Eskom and coal5 Mar 2019 06:28
Not going to happen for much longer - not when you read this report on State Capture by the University of Capetown ( https://www.gsb.uct.ac.za/files/Eskom_Enquiry_booklet_V3_Web_3.pdf )
What has come to light, however, is evidence that would suggest
corruption in Eskom’s operating expenditure -
which totals around R140 billion per annum (excluding
finance costs, depreciation and taxes). The operating
budget includes maintenance, refurbishment, staffing
costs, consulting and service contracts, but the
largest component is for primary energy purchases
- specifically coal, which is used to generate the bulk
of Eskom’s power. It is here that the most blatant
acts of corruption appear to have been perpetrated
- through the awarding of over-priced coal contracts,
the squeezing out of incumbent coal majors, and the
questionable acquisition of coal mines by the Gupta
family, financed by Eskom.
Average coal costs are now close to R400 per ton, up
from R190 per ton in 2011. During load-shedding years,
diesel fuel costs for Eskom’s peaker plants were as
high as R10 billion per annum, also allegedly inflated by
corruption.
Burgeoning costs, arguably propelled by rent-seeking
and corruption, have resulted in electricity tariffs
increasing by more than 400% over the past decade
while electricity services have deteriorated. The effects
of this on the South African economy and prospects
for economic development and transformation hardly
need to be stated and reinforce the urgent need for
governance and structural reforms at the utility.
Thankfully it looks like Ramaphosa has managed to get to the problem and get a grip on it before it was too late.
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