Eskom self-reflects, gets ready for change

Thursday, November 16, 2017

Eskom says it has adopted a plan to rebuild governance and the company’s integrity. 

“We have adopted a five-path plan to rebuild a robust governance process and preserve our core value of integrity. This includes strengthening our general internal ethics and fraud framework, where we have reviewed and approved our ethics and fraud management policy. 

“We have started on an education drive called ‘The Way’, for the Eskom Board, leadership and employees on their responsibilities towards ethical conduct and reporting,” said Eskom Interim Group Chief Executive Sean Maritz on Thursday. 

Speaking in Midrand during the last leg of the National Energy Regulator of South Africa (Nersa) public hearings into the power parastatal’s tariff application request, Maritz said the company’s Executive Committee has resolved to take bold action to shift the organisation’s reputation towards positive change. 

Nersa has to date held public hearings countrywide to give the public an opportunity to have their voice heard on the power utility’s tariff increase request. Eskom is asking the regulator for a total allowable revenue of R219.5 billion. The total allowable revenue application translates to a 19.9% average increase in electricity tariffs. 

Eskom said the regulator’s public hearings have offered it an opportunity to share the merits of its one-year tariff application from April 2018 to March 2019. 

Maritz said during the process, Eskom has shared an honest representation of its business as well as what it would require to remain on a firm operational footing. 

“The fulfilment of these requirements will enable us to deliver on our primary mandate of providing electricity in an efficient and sustainable manner while we continue to play an important role in sustaining the economy of South Africa.” 

Trillian, McKinsey contracts 

Eskom is also implementing independent audits on leadership where members of the Executive Committee, Divisional Executives and Senior General Managers will undergo regular independent lifestyle and conflict of interest audits. 

They also commit to co-operate with all independent inquiries on corruption, when required to do so, Maritz said.

In addition, Eskom is also terminating all irregular supplier contracts and work. 

“I can confirm that the McKinsey contract was terminated in July 2017. The contract with Impulse International has been suspended, pending the outcome of a forensic investigation. There are no dealings with Trillian contractually or otherwise. A legal verification was instituted on McKinsey, Trillian and Impulse after respective investigations conducted by independent investigators. 

“Independent audits on the Tegeta contracts have been clarified as being within range of other similar contracts and all control gaps have since been tightened,” Maritz told the public hearing. 

Governance, tender approvals 

Governance issues at the utility are also being addressed, ensuring that decision-making powers fall within appropriate levels of management. 

“Having also recently created additional governance structures for tender approvals, we are thereby creating the opportunity to increase the focus and time for robust scrutiny. 

“We are instituting disciplinary charges and taking legal action if required. To date, we have suspended eight members of leadership, who have allegedly been involved in governance irregularities. Four of whom are from my executive team. We have also instituted criminal charges against certain Eskom management in this regard,” Maritz said. 

Enhancing operations 

In terms of enhancing operations, two separate dedicated teams have been established. The first team is focused on a recovery programme in closing out the audit qualification. The second, established two years ago in line with the design-to-cost strategy, is driving the internal efficiency and cost-containment programme in our business. 

Maritz said the company’s cost-cutting measures are bearing fruit, with a saving of R47 billion realised from the financial year 2012/2013 to this financial year 2017/2018. 

Eskom is continuing with its intense debt collection strategy to recover unpaid debt from all customers, including Soweto and defaulting municipalities. 

“Despite all the governance setbacks, we need to be reminded that this is a revenue application, and decisions made by Nersa are decisions that will impact the sustainability of Eskom and the ability to provide reliable electricity.

“I have full faith that Nersa will make the right decision for this country. I equally assure you that Eskom will move towards a successful future and free of corruption,” he said. 

The Gauteng leg of public hearings that got underway on Thursday will conclude on Monday. 

Nersa’s decision on the revenue application is expected on 7 December. –

Most Read

SAnews on Twitter