Public Enterprises Minister Pravin Gordhan has called on Eskom to be vigilant in checking costs and contracts, in a bid to reduce unnecessarily high prices and stop corruption in every step of its supply chain.

“We've been saying to the Eskom management team that we can’t take these costs for granted. Are you checking what happened in the construction processes? Are you checking the coal contracts? Some coal suppliers make between 75% and 100% profit,” Gordhan told a joint meeting of portfolio committees at Parliament on Tuesday.

He said coal suppliers had capitalised on coal shortages "and make sure they get more than their pound of flesh", while procurement of everything from turbines to spare parts was also open to exploitative prices.

According to the presentation on Eskom's sustainability presented to Parliament, coal costs have increased nearly six-fold since 2007, from R10-billion to R58.5-billion.

Eskom chairperson and acting CEO Jabu Mabuza conceded that some suppliers took advantage of Eskom.

“We are seen by some of the suppliers as sitting ducks.”

Gordhan said he had recently met with coal suppliers to talk about fairer prices and a steadier supply.  

Meanwhile, the new Medupi and Kusile power stations have faced massive delays and cost overruns due to poor procurement practices and corruption, as well as poor planning and poor engineering designs.

The costs for the plants have soared to over R300-billion, with Medupi's capital costs having increased from R24.9-billion to R145-billion and Kusile's capital cost from R80.7-billion to R161.4-billion, according to the Eskom presentation to Parliament’s Standing Committee on Appropriations, the Public Enterprises Committee and the Select Committee on Appropriations.

Cost savings within procurement has been identified as a key part of Eskom’s turnaround plan.

Gordhan was fairly confident that a lot of the money that had been stolen from Eskom in questionable deals and through corrupt practices and dodgy procurement, was recoverable.

“One senior manager alone was involved in a deal worth R1-billion. That’s just one manager . . . and he will come to court.”

He said 3 000 forensic reports had been gathered over the past year.

“Various recoveries have taken place, but a lot more can be done. It depends on whether forensics have been done, if the Hawks have done their work and if the prosecuting authority is ready to prosecute.”

Gordhan said it was a difficult choice when State-owned entities had been fleeced.

“We have to make a choice as a country and a government with the level of damage imposed upon these institutions. Do you want them to collapse, or stabilise at some level so that we get something out of them? There are some assets that nobody will pay us a cent for, but you will have to pay R15-billion to R20-billion if you want someone to take it over. That’s the reality of State capture.”

Gordhan said apart from Eskom, the Department of Minerals and Energy also needed to be reshaped, as it had been at the centre of State capture.

“The department orchestrated State capture. It is the department through which board members were appointed and managers were shifted around. We are in the process of building the capacity of the department so that it has the oversight that is necessary.”

Gordhan said that, while turning Eskom around, government and other entities had to prepare for a "non-fossil-fuel future". President Cyril Ramaphosa has promised that there won’t be retrenchments but people will have to adapt, especially at power stations such as Grootvlei, where three units have already closed.

“They don’t have more than a two- or three-year future. They may need to get investment in renewable energy in that area, migrate workers to other power stations or start a new working life and skills in installations or other technologies.”

According to the Eskom presentation, some 46 600 people currently work for Eskom, up from 32 700 in 2007.