MPs fume at board of bankrupt Eskom, criticise 7% wage hike

Against a background of board members talking about good policies and systems, it has emerged that Eskom has become a bottomless financial pit, with an MP serving on the standing committee on public accounts (Scopa) on Wednesday asserting that the embattled power utility is a bankrupt company.

Scopa was this week conducting an oversight visit at the power utility’s Megawatt Park headquarters and deliberating with board members on the state of Eskom. It was also probing explosive allegations made by former group chief executive André de Ruyter who has published a book based on his stint at the helm.

Eskom reliant on government

Conceding that Eskom faced a financial hurdle, acting group CEO Calib Cassim who, along with other board members, faced a barrage of tough questions from MPs serving on Scopa, said he “fully agreed” with MP Robert Alfred Lees that the state-owned company could not operate without financial assistance from government.

Said Cassim: “In terms of meeting its obligations, Eskom cannot do it without the government support. In the past few years, we have had equity injections of billions of rands. Now, we have a debt relief again – representing a significant amount of taxpayer’s money.

“We have to rectify our generation capacity to meet targets of 65% by the end of this year and 70% at the end of next year.”

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But the level of debt has become an impediment.

“We are owed R16 billion by municipalities. This would make a big difference in liquidity, but is not going to get us out of the R100 billion debt on our books. But it is an important element that needs to be resolved at government level.

“The other element is in terms of the regulatory mechanism – recovery of efficient costs. Over and above operating costs, if you look at the returns the regulator allows to Eskom, it sits at 1% return. It then leaves government to cover 75% of our debt in guarantees.”

Eskom agrees on wage increase

Despite its financial woes, Eskom has maintained a bloated staff complement and signed a three-year, 7% wage deal with unions – a move challenged by Lees.

“Eskom is a bankrupt company. Do not try to tell me about the sovereign having taken over your debt. You are a bankrupt company, which should make a profit. It is shutting down sources of its manufacturing. It manufactures electricity, which is its product,” said Lees.

ALSO READ: Eskom and unions agree on 7% wage increase

“You are downsizing the organisation, but your level of employees has gone up by almost double over the past 15 years – specifically during the state capture period.

“When South Africans look at you, they say you cannot produce electricity – facing a higher crisis than you did a few years ago. And you are keeping this bloated staff complement and giving employees a 7% increase.

“Employees should wish to protect their jobs by taking a decrease in salary, because the company is bankrupt. But you give them a 7% increase.

“Your employees should be there to make it work or leave. When you do a wage deal with unions, it must be beneficial to everyone. A 7% wage increase to a bloated staff complement – paid more than the market value – makes no sense when people cannot get electricity out of Eskom.

“I hope there is action to downsize your staff complement in line with the needs of the company,” said Lees.

“Your company is short of skilled people. The sovereign has taken part of the debt, but where is the remaining going to land up?”

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