Antoinette Slabbert
2 minute read
5 Jun 2014
6:00 am

Eskom executives surrender bonuses

Antoinette Slabbert

Eskom says its senior executives will not take their annual bonuses for the financial year 2013/14 in light of the R225bn revenue shortfall over the five-year period 2013-2018.

Picture: Supplied.

This follows shortly after Eskom shelved plans for a R500m upgrade to its head office, Megawatt Park near Johannesburg.

Eskom has come under fire before for paying high salaries and bonuses while consumers battle with rising electricity tariffs.

Eskom is cash-strapped and has earlier revealed an over-expenditure of R8bn in the first half of the same financial year on diesel to feed its open cycle gas turbines. These plants are designed to augment power generation during periods of peak demand, but have been running overtime as the performance of Eskom’s other plants deteriorate.

Searching for funds

The Departments of Energy, Finance and State Enterprises have been looking for funds since February to assist the utility, but nothing has been forthcoming so far. Eskom has also approached the National Energy Regulator of South Africa (Nersa) for an extra, interim tariff increase over and above the 8% per year granted for 2013-2018. An announcement in this regard has been delayed and the extra increase will only take effect next year.

Interim Eskom CEO Mr Collin Matjila said yesterday: “The top executives at Eskom have acknowledged the financial constraints by agreeing to forgo their annual performance bonuses this year as one of the efforts to cut costs. The Board welcomed this move as the company is implementing efficiency intervention initiatives to achieve long-term financial sustainability.”

Eskom spokesperson Andrew Etzinger could not say how much the bonuses would have amounted to, but said about 30 executives were affected.

In 2012/2013 the executive management committee received no increase to the guaranteed portion – 35% was based on individual performance and the balance on collective Eskom performance weighted towards the relevant division.

The good life

In that year, former CEO Brian Dames earned total remuneration of R8.4m and former CFO Paul O’Flaherty R5.9m. The other eight members of the executive management together earned R36.6m.

Eskom said Nersa’s 8% determination left Eskom with a funding gap and it had started a stringent savings program to deal with the shortfall.

“While significant shifts have been made in terms of business operations to achieve internal efficiencies, the company is certain that this revenue shortfall cannot be achieved by belt tightening alone. It remains important to move towards a cost-reflective tariff urgently,” Matjila said.

Warm reaction

Deon Reyneke, head of metal, engineering and electrical industries at union Solidarity welcomed the decision, saying workers had to deal with a salary increase below inflation. He said the savings should be used to give ordinary staff an increase above the offered 5%.

Shaun Nel, spokesperson of the Intensive Energy Users’ Group said the gesture wouldn’t make a big difference to Eskom’s over-all financial picture, but was an acknowledgement that it couldn’t be “business as usual” any more.

Business Unity SA had identified opportunities where Eskom could achieve substantial savings and it would be wrong for Eskom to continue operating in a bloated environment.