No more secrets, Eskom – Moneyweb

The Supreme Court of Appeal (SCA) on Monday 23 March dismissed Eskom’s appeal against an earlier high court ruling to compel the utility to disclose its contracts for purchasing and transporting coal and diesel.

The court found that it is in the public interest to disclose the contracts and rejected Eskom’s argument that the contracts are commercially sensitive.

Read: Eskom ordered to disclose coal, diesel and electricity export contracts [Mar 2024]

Coal is the single biggest item on Eskom’s shopping list, while its diesel purchases skyrocketed when its coal-fired power stations faltered and load shedding was at its worst.

At the height of load shedding, Eskom spent R33 billion on diesel (in 2023/24), exceeding its budget by far.

Energy regulator Nersa provided R95 billion in Eskom’s revenue allocation for buying coal in the current financial year. That goes up to R105 billion in 2027/28. For diesel it provided for R7 billion in the current year, increasing to R7.6 billion in 2027/28.

Crucial that contracts be scrutinised

Because the law provides that Eskom is allowed to recover only efficiently incurred cost from electricity users, it is crucial that its contracts with suppliers for diesel and coal be scrutinised – but Eskom has so far insisted that this is confidential information.

The secrecy was maintained by Nersa, as can be seen in the heavily redacted Nersa document below.

ADVERTISEMENT

CONTINUE READING BELOW

This was among the reasons provided for its decision on Eskom’s revenue for the three years ending 31 March 2028.

Source: Nersa

In June 2022, amid intense load shedding, AfriForum sent a request in terms of the Promotion of Access to Information Act (PAIA), asking for copies of Eskom’s electricity supply contracts with neighbouring countries as well as its coal and diesel purchasing and transportation contracts.

Eskom provided the contracts with neighbouring countries but refused to give AfriForum access to coal and diesel contracts, claiming they are “commercially sensitive”.

AfriForum challenged Eskom’s refusal in the High Court in Pretoria and received a ruling in its favour in 2024.

Eskom refused to accept the ruling and lodged an appeal in the SCA, with leave of the high court. This appeal has now been dismissed.

The SCA rejected Eskom’s argument that the information is commercially sensitive.

Judge Elizabeth Baartman emphasised that “[the] public, in whose interest Eskom concludes these contracts, has a right to access them”.

She further supported the high court’s finding and stated: “It follows that I cannot fault the high court’s finding that there is nothing to support the allegation that the agreements are confidential, contain information that is commercially sensitive, and would disadvantage Eskom or third parties in contractual negotiations”.

Questions can now be answered

Morné Mostert, manager of local government affairs at AfriForum, says it will now be possible to finally investigate, almost four years since the organisation originally submitted its PAIA application to Eskom, whether the coal and diesel contracts are market-related and legally concluded.

“Eskom procures more than 100 megatons of coal annually, making it one of its largest expenses,” he points out.

“Considering documented irregularities regarding Eskom’s procurement processes, findings of the Zondo Commission of Inquiry into State Capture and detailed shortcomings in Eskom’s own financial statements, transparency regarding these contracts is essential,” Mostert emphasises.

Read:
Eskom prepaid Guptas’ Tegeta $38m for coal supplies [Jun 2016]
Eskom executives blocking investigation into coal contracts
National Treasury slams Eskom, Tegeta statements on coal contracts
Minister tells Eskom to release coal contracts report
Treasury blocks Eskom’s request for Tegeta coal-supply extension
Gordhan says will soon conclude evaluation of coal contract
Guptas’ Oakbay signs coal-export deal at premium to Eskom prices
The coal crisis at Eskom worsens …
Eskom to revise coal contract strategy
The curious case of Jabu Mabuza and Eskom’s coal policy
Eskom’s R60bn-coal bill headache largely of its own making
NUM implicates Eskom in procurement corruption

He says there is immense interest in the contracts from, among others, universities.

“I get phone calls every week from parties with expert knowledge that are interested in assisting with the analysis of the contracts.”

He says AfriForum will assemble a team of experts to study the contracts. Eskom does however still have the option of taking the matter to the Constitutional Court.

Eskom refused to provide Moneyweb with a copy of its Distribution Agency Agreement with the Merafong local municipality, also because it views it as being commercially sensitive. Moneyweb succeeded in getting a copy from another source.

Read:
Merafong councillors in the dark about Eskom’s electricity takeover
Eskom sent to redraft ‘one-sided’ municipal distribution agreements
Eskom defiantly sticks to current municipal DAA

Eskom and Nersa concluded a secret settlement that would cost consumers R54 billion more in electricity tariffs following a mistake Nersa made with Eskom’s revenue determination.

AfriForum and Minerals Council SA took the matter on review to the high court where it was declared unlawful, set aside and remitted to Nersa.

Read:
Nersa entered R54bn settlement to avoid court scrutiny
No go for Eskom-Nersa R54bn secret settlement
Nersa consults on R76bn additional revenue for Eskom from your pocket
Municipalities ‘must be heard’ before Nersa sorts its R76bn mistake
Nersa’s mistakes turn 5.36% tariff increase into 8.76%

The court expressed its discomfort with the secrecy and exclusion of the public and stated: “Decisions made in secret and without public knowledge is anathema to the statutory framework, and to our Constitutional norms.”