Nene (Butcher of Finance) defiles Right of Speech and keeps ESKOM funded

The reporting “on the matter” of the troubles at Eskom “has not been helpful”, Finance Minister Nhlanhla Nene told MPs serving on the national assembly finance portfolio committee today. Responding to questions from MPs serving on the committee – including chairperson Yunus Carrim, an ANC MP who said the newspaper reports about Eskom were “troubling”, Nene said: “You are creating an environment… even if there are shortcomings that need to be addressed (where) our (National Treasury’s) hands are tied… because we are scared of the reports that come (in the media),” the minister said. He said government is taking measures to resolve the problems at Eskom – carefully avoiding any mention of a crisis – to address its financial sustainability. “The financial package (for Eskom) was proposed in the MTBPS (mini budget)… and confirmed in (the February) budget.”

“We are on track on the financial sustainability of Eskom,” he said, noting that Deputy President Cyril Ramaphosa would be fleshing out the details of the work of the “war room” on Eskom that he leads. Carrim, a former minister of communications and former deputy minister of local government, rounded up questions in the committee today by expressing concerns about the newspaper reports “on what is going on there (at Eskom) in the last two weeks”. The committee chair said the reports are “extremely worrying”, including that the chairperson of Eskom Zola Tsotsi “now appeared to be under siege” by his own board.

h3. Tsotsi Inquiry Proposals rejected

Nene avoided reference in particular to any of the parties to the uncertainty at Eskom, including the suspension of the chief executive officer Tshediso Matona and three of his executive colleagues earlier this month. Carrim, however, said it may be unfair to ask the minister of finance about this issue as he is not the line function minister responsible for Eskom. In response the minister laughed, but only referred to the issues at Eskom generically. A national newspaper reported today that the Eskom board has rejected the proposals for an inquiry into the troubles at Eskom initiated by Tsotsi. Now the board that he leads appears poised to recommend his removal. The board reportedly turned on Tsotsi, who is believed to have instituted an inquiry at the behest of President Jacob Zuma. If the board does, indeed, seek to remove him, it would need to make the recommendation to Public Enterprises Minister Lynne Brown.

Asked to comment on the allegations, Eskom tstated today: “Eskom will not be commenting on this matter. As per normal corporate governance procedures for boards, Eskom board meetings and discussions thereto are confidential. Any discussion that is meant for public consumption will be communicated accordingly.”

Meanwhile, Nene referred to the downgrade of Eskom by rating agency Standard & Poor’s. He reported only that government had taken into account the impact of the ratings downgrade “that we have just seen” on the financial sustainability of Eskom.Eskom’s long-term credit rating was downgraded to junk by Standard & Poor’s on March 19. This followed the suspension of four of its senior officials the previous day.

h3. Treasury supports Tariff Hike

Nene denied the proposed sale of state assets – as proposed in the recent budget – to assist Eskom was shrouded in secrecy. In response to Economic Freedom Fighters’ MP Floyd Shivambu, a member of the finance committee, who warned against privatisation and the secrecy over the sell-off, Nene said it is not appropriate to identify the assets as yet “as putting that out there (making it public) whilst we still have not concluded the transaction … might have a negative impact on the price of the asset”.

Nene suggested that he does not believe the finance committee would wish to be party to making this information public at this stage. “We are not going to be irresponsible… (but) we should be clear, we are talking about (selling) an asset that actually would not impact on government’s ability to execute its mandate or providing public goods.” Nene suggested that certain public “assets” achieve the opposite of delivering on a mandate. “They actually do the opposite,” he said, without elaborating further.

National Treasury announced that the government aims to sell “non-core” assets to raise ZAR 23bn for Eskom this year. Eskom faces a funding gap of some ZAR 220bn to build new power plants and keep the lights on. Nene first announced in the mini budget in October 2014 that Eskom would be favoured with “a broad package” of support, including a capital injection of ZAR 23bn. The other elements of the package involved governance improvements, cost containment of operations and additional borrowing. Nene also said in February that Treasury pledged its support “for required tariff increases” by the power utility. Eskom’s first instalment of ZAR 10bn is scheduled for June 2015, followed by a ZAR 13bn tranche later in the year.

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