Eskom still wants R5bn cash injection

IOL pic feb26 eskom 243338312_14 BLOOMBERG Eskom chief executive Brian Molefe is frustrated at what he terms an "almost arbitrary" decision by the Treasury to delay a payment of R5 billion that the utility had been allocated to ease the financial constraints in providing power to the country. Picture: Waldo Swiegers, Bloomberg

Johannesburg - Eskom chief executive Brian Molefe has come out swinging after the Treasury decided to withhold R5 billion of a R23bn allocation to the power utility, arguing that it had complied with the conditions of the cash injection.

Molefe yesterday expressed frustration at what he termed an “almost arbitrary” decision to delay the payment.

He said Eskom had done its best to show the Treasury that it had complied with the conditions of the cash injection and accused the department of failing to respond to its explanations. “We need that R5bn,” he said.

In a move to ease Eskom’s financial constraints, former finance minister Nhlanhla Nene in 2014 announced a capital injection of R23bn for Eskom. The cabinet approved the allocation last year and said the bailout would be paid in three tranches – R10bn in June 2015; R10bn in December 2015, and the remaining R3bn in 2016/17.

The government also used proceeds from the sale of its 13.9 percent stake in Vodacom to fund the allocation. But on Wednesday, the Treasury said it had so far paid a total of R15bn, instead of R20bn.

Conditions

“The minister of finance has withheld the transfer of R5bn until Eskom complies with several conditions attached to the equity allocation,” the Treasury said.

“The conditions related to the implementation of cost reductions, improvement of maintenance and the execution of the capital expenditure programme.” The Treasury said it had raised the R5bn but decided to withhold it.

Molefe said he was taken aback by the announcement as Eskom had delivered on an important mandate of ensuring that there was sufficient power supply in the country.

“Withholding the R5bn will take us back,” Molefe said. “We got a letter in early December saying we have not complied. We asked them to give us details of the non-compliance. When we got that information, we clarified that we had complied.

“In fact on December 23 we sent a thick file to the National Treasury accompanied by a covering letter from our chairman (Ben Ngubane), showing that we have indeed complied with all the conditions. Up to today, we have not received a formal response to the letter and the information we provided,” he said.

Eskom last year told Parliament that it would use the R23bn to fund capital expenditure. Molefe has been putting out fires lately.

“This is the second time something like this happens this week,” Molefe said.

Reports claimed that the Treasury intended to scrutinise all of Eskom’s coal contracts “especially those where the parastatal did not follow proper procurement processes”.

Surprise

The alleged investigation of the coal contracts also took Eskom by surprise “because the company is still waiting for a final report from the National Treasury on the probe that was conducted last year on the same matter”, Molefe said earlier this week.

Treasury spokeswoman Phumza Macanda said that the department was making plans to pay the R5bn. She said that the payment could be made next week, without giving further details.

On Wednesday, the Treasury denied Eskom was being targeted for an investigation.

It said the primary focus of the review was on all state-owned companies such as the Passenger Rail Agency of South Africa, Eskom, Transnet, SABC and SAA.

“The coal contracts of Eskom happen to fall within the category of contracts that are above R10m. Eskom has been co-operating with the review,” the Treasury said.

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