BY DR MARIO GR ORIANI-AMBROSINI, INKATHA FREEDOM PARTY, MP, ON IFP CHALLENGES ANC TO SUBJECT WORLD BANK TO PARLIAMENTARY LOAN REVIEW AND SETS OUT AGENDA FOR A CLEAN DEAL IN THE INTERESTS OF THE COUNTRY
The IFP challenges the ANC to do the right thing and subject the World Bank loan to the review and approval of the parliamentary Portfolio Committee on Public Enterprises. At least if so approved someone will bear the political responsibility for this outrageous corruption.
Parliament and the South African people have been duped again. In his fiscal policy framework presentation to Parliament, Finance Minister Pravin Gordhan never disclosed that the State would bear the ultimate financial liability for the $3.75 billion loan to Eskom to build the new power plants. On the contrary, he and Minister of Public Enterprises Barbara Hogan went to great lengths to justify the outrageous tariff increases as necessary to strengthen Eskom's future cash flow to enable it to raise a construction loan on its own balance sheet and on a commercial basis.
Instead the South African Government went to the lender of last resort. Decades of South African experience prove that a government guarantee soon becomes a license to overspend and waste money, well knowing the sugar-daddy State will pay the bill with no questions asked. Few government guarantees have ever gone unpaid. Yet Parliament has no say in the matter.
IFP MP Mario GR Oriani-Ambrosini met with the World Bank in Washington DC on Monday April 12. It was agreed that the contents of such meeting would remain off the record. There is no reason to resort to the World Bank which merely borrows the money internationally and on-loan to South Africa. The Treasury could have and should have issued its own bonds for this loan. It did not, to avoid parliamentary scrutiny and a public outcry. In so doing, a huge loan which could have been Rand denominated has become Dollar denominated at a time in which the government is calling for the devaluation of the Rand. This is reckless management of taxpayers' money! Plus, the World Bank, which had not lent to South Africa since 1962, now has its teeth in our economy and our people, which is a situation which around the world and over the past half a century has not proven to be beneficial.
For a year IFP MP Mario GR Oriani-Ambrosini has fought to place a discussion on Eskom's funding model on the agenda of the Portfolio Committee of Public Enterprise. Parliament must now be seized with the matter and do the right thing which is -
1. Cancel the World Bank loan or not draw on it, using it merely as a credit line facility should the need arise, but subject to parliamentary approval. According to its protocols, the World Bank should not have considered this loan because it will directly benefit a political party. The World Bank broke its own rules to get into South Africa at last. It resorted to the disingenuous excuse of providing for the financial disentangling of the ANC by ostensibly funding only a portion of the deal from which the ANC will not benefit. This is like stating that poisoned water poured at the source of the river can be separated from what is used for irrigation down valley!
2. Call for an international tender. Foreign electricity generators have long expressed their interest in financing and operating the new powers plants. This would be a unique opportunity to bring into the country huge long-term fixed capital investments. In this economic environment, no other sector of society offers even near the opportunity for such type of foreign investment. Plus, this will create healthy and necessary competition in electricity generation, as is the case anywhere else in the developed world, which will increase efficiency, reduce tariffs and increase the overall level of skills and exportable technology in the field.
3. The ANC must cause Chancellor House to liquidate its holdings in Hitachi Africa at acquisition cost, so that its sale price may not discount the financial gains of the Eskom contract which have already been discounted in the present value of the shares. Failing this, for the sake of the survival of democracy this Parliament must cancel this tender, by law if necessary.
Having investigated the matter, the Public Protector found that there was a clear conflict of interest, and that the then Eskom Chairman Valli Moosa acted improperly. If there is an undeclared conflict of interest the tendering process is usually null and void. If the ANC receives an estimated billion Rand worth of net profits from this deal, it will be able to fund its election campaigns for years to come. No other political party will ever be able to compete with it and democracy may very well be declared dead.
4. This loan or any loan should be granted to a new competing company, an ESKOM II, so that the new power stations will be owned and operated by a new company competing with Eskom, so as to transform Eskom's monopoly in electricity generation into at least a duopoly, as is the case throughout most of the developed world. This will abate a great deal of the corruption in the supply chain which Parliament has been investigating, especially in respect of coal procurement contracts. Because of competition, a duopoly will also create an incentive to restrain the spiraling electricity tariff increases, while redressing the present practice of pricing differentiations which penalizes households over businesses.
5. The special pricing arrangements for aluminum smelters must be revisited either through negotiation or legislation. Aluminum smelters produce few jobs but are responsible for a great deal of the energy demand. Yet, because of sweetheart deals consummated during apartheid, they receive electricity at ridiculously low rates.
Issued by the Inkatha Freedom Party, April 15 2010
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