South African power firm Eskom loses $55 million a month to theft and corruption.
“This is a conservative estimate based on my assessment of the losses incurred by Eskom that have come to my attention,” Andre de Ruyter, a former CEO of the state-run company, has alleged, according to Africanews.
De Ruyter made the allegation in a letter to the South African parliament’s standing committee on public accounts (SCOPA). It has come amid an energy crisis that threatens to cripple South Africa’s economy.
The sector veteran has for months been engaged in a tussle with the government over corruption in Africa’s biggest utility power company. He had earlier accused some leaders of the ruling African National Congress (ANC) of crippling the power giant with their corruption. The party, however, hit back saying de Ruyter was trying to taint its image ahead of the 2024 national polls.
Ex-CEO allegedly survived an attempt to poison him
On Dec. 12 last year, De Ruyter survived an alleged murder attempt at the Eskom office in Johannesburg after he drank a cup of coffee reportedly laced with cyanide.
This happened shortly after he declared his intention to resign. His term as the company’s CEO was known for the purge of corrupt staff who had been reportedly sabotaging the power supply, damaging the infrastructure.
In February, however, De Ruyter was relieved of his duties.
In his submission to SCOPA, the former Eskom boss listed a number of ways corruption had seeped into the company. Coal theft, he said, caused its biggest losses as an estimated 5% of Eskom’s spending on coal—more than $27 million a month—was stolen.
There was also an alleged $22 million-per-month racket involving prepaid electricity vouchers. This is besides the alleged theft of fuel worth millions of dollars from power stations, according to de Ruyter.
South Africa loses $51 million a day to load shedding
South Africa has been facing its worst power crisis in at least two years, with citizens forced to go without electricity for up to 10 hours a day.
The country’s central bank has forecast 250 days of blackout in 2023, translating to a historic annual loss of $12.7 billion—$51 million per day. Last year saw more than 200 days of such rationing. This has led to an economic meltdown, with the phenomenon being declared a national disaster.
“We are [therefore] declaring a national state of disaster to respond to the electricity crisis and its effects,” president Cyril Ramaphosa said during his annual State of the Nation Address in Cape Town on Feb. 9.
President Cyril Ramaphosa has addressed the crisis by following emergency procurement protocol and unlocking more funds to buy new generators and solar panels.
Read More
Africa’s biggest electric power provider, the Nigerian Electricity Company (NEPA), is in dire straits due to alleged corruption that is costing the firm tens of millions of dollars each month.
According to a recent report, the Nigerian electricity provider is losing an estimated $55 million every month because of corrupt practices in its operations. This is a significant blow to the firm which has been struggling to meet the increasing power demands of the African nation.
The report claims that the corruption is taking place in the form of fraudulent bills, forged records, overcharging customers and leaving consumers without power for extended periods of time.
The report further states that approximately 40 percent of NEPA’s losses can be attributed to organized crime and theft of power equipment and meters. An additional 30 percent of losses can be attributed to inefficiency and mismanagement, with another 15 percent attributed to power theft. The remaining 5 percent of losses can be attributed to fraudulent consumption billing.
NEPA is not alone in its battle against corruption. Other African nations, such as Angola, have also reported significant losses due to corrupt practices. The Harvard Kennedy Scholl estimates that in total, the African continent loses over $148 billion due to corruption each year.
This is a truly staggering amount, and one that should encourage governments and agencies to take proactive steps in tackling corruption. For example, NEPA could implement robust anti-corruption policies, such as regular audits and investigations into suspicious activities. In addition, finding ways to incentivize whistleblowers and protecting those who reveal corrupt activities should be a major priority.
Ultimately, African nations must take steps to ensure that large energy companies, like NEPA, do not have to suffer losses due to corruption. However, without concerted efforts from governments, firms, and individuals, corruption will continue to have a disproportionate cost on these firms and the people that they serve.
