Monday, 14 December 2020 13:15

By Lehlohonolo Lehana,

The Department of Public Enterprises (DPE) said it was pleased about the recovery of R1.56 billion from ABB South Africa back into Eskom's coffers. 

This comes after Eskom and the Special Investigating Unit (SIU) reached an agreement with ABB to pay back in full, money derived from an overpayment by the power utility for work at the Kusile power station that started in 2015.

The department has described the agreement as a crucial milestone in the fight against corruption and State capture.

"It ensures that companies and individuals found to be complicit in or have benefited from malfeasance at State-owned entities are held accountable, "the department added.

Eskom has also instituted claims of about R3.8 billion to recuperate funds from former Eskom executives, former Board members, members of the Gupta family and their associates.

"The settlement agreement is a culmination of years of work by various parties, particularly after detailed investigations by the Special Investigations Tribunal in terms of the Presidential Proclamation R11 of 2018, initiated by the DPE."

Meanwhile, according to the department, the SIU is currently executing proclamations into Denel, Transnet, Eskom and South African Airways.

The department is currently monitoring the implementation of consequence management arising from forensic reports at SOEs to ensure that those implicated in wrongdoings are brought to book.

"The department is also in the process of rolling out an SOE Risk and Integrity Framework geared towards restoring good governance in SOEs, "the department said.

According to the DPE, the framework is aimed at introducing stringent reforms about the management of conflicts of interest and integrity assessments of SOE employees and companies doing business with the SOEs.

"The department commends ABB for their disclosure and urges other companies, both local and international, to also come forward and make disclosures, as the SIU through the proclamation will track down all those culpable in the State capture project."

The department has warned companies that are hiding illicit funds that the SIU and other international law enforcement agencies are working hard in returning stolen money to the fiscus.

"The recovery of the funds also confirms that there is a long list of entities and individuals, some who were at the executive level at SOEs that were involved in State capture and need to be pursued and monies recovered from their accounts."

The department said it was confident this agreement is an indication that government is gradually turning the tide against State capture and corruption in the public and private sectors.

"The close partnership of the DPE, SOEs and law enforcement authorities will act as a deterrent and disincentive to anyone wanting to divert taxpayers’ money from being used properly in the efforts to eradicate poverty and inequality in our country."

Meanwhile Eskom has announced that it achieved progress in some key areas of the business, setting it on a path to operational and financial stability.

According to the power utility, this is based on the interim results for the six-month period ending in September 2020.

Eskom said the earnings before interest, taxation, depreciation and amortisation (EBITDA) increased to R28.1 billion from R26.4 billion last year.

The State-owned entity recorded a net profit, after-tax, of R83 million, while navigating a very challenging operating environment.

"Revenue grew to R108.7 billion compared to R107.5 billion in the same period last year, marking an increase of 1.1%," Eskom’s statement read on Monday.

Also, sales volumes dropped 10.3% in the period due to the COVID-19 national lockdown to curb the spread of infections.

Eskom also contained its employee benefit costs and operating expenses, with employee benefit costs marginally increasing to R16.7 billion, compared to R16.4 billion in September 2019.

"In its attempts to rein in costs, Eskom relied mainly on natural attrition and voluntary separation packages for managerial staff to reduce headcount, and there were no salary increases or incentive bonuses for managerial level staff, "Eskom said.

The utility said the primary energy costs rose to R54.3 billion in the period, versus R52 billion in the same period last year, a 4.4% increase.

Also, sales volumes dropped 10.3% in the period due to the COVID-19 national lockdown to curb the spread of infections.

Eskom also contained its employee benefit costs and operating expenses, with employee benefit costs marginally increasing to R16.7 billion, compared to R16.4 billion in September 2019.

"In its attempts to rein in costs, Eskom relied mainly on natural attrition and voluntary separation packages for managerial staff to reduce headcount, and there were no salary increases or incentive bonuses for managerial level staff, "Eskom said.

The utility said the primary energy costs rose to R54.3 billion in the period, versus R52 billion in the same period last year, a 4.4% increase.

Meanwhile, Eskom has redoubled its efforts to curb coal costs, which remained relatively manageable, with an increase of only 4.6% in the average purchase cost per ton of coal, compared to 14.2% in September 2019.

"However, Eskom and IPP [independent power producers] open-cycle gas turbines (OCGTs) were utilised frequently to support a strained power system, "the utility said.

According to Eskom, OCGT’s generated 496GWh [gigawatt hours] for R1.4 billion in the period, an increase from the R1.1 billion spent on 331GWh during the same period last year.

Group Chief Executive, André de Ruyter, reiterated that Eskom’s top priority remains addressing operational and financial challenges and return to financial sustainability.

"Given the challenging environment in which we operate, this will require extraordinary efforts from every Eskom employee, and continued support from government and all South Africans.

"The implementation of our reliability maintenance programme continues to bear fruit and positively affecting plant performance," De Ruyter said.

He explained that the "divisionalisation" of Eskom has been finalised, with the implementation of the new operating models of the functionally separate entities progressing well for completion in the first half of 2021.

Municipal arrear debt remained an area of great concern, with R32.9 billion incurred by 30 September 2020, from R25.1 billion in September 2019.

According to Eskom, the top 20 defaulting municipalities constitute 80% of the total invoiced municipal arrear debt, with 48 municipalities carrying arrear debt of more than R100 million each by 30 September this year.