The scourge of load shedding in 2008 was manufactured for financial gain, when Eskom paid exorbitantly for emergency coal contracts.
This damning revelation, which was officially tabled in 2017 to the president of South Africa at the time, Jacob Zuma, has resurfaced in the wake of renewed incompetence embattling Eskom, leading to further load shedding in 2019. A report by City Press journalists, Sipho Masondo and Nicki Gules, cites documents penned by the Special Investigating Unit (SIU); documents that point to coal contracts which cost South Africa R14.5 trillion over a decade ago.
Eskom did little to avoid load shedding
The SIU report – the result of a four-year investigation, first initiated in 2013 – also points to a sordid plot of self-sabotage for financial gain. According to the SIU report, evidence shows that Eskom employees purposefully minimised capacity and implemented load shedding in an attempt to award irregular coal contracts, ostensibly, for the enrichment of closely connected suppliers.
For the first time since its completion and delivery to Zuma, snippets of the SIU report have been made public. It would appear that the Presidency, after reviewing the investigate report in 2017, decided to keep the information a state-secret. Politicians and civil societies, who had previously heard of the report, say their suspicions have been confirmed but added that the figure given by the SIU seems to be overinflated.
Load shedding, the result of nepotism
The contentious report highlights three issues which revolve around the load shedding crisis in 2008; issues, which, worryingly, bear glaring similarities to the current crisis which has recently enveloped South Africa. The SIU report claims that a deadly concoction of incompetence, corruption and nepotism plunged the country into darkness many years ago.
While many analysts, energy experts and conspiracy theorists have alleged that the load shedding crisis has been engineered by Eskom to benefit politically connected businesses and suppliers, the now-public SIU report adds more weight to those claims, validating theories of self-sabotage and espionage.
In January 2008, Eskom’s coal reserves were running dangerously low. Despite numerous warnings the year prior, the Coal Supply Unit Manager failed to take action, thereby forcing Eskom into an official emergency. The Arnot Power Station in Mpumalanga ran out of coal, rendering it useless, while a further eight stations teetered on the brink of operational collapse.
Eskom exploits a tender loophole
This ‘state of emergency’ instituted by Eskom allowed the company to bypass tender protocols and purchase coal directly from mines. Eskom swiftly signed ten-year contract agreements with four unvetted companies. These companies were paid R164 billion to deliver 490 million tons of coal. Other irregular short-term contracts were awarded to companies by exploiting the emergency procedure. At least one of these contracts were awarded to a broker, which, at the time, did not own a mine.
The SIU report gives credence to earlier inquiries undertaken by Dentons in 2015, and auditing firm Deloitte in 2011 – both of which claimed that the load shedding crisis was engineered to benefit certain companies, regardless of their competence for the job at hand.
Poor quality cool hurts power plants
Evidence points to substandard coal deliveries; both in terms of frequency and quality. As a result of these dubious deals, power plants were forced to burn poor quality coal which essentially reduced operational efficiency and put further strain on the power grid. This strain is also likely to have damaged infrastructure, thereby increasing the long-term cost of repairs.
During the 2008 load shedding crisis, Jacob Maroga was Eskom’s CEO. The utility’s board was chaired by Mohammed Valli Moosa. Eskom has promised to answer the report’s finding in the upcoming week.
Recent allegations of an ‘engineered crisis’
More recently, similar allegations have been aimed at Eskom and government, now under the watch of Public Enterprises Minister Pravin Gordhan and President Cyril Ramaphosa. Before the lights went off in 2018, Eskom warned of major coal shortages, echoing the call for emergency first heard a decade prior. It was at this time that the dubious ten-year contracts were coming to an end.
Load shedding returned in 2019, with more electricity being rationed than ever before. Theories of self-sabotage have, naturally, returned, too. This time, however, conspiracy theorists are taking aim at Independent Power Producers (IPP) and familial connections within the political world.
At the centre of the controversy is energy minister Jeff Radebe, who has signed-off numerous IPP deals as approved under his own Integrated Resource Plan (IRP) which determines the future of South Africa’s energy mix.
South African mining magnate, Patrice Motsepe, founder and chairman of Africa Rainbow Energy and Power (AREP), has successfully bid on a number of lucrative IPP projects. Radebe is married to Motsepe’s sister, Bridgette. President Ramaphosa is married to another one of Motsepe’s sisters, Tshepo. This close familial connection and its proximity to determine the future of South Africa’s energy supply, has been put under the microscope.
Patrice Motsepe has vehemently denied any traces of nepotism relating to the IPP contracts. In fact, the businessman has previously stated that having a brother in law as Minister of Energy has made things ‘harder’.
Ramaphosa’s recent announcement, that Eskom will be unbundled and split into three separate entities, has done little to stop the gossiping. While it’s clear that something needs to be done to avoid the complete collapse of South Africa’s most valuable state owned enterprise, many have noted that unbundling could be the first step to privatising Eskom.
(Source: The South African)