that the power utility would reach day zero if it did not get a cash rescue by April.
Briefing the public enterprise portfolio committee on Wednesday, acting director general Thuto Shomang said Eskom was technically insolvent; at its current trajectory, it would cease to exist in a matter of weeks.
Speaking at the meeting, Public Enterprises Minister Pravin Gordhan said those responsible for corruption at Eskom should be imprisoned. Systemic corruption, malfeasance and fraud had compromised Eskom's credibility, he said. “Any person caught in corruption, in any sphere of government should be in an orange uniform,” Gordhan said.
"Such was the toxic environment, that ‘good people were forced out’," he said. “Engineers left Eskom for the Philippines and Indonesia. We need these people back,” said Gordhan.
This emerged when the state of Eskom, spanning over 10 years, was spelt out when Public Enterprises appeared before the portfolio committee.
Shomang said the utility’s debt was standing at R435billion, representing 15% of sovereign debt. “Any default at Eskom is threatening the economy."
Cash generated by Eskom did not cover operating and debt servicing costs, Shomang said. The escalation of municipal and Soweto debt - totalling R28billion - was growing at R1bn a month.
“The number of employees increased from 32000 in 2007 to 48000 last year, with associated with costs growing from R9.5bn to R29.5bn over the period."
Gordhan said corruption made the elite in business and government to lose credibility in the eyes of the public.
Asked whether there was an investigation into possible sabotage regarding load shedding and what was being done, Gordhan said: “Is there sabotage? I have not seen evidence to suggest there is.”
Gordhan noted that mismanagement, replacement of good people, and corruption, all together, had damaged “this very important institution. Today we deal with the culmination of effects of all that has happened before”, he said.
Gordhan said Ramaphosa had stated that security of supply was absolutely imperative for the economy and every household. “We will hear next Wednesday from the finance minister on financial support for Eskom from government given the fiscal constraints,” he added.
A financial solution was being sought, he said, but the Eskom debt was no easy matter. “It requires a fair amount of complexity and determination by government to ensure it is not a financial burden in the medium term."
Asked how long load shedding would last, Gordhan said: “I would like to assure that everything is being done to ensure we minimise load shedding."
Shomang said Eskom was struggling to maintain operational sustainability with its ageing generation fleet, which on average is about 37 years old.
There have been no essential mid-life refurbishments. Poor quality of maintenance due to poor workmanship resulted in at least 40% of plant breakdowns due to human error, Shomang said.
Ongoing coal shortages due to poor management; lack of investments in mines; significant loss of critical skills and low staff morale added to the woes.
Shomang also said the Medupi and Kusile plants suffered massive delays and cost overruns due to poor planning, poor engineering designs, poor procurement and corruption. “The costs for the plants have escalated to over R300billion, Medupi from R24.9bn to R145bn; and Kusile from R80.7bn to R161.4bn."
Queried by MPs on the poor engineering at Medupi, Gordhan said litigation would be pursued over shoddy workmanship as “state capture messed up many systems” and public money went in pockets of the wrong people.
“There must be consequences."