The Eskom’s Board’s latest announcements of intentions to appeal a 5% tariff approval does not come as a shock, according to Ted Blom, a partner at Mining & Energy Advisors, and former Eskom staffer.
This “reopener” application for a NERSA review comes against Eskom’s backdrop of excessive runaway costs attributable to out-and-out poor decision making since 2008 – which is intensified by massive corruption. Further, Eskom’s refusal to respond to a changing environment has seen sales stagnate at pre-2008 levels, yet the State Entity has continually forecast positive growth over the past ten years in what can only be seen as a fraudulent mechanism to boost RCA claims for “lost sales”.
Recently Eskom announced intentions to apply to the Courts for a review of Nersa’s decision to only grant them a 5% increase for 2018/19 as opposed the 19.9% Eskom had requested. The only appeal mechanism prescribed in the Nersa Act is via the courts – an expensive process which is beyond the means of the average consumer.
Eskom, however, has run out of time as the PAJA (Promotion of Administrative Justice Act) states an appeal must be made within 180 days from a decision. As Nersa’s ruling was published on 15 December 2017, Eskom’s request should have been made before 15 May 2018.
“This entire pricing issue is becoming an entangled mess,” says Blom, who suggests this could be a deliberate attempt to confuse the public, as when added together, Eskom’s tariff increase applications in 2018 are estimated at well over 100%. Eskom, during the most recent hearings, admitted that their requests are tainted by corruption, abysmal management decisions and poor execution since 2008 – a period when new power station builds were announced.
According to Blom, Eskom has received more than R1 trillion in excessive tariff increases and loans to fund a mere ZAR100 billion in projects. Was it not for mismanagement or corruption, the correct price of electricity would be 40c/kWh and not Eskom’s current tariff of over ZAR1.00/kWh.
“The resolute board announcement over the weekend that they require far steeper tariff increases to double earnings, is a familiar tune which they have been signing since 2008,” says Blom.
“It seems Eskom’s Board remains a one trick pony where the only remedy is to bludgeon the electricity consumer.”
Blom expressed massive disappointment as he, along with Minister Pravin Gordhan and all South Africans, expected the new Board to salvage Eskom from ruin.
“You cannot expect a board with zero experience to turnaround a complex organisation like Eskom, especially when faced with a corrupted and incompetent senior management feeding them rubbish, “ states Blom.
Blom went on to highlight that the only feasible way forward is to strengthen the board by enlisting competent industry experts who are capable of providing accurate independent information. Such individuals have experience with previous benchmarks Eskom held as a top five, world-class utility.
“Under the current setup, you have the corrupt leading the blind – a recipe for a far greater disaster.”
“Until Eskom starts making sensible decisions, we strongly suggest civil resistance to price increases and will be publishing the means on our website later this week.”