A group called the Anti Poverty Forum (APF) has laid a complaint with the public protector claiming that Eskom was forced into signing contracts with independent power producers (IPPs) that are now responsible for the company’s financial crisis.
The forum is run by Phapano Phasha, who is associated with various lobby groups supporting former president Jacob Zuma. It has also previously laid charges against acting SA Revenue Service commissioner Mark Kingon, claiming he should not have entered a legal settlement with a former employee.
The IPP programme, which for the first time enabled private companies to supply electricity to Eskom, has become a highly contested political issue as trade unions, former Eskom employees and Zuma-supporting lobby groups joined forces to mount a campaign against them.
The IPPs are chosen through a competitive bid process of which there have been four rounds since 2011, presided over by the department of energy. Eskom is then directed by the government to sign 20-year power purchase agreements with the companies, guaranteeing them a set price to deliver power.
The APF says that Eskom has been “illegally” forced to sign these contracts “under pressure from political principals.”
These contracts, contend the APF, force Eskom to buy electricity from private producers and sell it at a loss, even though it produces its own electricity.
It is “unlawful and unethical” for government to compel Eskom to buy power from IPPs, says the forum.
The request is made urgent by the announcement by public enterprises minister Pravin Gordhan last week that government has requested Italian utility Enel to provide Eskom with technical assistance. As Enel is a participant in the renewable IPP programme, this poses a conflict of interest, says the forum.
The complaint also contains several factual errors and misconceptions. While it claims that Eskom buys power from IPPs at a loss, the full cost of renewable energy is recouped by Eskom through the tariff and therefore paid by the consumer.
The forum also makes the claim that renewable energy producers “don’t work during load-shedding as they depend on Eskom’s grid”, which is fallacious.
On Thursday, in his reply to the state of the nation debate, President Cyril Ramaphosa praised the renewable IPP programme and gave the strongest assurance yet that government intends to embark on a transition to clean energy.
“Through the competitive bidding process, SA has benefited from rapid global technology developments and price trends, buying clean energy at lower and lower rates with every bid cycle. As a result, SA is now getting renewable energy at some of the lowest tariffs in the world,” he said.
Ramaphosa said it was estimated the programme would create 114,000 jobs over the 20-year generation period, and pledged that government would work with coal-producing communities and workers to ensure that “no one is left out”.
The public protector’s office was unable to confirm on Monday whether or not it had received the complaint.
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