Thabo Seseane
On Monday, ESKOM, the largest South African power utility, began
implementing its second round of “managed” blackouts this year, cutting
2,000 megawatts from its grid because it could not meet demand. Tshediso
Matona, ESKOM’s chief executive, has warned about the possibility of a
total collapse of the power grid.
South Africa’s political elites are profiting from the crisis by
awarding themselves massive contracts related to the construction of new
power stations. In particular, a company directed by the wife of
African National Congress (ANC) Secretary General Gwede Mantashe
received a R639 billion ($55 million) contract for providing food to
workers at the construction sites of the new Medupi and Kusile power
plants.
The Sunday Times reported that the Kusile contract was
awarded on October 1, 2013 to RoyalMnandi Duduza, part of the
politically connected Bidvest group of which Nolwandle Mantashe, is a
director. The five-year contract is worth R639 million, one of the
largest ever sums for catering.
Another, worth R787 million, was awarded to Lephalale Site Services
for catering at Medupi in Limpopo and expires this month. Then a new
contract, “likely to push catering costs closer to R2 billion,” kicks
in.
The Times, sister publication of the Sunday Times,
reports that Nolwandle is also chief executive of Tamorah Resources, “a
new company hoping to secure contracts to supply coal to ESKOM.”
In response to criticism over the impropriety of the awarding of the
RoyalMnandi contract, she said, “I do not rely on political connections
to do business but on capable black and white people.”
At a meeting of businessmen earlier in January, Matona was quoted as
saying that “one unexpected event at any of ESKOM’s power stations could
push the country to the total failure of the national electricity
system” that could take weeks to resolve. ESKOM spokesman Andrew
Etzinger said that Matona had been “misinterpreted” because of incorrect
grammar.
Construction at Medupi and Kusile was announced after rolling
blackouts began in 2005. Chancellor House Holdings, an ANC investment
vehicle, owned 25 percent of the chosen boiler supplier, Hitachi Power
Africa. Boiler construction and software were subcontracted after
Hitachi's welding on boilers and its software failed tests.
The Public Protector probed the company’s ESKOM contract, not least
because Valli Moosa, then ESKOM chairman, is a senior ANC member. The
inquiry concluded that Moosa, now Anglo American Platinum chair, “failed
to manage the conflict of interests,” and Hitachi could not guarantee
that the ruling ANC would not benefit from the R50 million profit it
stood to make through its Chancellor House stake.
Medupi is set to generate its first power this year—18 months behind
schedule and at an estimated cost of R154 billion, more than twice the
R69 billion originally projected.
Costs at Kusile have ballooned to R172 billion from an initially budgeted R80 billion.
The ANC called on ESKOM to “fast-track” construction at the two new
power stations after the collapse of a coal silo at the utility’s Majuba
facility in Mpumalanga led to rolling blackouts amid heavy rains in
early December.
A year ago ESKOM was forced to ask major industrial clients including
SABMiller, BHP Billiton and Glencore Xstrata to temporarily cut
consumption by at least 10 percent to ease strain on the national grid.
Irregular electricity supply is often cited as a reason for the spate of
reviews and downgrades of public and private South African debt by
international credit rating agencies.
Construction at Kusile ran behind schedule partly because of delays
in the signing of a coal supply contract with Anglo American Inyosi
Coal. Former ESKOM CE Brian Dames said in 2013 this was because powerful
interests wanted ESKOM to sign a contract with a company that was
black-controlled. As it is, Inyosi Coal is only 27 percent black-owned,
by a consortium that includes Lithemba Investments and Pamodzi
Investment Holdings, in which among others, former Deputy President
Kgalema Motlanthe, have been involved.
Matona, the current ESKOM CE, attracted widespread ire with his remarks that the country, but not ESKOM, was “in crisis.”
At the Lethabo power plant which burns coal like most ESKOM power
stations, the ash system failed. The plant effectively choked on its own
waste, worsening the blackouts in December.
According to a clinic in the area, more people have shown signs of
respiratory problems. Yet the Department of Environmental Services of
the ANC government that appointed Matona, was not even aware of the
dense cloud of toxic ash settling over the area.
In the run-up to the 2010 world soccer tournament, according to
Matona, the government would not allow ESKOM to shut down plants for
routine maintenance. With the 2009 general election adding pressure,
ESKOM ran its existing plants at full tilt to keep the lights on at all
costs, leading to more frequent breakdowns. “We are paying the price of
these decisions,” Matona said. “That’s why we’re in the situation we’re
in now.”
ESKOM warned as early as the first administration of former President
Thabo Mbeki(1999-2004) that new investment in generating capacity was
needed. Hoping to break up and privatise the utility, however, the
neoliberals surrounding Mbeki ignored the advice until it was too late.
Mpumalanga, home province of Kusile, is like Limpopo, has also forked
over to politically-connected businesses. Last March City Press
reported that the newspaper was in possession of “copies of bank
statements that show R39.8 million was paid to celebrity event planner
Carol Bouwer in the space of a week.”
Bouwer’s company, which did not bid competitively for the job, was
tasked by Mpumalanga Provincial Director-General Nonhlanhla Mkhize with
organising memorial events following the death of former president
Nelson Mandela on December 5, 2013.
This outlay took place with the full connivance of provincial Premier
David Mabuza. As a result, City Press reported, “Mpumalanga’s
government... shifted R70 million from six of its departments' service
delivery budgets to cover employee salaries...”
The affected departments included social welfare services, public works and finance.
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