The Portfolio Committee on Public Enterprises was today briefed by the power utility, Eskom, on its governance and operational challenges.
The Committees’ interaction with Eskom’s Board included the challenges facing the company, such as governance instability, operational performance (delays in build programme, labour unrest and load shedding), financial challenges, maintenance, and a progress update on the five-point plan and the war room.
In her opening remarks the Chairperson for the Committee, Ms Dipuo Letsatsi-Duba, said the meeting was an extraordinary one which required engagement with the Board so that the Committee can fully comprehend the challenges the utility faces and clarify issues that are in the public domain.
“The Board has a fiduciary responsibility to ensure that the company runs efficiently, the Board needs to understand that responsibility rests on their shoulders when it comes to the success of Eskom,” said Ms Letsatsi-Duba.
Briefing the Committee, Eskom Acting Chief Executive Mr Brian Molefe, said from a financial point of view Eskom is not in a bad situation. Over the past year Eskom made a profit of R21bn and a further government injection amounting to R23bn from the National Treasury will be transferred in two phases. “Eskom is not about to be declared bankrupt, it is still solvent,” said Mr Molefe.
On the issue of the four suspended executives, a company has been set up to investigate the matter and will report back to the Board in a matter of three months. Regarding labour unrest, Mr Molefe said Eskom has about 46000 employees and there has not been any major strike since 1998. However, Eskom has a build programme which has contractors on site. It is the employees of the contractors that are on strike. Over the last five years labour unrest has happened at two power stations.
Giving an overview of the challenges of the power utility, Mr Molefe said: “Because of maintenance backlog, we have been delinquent with maintenance, we have now decided to fast-track maintenance and play catch-up. If we do not do maintenance, we will lose the capacity that is installed to be below what demand is. Demand for electricity is growing because we are busy with connections.”
The shortage of energy is 3000MG, this is the amount needed to do planned maintenance and breakages without having load shedding.
The Committee welcomed the announcement that Eskom has made a profit and that the financial situation was not as dire as reported.
The Committee expressed concern of the 25% tariff increase that Eskom has requested from the national regulator. Members of the Committee said steps should be taken to cushion poor people against high tariff increases.
The Committee was of the view that load shedding will have unintended consequences on the economy such as job losses and will exacerbate the social challenges of the country. Members of the Committee questioned how long load shedding will stay, and if stage four load shedding is on the cards.
The Committee called on the power utility to improve its communication to the South African public. This call by the Committee was as a result of the confusion that occurred last week where reports indicated the country was at stage four with regard to load shedding.
The Committee questioned what Eskom is going to do regarding the 80% debt that municipalities owe the power utility, as this has a serious impact on the cash flow of the company.
The Committee called upon the Board to conduct proper oversight on the build programme and to ensure that operations are running smoothly.
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Ms YoliswaLandu
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