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Pub­lic en­ter­prises min­is­ter wants to know why the power util­ity spent mil­lions on un­ap­proved devel­op­ment project

CityPress - - Business - SIZWE SAMA YENDE busi­ness@city­press.co.za

Pub­lic En­ter­prises Min­is­ter Lynne Brown is de­mand­ing an­swers from Eskom’s chair­per­son, Ben Ngubane, its board and act­ing CEO Mat­shela Koko about R310.8 mil­lion that was ir­reg­u­larly spent on an un­ap­proved project. Brown, ac­cord­ing to a let­ter ob­tained by City Press, ex­presses a con­cern that Eskom went ahead with its Back to Ba­sics (B2B) Pro­gramme, even though her pre­de­ces­sor, Malusi Gi­gaba, de­cided not to ap­prove the pro­gramme in May 2014.

The pro­gramme aimed to im­prove Eskom’s busi­ness pro­cesses in­volv­ing en­gi­neer­ing re­li­a­bil­ity and main­te­nance of the power util­ity’s as­sets, in­for­ma­tion tech­nol­ogy, qual­ity as­sur­ance, and pro­mot­ing the safe and healthy life­style of em­ploy­ees.

Eskom has spent R2.55 bil­lion so far in the project – R310.8 mil­lion of which has been clas­si­fied as ir­reg­u­lar ex­pen­di­ture.

Eskom’s spokesper­son, Khulu Phasiwe, con­firmed re­ceiv­ing writ­ten ques­tions from City Press on March 9, but has failed to re­spond de­spite a com­mit­ment to do so.

City Press has since at­tempted to con­tact Phasiwe and mem­bers of his com­mu­ni­ca­tions team many times, which in­cluded send­ing nu­mer­ous text mes­sages and two fol­low-up emails on March 10 and March 13.

City Press made 22 calls to Phasiwe seek­ing an­swers to the ques­tions. Calls were an­swered or left unan­swered.

Brown’s let­ter, dated Jan­uary 11, which was sent to Ngubane and copied to Koko, has still not been re­sponded to – ac­cord­ing to a source in Eskom’s man­age­ment.

Brown is de­mand­ing to know what ac­tion the board has taken against the ir­reg­u­lar ex­pen­di­ture.

“Ac­cord­ing to your let­ter, the board’s in­vest­ment sub­com­mit­tee has con­doned the ir­reg­u­lar ex­pen­di­ture amount­ing to R310 788 195 re­gard­ing the B2B Pro­gramme. As you are aware, sec­tion 51(1) of the PFMA [Pub­lic Fi­nance Man­age­ment Act] re­quires the board in­ter alia to take ef­fec­tive and ap­pro­pri­ate steps to pre­vent ir­reg­u­lar ex­pen­di­ture as well as dis­ci­plinary steps against any em­ployee who makes or per­mits ir­reg­u­lar ex­pen­di­ture,” the min­is­ter said.

She said that she re­quested full de­tails on what ac­tion the board had taken re­gard­ing the ir­reg­u­lar ex­pen­di­ture in line with the PFMA, and also an ex­pla­na­tion on why Eskom had not re­sponded to Gi­gaba’s let­ter about the B2B Pro­gramme sent a year be­fore.

“Fur­ther­more, Eskom must ex­plain how the R2.55 bil­lion was in­curred given that my pre­de­ces­sor’s de­ci­sion not to ap­prove the B2B Pro­gramme was com­mu­ni­cated to Eskom in May 2014, in­clud­ing the quan­tifi­ca­tion of the ben­e­fits as­so­ci­ated with com­po­nents of the pro­gramme that have al­ready been im­ple­mented,” Brown said.

A source – who de­clined to be named for fear of reprisals – told City Press that the pro­gramme had been im­ple­mented in a hurry and the nec­es­sary ap­provals were not ob­tained.

“The full pro­gramme was es­ti­mated at R2.55 bil­lion, but only the en­gi­neer­ing tools com­po­nent, which cost R310.8 mil­lion, was im­ple­mented,” the source said.

Koko was di­vi­sional ex­ec­u­tive of group tech­nol­ogy at the time the B2B Pro­gramme was first im­ple­mented and this puts the ir­reg­u­lar ex­pen­di­ture at his doorstep.

Two com­pa­nies – Ac­cen­ture and EY – re­ceived con­tracts on an emer­gency ba­sis to im­ple­ment the en­gi­neer­ing tools com­po­nent of the pro­gramme.

“The orig­i­nal PFMA ap­pli­ca­tion made in July 2013 sought ap­proval only for the en­gi­neer­ing tools com­po­nent of the B2B Pro­gramme … an ap­pli­ca­tion was not made for the full pro­gramme.

“Gi­gaba de­clined to ap­prove the ap­pli­ca­tion, but the en­gi­neer­ing tools com­po­nent went ahead nev­er­the­less, caus­ing the R310.8 mil­lion ir­reg­u­lar ex­pen­di­ture,” said the source.

Brown’s spokesper­son, Colin Cruy­wa­gen, said the Eskom board was of the view that no dis­ci­plinary ac­tion was re­quired be­cause value for money was de­rived.

“The min­is­ter has writ­ten to the board to clar­ify cer­tain is­sues be­fore the PFMA with­drawal can be fi­nalised and this in­cludes steps taken to pre­vent waste­ful ex­pen­di­ture, rea­sons dis­ci­plinary ac­tion was not taken and de­lays in re­spond­ing to the min­is­ter’s ini­tial re­quest for a re­vised ap­pli­ca­tion,” Cruy­wa­gen said.

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