Energy expert hails victory for users as Eskom ‘agrees to reduce tariffs’

The Soweto National Energy Regulator of SA (Nersa) hearings into Eskom’s record-breaking R66bn RCA claim (Regulatory Claim Account) took an unexpected turn on Friday when Eskom was forced to present responses to accusations of fraud, corruption and poor execution.

So says Ted Blom, a partner at the Mining & Energy Advisors and Energy Expert Coalition.

After Eskom’s alleged avoidance of the issue, Blom launched a devastating attack in a press statement on Sunday night by again highlighting the hundreds of billions of rands lost to questionable spending and corruption. Blom, who claims to have revealed the extent of corruption inside Eskom after travelling to Nersa’s Cape Town hearings in April, said: “This has been a 10-year fight where Eskom have resisted at every step. I am pleased to say Nersa forced Eskom’s hand on Friday by demanding the issue be addressed in closing comments”.

Nersa insisted Blom present further arguments at the final hearings on Monday, 14 May (tomorrow).

He said that Eskom reluctantly admitted corruption could have had a hand in their tariff increase application but insisted that since the investigations were now imminent, Nersa should allow the increases. Eskom further noted they would voluntarily apply to Nersa to reduce tariffs in future once investigations had been wound up.

“While this is a major victory towards lower tariffs, there are still plenty battles to close,” said Blom. “We are heading towards a battle in the courts and are going to need the public behind us.”

It was unfortunate that Eskom has to be dragged every inch of the way towards full transparency as there was still no mention of the Dentons report, he complained.

“Such resistance from Eskom senior management suggests corruption is still hidden from the SA public. The fact is the corruption alone amounts to over R800 billion, plus there is still the consequential cost of abysmal decision-making Eskom admitted to on Friday.

“Eskom further admitted to not being ready for the new build programme in 2004 and had used Majuba, an old technology station, as the starting block for the design of Medupi and Kusile – Africa’s first supercritical type power stations. According to Eskom, this decision was responsible for the enormous cost escalation from an initial quote of around R34 billion for each of Medupi and Kusile, to the current R170 billion per station.

Blom, however, was having none of this.

“I do not trust Eskom at all”, he said. “They have had many opportunities to come clean. City Power calculated that Eskom’s overspend on coal for the three years under review exceeds R16 billion. This occurred at the same time the Gupta frauds were committed,” states Blom.

“I cannot allow Eskom to be player and referee in this game,” said Blom. “I want an independent entity that is aware of all these intricate frauds to be nominated as watchdog.”

Blom made it clear that as the frauds on face value amounted to more than the R66 billion RCA claim, no increase in tariffs could be allowed until a full independent forensic was completed.

“Halting this RCA tariff increase will also assist the legal commission of inquiry into Eskom and will widen its terms of reference to include suspected corruption pre-2008,” Blom said.

“All South Africans need to get behind this worthy fight as a court victory will benefit all citizens or business owners and reignite our economy.”