One simple factor explains ninety percent of African National Congress (ANC) government decisions – it is PCP, or Positive Corruption Potential. Power generation is a good example.
In December 2019, President Cyril Ramaphosa announced an ‘emergency’ electricity procurement initiative. Nine months later, the Department of Energy announced an urgent Request for Proposals for 2 000 MW of emergency power to be available within two years. (It cost R25 000 just to put in a bid).
There is no ‘emergency’ – only an ongoing ten-year-old crisis called Eskom. It produces less electricity now than in 2007; charges 500% more for it, with 15 000 more staff (it is 66% overstaffed, according to the World Bank); has only 60% of its 42 000 MW capacity available (vs 92% 20 years ago), and has a debt of R488 billion. It spends R1 billion a month on diesel-fuelled turbines to reduce power cuts.
Yet some 10 000 MW capacity has been available for the last five years, requiring only the minister’s signature: 5 000 MW generated by industry and farmers; over 4 000 MW in renewable wind and solar projects from Bid Windows 4 and 5 by 2015; and
500 MW in excess renewable electricity which producers are prevented from supplying. All could have been up and running by now, preventing any power cuts. So where is the emergency?
Answer is simple
What is the difference between the readily available renewables and the government’s ‘emergency’ requirements? The answer is simple: Positive Corruption Potential (PCP). The 10 000 MW is in the hands of the private sector, with foreign capital funding (over R200 billion), and has very little PCP. On the other hand, Turkish powerships or Russian nuclear or Chinese-backed coal power stations with truck-by-road coal delivery have very high PCP.
Soon after the Arms Deal convinced the ANC of PCP’s importance, its investment wing, Chancellor House, pulled off a stunning deal which puts Ponzi schemes in the shade: on a R1,25 million deposit they got a 5 000% return. A French firm, which perhaps had too little grasp of PCP, won the contract to design and supply the boilers for Medupi at R20 billion, and later at R40 billion with Kusile. Then, in 2007, it emerged that the contract belonged to Hitachi, B-BEEE partners with Chancellor House.
US$6million in kickbacks, $1million in success fees, dividends of $5million, and buyout in 2014 at $4,5million demonstrated then Eskom board chair Valli Moosa’s effectiveness in his other role – as a member of the ANC fundraising committee.
Hitachi meanwhile discovered that ‘ANC’ welding skills on boilers could not be relied on, so had to re-do 9 000 welds; then the nasty Americans relieved them of US$19 million for bribing the ANC, and they had to pay a massive settlement to big brother firm Mitsubishi. And now, in 2020, the brand new boilers need re-designing. PCP works for the ANC, not necessarily for their partners.
Twice the price
Eskom’s low-cost electricity used to be based on power stations supplied by conveyor belt or railway from large neighbouring coal mines. Under Brian Molefe that policy was abandoned in favour of trucking coal by road from small BBEEE-owned mines at twice the price. Rational? No. PCP? Yes. And we have not even mentioned the Guptas, Tegeta, and the rest.
There are signs that Eskom may now be viewing PCP differently; in July it cancelled a R14 billion contract for oil supplied by a small black female-owned company. (SAA, which is a somewhat larger organization, is famous for needing only R10 billion.)
So, there is no ‘emergency’ power supply needed: there is only a shortage of ANC funds before the 2021 local government elections. In this context, the PCP of R40 billion ‘emergency’ power would be really useful.
Apply PCP to any ANC government decision you have had difficulty understanding in the past decade, and all will be clear.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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