Troubled Eskom to focus on procurement to drive change

4 March 2021

Embattled South African state power utility Eskom has been instructed by its board to focus on procurement to deliver savings as it seeks to recover from the state capture scandal and a plunge into debt.

Parliament’s Standing Committee on Public Accounts (SCOPA) heard representatives of Eskom’s board say expected savings from procurement had so far failed to materialise.

“The board has therefore encouraged and instructed the executive management of Eskom, including the group chief executive, André de Ruyter, to pay particular attention to the procurement function to effect the required change, and deliver the expected savings,” the board said.

“Procurement at Eskom has long been an area of particular concern to the board of Eskom, as it has been, and continues to be, an area associated with state capture.”

SCOPA had been due to consider Eskom’s annual report but decided to defer this and instead consider claims made by suspended Eskom CPO Solly Tshitangano.

Tshitangano has been reported as having accused de Ruyter of procurement failings and racism in a letter.

SCOPA said Eskom’s progress in making procurement savings had been slower than it would have liked, in part due to an absence of procurement leadership.

However Eskom’s board also told the committee it was confident that management was executing its mandate to restructure the business and drive greater efficiency through cost savings, including by scrutinising existing and new procurement contracts.

Eskom Holdings is $32bn in debt because of overspending on projects, according to a report in Bloomberg news.

Much of the overspent cash is alleged to have gone towards lining the pockets of stakeholders named in South Africa’s state capture enquiry.

The utility’s troubles have been described by Goldman Sachs as the biggest threat to the South African economy.

Its shortage of cash has led to South Africa facing intermittent power cuts because of inadequate maintenance at ageing coal-fired power plants.

☛ Want to stay up to date with the news? Sign up to our daily bulletin.

CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates