South Africa: Committee questions continuation of Green contracts and Budgetary deviations
The meeting follows the committee’s approval of Eskom subordinated loan special Appropriation Amendment Bill [B17-2015] and Eskom Special Appropriations Bill[B 16—2015]
Good governance is non-negotiable and the committee wants a clean audit report
The Standing Committee on Appropriations yesterday (Thursday 26 2018) questioned the continuation of Green contracts and the large budgetary deviations relating to Eskom’s Medupi and Kusile Units.
The committee enquired about the annual value of the Green Contracts, and the measures taken by Eskom to phase out these contracts. Ms Neli Magubane, an Eskom board member said that Green Contracts is one of the five major issues on the list of issues being addressed by Eskom’s new board, which is of the view that these need to be diversified. While immediate values were not available, Ms Magubane committed to providing the committee with a comprehensive report within 7 days as per the committee’s instruction.
The Chairperson of the committee, Ms Yvonne Phosa said: “the constitution states that procurement by all organs of state must be fair, equitable, transparent, competitive and cost effective. This means no to Evergreen contracts which are anti-transformation and anti-skills development”, said Ms Phosa.
According to a National Treasury report, Eskom is one of the entities that have committed major deviations. These were marked especially at the Mdedupi and Kusile units, said Ms Phosa, who wanted an explanation on these deviations. Although Mr Willy Majola, the Acting Group Executive: Transmissions, attributed the deviations to inadequate front-end engineering, and issues with the contractors and delays attributed to labour unrest at the plants; Ms Phosa said that this is an indication of poor planning.
The committee spoke strongly against the deviations, which are not only anti-transformation and anti-competitive; but pose a threat to small businesses. Eskom was requested to provide the committee with a report listing its coal suppliers, the number of black owned business partners and the overall percentage of business that these companies receive from Eskom.
The committee is happy that Eskom is dealing with mismanagement and irregularities that have led to the suspension of five senior executives on the allegations of serious misconduct, while a further three remain on suspension.
The committee is pleased with the process of lifestyle audits reported during the presentation and said that no state employees should be doing business with Eskom. “Good governance is non-negotiable and the committee wants a clean audit report,” said Ms Phosa.
The committee will continue monitoring Eskom very closely to ensure that the money given to Eskom services the people of South Africa in a meaningful way. The committee pledged to support the new board and executive team in turning around Eskom and ensuring that it contributes to inclusive economic growth to overcome poverty and inequality.
The meeting follows the committee’s approval of Eskom subordinated loan special Appropriation Amendment Bill [B17-2015] and Eskom Special Appropriations Bill[B 16—2015], after which Eskom received a R23 billion equity injection aimed at driving delivery of planned maintenance, capital expenditure and cost savings.
Eskom appeared before the committee at Parliament yesterday on a follow up briefing on the expenditure and performance progress by Eskom following the approval of the recapitalization and debt relief funding.
Distributed by APO Group on behalf of Republic of South Africa: The Parliament.