Eskom pays 1,000% more than it should for services and materials

Daily Investor • 28 Nov 2022

Eskom acting generation executive Rhulani Mathebula revealed that Eskom is paying up to ten times more for services and materials because of procurement problems, fraud, and corruption.

Last year, Eskom CEO Andre de Ruyter revealed that they significantly overpay for many products, including basic goods like milk and toilet paper.

He discovered that Eskom agreed to pay R238,000 for a wooden mop, R28 for a roll of single-ply toilet paper, and R56 for a bottle of two-litre milk.

Despite getting rid of Eskom’s chief procurement officer, Solly Tshitangano, and clamping down on overpaying for goods and services, it remains a problem.

Mathebula revealed that Eskom continues to suffer from inflated costs for services and materials, which is aggravated by fraud and corruption.

“We have a situation where Eskom is paying three, four, and even ten times the price it is supposed to pay,” he said.

The power utility is already drowning in debt and struggling to get enough money for maintenance, and overpaying for goods and services aggravates the situation.

Mathebula highlighted two reasons for the ongoing procurement problems at Eskom.

  • Fraud and corruption.
  • There are too many providers which cannot deliver on what they promise.

“Some service providers have found their way into the maintenance programs without the necessary skills to perform the work,” he said.

Although unsuitable providers are damaging to Eskom, the power utility’s biggest problem is fraud and corruption.

“The impact of fraud and corruption is significant. It includes people stealing coal and damaging plants to get maintenance contracts,” Mathebula said.

He said fraud and corruption is the biggest enemy of progress at Eskom. “It continually undermines any effort by the great engineers and other staff at Eskom,” he said.

The impact of malfeasance includes delays in placing contracts and employing “shady service providers” who do poor work and fail to deliver spares on time.

These service providers also regularly deliver the wrong spares, which harm maintenance programs and cause prolonged outages.

Mathebula said fraud and corruption is the most important issue to focus on to fix Eskom and get its maintenance program back on track.