Parliament

Mboweni waxes biblical as MPs approve R59bn Eskom bailout

By Marianne Merten 23 October 2019
Caption
Finance Minister Tito Mboweni speaks to the media shortly before delivering his maiden budget speech in Parliament, Cape Town, 20 February 2019. Photo: Leila Dougan

Troubled power utility Eskom came a step closer to getting its R59bn bailout over two years when the National Assembly adopted the Special Appropriation Bill. But Tuesday wasn’t without sound and fury – neither in the House, nor the public spending watchdog committee, Scopa.

Parliament’s watchdog, the Standing Committee on Public Accounts (Scopa), cancelled its meeting in censure of a ministerial no-show – and it has requested all flight and accommodation costs for those officials who did come so the committee could allocate responsibility to carry the fruitless expense.

In one of the strongest expressions of parliamentary oversight in the post-May 2019 election Parliament, MPs from the ANC, DA and EFF took a dim view of being ditched at the last minute by Co-operative Governance Minister Nkosazana Dlamini Zuma on Tuesday 22 October.

Dlamini Zuma now chairs the inter-ministerial task team established in August 2017 tasked with interventions in the deadlock between Eskom and municipalities, not only over the ballooning municipal debt but also their dispute over electricity reticulation.

Municipal debt stood at R25.1-billion at the end of September, according to Eskom’s own statistics. Other debt to Eskom includes R2.5-billion by government departments and just under R1-billion from international sales to, among others, Mozambique and Zambia.

The still-unresolved tensions over electricity reticulation – or who distributes, and gets to charge, for municipal electricity supplies – got a bit more complicated with February’s announcement of the unbundling of Eskom into three entities: generation, transmission and distribution.

Moves to restructure the power utility have officially been linked to the so-called Eskom special paper. In the making since February, and twice past government’s self-set deadlines, it is now expected by the end of October.

Tuesday’s ministerial failure to arrive came, as it emerged from committee proceedings, despite undertakings as late as Monday evening that Dlamini Zuma would attend, even if she would have to leave a little earlier.

But MPs were left fuming when Dlamini Zuma did not arrive and neither did any of her Cabinet colleagues on that task team, including energy, public enterprise and finance. Other absentees were the SA Local Government Association (Salga) president and the Eskom board chairperson.

If we sit here and allow the meeting to proceed, we are saying it’s okay [to be misled]. That kind of nonsense ends here,” said Scopa chairperson, IFP MP Mkhuleko Hlengwa.

We are used to this tendency of being misled… If we need to subpoena people, we will. There was load-shedding. The project manager at Medupi has resigned. The SSA [State Security Agency] came here – of 121 Eskom managers to be vetted, 21 complied, meaning there’s 100 people telling us: ‘Go jump off the cliff’.”

Scopa took exception to the no-show precisely because later the same day the National Assembly was dealing with the Eskom Special Appropriation Bill that would give the power utility R59-billion over two years – in addition to the R23-billion a year for 10 years already allocated in February’s Budget.

Some six hours later in the House on Tuesday, the Eskom Special Appropriation Bill was adopted with 200 votes in favour and 105 against – with the objection of the DA, EFF, African Christian Democratic Party (ACDP), United Democratic Movement (UDM) and Freedom Front Plus (FF+) recorded.

Closing the just over the one-hour debate, Finance Minister Tito Mboweni told MPs they could not reduce a complex problem that also needed correctly appointed competent leadership from board to management at Eskom, to the most common denominator, money.

When I hear members saying Eskom must be funded, I agree. But where do I take the money from? There must be give and take. You can’t have everything at the same time,” said Mboweni in what sounded more like a medium-term budget policy statement (MTBPS) conundrum.

The problem at Eskom is not just financial. And if we are continuing to reduce a complex problem to the common lowest denominator, we are not solving the problem.”

The parliamentary debate in large parts traversed previously trod ground.

The ANC argued what it described as “the recapitalisation of Eskom” (opposition parties called it a bailout ) was needed to prevent a default. And such a default could trigger a cross-call in of other government-guaranteed state-owned entities’ (SOEs) debt at SAA, SA Express, arms manufacturer Denel and elsewhere.

It was a repeat of the argument the Appropriation Committee proffered in approving the bill earlier in October without insisting on conditions written into the draft law. That decision, carried by the ANC majority on the committee, has effectively given Mboweni, and National Treasury, not Parliament, the final say in what conditions are imposed.

Financial support is one of the measures necessary to take Eskom to financial sustainability,” said Appropriation Committee chairperson Sfiso Buthelezi, also speaking in support of coal, which remains dominant in the recently released Integrated Resource Plan.

Opposition parties spoke of South Africa being held to ransom by Eskom, described by EFF Chief Whip Floyd Shivambu as “a sieve”. The usually quietly spoken ACDP MP Steve Swart did not mince his words:

Eskom’s debacle is entirely of its own doing, aided and abetted by ANC ministers… Now taxpayers have to bail it out.”

But while many opposition parties clearly opposed what DA MP Ashor Sarupen called “a blank cheque”, others like the IFP said it was a case of doomed if you do and doomed if you don’t to underscore their not-unqualified support of the special appropriation.

Coincidentally, Dlamini Zuma’s failure to honour her appointment with Scopa came back to haunt Deputy President David “DD” Mabuza’s Q&A in the House. DA Chief Whip John Steenhuisen raised this, and the fact that about half the written parliamentary questions to Dlamini Zuma were returned with the response that the department didn’t immediately have an answer.

I think it’s important [ministers] must in their day-to-day work be mindful of the work of Parliament and also respect the institution. I will take a discussion with the minister. Whatever the challenges, whatever the misunderstandings are, they will be addressed,” said Mabuza.

Dlamini Zuma’s absence came up again in the debate on the Eskom Special Appropriation Bill when FF+ MP Wouter Wessels raised it.

The inter-ministerial task team now chaired by Dlamini Zuma was established as far back as August 2017 because of the deadlock between Eskom and Salga, not only over the ballooning municipal debt, but also their dispute over electricity reticulation.

Broadly put, Salga represents the interests of municipalities, which raise significant portions of their revenues from electricity sales, and thus want municipalities to distribute electricity. Eskom claims electricity distribution and sales as part of its structure and revenue stream – and is unwilling to give it up.

Many township and rural areas are still directly supplied by Eskom, which means councils cannot surcharge on electricity tariffs, a key revenue generator alongside measures such as monthly flat fees.

So it’s about money – and the hangover of apartheid that continues even 25 years into the constitutional democracy.

In a briefing to MPs on 10 October 2017, it emerged the task team had not found a resolution to the tensions between Eskom and Salga over reticulation, recommending instead that the High Court should be approached for a declaratory order on who is in charge of electricity reticulation.

And while former co-operative governance minister Zweli Mkhize briefed Scopa at least four times between May and November 2018, it seems the focus was more on persuading Eskom to stave off its municipal cut-offs and legal action over council debt.

In September, MPs of Parliament’s public enterprises committee were told the ballooning municipal debt had affected the Eskom balance sheet.

Auditors have now refused to allow Eskom to enter the monies owned by municipalities as revenue. The auditors said, ‘We have demonstrated an inability to collect from municipalities’,” said Eskom board chairperson Jabu Mabuza, citing causes such as lack of electricity meter roll-outs and the ongoing disagreement between Eskom and municipalities over reticulation.

It’s all part of what Mboweni described as complexities around Eskom.

And as Mboweni – who faces a tight balancing act on 30 October when he presents what is arguably South Africa’s toughest and most crucial MTBPS, or mini-Budget – told MPs on Tuesday:

Go mobilise your people to render onto Eskom what belongs to Eskom…” DM

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