Eskom’s Rotek riddle Little-known firm at centre of murky negotiations
THE DEMAND by Eskom for its suppliers to give the embattled power utility 30 percent equity stakes in their businesses has cast the spotlight on Rotek, a little-known subsidiary which appears to be involved in most of what Eskom does.
Until this week, there had been very little said about Rotek. But it has since emerged that the company is at the centre of Eskom’s murky negotiations for future contracts on its lucrative expansion programmes. An investigation by Business Report this week has shown that Rotek is run by the utility’s powerful executives, who adjudicate on Eskom’s procurement processes.
According to Eskom, Rotek – also known as Eskom Enterprises – provides critical input to the utility, including electrical and civil infrastructure construction, bulk material handling, order book and logistics and transportation services.
The Companies and Intellectual Property Commission (CIPC) lists at least seven directors, most of whom are employed in strategic positions by Eskom, in its database last published in November.
Among them is suspended head of group technology and commercial head, Matshela Koko, and Thava Govender, the former chief of transmission and customer services, who was promoted to generation boss when Koko was suspended alongside three other senior executives. Two weeks ago, Govender was appointed the acting chief executive while Brian Molefe was away on business overseas.
Asset base
It is not clear what Rotek’s asset base is and the status of its balance sheet, if it has any, but the CIPC says its books were last audited in November. Rotek says it has a national footprint and operates from its head office in Roscherville, east of Johannesburg.
But to understand how much of an influence the company has in Eskom, a profile of Rotek showed that it provided nearly exactly the kind of services that the power utility should be able to provide itself.
While Rotek touts itself as a wholly-owned Eskom subsidiary that is an energy industry support service, Business Report can reveal that it enjoys a full staff compliment that includes finance, human capital, communications, risk and resilience, as well as customer services.
Attempts to ascertain the exact number of Rotek employees was unsuccessful. But a brief profile on the Eskom website says “the employees of Eskom Enterprises have been seconded from Eskom to manage the assets of Eskom Enterprises”.
Scant reference
A supplementary and divisional report from Eskom’s 2014 annual report provides virtually no financial information on Rotek’s finances and makes scant reference to the existence of the subsidiary.
But this week, minutes from a May 8 meeting of Eskom and its boiler-serve contractors, put Rotek at the centre of Eskom’s dealings with its suppliers.
On Tuesday, Business Report unearthed a controversial plan by Eskom where it wanted companies that did business with it to give it a 30 percent equity stake on every contract granted between 2016 and 2026 at no cost.
Eskom estimated the value of the contracts to be about R30 billion, which would mean that Rotek would earn R9bn through them, mainly as the power utility goes on an aggressive programme to finish its Medupi and Kusile power stations that are crucial to the country’s power supply.
Eskom also wanted to take over the contractors’ intellectual property rights on work that was performed on its sites and house the rights through Rotek.
One contractor claimed that Eskom had become both a player and a referee in all the contracts that it was renegotiating with contractors.
“It is like a going into a match you know you are destined to lose, not because you are not good enough, but because the stakes are stacked against you from the onset,” said the contractor.
Two other survivors of the March clean-up, which saw then chief executive Tshediso Matona leaving with a golden handshake to sit on the Rotek board, are Mongezi Ntsokolo, who swopped positions with Govender, and Ayanda Noah, the utility’s chief of distribution.
The rest of the directors are Sibusiso Dzenga, Johnny Dladla and Ernest Viljoen.
In its mission statement, Rotek claims that it is known and respected in the industry for high quality engineering services, which support Eskom’s evolving African strategy.
The company also claims to be involved in the delivery of coal to power stations.
It also boasts a “strategic enablement” division to “look at the overall Rotek and Roshcon picture and give direction for the organisation to follow”.