Eskom Ex-Acting CEO Blames Plant Cost Overruns for Debt Blowout

(Bloomberg) -- The former acting chief executive officer of South Africa’s state power utility blamed its crippling levels of debt on excessive costs incurred in building new plants and denied that it could be attributed to corruption.

Eskom Holdings SOC Ltd. owed 419 billion rand ($29 billion) at the end of its last financial year, and evidence presented by a judicial commission of inquiry has placed it at the epicenter of a looting spree at state companies during former President Jacob Zuma’s almost nine years in office. Construction of the utility’s two new coal-fired power stations, Medupi and Kusile, is running years behind schedule and the anticipated cost has more than doubled to excess of 300 billion rand.

The debt was incurred “building assets and there are cost overruns,” Matshela Koko, who was suspended from Eskom in 2017 amid allegations that he was party to the theft and resigned from the utility a year ago, said in an interview with Johannesburg-based Talk Radio 702 on Monday. It was “not as a result of stealing,” he said.

Koko allegedly guaranteed 6.5 billion rand in future contracts to Asea Brown Boveri Ltd. on condition the Zurich-based electrical engineering firm subcontracted work on Kusile to his stepdaughter’s business, Johannesburg’s Sunday Times newspaper reported on March 10, citing a report by the nation’s Special Investigating Unit. Koko has denied any wrongdoing.

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