The Democratic Alliance says it will request a full explanation for the dramatic decline in income and massive increase in costs at power utility Eskom.
Despite frequent power outages in 2015 amid a change in leadership and a lack of supply, Eskom said on Monday that the country has enjoyed stable electricity supply for a month.
The DA said in a statement on Sunday, that Eskom’s Integrated Report 2015 on the entity’s financial performance for the 2014/2015 financial year shows clearly that Eskom is in a financial crisis – with a revenue having fallen from R7 billion to R3 billion during the period under consideration.
The report also showed that an amount of R51 million was incurred on fruitless and wasteful expenditure – “and that the entity had a high failure rate in terms of performance targets met,” said Natasha Mazzone, DA shadow minister of public enterprises.
“Yet, Eskom still spent an exorbitant R50 million on executive salaries over this period – with an additional R10.8 million being paid out for long-term incentive bonuses. This amounts to R1.4 million per executive member.”
“The current executives at the helm of this failing entity are performing dismally. It is extremely unjustifiable that they are receiving these exorbitant pay checks and bonuses,” Mazzone said.
BusinessTech reported in August that the state-owned company paid its top executives a total of R49.2 million in the 2015 financial year, down from R62.6 million in 2014.
The total was also down from R57.4 million in 2013.
Notably, however, former chief executive Brian Dames, who left the utility at the end of March 2014, took home a pay package of R15.4 million in 2014.
This is in contrast to the two subsequent CEOs, Tshediso Matona and Brian Molefe, who shared nearly R8 million in total, including a salary of R3 million for Matona, and R3.8 million for Molefe.
The DA said it has written to the chairperson of the Portfolio Committee on Public Enterprises, Dipuo Letsatsi-Duba, and to request that public enterprises minister Lynne Brown and deputy president, Cyril Ramaphosa, who chairs government’s energy “war room”, to appear before the committee to give a full explanation for the dramatic decline in income and massive increase in costs.
“It is they who must take full responsibility for the poor management at Eskom,” Mazzone said.
“Minister Brown must also explain to the committee why these unacceptably high salaries remain in place – and what she is going to do to decrease these salaries to a more appropriate level for the future.”
According to the report, the net profit of the group after tax declined from R7.1 billion in 2014 to R3.6 billion in 2015, with Eskom putting this down to the increased usage of the Open Cycle Gas Turbines and subsequent fuel costs incurred through using diesel to power these turbines.
Of the 37 performance targets, Eskom only met 51% of its performance targets, the DA said.
The political party listed what it deemed to be the most significant:
- The Energy availability factor: Target was 80%, Actual was 73.73%
- Generation capacity installed and commissioned: Target 433 MW, Actual 100 MW
- Interest cover: Target 0.69, Actual 0.44
- Debt/Equity: Target 2.48, Actual 2.70
- Free funds from operations as % of gross debt: Target 7.63%, Actual 2.37%
- Outstanding maintenance backlog: Target 1, Actual 2
- Unplanned capability loss factor: Target ≤10%, Actual 14.22%
The DA reiterated its call for minister Brown to freeze bonuses for Eskom executives’ until performance at the parastatal improves.
“The current energy crisis has caused economic growth to grind to a halt, leaving unemployed South Africans very little hope of finding work,” the DA said.
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