Former Eskom CEO André de Ruyter has alleged that the power utility was losing at least R400 million a month through fraud and theft of prepaid electricity vouchers run by syndicates.
De Ruyter today maintained his allegations that based on the assessment of the losses that have come to his attention, a conservatively estimated R1 billion per month was stolen from Eskom.
In his affidavit to the Parliament Standing Committee on Public Accounts (Scopa), De Ruyter said this was done through a variety of fraud and corruption including coal, fuel and infrastructure theft, theft and fraud of prepaid electricity vouchers, and the purchase of goods or services at inflated prices.
De Ruyter said there was significant theft and fraud of prepaid electricity vouchers, which was estimated to amount to billions of rands per annum.
He said while some progress had been made to replace the existing system, significant delays and internal resistance had been experienced.
“In conjunction with the Hawks, individual ‘ghost vendors’ and syndicates are arrested from time to time, with losses for one syndicate alone estimated to be between R150 000 to R250 000 per day, or between R4.5m and R7.5m per month,” De Ruyter wrote.
“However, this is only a very modest victory against an ongoing major loss for Eskom. The total loss due to prepaid voucher fraud could exceed R5bn per year, or R400m per month.”
De Ruyter said fuel oil cost at Tutuka power station were reduced by some R100m per month after additional control measures were instituted following his observation of excessively high fuel oil consumption.
However, fuel oil consumption soon thereafter increased significantly at Grootvlei and Majuba power stations.
“It would, therefore, appear that there is significant fuel oil theft taking place at Eskom, possibly with the involvement of organised crime cartels,” he said.
“Having regard to the fact that there are 14 other coal-fired power stations at Eskom, the opportunity for theft of fuel oil remains very considerable.”
He also said there was significant infrastructure theft, including cables, overhead lines, transformers and conductors, costing Eskom approximately R2bn per year, or R170m per month.
He said there was substantial fraud and corruption taking place in the procurement process, particularly at power stations, with R1.3bn having to be written off in the 2020 financial year, with a further R800m in the 2021 financial year.
Similarly, De Ruyter said coal theft was estimated to be a very significant contributor to losses from theft at Eskom, as even a 5% loss factor on coal would equate to some R500m per month given that Eskom spends about R132bn per annum on buying primary energy.
Meanwhile, Scopa resolved to invite parties that are mentioned in De Ruyter’s submission to the committee following a request from the committee to elaborate on his interview on eNCA regarding alleged corruption and malfeasance at Eskom.
The committee has indicated that it plans to invite the Minister of Public Enterprises Pravin Gordhan and the Board of Eskom.
It also plans to invite the Advisor to President Cyril Ramaphosa, Dr Sydney Mufamadi, State Security Agency, Directorate for Priority Crimes Investigation (Hawks), National Prosecuting Authority, Special Investigating Unit, and the South African Police Services.
De Ruyter declined to name the “high-ranking” politician he implicated in allegations of corruption, but indicated that he reported his or her identity to Gordhan, Dr Mufamadi and the Hawks.
The committee also plans to find out from law enforcement agencies what progress has been made in the cases that De Ruyter says he reported in April last year.
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