Eskom ‘broke rules’ on Chinese deal

ESKOM treasurer Andre Frank Pillay told the Zondo commission of inquiry into state capture how Eskom flouted its own procedures when it signed a R25 billion unsolicited capital funding proposal with a Chinese consortium.

In 2015, Eskom entered into an agreement with China-based Huarong Asset Management, which had approached the cash-strapped power utility with a proposal to grant it $1.5bn (about R25bn) for Eskom to build or refurbish power stations.

Pillay said that the unsolicited proposal to fund capital projects was pursued by Eskom even though its terms were erroneous.

He said that Eskom’s rules and procedures were flouted and that Eskom had pushed through with the deal even after realising that Huarong was not going to deliver on its promises.

Huarong had partnered with a South African-based electrical engineering contractor, Tribus Energy, owned by Rajeev Thomas, to establish a BEE-compliant consortium, Huarong Energy Africa, which would implement this proposal to Eskom.

At the time, Eskom – which raises capital from domestic bonds, international markets, commercial paper loans, multi-lateral institutions and export credit agencies – was looking for an funding offer that did not rely on government guarantees.

Pillay said Eskom executive, led by former chief financial officer Anoj Singh, travelled to China to meet a Huarong delegation for discussions.

At this meeting, Pillay said Rex Madida introduced himself as political deployee of the ANC and was part of the Tribus group.

He had concerns with the manner in which Eskom went about the Huarong deal even though it was punting it as innovative funding which would see it receive a cash injection without giving up control of the company and have no damage on the balance sheet.

Pillay said he had been pressured by Singh into signing the non-binding term sheet as Huarong partners wanted to be at ease about the good working relationship. “I was uncomfortable about signing term sheets because we were not used to signing term sheets like this, but Singh said I should not worry because it was non-binding.”

Meanwhile, Chief Justice Raymond Zondo announced that acting secretary of the commission Peter Pedlar, will continue in his role until the end of the month as the investigation against permanent secretary Dr Khotso De Wee has not been finalised. De Wee requested to take special leave after allegations of taking bribes. |