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Eskom yet again finds itself under the national spotlight, following the suspension of it’s Chief Procurement Officer, Mr Solly Tshitangano.
Eskom chief executive officer, André de Ruyter, suspended Tshitangano in February for poor performance and not being able to cut the power utility’s annual expenditure in its procurement division by at least 4%.
At the time of the suspension, De Ruyter explained Eskom spends approximately R140 billion on an annual basis for foods and services, more than the allocated budget. Adding to this, De Ruyter stated Eskom would have paid R238,000 for a mop if he had not stepped in and put a stop to it. Additionally, according to De Ruyter, the government entity had allegedly been paying R28 for a roll of single-ply toilet paper and a staggering R56 for a 2-litre bottle of milk.
Adding fuel to the fire, Tshitangano also did not attend numerous important meetings with De Ruyter, Eskom’s human resources executives, people management, and the company’s chief financial officer. Standing accused of severe allegations, the Chief Procurement Officer has now accused both the power utility’s legal head and De Ruyter of racism, saying they had used their skin colour to undermine his authority.
He further claimed De Ruyter was determined not to use black suppliers while showing substantial leniency towards white suppliers.
Furthermore, the CEO has also been accused of misleading the media about stopping the purchase of the R238,000 mop and protecting colleagues involved in project management contracts at Kusile Power Station, which spiralled from R100 million to R12 billion. The matter has escalated to the point whereby Parliament’s Standing Committee on Public Accounts (SCOPA) will now be investigating the matter.
In a statement, SCOPA said, “The committee will be investigating the very serious allegations levelled against the group chief executive officer (GCEO) of Eskom specifically, as well as procurement and contract management in general. The GCEO will be granted an opportunity to respond to those allegations.”
With investigations being implemented, Eskom’s Board also issued a statement, where it emphasised, “Procurement at Eskom has long been an area of particular concern to the Board of Eskom, as it has been, and continues to be, an area associated with state capture. Savings expected from procurement have failed to materialise, and as hearings at SCOPA have repeatedly evidenced, compliance with National Treasury requirements have not met the expectations of the Board with regard to good governance.”
Moreover, the Board claims it has therefore encouraged and instructed the executive management of Eskom, including de Ruyter, to pay particular attention to the procurement function to effect the necessary change and deliver the expected savings.
Progress in this regard has been slower than the Board would have liked to see, at least in part due to leadership gaps in the procurement function.
While explaining it has complete faith in the company’s internal processes and governance procedures to deliver a fair process and outcome on the matter of the suspended Chief Procurement Officer, the Board states, “Unfortunately, over the past few weeks a number of allegations have been put in the public domain and in the media, which, on the face of it, seek to influence internal operational and good governance processes by exerting pressure through structures outside of Eskom.”
The Board further states these allegations and the accompanying unwarranted attacks on Eskom’s management team have the potential effect of distracting management from the critical role of restoring Eskom to operational effectiveness and financial stability.
The Newcastillian – Online News reported on Eskom confirming an average price increase in its tariffs of approximately 15% from 1 April 2021. This was to remedy the massive shortfall in the power utility’s revenue while allowing the entity to recover incurred costs for producing electricity and to assist in improving its financial sustainability.
The High Court of South Africa (Gauteng Division) ordered an amount of R10 billion be added to Eskom’s allowable revenue to be recovered from customers in the 2021/22 financial year. Currently, Eskom will require government funding of roughly R1 billion per week to remain financially stable and operationally functional in 2021.
Without this assistance, it will not be able to service its R480 billion debt.
In response to this, SCOPA has claimed it is disturbed by the executive’s failure to present a coordinated approach of dealing with the debt, particularly since Eskom is the major contributor to the current technical recession. In a statement, the Committee points out, “SCOPA will come up with a roadmap to deal with how these intergovernmental challenges can be resolved. SCOPA’s objective is to ensure that Eskom moves towards a direction of viability and profitability.”
As Eskom looks at ways to deal with its debt and overspending while addressing internal conflict, what are your thoughts?
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