Eskom’s Achilles Heel; race criterion on tenders – John Kane-Berman

CAPE TOWN — It’s not often lately that you see Pravin Gordhan taken on full square, with his actions around Eskom labelled “cynical and hypocritical.” Here the man, who second only to President Cyril Ramaphosa, has won the respect and admiration of millions of beleaguered South Africans, is taken to task by none other than respected academic and Institute for Race Relations policy fellow John Kane-BermanHis bone of contention? Eskom’s continued and accelerated insistence on using race criterion in calling for tenders – when this very policy has contributed hugely to the financial morass it and State Capture have landed us in – threatening our entire economy and well-being. There’s ample evidence in both new power station builds and expensive maintenance and repair, that contracts are being and were awarded to people unable to implement them, or staff appointed to jobs for which they were not qualified. If this is what carrying out the ANC government’s radical economic transformation policies does (besides being a handy vehicle for corruption and nepotism) then providing electricity in “an efficient and sustainable manner” is a mutually exclusive concept, Kane-Berman avers. First published on the Daily Friend. – Chris Bateman

Pravin Gordhan should stop making a scapegoat of Eskom

By John Kane-Berman* 

Eskom, we were reminded last week, is drowning in debt and anticipates a shortfall of R250bn in income over the next three years. Yet the organisation apparently still luxuriates in using race as a criterion in calling for tenders.

Accordingly, the business organisation Sakeliga has renewed its legal challenges to regulations enacted under the Preferential Procurement Policy Framework Act of 2000. Promulgated in 2017 by the then finance minister, Pravin Gordhan, the regulations came into operation in April last year. Sakeliga’s argument that they were unconstitutional dismissed by the High Court in November last year. But the organisation is now taking this decision on appeal, as Politicsweb reported last week.

Sakeliga CEO Piet le Roux says that Eskom is “increasingly stipulating race-based pre-qualification criteria in its tender documents”. Businesses that are “not 51% black-owned are frequently pre-emptively disqualified from consideration for award of a tender”. They are indeed “rejected out of hand”.

The claims are made in a letter to finance minister Tito Mboweni, Eskom CEO Phakamani Habede, and Mr Gordhan in his capacity as minister of public enterprises. The three are asked to suspend all race-based pre-qualification criteria pending the outcome of the appeal. Sakeliga implies that pre-emptively rejecting contractors on racial grounds is not in keeping with the “team effort” Mr Gordhan has called for to resolve the country’s electricity crisis.

If Eskom is indeed using race to disqualify contractors on an “increasing” scale, as the Sakeliga letter states, then both Eskom and the government have proved once again that they do not wish to learn from their own calamitous mistakes. Awarding coal supply contracts on the basis of race was one of the reasons for the blackouts that struck the country in January 2008. The use of race to weed out white staff down the years has helped to perpetuate the disasters that Eskom continues to inflict upon the country.

If experience is a guide, Eskom will simply take refuge in denial. That is what its chairman, Jabu Mabuza, did last year. Despite the fact that the organisation had some years earlier specified that coal mines supplying power stations needed to have a black ownership target of more than 50% throughout the life of the mine, Mr Mabuza said Eskom did not have a policy that coal suppliers had to be majority black-owned.

Last month Mr Gordhan said the previous Eskom CEO and his colleagues “have a lot to explain to South Africa”. So indeed they do. But Mr Gordhan also has some explaining to do, so his brazen scapegoating of Eskom is cynical and hypocritical. The previous CEO – like those of dozens of other moribund state agencies – was put there by the African National Congress. If contracts were awarded to people unable to implement them, or staff appointed to jobs for which they were not qualified, Eskom was merely implementing the ANC government’s radical economic transformation policies.

It is indeed still determined, and no doubt expected, to do so. Answering questions in Parliament last month posed by the Freedom Front Plus (FF-plus), Mr Gordhan said that Eskom had a mandate to provide electricity in “an efficient and sustainable manner”, but that it also viewed “transformation as a strategic imperative”.

Providing electricity “in an efficient and sustainable manner” is not compatible with disqualifying would-be contractors on the basis of race. Neither is it compatible with any serious attempt to contain costs by Eskom or any other of the state-owned agencies with the R1.5trn budgets set out for them by Mr Gordhan when he was minister of finance – in which capacity he once lamented the enormous wastefulness in public procurement, although this did not stop him from later gazetting regulations to perpetuate the problem.

Nor is “efficient” provision of electricity compatible with the continuation of the “strategic imperative” of ensuring that “workplace demographics reflects the economically active population”, to which Mr Gordhan says Eskom – having already “transformed substantially” – will adhere. This means more affirmative action until such time as the proportion of senior managers who are white has dropped from last year’s 31% to 9%. Among professionals and middle managers, whites will have to drop from 24% to 9%.

Mr Gordhan also told the FF-plus that Eskom “will always strive to ensure a balance between its core business versus the transformation imperatives of the country”. In other words, he expects the organisation to continue trying to achieve a balance that it has spent the last decade or more proving it cannot achieve.

  • Joh Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by clicking here or sending an SMS with your name to 32823. Each SMS costs R1. Ts and Cs apply.