R335 million wasted on BIC pens, mops, and air fresheners

The Auditor-General flagged nearly R5 billion in irregular spending at City Power, with over R300 million allegedly being spent on inflated prices for cleaning equipment, and failed maintenance and infrastructure projects.

The Auditor General (AG) has raised concerns about City Power in an unqualified audit opinion for the 2023/2024 financial year, revealing that irregular spending at the utility amounted to nearly R5 billion.

The AG said City Power recorded R4.9 billion of electricity material losses, representing about 30% of all purchased electricity by the power utility.

According to a recent News24 report, the utility’s executive management failed to take reasonable steps to prevent this irregular expenditure.

News24 also found that the City Power’s maintenance budget was looted, with R335 million reportedly being spent on BIC pens, air fresheners, mopping trolleys, and fraudulent job invoices, among other things.

City Power CEO Tshifularo Mashava chalked the R5 billion wasteful expenditure up to a technicality, telling Newzroom Afrika that it was mostly the result of payments to Eskom exceeding expectations.

Mashava said that because there was load-shedding during the period, their midterm budget was cut since the utility expected to spend less on electricity.

However, to many people’s surprise, load-shedding stabilised during that time, which meant that their Eskom spending increased more than they had anticipated.

Mashava said that around R4 billion out of the R5 billion which was over budget was spent on paying Eskom, and around R150 million in interest due to the utility.

City Power also received R400 million from the province, Mashava said.

Since they spent that money without it being allocated in the budget means that it was also classified as “irregular spending”, despite the fact that they had the money available.

She also chalked up these losses due to failing infrastructure, EWN reported.

“We lose the electricity either because our infrastructure is very old, so we lose that electricity because of heat, or we lose that electricity because we have suboptimal designs.”

Mashava explained that she sanctioned the internal audit after receiving reports of fraudulent activities around contractors and their maintenance budget being depleted early.

She said that City Power receives about R1.2 billion a year for repairs and maintenance across the city

However, their budget was being depleted before the financial year end in June, and executives were asked to investigate why this was happening.

The report consisted of two parts, Mashava explained.

“The first phase of the report spoke to the fact that we needed to tighten our controls within the operation space.”

At the time, they were running a decentralised model with eight service delivery centres, all of which could create purchase orders, which meant that there wasn’t good oversights over the utility’s spending.

In line with the recommendations of the audit, they centralised all of the centres into one space that could be properly monitored.

The second phase of the report investigated whether there was any wrongdoing by employees and contractors at City Power.

That report indicated that 15 employees were negligent in their activities, which resulted in the utility making payments it shouldn’t have.

The report also recommended criminal charges against one employee and revealed that five contractors also invoiced City Power for things they shouldn’t have.

Mashava said that City Power is currently instituting disciplinary proceedings against the 15 employees, criminal proceedings against the other one, and legal proceedings against the contractors.

Despite assurances that the utility is working to turn its performance around, it allegedly took over six months – from May to October 2023 – to halt spending after Mashava received the internal memorandum which suggested the entity was being defrauded.

On top of this, a significant portion of the alleged infrastructure funding was allocated to Randburg and Roodepoort, both of which experienced 11,000 electricity outage calls in the past week due to blackouts caused by severe storms in the area.

As a result, there have been calls for further investigations into the wasteful expenditure and leadership inefficiencies at City Power.