Eskom says it spent R250 million on three-month security contract, not R500 million

Eskom says it spent R250 million of a budgeted R500 million on a private security contract last year and that the procurement was above-board.

This follows a City Press report about the contract last month.

According to the report, Fidelity was to supply 400 armed guards; aerial surveillance, response services, and support; and armoured surveillance and response vehicles.

Following the report, The Association of Private Security Owners of South Africa (Tapsosa) revealed they wrote to then-Eskom CEO André de Ruyter and COO Jan Oberholzer about the contract award at the time.

Tapsosa was met with silence and escalated its demand for transparency to the National Treasury.

It said Treasury met with them and said Eskom did nothing wrong in using emergency procurement processes, as the Public Finances Management Act outlines cases in which normal procurement processes can be ignored.

Tapsosa alleges that the emergency tender was initiated to follow up on De Ruyter’s intelligence report conducted by George Fivaz Forensic and Risk and funded by Business Leadership South Africa (BLSA).

It vowed to escalate its demands to the relevant Parliamentary oversight committees and electricity minister Kgosientsho Ramokgopa.

“Eskom would like to reassure South Africans that the placement of the Fidelity Services security contract was in line with Eskom’s Procurement Procedure and the National Treasury directives for emergency procurement of services,” the power utility said in a statement on Sunday.

“The placement of the security contract was necessitated by information received by management indicating that there was a potential serious security risk to Eskom’s operations and assets.”

Eskom said the contract was established for the period July 2022 to September 2022 with an estimated budget of R500 million.

“A total of approximately R250 million, including VAT, was spent for the duration of the contract,” it said.

It is worth noting that the Fidelity contract was established following a spate of attacks during an unprotected strike over wages at Eskom.

Public enterprises minister Pravin Gordhan revealed during a public address on 28 June 2022 that some Eskom employees had their car tyres slashed, their homes petrol-bombed, and, in some cases, their vehicles set alight.

Gordhan said protestors had also dumped loads of coal on the roads leading to the Camden power station and had tampered with the electricity supply to the homes of Eskom staff.

The strike plunged South Africa into stage 6 load-shedding, and Eskom has hardly been able to suspend rotational power cuts since.

Wage negotiations between Eskom and unions have also reached a stalemate this year, with the parties set to sit for one last round of discussion on 13 and 14 June.

In court papers filed in April 2023, De Ruyter said Eskom had been the subject of a “sustained campaign of sabotage” for years.

De Ruyter said not all of the damage to Eskom operations and property is caused by sabotage but that “it is clear that [some] damage to Eskom property and operations has been deliberate.”

He provided ten instances where he believed sabotage had caused significant costs at Eskom, which included:

  • Fire at Majuba — Two valves controlling the water flow to a fire suppression system were shut off before the fire broke out.
  • Pylon collapse at Lethabo — An investigation found clear evidence of a cutting instrument being used, and no evidence of corrosion.
  • Coincidental breakdowns — One unit at Kendal Power Station, and two at Matla Power Station, broke down on the same day — taking down capacity worth two stages of load-shedding. These power stations are just 50km apart.
  • Oil burner trips at Camden — A contractor admitted to removing the bearing oil drain plug from one of the station’s bearings – and confessed that this was an intentional act of sabotage.
Collapsed pylon that powers Lethabo Power Station’s coal conveyor (Click to enlarge)

In its statement about the contract with Fidelity Services, Eskom said it was placed under emergency procurement to avert potential threats and safeguard critical sites at Eskom.

“The scope of the contract mainly focused on the critical power stations, strategic corporate sites as well the transmission network,” Eskom stated.

“Prior to placement of the contract, Eskom assessed the quotation from the supplier in responding to Eskom’s request and was satisfied on proceeding with their offering, including the prices quoted.”

Eskom said there was daily and monthly monitoring of activities, and the payment of the invoices over the three months was in line with the contracted services.

“Eskom is also aware of the publications on various media and internet platforms of unverified messages and claims of corruption and fraud linked to the R500 million contract,” the state-owned power utility said.

“Given the seriousness of such allegations, Eskom will work with the relevant authorities on any investigation. In addition, Eskom encourages anyone with any credible evidence on concerns relating to this matter to contact the authorities.”

It said such reports may be made to the police, or via Eskom Crime Line on 0800 11 27 22.

Now read: Why South Africa’s petrol is so expensive — and how to make it cheaper

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Eskom says it spent R250 million on three-month security contract, not R500 million