“Eskom is a bankrupt company”

Democratic Alliance MP Alf Lees says Eskom is a bankrupt company, and the power utility’s acting CEO Calib Cassim agrees it cannot manage its debt without assistance.

During a meeting of the Standing Committee on Public Accounts (Scopa), Lees urged Eskom to meet with George Fivaz Forensic and Risk to get to the bottom of its intelligence report initiated under former CEO André de Ruyter.

“Eskom is a bankrupt company. Don’t try and tell me it’s not because the sovereign is taking your debt away. It doesn’t make a profit, and it’s shutting down sources of manufacture,” said Lees.

“So you’re downsizing your organisation, but your number of employees has gone up dramatically and, I think, almost doubled over the past 15 years, specifically during the State Capture period.”

“So South Africans look at you and say: ‘They can’t produce electricity. They are selling it at hugely high prices now, and yet you give this bloated staff complement a 7% increase’,” he added.

On 15 June 2023, the power utility announced that non-managerial employees would receive a 7% salary increase over three years from 1 July 2023 to 30 June 2026.

Cassim explained that no Eskom staff had received any short-term incentive in the past six years and agreed with Lees’ statement that Eskom can’t pay its debt without assistance from the National Treasury.

Calib Cassim, acting Eskom CEO

“I fully agree that in terms of Eskom meeting its debt obligation, we can’t do it without the government’s support,” he said.

“In the last few years, we’ve had equity injections of billions of rands. Now we’ve got the debt relief again. It’s a significant amount of taxpayers’ money.”

However, he emphasised the impact of municipal debt on Eskom’s financial situation.

“We have R60 billion of municipal debt that is due to us. That makes a big difference in liquidity,” said Cassim.

“It’s not going to get us out of the R400 billion debt on the books at the moment, but it is an important element and needs to be resolved at a government level.”

The charts below are from an analysis by Daily Investor of the size of Eskom’s workforce compared to how much power the utility produced over the years. It shows that Eskom produced more electricity when it had fewer staff, with productivity peaking around 2005.

Eskom urged to meet with George Fivaz

Cassim says the company has requested a meeting with George Fivaz Forensic and Risk to get to the bottom of its intelligence report initiated under former CEO André de Ruyter.

This came after Lees expressed his surprise at the lack of urgency on the part of the Eskom board to approach Fivaz for a meeting.

“The fact is that the SIU [Special Investigating Unit] does have it [the report]. The fact is that the media do have it,” said Lees.

“I would have thought that you, as the board, would have by now delegated that someone make an appointment to go and see George Fivaz.”

“Has that not happened? Surely, there’s more urgency than that,” he added.

Cassim said he has been in contact with the SIU and Business Leadership South Africa (BLSA).

“Honourable Lees, I did have a discussion with SIU, as well as with BLSA. George Fivaz, no, I haven’t had a discussion with him as yet, but we have requested it,” he said.

“I am awaiting feedback from the SIU and BLSA.”

Lees explained that there should be more urgency around the Eskom board trying to get access to the contents of the report.

“Should I give you a copy?” asked Lees.

“I’m not in a position to do so, but I’m saying, it’s not so much getting the copy [of the report], it’s the contents that should be an urgency.”

He indicated that, without it, Eskom would battle to get to the root cause of its problems.

“We hear about all the good work you’re doing with systems, processes, and so on, but they’re not going to solve the problem. It’s a people problem,” said Lees.

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“Eskom is a bankrupt company”