City Power doesn’t owe Eskom R1.075bn – Gordhan wrong?

Pravin Gordhan stated in a written reply to a parliamentary question this week that the City of Johannesburg’s City Power was Eskom’s biggest debtor, owing the power producer R1.075 billion out of the R10.8 billion that municipalities across the country owe Eskom. This statement is a direct contradiction to the message that Parks Tau delivered on CNBC Africa’s Power Lunch last week, where he said, without any doubt, that City Power was up to date on all of its outstanding payments. Sicelo Xulu, Managing Director of City Power joined Alec Hogg to discuss the facts from City Power’s perspective. Is City Power efficiently operating as Johannesburg strives to world class status – Alec Hogg gets all of the details on the debt claims as well as the lowdown on fraud, courrption and traffic lights. – LF

ALEC HOGG: Some town in the City of Johannesburg owes the National Power Utility, Eskom, over R1bn. Joining us for more on this is City Power MD, Sicelo Xulu. Sicelo, I ask this and I’m really confused now because your boss, Parks Tau… He is your boss…

SICELO XULU: Yes, he’s my boss.

ALEC HOGG: He was sitting exactly where you’re sitting, on Friday, and I asked him a very specific question. I asked him ‘do you owe Eskom any money’ and he said ‘no, we are fully up-to-date with all our payments’. Now yesterday, we get the new Minister of Cooperative Affairs, Pravin Gordhan, saying ‘our biggest debtor is City Power’. What gives here?

SICELO XULU: Let me just confirm again what the Mayor said. Certainly, we don’t owe Eskom anything and I just checked before I came here. We don’t have debt older than 30 days with Eskom. We made sure that over the years, we pay Eskom at least 15 days after the invoice and we’ve continued to do so. The media reports are actually, factually incorrect and I think I need to state that categorically.

GUGULETHU MFUPHI:  So if you don’t owe Eskom, whom do you owe?

SICELO XULU: Let me start by saying that if you look at our cash position at the end of the financial year, which ended in June, we’re sitting at just over R2.2bn, so we have no issues with servicing our short-term obligations. We don’t owe anyone at this particular point and I think our financial position is very, very healthy.

ALEC HOGG: Sicelo, please help me here. Pravin Gordhan was quoted as saying that the City of Johannesburg owes Eskom R1bn. From where is he then getting his information?

SICELO XULU: We’ve actually since made contact with the Office of the Minister and I must say that I’ve received a confirmation from their side that we actually don’t owe anything. We’ve also made contact with Eskom and we’re still waiting for the correspondence. We’re also trying to get to the bottom of this matter as to exactly what happened. Based on the records, which are very factual, we actually don’t Eskom anything.

ALEC HOGG: It puts you in a bad light. It puts Parks Tau in a bad light. Pravin Gordhan’s being misinformed and it’s nice, sensational stuff that Johannesburg’s not doing what it should be doing in the journey to a world-class city.

SICELO XULU: I must say that based on our corporate governance, that’s what we strive to do. Therefore, issues around payments of either Eskom or any other service provider for that matter, we actually endeavour to comply with those legislations unless there’s an issue that we’re actually picking up with one of our invoices. We’ll follow those through and make sure those issues are resolved. However, at this particular point I must say that we’re clear in that we don’t owe Eskom R1bn. We obviously don’t have any debt owning to Eskom older than 30 days, so our account with Eskom is current.

GUGULETHU MFUPHI:  It sounds to me, like its good news story then Alec, because clearly, it must mean you and your team are doing something right.

SICELO XULU: Certainly, I think that as an organisation….

ALEC HOGG: Have you seen what we pay for power in Johannesburg?

SICELO XULU: Again, if you look at that argument, we also pay – if you look at our total cost – about 70 percent of the cost goes to Eskom, in terms of power purchase. What we’re left with is obviously, 30 percent if you look at the total cost.

ALEC HOGG: I have to ask you, because this is bugging me. We want a world-class city here, but we have streetlights that have wires hanging across them. That’s not a world-class city. That’s a developing country. That’s what we see in parts of India. Can’t you guys fix that? It’s just a silly thing. They talk about the ‘broken window syndrome’. If you get the little things right…

SICELO XULU: There are two aspects to that. Firstly, we are aware of the issue of cable theft. When you see those wires hanging, those are aluminium wires so it means it’s an aerial bungee conductor. What we’re trying to do is introduce certain technologies so that we move away from copper, just because of the copper theft that we’re experiencing within the country. Something has to give and take and I know from the aesthetic point of view, that might give some of the challenges but we’re carefully moving away from copper into aluminium just to make sure that we deal with the issue of cable theft.

ALEC HOGG: You can’t put the aluminium in the ground.

SICELO XULU: No, we can, but it depends on the size of that particular cable. Therefore, we’re engaging with the manufacturers to be able to move towards that.

ALEC HOGG: I’m very happy to hear that Gugu.

GUGULETHU MFUPHI:  It’s going to be a pretty city.

ALEC HOGG: Of course, it will be but the point is that you think… The immediate assumption – and an assumption makes an ass out of you and me. The immediate assumption is ‘well, there’s something broken so let’s just do the quick fix’ and it’s not the case at all.

SICELO XULU: It’s not the case. I think it’s a well thought out process that we’ve embarked on and we’re actually changing some of the copper bay wires at a suburb level, where we change them to an aerial bungee conductor, which is basically, an aluminium conductor, to try to curb the issue of cable theft.

ALEC HOGG: Have you caught any of these cable thieves lately?

SICELO XULU: If you just look at the last financial year ending end of June, we caught about 286 of the suspects with a conviction rate of about 86 percent, so I think that’s quite a success. Today and tomorrow, we’re going through suspensions, even within City Power, where we actually caught some of the employees who are obviously involved in terms of the cable theft. We’ll be announcing that as well.

ALEC HOGG: We’re looking forward to that because that was exactly what Parks was telling us about last week. We want you to name and shame. Don’t we?

GUGULETHU MFUPHI:  Exactly – holding people accountable.

ALEC HOGG: Shopping centres. We look forward to having that. Thank you Sicelo, for clearing up quite a lot of the issues there that have been concerning a few people. That was City Power’s MD, Sicelo Xulu.

GUGULETHU MFUPHI:  Your Zulu’s on point.

ALEC HOGG: Remember, you can email us on [email protected].

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