Eskom, South Africa

R.E.T. Radical Economic Transformation

State Capture of Eskom

This is an interview by Sifiso Mahlangu of ANN7 with Dr. Ben Ngubane, former Board Chairman of Eskom.

Dr Ngubane speaks about the mis-representation of Eskom by the media who have called it a mis-managed, corrupt and inefficient institution, ‘state-captured`. Thuli Madonsela`s State of Capture Report accused Brian Molefe, former CEO, of corruption. Dr Ngubane puts the record straight on Molefe`s commendable and dedicated time in Eskom as well as giving his thoughts on the real state of capture in South Africa.

Prior to management under Mr Molefe and Dr Ngubane, Eskom was compartmentalized with little communication between sectors. This was changed to make a far more cohesive system in which management from all areas communicated with each other. With a more cohesive management system, power shortages under `load shedding` were minimized and Eskom`s profitability went up.

The following is a transcript of excerpts from this interview.

Source: Afro World View TV

Dr Ngubane: “He ( Molefe) visited all the power stations, met all the managers, made them sign performance agreements, forced each division to speak to the others in terms of sharing information, which was not the case before. The guy in generation was not talking to National Control. That was why we were mismatching the mega-watts on the system, unable to predict demand, unable to predict when we are going to do outages, that is planned outages. It was a total mess. Financially Eskom had collapsed. And within the first year our earnings before interest tax depreciation shot up and we were able to declare a reasonable profit.”

Dr Ngubane:”I am sorry that we have been so mis-represented in the media, when you [are lead to ]think it has been a collapsing organisation, when in fact it is at its strongest today.”

Sifiso Mahlangu : ” Do you think the turn of events that are happening at Eskom and in this country is because of the State of Capture Report which we know is an incomplete and inconclusive report?”

Dr Ngubane: “You know, I was at CODESA. President Mandela spoke about reconciliation. But reconciliation demands that justice should be done. You cannot reconcile unilaterally. We hoped then that the forces of money, the forces that hold the land and wealth in this country would understand the meaning of reconciliation. And we would use institutions to work out all those thorny areas in the relationship between all the different races in this country, the inequality in terms of wealth, the serious poverty that exists, the systematic deprivation of skills to black people during Apartheid, we hoped all those things would be on the table. But it didn`t happen. That`s why we are at this juncture, having strident talks about white monopoly capital. We have white monopoly capital trying to defend itself because it thinks it`s under threat.

The mere fact that Brian [Molefe] questioned the 40 year contacts of some 4 or 5 big companies which under Apartheid received 40 year contacts with Eskom and therefore received billions and billions of Rands. When he raised the issue of Transformation that it should start there, we have a spend at Eskom exceeding 50 billion [rand] for coal only. Now that needed to be shared. I think that is when the trouble started for Brian. He was seen as a cheeky little fellow who dares to question what has been the status quo in this country and therefore all the guns were unleashed. They are being unleashed on all of us, black intelligentsia. I mean, unfortunately our own are actually in the vanguard of this onslaught. It is very disturbing. I mean I have read a lot about democratic transitions which have happened in Spain, in Latin America, moving from rule by the Junta, academics, intellectuals leading the charge for freedom; and it`s been said that initially the elite in a democratic transition scrabble and take time to understand how to handle it and operate the levers of power.

Here it`s been the opposite. We went in through under the leadership of Mandela, through to now, starting from a very strong ability to govern and our acceptance of our capacity to govern. But gradually this has been eroding. Gradually if you are black in this country, you are corrupt, you are incompetent, and they forget that to be competent you need to be trained. and skilled. And most of us didn`t have the skills. The earlier vanguard troop for our liberation is now retired, has grown old, and then the deficiencies are coming through. Most of our people who came in to liberate us were trained overseas, universities overseas and so on, those people are going off, what we are remaining with is , is the emerging intelligentsia which unfortunately is being fed poison when they are being taught at institutions that have not transformed.”

Sifiso Mahlangu: “Dr Ngubane, you speak so eloquently on white monopoly capital, but some of the comrades you worked with in the then Government of National Unity and the government just after democracy are today denying the existence of white monopoly capital. These are struggle stalwarts that you sat with in CODESA in negotiations and they know that the ANC was out- manoeuvred and they are aware that black people only own 3% of the economy but it is these cadres and comrades today that are denying the existence of white monopoly capital. What do you think of that?”

Dr Ngubane: ” Well, probably I shouldn`t defame people. But I was shocked when Trevor Manuel made those statements. You know I had had a lot of respect for him. But I was absolutely shocked because everyone knows that 34 million families were moved from their homes, their land, in order to implement the Group Areas Act. Very painful. First of its kind in modern history that there was such huge enforced movement of people. Now how can a comrade say there is no such thing as white monopoly capital ? Land is wealth. If I give you land, I`ve given you wealth. If I deprive you of land you will never be wealthy whatever you do. Because you will only be receiving crumbs from the table of the masters. So that speech by him, or those remarks by him were absolutely shocking. I even doubt if he ever understood what the struggle meant.”

Dr Ngubane talks about the history of land theft in South Africa, the vast territories of the Zulu Nation, the decimation of the Koi by small-pox infected clothing and blankets. He says that state capture began in 1948.

Sifiso Mahlangu: “Dr Ngubane are these the same groups who want to capture Eskom or who have captured Eskom throughout the years? And I am referring to the 40 year contracts that Eskom had given to certain families?”

Dr Ngubane: Yes.

Sifiso Mahlangu: “And those contracts are coming to an end and that`s why there`s such hostility against you and Mr Molefe, I believe. Talk to me about those families and how they have captured Eskom throughout the years.”

Dr Ngubane: “Well, it was given because of the contracts. You couldn`t touch those contracts. Certainly now that they are coming to the end we are introducing new junior miners. We are even in manufacturing, we are trying to create skills and abilities through our academies of learning and training. So it`s a given , our life in South Africa, has been one of being captured. Which other group used to be woken up at 3 o` clock in the morning by a knock on the door by the police looking for passes. That was our life, the experience of our parents.”

Sifiso Mahlangu:” And the largest coal suppliers are still the likes of Anglo American, Exxaro. And if there`s a small player who comes in at Eskom he`s kicked out because of these long term contracts.”

Dr Ngubane: “You would think that people would understand that they have to share the wealth and the opportunity. We had expected that the big players would train junior miners and probably open up a seam in the mine and say : `you must look after this in partnership with us, we will help you, so you can grow the expertise and be equal operators`. That doesn`t happen.”

Sifiso Mahlangu: “So white monopoly capital had seized Eskom for all these years and now the talk is that Radical Economic Transformation must come. Is this why there is such a reactionary, a negative reaction, to Radical Economic Transformation because white monopoly capital had captured Eskom over the years, as you say?”

Dr Ngubane: “Absolutely, not only Eskom. I mean we are said to be in recession today but how much money lies in the banks un-invested? It has been said there are no bankable plans, no bankable projects. That is why manufacturing is not being promoted. It`s a systematic way of strangling this black government.

The ANC must wake up to that. It is being strangled. When we increase manufacturing in the country you increase jobs but to do that you need skilled workers. And those skilled workers will earn more and higher wages and therefore the purchasing power of the economy will improve year by year. Ultimately you have a thriving economy that is export orientated, that can provide a living wage, not just the minimum wage, to everybody. But that means the people must be re-skilled and the majority of our people were never given skills. So the capture, we need a whole seminar to discuss this issue. It is so fundamental to the future of this country.”

Sifiso Mahlangu; “Dr Ngubane, do you think our National Treasury has assisted or encouraged or facilitated the capture or oppression of Eskom and maybe other state-owned enterprises?”

Dr Ngubane:” Absolutely. You know we have submitted report after report to the National Treasury. They only want to pick out those pieces that indicate that our pre-payment to TAGETA was wrong. They have even said it must be called a loan. We bought coal from TAGETA at the height of winter when we didn`t have the reserves. The coal came, so it was paid for. The internal audit certified that the amount we paid as pre-payment, had bought the equivalent amount of coal. Now how can you query this and say this must be a loan when in fact you have bought goods that are demonstrably there and of good quality. The test of a good supplier of coal is that the power stations can burn it and generate the requisite mega- watts into the national grid. All the stations do that because the coal is right. There will be batches of coal from certain seams in the ground that do not produce the same giga-joules as required. Those are called reject coal and Eskom does not pay for them.

So this talk that we bought inferior coal from TAGETA when Majuba is working perfectly, producing the required mega-wattsis absolute nonsense.It is just a way of finding fault with Eskom, to give the impression a favour was done to TAGETA, that we did not do the right procurement processes and so on. You know, I said in Parliament, 4 power stations did not have the required 28 days supplies of coal which we need for every winter. Then they sorted this out but still 2 more do not have adequate supplies.In fact you need 28 days supply, these 2 others have only 14 days supply, it is a danger in terms of our sustainability of electricity.

This has come about because Treasury has decided to take away the power from Eskom to procure coal. Eskom is an electricity company. People sit in Treasury, they have no idea how electricity is generated. They are now insisting they are going to see Exxaro, they are will have a meeting with Exxaro. Exxaro said, on its documents, they cannot supply the quality of coal we need. But Treasury still insists that we must buy from them. So what is this? To me, Radical Economic Transformation must start with the Treasury.”

Part 2

Sifiso Mahlangu: “…and who stands to benefit when Treasury captures Eskom? I think you put it so bluntly in our previous conversation that Treasury is putting the hackle on Eskom to produce things that they cannot. Who stands to gain when Treasury possesses or opposes or oppresses Eskom?”

Dr Ngubane: “Well, it`s people who own the wealth and the power in the country who want to control Treasury. We are on a Washington consensus model of expenditure. For a newly liberated country this cannot work. We need to find a model that addresses developmental agendas of the counntry. Now when a Minister of Finance stands up on every platform and says that the state enterprises are corrupt and does nothing to implement the PFMA or charge the people he is calling corrupt; that minister is conditioning the mind to justify paying R5 million to the public protector to hastlily put together a report, without interviewing the respondents in that report. And then push it out as state capture and damb everybody.”

Siphiso Mahlangu: “Hold on Dr Ngubane, just a minute! So who paid who to release the State of Capture Report?”

Dr Ngubane: “Pravin Gordhan when he was Minister of Finance gave funding to the public protector to hurry up the State Capture Report. It was in the dying days of her contract as public protector. That is why we were not even given a chance or a hearing. Our documents we submitted were never studied. That is why the report was hastily produced, without findings, mind you, but only remedial action requiring a judicial commission.That was, as far as I am concerned, a hatchet job on state enterprises. But in that hatchet job it`s only Eskom that was targeted. And it was clear that it`s because we bought coal from TAGETA. It was clear that the general impression that was being created about TAGETA was being affirmed through an organ of state.”

Siphiso Mahlangu: “Very serious Dr Ngubane, what is the way forward with this? Can you take it up with the S.A.P.S or with the Hawks or what action can be taken, from what Mr Gordhan did ?

Dr Ngubane: “Well, we want a proper review. He must come there and give any reasons why in the dying days of the public protector`s term, he gave money to hurry up the State of Capture Report. Which is totally inadequate, which is totally unconstitutional in terms of giving the right of the [_] principle which is the corner stone of our judicial system, ride rough shod of all reputations, make Brian ( Molefe) absolutely demoralized, and putting in danger a very important state institution which is Eskom.”

Siphiso Mahlangu: “Dr Ngubane, you have served this country for many, many years. In the days of pre-democracy , leading to the government of National Unity, CODESA,and beyond to this day. You `ve just resigned from Eskom, what does the future hold for Dr Ben Gobane?”

Dr Ngubane:” I am going to look out for business opportunities because now when I die, at least I must leave a little bit of wealth for my family.”