MENU
 Registered users can save articles to their personal articles list. Login here or sign up here
  Author profile
 
  19 COMMENTS

  This case should go to court. The Eskom Board is dysfunctional and unable to make complex decisions. It does seem that there are may 'under the table' transactions sanctioned by the board that needs t...  

 Registered users can save articles to their personal articles list. Login here or sign up here

Why Lynne Brown might be cooking up a storm

Startling statements were made when defending the Molefe move.

At the start of her media briefing last Friday, public enterprises minister Lynne Brown told journalists that she cooked a pot of soup before coming to the meeting.

“That’s what I do, I cook a pot of food when I’m stressed,” she said, laughing at herself.

The briefing was called in response to the news that the Eskom board “rescinded” its earlier decision to accept Molefe’s “application for early retirement” in November last year.

This very sentence contains highly-disputed statements at the heart of Brown’s stress. Did he not resign? How can a decision that was accepted, confirmed and implemented be rescinded about six months later?

Nevertheless Brown supported Molefe’s return, basically saying government had little choice but to either pay Molefe the R30 million “pension” the board committed to before she earlier disallowed it, or reinstate him. Alternatively Molefe would have dragged Eskom to court, Brown said.

That is R30 million for about two years’ service by a person contracted for five years, who is only 50 years old.

Since then, the ANC told Brown to reverse her decision to allow Molefe’s return and there is no indication so far as to how she is going to navigate the competing interests and conflicting demands in this situation.

In her effort to defend Molefe’s return, Brown made a few very interesting statements, some of which didn’t make sense and at least one contradicts statements she herself made not so long ago. 

We looked at some of them critically:

“Mr Molefe was actually the person who brought Eskom to where it is now after three years”

Brown attributes the Eskom recovery wholly to Molefe’s leadership. It is true that load shedding stopped and the plant performance improved under his leadership from 70.3% in the three months to the end of 2015 to 77.3% in the corresponding period in 2016. This enabled Eskom to do more maintenance and reduce breakdowns over the same period from 16.2% to 10.7%. Eskom illustrated the turnaround in this graph:

While his leadership skills should not be underestimated, one should also keep in mind that the drop in electricity demand provided space for maintenance. The government cash injection of R23 billion and conversion of a loan of R60 billion to equity, as well as the focused support of the war room, made the job considerably more possible than what his predecessors had to face.

Stats SA illustrates the drop in demand as follows:

Molefe should probably be given credit for the 25% increase in export sales, which is a way of utilising excess generation capacity that would strengthen Eskom’s finances.

“. . . the board has assured me it (the reinstatement of Molefe) is a legal process”

Brown’s readiness to accept the Eskom board’s assurance that it is acting lawfully is strange in light of her earlier statement that she found the “argument presented by the board on why the (R30 million) pension arrangement was conceived lacking in legal rationale”. Nevertheless, this might ultimately be decided in court as various parties have indicated that they will challenge Molefe’s reinstatement.

“They haven’t had a bonus under my watch”

Brown criticised the media for always raising the matter of bonuses paid to the Eskom executive. She said no bonuses had been paid for the last three years. Nevertheless, she said in her statement issued on April 23: “I found the argument presented by the board on why the pension arrangement was conceived lacking in legal rationale, and it cannot be substantiated as a performance reward because Mr Molefe has already been granted a performance bonus for his contribution to the turnaround of Eskom.”

“Eskom, for the first time, has actually been able to even run its company with a 2.2% tariff increase.”

Energy regulator Nersa’s hands are tied by a court ruling regarding interim increases of R44 billion Eskom applied for earlier. As a result, it granted Eskom only a 2.2% tariff increase which even Nersa admitted is financially unsustainable for Eskom. In fact, if Eskom got the R44 billion it applied for and presumably believes it needs, the tariff increase this year would have been around 18%.

Nevertheless, Eskom’s customers should be grateful if, as Brown says, the utlity’s finances improved so much that it can do with 2.2%. Eskom is expected to submit its next tariff application for 2017/18 within the next month and on the basis of Brown’s statement, consumers might insist on a reasonable increase. Moneyweb will, however, not hold our collective breath.

“The act governs the pension and that is how the calculations (for the R30 million) have been done”

There is a world of detail between the Pension Fund Act and the R30 million payout the board approved for Molefe and the devil is often in the detail.

There was an agreement with the previous energy minister that 72c/kWh would help.

Brown said this in response to a question about Eskom’s resistance to Independent Power Producers (IPPs) in conflict with government policy.

Moneyweb has confirmed with both the Department of Energy and the South African Renewable Energy Council (SAREC) that there was no agreement to cap the tariff Eskom would pay IPPs on the outstanding 37 projects in bid rounds 4 and 4.5. If that is what the minister meant, she was mistaken. Former energy minister Tina Joemat-Pettersson set a deadline for Eskom to sign the 37 outstanding power purchase agreements, on April 11, at the tariffs that were negotiated with the department. Eskom is refusing and is only prepared to sign at a maximum of 62c/kWh, but there is no agreement in this regard.

Lynne Brown is known as a straight-talking, down-to-earth and principled leader. During the press conference one journalist however asked her about an apparent disconnect between the principled Lynne Brown and Lynne Brown as public enterprises minister.

It seems as if Brown is in a corner. We don’t understand why and we don’t know how she is going to get out of it.

That’s why we suspect she might be sweating behind the stove right now.

Need help with video production?

  • This field is for validation purposes and should be left unchanged.
More stories from Moneyweb
Mart-Marie de Jongh

Mart-Marie de Jongh

Gray Swan Financial Services (Pty) Ltd
Moneyweb Click an Advisor
   19 comments

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up here

I am sorry Lynne, why not just stay in the kitchen? Your arguments do not hold water and do not address the very real issues that caused him to leave in the first place. We need an inquiry into state capture and allowing him back just allows him to destroy evidence.

What part of:- Brian Molefe has a dubious track record and is suspected to be part of Zuma’s captured team operating for the Gupta’s – does this minister not understand? My thoughts now are wondering as to whether this minister herself is one of the favored and captured team? I am wondering if she is also in the Gupta payroll?

She will be in the soup in evidence proves she too is part of the corrupt Zuma / Gupta alliance.

There is no way ANY PERSON can receive a R 30 million Pension Payout for 18 months employment. Not for 5 years and not 40 years.
This is theft – nothing less.

Here is a different view. As CEO Brian Molefe is solidly in the sights of any investigation into potential corruption. I think Lynne knows something and want to ensure he can be held fully accountable as public officer. The step up in revelations about Tegeta has already started. Would not surprise me if over the next month much more comes to the fore linking the “current CEO’ of Eskom to more fraud.

But he can be held fully accountable for the period when he was CEO. He doesn’t have to be CEO now to be held accountable. Bob Hewitt was convicted on rape charges as a tennis coach for things that happened 25 years ago.

Lets analyze the analysis:

“How can a decision that was accepted, confirmed and implemented be rescinded about six months later?” Well, by changing the decision.
How does someone who retires gets rehired more that a year and half later (Pillay’s case at SARS)?

“…also keep in mind that the drop in electricity demand provided space for maintenance.” This statement about drop in demand has been recycled for while now without providing any evidence, at least, none I’ve seen/ heard. Please how did the drop come about?

The drop in demand came about because of the coming on line of Meduopi generating sets, the closure of industries due to the failing economy and the increased time available for maintenance due to lower demand from older stations and the stricter implementation of maintenance schedules.

1. The “… coming on line of Meduopi generating sets…” would increase supply and NOT decrease demand.
2. I checked with Statistics South Africa and The Energy Intensive User Group (EIUG), to hopefully find more information on the impact of any closed industries on the electricity demand and I could find nothing substantial. In fact I could not find numbers showing such an effect. Please provide numbers.
3. “…the increased time available for maintenance due to lower demand from older stations …” I have no idea what this means. What do “older stations” demand that would “increase time”?

IF growthrate = 10% and employ period was 24 months
then to achieve R30 000 000 the contribution AFTER fees must be R1 134 347 per month, and this is 30% of pensionable salary (no employer contribution in this calculation).
ASSUME employer contribution of 50% that means his contribution was about R567 173 per month and with the law allowing about 30% to be deducted for pension his monthly pensionable salary (not total salary) must be about R1 890 579 – which is about R22 000 000 per year!!!!!!

Unless the pension fund grew MUCH more than 10% per year???

Further if the payout occurs according to the pension fund’s rules, the minister has absolutely NO say about it.
Yet she refuse the payment.

What gives?
Mmmmmmmmmmm………………..

laughing and making jokes at the expense of the tax payer, just like her boss. I feel like General Motors and call it a day. thanks allot rainbow nation.

It seems that it pays to be a politician. New new Royalty?

What is a few Billion or Million?
The tax payer will always pay, just raise the taxes some more.

I am waiting for the D-day when the tax payer stays home and tells the politicians to go work for their money.

Maybe when personal tax reaches 50%?

“It seems that it pays to be a politician. New new Royalty?”

This seems pretty common in countries that get democracy before they get a decent economy. Government is the only gig in town…

Lynn Brown “cooks a pot of food when she’s stressed”

From her picture, it looks like she stresses quite a lot

Sies Man; jy is onbeskof. 🙂

Van onbeskof gepraat, Lynn Brown en al haar medeboewe in die Zuptas is flippen onbeskof met die publiek se geld.
I’m never going to be polite to thieves and gangsters.

Welcome to ANC corruption 101. ANC needs him there for nuclear deal so that anc/gupta thievery can continue. Not that difficult. Tax payers will pay as usual. But seems to me that pot is shrinking but keep it up!

Brown in is in the dwang.The same look and cut of the same cloth as Duarte,and we know which side she bats for.Being horribly exposed .May as well start negotiating her own pension

This case should go to court. The Eskom Board is dysfunctional and unable to make complex decisions. It does seem that there are may ‘under the table’ transactions sanctioned by the board that needs to be exposed.

LATEST CURRENCIES  

ZAR / USD
ZAR / GBP
ZAR / Euro

Podcasts

MONEYWEB NEWSLETTERS

Subscribe to our mailing list

* indicates required
Moneyweb newsletters
GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2