R1.1 billion down the drain

Two residential projects by Eskom, amounting to just under R1.1 billion, have been abandoned and left to waste.

The Democratic Alliance (DA) is calling for the state-owned power utility to appear before Parliament to account for the abandoned R840-million Wilge residential development in Mpumalanga.

This comes after 2023 reports about the R250 million squandered on housing project in Limpopo, which now stand vacant and neglected.

The Wilge property development was intended to house the workers of Kendal and Kusile power stations in its 336 apartments – but nobody has ever occupied these flats.

In July 2012, Eskom entered into a contract with the Liviero Group to construct the Wilge flats, with the costs of the contract sitting at R160-million at the time.

The original cost per unit was estimated at R770,000, but the project was abandoned after the costs ballooned to over R2.5 million each.

Back in 2019, the Mail & Guardian reported that the state-owned entity had abandoned the project and allegedly spent more than R1-billion on renting accommodation for the same employees it had planned to house.

In 2021, a meeting of parliament’s standing committee on public accounts heard how Eskom could not provide answers to the money spent on building the flats and that the costs for the development had gone from R160-million to R840-million, mainly attributing it to “fruitless and wasteful expenditure.” 

The DA’s spokesperson for electricity and energy and MP, Kevin Mileham, said that his oversite visit to the development “revealed how the national electricity company wastes hundreds of millions of rands, while at the same time seeking to raise power prices for South Africans.”

Mileham said that the now abandoned development has been left to fall “into ruin and decay” and the buildings stand empty and entirely unused.

“After seeing this criminal waste, it is abundantly clear to the DA that Eskom has no regard for the public money it wastes, doing so with little to no accountability.

This comes as Eskom incurred a R24 billion financial loss in 2022/23, which includes:

• Irregular expenditure of R5 billion;
• Wasteful expenditure of R105 million;
• Material losses of R6 billion (R81 million attributed to corruption; R5.6 billion attributed to “non-technical losses” – money lost to mismanagement of resources and a lack of efficiency).

“The most serious hypocrisy of this situation is that this R840 million loss comes as Eskom’s latest tariff hike request is currently before NERSA, asking South Africans to bear the brunt of its financial mismanagement,” said Mileham.

“Eskom seeks a price hike that could increase our electricity bills by 40%, while wasting R840 million, is unacceptable,” he added.

“Even more concerning, Eskom sought exemption from the Public Finance Management Act last year, trying to hide the true extent of its irregular, wasteful, and fruitless expenditures,” said Mileham.

In light of this, the MP said that his party is calling for:

• The Board of Eskom and the National Department of Human Settlements to appear before the Energy & Electricity Portfolio Committee to answer questions about the Wilge Project, “as it is time those responsible are held to account for this monumental failure.”
• For Eskom to release its 2023/24 Annual Report and disclose details on its financial performance, including irregular, wasteful expenditure and material losses.

These steps are crucial in holding Eskom accountable and ensuring transparency for taxpayers.

BusinessTech contacted Eskom on multiple occasions for comment but did not receive a response by the time of publication.

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