Public protector launches probe into Eskom outsourcing

Public protector Busisiwe Mkhwebane has fired off a new salvo at the Cyril Ramaphosa administration in launching an investigation into contracts Eskom signed with renewable independent power producers (IPPs) in April 2018.

The signing of the contracts had been blocked during the administration of Jacob Zuma and their finalisation was one of the first administrative actions taken by Ramaphosa and then energy minister Jeff Radebe after Zuma stepped down in February 2018.

Ramaphosa has made a point of voicing support for the IPP programme, which has brought more than R190bn of investment into the energy sector over the past five years.

Mkhwebane’s investigation is based on a complaint laid by a group called the Anti-Poverty Forum run by Phapano Phasha who is associated with various lobby groups supporting former president Zuma. At the heart of the complaint is Phasha’s contention that it did not make financial sense for Eskom to sign the contracts as they were onerous and caused Eskom to lose money.

On Thursday, Mkhwebane wrote to Eskom chair Jabu Mabuza requesting a comprehensive response to the allegations as well as raft of documents relating to the transactions and all the individuals involved. This must be provided to her within 14 days, she said, in order to write and finalise a report.

Mabuza said on Sunday he had received the letter and would
co-operate with the public protector and provide all the information requested. However, some of questions would be best answered by the department of energy and the IPP office.

The tussle over the signing of contracts with IPPs became highly politicised over the past few years as competing factions in the ANC campaigned for various energy technologies, in particular nuclear energy, which was championed by Zuma.

Former Eskom executives, supported by pro-Zuma lobby groups and the National Union of Metalworkers of SA (Numsa) have campaigned against IPPs. Under the agreements, Eskom is compelled to buy energy produced by the IPPs, whether or not it is needed to meet the needs of the grid.

Initial rounds of procurement from IPPs were expensive with the result that Eskom pays an average cost of R2.23/kWh for renewable energy. In her letter to Mabuza, Mkhwebane in referring to the complaint states that Eskom receives only 89c/KWh for the energy is sells, “resulting in Eskom absorbing the deficit of 133c per KWh resulting in a loss estimated at R21bn per annum”.

However, Mabuza and Radebe have explained on numerous occasions that the costs are not borne by Eskom but by the consumer and are the result of a policy decision by the government to include some renewable energy in the energy mix. More recent rounds, in particular the one in question, are far cheaper than procuring new coal energy with solar at R0.96/kWh and wind at R0.76/kWh.

Mkhwebane is at the centre of driving the political storm between the Zuma and Ramaphosa factions, racking up investigations against Ramaphosa and his ministers.

She has recently made adverse findings on Ramaphosa for a donation received from corrupt supplier to government, Bosasa, to his ANC campaign to become president, and on public enterprises minister Pravin Gordhan, who she found was responsible for establishing an investigative unit at the SA Revenue Service (SARS), which engaged in illegal and unlawful work.

She has also launched an  investigation into the appointment of new SARS commissioner Edward Kieswetter. 

In response, she is facing significant pushback. Ramaphosa and Gordhan are taking her findings on review. Her report on the corruption at Gupta-lined Estina dairy has been set aside and she has also had a cost order against her report on Absa Bank and the apartheid-era lifeboat/Bankorp saga.

She also faces threats to her survival. Lobby group Accountability has asked the Legal Practice Council to consider bringing an application against Mkhwebane to have her struck from the roll of advocates.

Lawyers for the Helen Suzman Foundation have written to the speaker of parliament, Thandi Modise, urging her to begin procedures to remove Mkhwebane on the grounds that she is not fit for office.

The DA has put the process in motion in parliament and has called for the probe into her fitness to hold office to be expedited.

patonc@businesslive.co.za