One Eskom employee got kickbacks on R450-million in dodgy deals

The Special Investigating Unit’s (SIU’s) investigation into Eskom’s procurement processes has revealed that staff at the Kusile Power Station created large numbers of purchase orders outside of regular work hours.

Based on its data, the purchase orders created outside of usual work hours at Kusile total more than R450 million, and a staff member at the power station is now facing disciplinary procedures.

Presenting before the Standing Committee on Public Accounts, Viven Govender, a forensic investigation specialist at the SIU, said the individual behind most of these transactions received kickbacks from the suppliers.

“I would say a big percentage of these transactions were facilitated by one individual at Kusile. That individual has subsequently been subjected to a disciplinary process,” he said.

“We have evidence that she has received financial gratification from the suppliers that have been identified.”

“So, we were able to draw the correlation between her actions and these POs that were issued to then the gratification that she received,” Govender added.

Eskom has now blocked implicated service providers from providing their services to the power utility.

“These POs were issued to the specific groupings of one and two. Group one and group two, I can confirm, the majority of the service providers have been blocked,” said Govender.

“This means they’re not going to be getting purchase orders.”

According to the SIU’s data, most of the after-hours purchase orders processed by the individual were submitted between 18:00 and 24:00, while some were also processed between 00:00 and 07:00.

The SIU included data on purchase orders outside of regular working hours for 13 other power stations to give perspective to the issue’s scale.

The flagged after-hours purchase orders at Kusile Power Station total R462 million. It dwarfed the next-closest power station, Duvha, which had after-hours purchase orders of R35 million.

The chart below, based on the SIU’s data, shows purchase orders created outside of regular work hours across 14 Eskom power stations.

Eleven years late and R145 billion over budget

Construction of Kusile Power Station began in 2008, and Eskom aimed to have the power station in commercial operation by 2014. However, it has yet to reach full capacity.

While it faced some unplanned delays in recent years, the project was flawed from the get-go.

Eskom had budgeted R81 billion to build the Kusile Power Station. However, its board approved budget revisions in 2020, assigning R161.4 billion for the power station.

Some energy experts disagree with these figures. In 2019, energy expert Chris Yelland said he was disturbed by the misinformed, outdated, and incorrect figures being reported for the cost of the power station.

He estimated the total cost of Kusile Power Station to have reached R226 billion, which is R145 billion more than the initial budget.

Not only have the costs surged, but the completion of the Kusile Power Station is more than a decade behind schedule, primarily due to flaws in its design.

In 2022, former Eskom chief engineer for power station design and later director of technology Alex Ham highlighted some of the defects at Kusile Power Station, most of which relate to the boilers and mills of generating units.

Eskom was forced to address this and, with the help of Mitsubishi Hitachi Power Systems Africa (MHPSA), began significant reworks on the power station’s six units.

The planned modifications to each of Kusile’s six units included:

• Eleven modifications to each mill for each unit
• Redirecting of the flue gas inlet to the bag filter and equipment changes to the pulsing systems for the pulse jet fabric filter
• Addition of internal erosion protection and modification to the pin rack driving the rotation of the gas-air heaters
• Implementing erosion protection in the various hot air ducts.

This required each unit to be shut down for around 75 days in sequence to complete the work. Eskom and MHPSA shared the costs.