Parliament: “Coal costs and IPP’s account for 50% of Eskom’s cost drivers”

The total debt owed to Eskom by municipalities is R20 billion.



Parliament has engaged with labour unions and discussed the issue of a “trust deficit” between Eskom’s management and the National Union of Mineworkers (NUM); and National Union of Metalworkers of South Africa and Solidarity (NUMSA).

The unions have explained that they are not being consulted with regarding the future of Eskom, the energy-generation mix, nor on the closure of some coal-fired generation plants on jobs, as this severely harms communities in which these closures take place.

“Some of the companies are making super-profits, up to 100%”

The Parliamentary Committee also heard that the independent power producers (IPPs) and coal costs are among the biggest cost drivers and account for over 50% of Eskom’s current costs.

“It is clear that some of the companies are making super-profits, up to 100%. The committee is of the strong view that those contracts should be renegotiated.”

Chairperson of the committee, Sfiso Buthelezi

Municipal debt owed to Eskom continues to highlight the culture of “non-payment”

The issue of “non-payment” by municipalities was also brought up, as the committee pleaded with Eskom’s management to pursue the plague and provide active measures that will help in collecting the debt due to the embattled power utility.

According to Eskom’s 2019 Integrated Report, the total debt owed to Eskom by municipalities is R20 billion; this indicates 71,7% of invoiced municipal debt which includes interest. The Department of Co-operative Governance and Traditional Affairs indicated that more than R9,7 billion is owed by national and provincial government departments to municipalities.

The National Treasury has indicated that the aggregate Municipal Consumer Debts amounted to R165.5 billion as of 30 June 2019.

Eskom’s problems are much bigger than load shedding

Labour-related challenges within Eskom have been highlighted, and the parliamentary committee is scheduled to meet before the end of October, to discuss recommendations regarding the instability caused by the high turnover at senior level; and the appointment of a permanent CEO for Eskom is on the cards.

During a meeting with parliament’s standing committee on public accounts (Scopa), the State Security Agency (SSA) Minister, Ayanda Dlodlo, revealed that 100 Eskom senior officials have refused to undergo security vetting processes which are meant to look into mismanagement and corruption.

It is further reported that only 21 of 121 officials have agreed to comply with the screening process, and Scopa intended to root out the main cause of government procurement spending that leads to billions annually, and Eskom’s continuous failure prevails despite government life-lines.