Insufficient oversight gives Eskom a free ride

Business Report 23 November 2012.

There is little doubt that state-owned enterprises can be successful. Theoretically they can provide services at a reasonable price and spread those services.

If Parliament – as defender of the interests of the shareholder, the state – is of sufficient standard as an oversight mechanism, the interests of the voter and taxpayer can also be part of the mix.

Eskom, interrogated by the trade and industry committee this week after releasing its interim results, is reasonably sound on paper. It turned a hefty profit of R12.6 billion in the six months to September.

Yet there are many clues that all is not right at Megawatt Park. Less electricity was sold, but revenue rose from R64bn to R73bn in the six months compared with last year. Warnings by various parties that driving up the cost of electricity will bleed the nation, cut jobs and de-industrialise the country have fallen on deaf ears.

Even ANC MPs on the trade and industry committee have pointed out that this is already happening. The drop in sales to the industrial sector is also evidence of this. Eskom chief executive Brian Dames reported that Eskom’s electricity sales for the period, 110 766 gigawatt-hours (GWh), were down from 114 043GWh. But electricity revenue was R72bn (2011: R63bn). Industrial consumers used 23 percent, or 26 220GWh, of the total. This is nearly 26 percent less than the same period last year…

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