Public Enterprises Committee hears Medupi and Kusile designs changed during construction
The Portfolio Committee on Public Enterprises was briefed by the Department of Public Enterprises on the issues emanating from the State of the Nation Address, progress in addressing audit findings of the Auditor-General on the department and state-owned companies for the 207/18 financial year. The committee received a report-back on recommendations of the 2018 Budget Review Recommendations Report (BRRR) and Budget Vote Report.
Briefing the committee, Eskom said it is technically insolvent and will cease to exist at the current trajectory by April 2019. The high levels of debt currently are at R420 billion of the sovereign debt. Default risk is threatening the economy.
In responding to the presentation by the power utility, the committee said the government had a ministerial task team and there was a war room that was established that looked after the challenges of Eskom. The committee questioned as to what happened to the ideas of the war room? The committee said it heard of another war room that has been established with experts, the committee wanted to know if it (war room) is operational and if it is offering expertise to assist the current crisis facing the country of load shedding.
The committee wanted to know if the department is investigating the possible issue of sabotage at Eskom, this after reports alluded to possible sabotage. The increase of employees and costs came under scrutiny after the power utility said employee costs increased significantly driven by employee benefits. In its report, the power utility said the number of employees increased from 32 000 in 2007 to 48 000 in 2018, with associated costs growing from R9.5 billion for R29.5 billion.
The Build Programme added to the cost overruns and poor performance at Eskom. Medupi and Kusile have suffered massive delays and cost overruns due to poor planning, poor engineering designs, poor procurement practices and corruption. The costs for the plants have escalated significantly to over R300 billion.
Briefing the committee, Minister of Public Enterprises, Mr Pravin Gordhan, said the designs of Kusile and Medupi were badly done and changed. The committee expressed concern and wanted to know how changes in construction were done without government not being aware. The committee proposed that the department should submit a special report of the cost breakdown of Medupi and Kusile so that it knows of the real problems that have transpired.
With regard to the municipal debt which has increased by R1.6 billion from R17 billion in September 2018 to R18.6 billion in December 2018, the committee wanted to know if there are discussions with the National Treasury with regard to the municipal debt. The committee said this matter involves the economy of the country, and a possible funding needs to be injected with credible business plans.
