Friday, September 11, 2009

Now you see why Eskom needed the massive tariff increase

Confidential Eskom memo shows rampant mismanagement

A leaked confidential internal Eskom memo in the possession of the Democratic Alliance (DA) reveals gross mismanagement of funds during the procurement of capital and management of coal supplies. Given the seriousness of the allegations made in this memo, it is clearly now incumbent upon the Minister of Energy to take action against the gross mismanagement of the coal procurement process at Eskom.

The document, which has been made available to the DA, is entitled "Forensic Investigation: Claims against Suppliers", and deals with irregularities in the supply of coal to Eskom, demonstrating glaring oversight failures on the part of Eskom.

The total claims for damages suffered amounts to more than R100-million, but Eskom has yet to take any action against these suppliers.

The memo refers to an investigation carried out by Deloitte & Touche, which revealed that gross irregularities amounting to unlawful, and probably illegal, conduct had taken place on a massive scale over a period of several years. The memo also shows how Eskom has been negligent in its failure to verify laboratory results.

In sum, Eskom appears to be entirely incapable of managing the procurement of coal, leading to enormous losses, which ultimately come at the taxpayers' expense.

Eskom now has to look seriously at its own cost effectiveness and see where they can cut costs before they submit their Multi Year Price Determination (MYPD), which, according to information supplied before the Portfolio Committee on Energy yesterday, will be submitted to Nersa by the end of this month. And, of course, they need to explain why they have yet to litigate on the over R100-million of damages highlighted in this report.

The DA will now submit parliamentary questions to the Minister of Energy to establish why Eskom has not litigated against these suppliers, and to ascertain what action is being taken to rectify the problems within Eskom's coal procurement process.

Statement issued by Democratic Alliance shadow deputy minister of energy.

5 Opinion(s):

Treacle Bender said...

..."The DA will now submit parliamentary questions to the Minister of Energy to establish why Eskom has not litigated against these suppliers"...

...simple answer DA Helen baby...the suppliers were in cahoots with eskom management, consisting mainly of meide, who in turn were receiving massive kickbacks..

The DA's ignoranance is astounding..don't they get it?



Doberman said...

@ TB, true. It's like giving an alcoholic a job at a liquor store and asking him not to over indulge in the produce.

Anonymous said...

We all know why - but obviously the DA can't just blurt it out. They have to look like they're going through the right channels... EKSDOM

Pensioner said...

I worked for a Colliery, in the 1970's, supplying coal to a large Eskom power station in the Eastern Transvaal. The contract between the Mining house (Anglo)and Eskom was for the supply of coal at a cost plus 10%. The mine's books were audited on a very regular basis by Eskom Auditors and there was no nonsense tolerated. I don't know what the penalties were but I was told that they were huge. In the 5 years I was there they were never penalised. This issue with the "wet coal" 2 years was also total crap. We had to have and maintain a 1 million tonne stockpile at all times, come rain, snow or in the heat of summer.
The stockpile temperature was constantly monitored and the Stockpile was compacted on an ongoing basis to prevent heat build up and oxygen ingress after rain.

Anonymous said...

@Pensioner - those were the good Apartheid days when things - wait for it - actually WORKED. Those were the days my friend....