The City of Johannesburg has made 22 arrests in 109 cases that resulted in a R200 million loss in electricity revenue – these include corruption, collusion, fraud and tampering.
Big business is widely implicated in this practice – so much so that Johannesburg has thus far only exposed the tip of the iceberg and other municipalities and Eskom are equally affected countrywide, says energy consultant and investigator from Energy Measurement Consulting, Eric Bott.
The names of the arrested people have not been released, but Johannesburg Mayor Parks Tau said among them are two employees of City Power and two of the City of Johannesburg. The rest are external contractors and members of the public.
Tau said investigations that started a year ago so far implicate 30 large power users. 61 of the cases were only discovered in the last two weeks and ten more arrests are expected to be made within the next two weeks, Tau said.
Sicelo Xulu, managing director of Johannesburg’s power utility City Power would not respond to a question as to whether any electricity resellers were involved. He said it could compromise on-going investigations.
Xulu said the City had a very clear idea of the profile of these delinquent big customers.
Member of the mayoral committee for environment, infrastructure and services Matshidiso Mfikoe said among the implicated users were shopping centres and big corporates.
The City has been able to recover R107 million in the past month.
Moneyweb earlier reported that Johannesburg suffered 22% electricity losses in FY2013.
Municipalities countrywide lose on average 18% of the electricity they buy, the national energy regulator (Nersa) said. That equates to 2511MW of generation capacity, which is more than half that of Eskom’s new Kusile power station and was valued at R15.4 billion at the municipalities’ purchase cost.
While these numbers include technical losses, non-technical losses (theft) are estimated to be huge.
Other consumers end up subsidising those who steal electricity, as municipalities hike tariffs in order to maintain revenue.
The focus has traditionally been on theft by some consumers in Soweto and other townships who make illegal connections, but that seems to be small in comparison with corporate theft.
Xulu said Johannesburg sells 60% of its electricity to big users and therefore the impact of theft at that level is expected to be bigger.
Bott, who has been involved in some of the investigations for the City of Johannesburg and other clients, says electricity theft by businesses is rife all over the country and includes some resellers.
He believes the losses may run into the billions and that the City has so far only started to open the can of worms.
He says there are “hundreds of ways” to manipulate the system. It often entails tampering with the meter as well as manipulating the billing system and is often done with the help of council officials. “A big businessman can easily give the official R50 000 to reduce his bill on an on-going basis. The higher tariffs rise, the bigger thee incentive,” he says.
Bott says he has seen the practice at small- and medium-sized businesses as well as listed companies. In the case of the large corporates, the top management is seldom aware of it, but in smaller companies he believes they have to be. “Otherwise, where does the money come from to pay the guy off?”