Alarm as Eskom tops list of ten­der ben­ders

Util­ity asked for pass on pro­cure­ment of R31bn Raises new ques­tions about gov­er­nance at power provider

Business Day - - FRONT PAGE - Khulekani Magubane Par­lia­men­tary Writer

Eskom heads the list of gov­ern­ment de­part­ments and agen­cies seek­ing per­mis­sion to de­vi­ate from nor­mal pro­cure­ment pro­ce­dure, with the util­ity’s re­quests amount­ing to R31.3bn of the to­tal R37bn worth of de­vi­a­tions re­quested in 2016-17.

This raises new ques­tions about gov­er­nance at Eskom, which is in the throes of state-cap­ture al­le­ga­tions cen­tred on the Gupta fam­ily.

Just last week, Eskom de­manded that con­sul­tancy firm McKin­sey, with its part­ner, the po­lit­i­cally con­nected Tril­lian con­sul­tancy, re­pay a to­tal of R1.6bn in fees, say­ing the con­tract that fa­cil­i­tated this did not meet le­gal re­quire­ments.

It also comes at a time when act­ing chief pro­cure­ment of­fi­cer Willie Mathe­bula is said to be lead­ing a bid to over­turn reg­u­la­tions that com­pel state en­ti­ties to seek per­mis­sion from the Trea­sury when they want to de­vi­ate from nor­mal ten­der pro­cesses.

The pro­cure­ment de­vi­a­tion was per­mis­si­ble for en­ti­ties and de­part­ments in cases where goods or ser­vices were sup­plied in an emer­gency or where the sup­plier was the sole provider of the goods and ser­vices be­ing pro­cured, said Mathe­bula.

Mathe­bula was briefing mem­bers of Par­lia­ment’s stand­ing com­mit­tee on fi­nance on Wednesday.

It was also his first briefing since he re­placed Schalk Hu­man at the helm of the of­fice of the chief pro­cure­ment of­fi­cer in Septem­ber.

Mathe­bula said the of­fice re­ceived 800 re­quests for de­vi­a­tions from state en­ti­ties in 2016-17.

How­ever, he pleaded ig­no­rance on whether his of­fice had a frame­work to guide it in de­clin­ing vari­a­tion re­quests.

The briefing on Wednesday also took place at a time when par­lia­men­tar­i­ans are wary of plans to ad­just pro­cure­ment guide­lines and Trea­sury reg­u­la­tions that will do away with the re­quire­ment to apply for pro­cure­ment de­vi­a­tions, ex­pan­sions and vari­a­tions.

Mathe­bula said his of­fice had re­viewed 263 con­tracts val­ued at more than R10m, with 260 per­tain­ing to the Pas­sen­ger Rail Agency SA and the rest from Transnet and the South African Broad­cast­ing Cor­po­ra­tion.

The Eskom con­tract re­view re­lated to ver­i­fi­ca­tion of the util­ity’s com­pli­ance with the sup­ply chain man­age­ment frame­work when ap­point­ing coal sup­pli­ers. Frame­work com­pli­ance was the sub­ject of in­ves­ti­ga­tion in the other re­views as well.

Mathe­bula said Eskom ac­counted for the lion’s share of the value of con­tracts, worth a to­tal of R31.3bn, for which de­vi­a­tions were sought. This was leagues ahead of the South African Rev­enue Ser­vice, which had the sec­ond-high­est quan­tum with R1.2bn.

The Trea­sury, un­der which the of­fice of the chief pro­cure­ment of­fi­cer falls, ap­proved 450 of the 793 ap­pli­ca­tions re­ceived in the fi­nan­cial year for per­mis­sion to de­vi­ate from pro­cure­ment guide­lines. The pro­cure­ment of­fice also ap­proved 398 of the 756 ap­pli­ca­tions to ei­ther ex­pand or vary the scope of a trans­ac­tion from pre­vi­ous cost spec­i­fi­ca­tions.

Com­mit­tee mem­ber and ANC MP Derek Hanekom asked Mathe­bula if he had found any cor­rup­tion in the pro­cure­ment func­tion of en­ti­ties since he

be­came act­ing chief pro­cure­ment of­fi­cer.

“What do you do when mat­ters come to your at­ten­tion that are not just de­vi­a­tions but are vi­o­la­tions of the sys­tems and a dere­lic­tion of the pro­cure­ment laws and guide­lines?” Hanekom asked.

Mathe­bula said he had un­cov­ered no cases of cor­rup­tion, leav­ing mem­bers of the com­mit­tee in­cred­u­lous.

DA MP David Maynier ques­tioned Mathe­bula on re­ports that he be­lieved the man­date of his of­fice needed an ad­just­ment.

“Re­ports sug­gest that you be­lieve that the [of­fice of the chief pro­cure­ment of­fi­cer] be­haves as a dic­ta­tor rather than an en­abler.

“Is that your view and do you sup­port the idea of a re­view of the [of­fice of the chief pro­cure­ment of­fi­cer]? If that is the case, it sug­gests that you would sup­port vol­un­tary de­fam­ing of the [pro­cure­ment of­fice] and Trea­sury,” said Maynier.

May­ihlome Tsh­wete, spokesman for Fi­nance Min­is­ter Malusi Gi­gaba, promised to get back to Busi­ness Day on ques­tions sent, but had not com­mented at the time of pub­li­ca­tion.

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