A lobby group has raised questions about how the power utility has spent hundreds of billions in funding.
The power ultility is seeking a 20% tariff increase from the National Energy Regulator of South Africa (Nersa).
The Organisation Undoing Tax Abuse (Outa) this week revealed to parliament’s public enterprises portfolio committee how the power utility should be relying on its own capital expenditure budget and government for its money and not ordinary South Africans to float it.
Finance Minister Malusi Gigaba earlier this month indicated that government was considering granting Eskom a favourable loan or possible bailout.
“Eskom uses the SAP accounting system‚ which requires full supporting documentation and authorisations before processing can take place.
“Explanations are needed as to how the R3-billion was processed without the documentation. Either there is a magic password which allowed this or there is an old cheque book lying around. Either way‚ Eskom’s chief financial officer‚ Anoj Singh‚ must explain.”
Blom described the electricity tariffs the average four-person household was paying as “daylight robbery”.
“There are three cost drivers to the power utility. They include the financing costs of money borrowed‚ their power plants and the operations‚ which involve buying coal and paying salaries.”
He said on the assumption that Eskom was efficient in 2005‚ and the monthly cost for electricity for an average four-person home was R160‚ the cost now for electricity‚ based on an annual escalation of a third of CPI‚ would be R290 for an average four-person household.
Blom said compounding Eskom’s financial problems was the building of the Medupi and Kusile power stations.
“In Eskom’s 2005 annual report its chairman and director’s statements said the then five-year capital expenditure would be R93-billion.
“In 2008‚ when we saw the first quote for Medupi it was R32-billion. India built a carbon copy plant for R35-billion.”
He said Medupi’s costs escalated to R91-billion by the time the board approved its construction.
“Because of delays it’s now running at a cost of R145-billion‚ Kusile’s costs standing at R160-billion.”
Blom said Eskom recently announced that they need to borrow R325-billion over the next five years to finish off the two stations.
Medupi and Kusile‚ “which divided by two‚ means they will cost R165.2-billion to build‚ plus the current costs of R145-billion and R160-billion.”
He said that equated to each power station costing R300-billion‚ 10 times the original cost of each.
“For that price we could have had another 20 such power stations.”
“With R93-billion spent on capital expenditure‚ they still have access to R1-trillion. We must question why they want an increase and what have they done with the money they raised.”