'Eskom benefit to party conflict of interests'
Public Enterprises minister Barbara Hogan has admitted that it is a conflict of interests for the ANC's front company to benefit financially from the electricity price hike.
"A conflict of interests in the sense that the ruling party benefitted, yes certainly it is not desirable" said Hogan in Parliament yesterday.
Much of the 24.8% electricity price hike will go towards building the new Medupi and Kusile power stations. The ANC's front company, Chancellor House, owns 25% of Hitachi Africa - which has a R38 billion contract to install boilers in the two new power stations.
Hogan first tried to downplay concerns about the ANC benefitting financially from the 24.8% price hike, saying "Chancellor House is a very, very minor subcontractor".
But when she was reminded that ANC treasurer-general Mathews Phosa promised two years ago to hire "reputable bankers" to exit Chancellor House from the Hitachi Africa deal, Hogan admitted that Chancellor House's shareholding in the new Eskom build project was a conflict of interests.
"A conflict of interests in the sense that the ruling party benefitted, yes certainly it is not desirable. But as Mr Phosa has said shutting down the Chancellor House thing is one of his projects so I am sure he will do that" said Hogan.
"Chancellor House's share of the build programme amounted to about R5.7 billion in 2008 - and the estimated costs of the boilers have almost doubled since then".
"The ANC must live up to the promise they made two years ago. They must get out of the boiler business if they are going to be profiting out of a coal based energy future, then this will influence their policies. Even if they divest now they will make a profit because Hitachi shares have gone up" ID 's Lance Greyling said yesterday.
Eskom's controversial new build programme is costing R385 billion. Eskom has borrowed almost R28 billion from the World Bank to fund the build.
The ID and independent energy experts have questioned whether South Africa needs two new coal burning power stations.
But Hogan said yesterday that Eskom's new build programme would create 40 000 direct construction jobs and 160 000 direct and indirect jobs.
She said government has also budgeted R6.2 billion "to assist with the mitigation for the poor".