Eskom, clean up corruption first, then ask for more money, says expert

Eskom should first account for corruption within its ranks before it asks the National Energy Regulatory of South Africa (Nersa) to grant it any price increase. And, should Nersa grant it an increase, it should prepare for a court battle.

This was an energy expert’s response to the power utility’s request to Nersa for an additional 3% annual increase for the years 2020 to 2022, to help recoup losses on its regulatory clearing account (RCA) and then recover the balance over five years.

Expert Ted Blom told The Citizen: “I think Eskom is trying to dress up its tariff increase into something that they think the South Africans will swallow.

“The fact of the matter is they are not entitled to any price increases until they’ve dealt with the corruption element inside their organisation.

“They’ve admitted their application includes money that is tainted with corruption.

“My view is that they must sort that out first with a forensic audit before they come and ask for a price increase.”

In January, Nersa said Eskom had made three RCA applications to further increase tariffs in order to recover R66.6 billion lost between 2014 and 2017.

Nersa has been holding public hearings on the matter.

At the last hearing in Midrand on Monday, Eskom’s acting chief financial officer, Calib Cassim, said the utility had made its proposal based on its financial situation.

“It must be noted that we have been carrying the amount under review for some time and had to go out to the markets and borrow in order to implement our mandate of supplying electricity,” Cassim said.

“These loans must still be repaid.”

Eskom said the RCA applications now amounted to R62 billion after the company “sacrificed” a further R4.6 billion of the actual costs it had incurred between 2014 and 2017.

“Eskom does concede that if Nersa were to grant the whole R62 billion at once, it would give rise to over 30% increases.

“This is why we have put the proposal for the amount to be phased in over a period of time,” Cassim said. “We believe the proposal on the table is fair and reasonable in terms of balancing affordability for the consumer and Eskom’s sustainability.”

However, Blom said he believed Ekom’s request for these increases were an attempt to make the consumer pay for the losses incurred through the corruption and poor management of funds by senior company executives.

“The corruption money is far more than the R66 billion that they’re asking for in the price increase, so they can’t ask for a price increase until they’ve sorted that out.

“If they don’t, we’ll take them to court and fight them in the highest court in the land,” said Blom.

Nersa is expected to make a decision on the RCA applications before the end of June. – jenniffero@citizen.co.za