DA Demands Probe: Eskom's R41.4 Billion Contract Expansions

• Eskom reportedly added R41.4 billion to existing contracts without competitive procurement processes, accounting for nearly 60% of national contract expansions.
• One engineering contract for Medupi and Kusile, initially R114 million in 2006, expanded to approximately R2.5 billion, with R437 million added in June 2025 alone.
• Eskom has received qualified audit opinions for five consecutive years, consistently highlighting weaknesses in its procurement and contract management.
• The DA is demanding that Parliament's Portfolio Committee on Electricity and Energy summon Eskom's leadership for a full explanation of these expansions and proof of value for money.
• The party also seeks information on whether any expenditure was classified as irregular and what consequences followed, before consumers face an 8.83% tariff increase.

Before Eskom proceeds with the impending 8.83% electricity tariff hike, the utility must provide a thorough explanation for the R41.4 billion added to existing contracts.

The Democratic Alliance (DA) is demanding accountability from Eskom following recent revelations that the state-owned power utility has reportedly expanded existing contracts by a staggering R41.4 billion. Critically, this substantial additional work was allocated without being subjected to new competitive procurement processes, raising significant concerns about transparency and value for money. An investigation conducted by the Sunday Times highlighted that Eskom's expansions alone accounted for nearly 60% of the R69.6 billion in contract expansions identified across various national departments and state entities. These significant financial increments were recorded between October 2023 and March 2026.

Eskom, as a single entity, was responsible for an astonishing 847 such expansions. The documented justifications for these numerous additions were often vague, reportedly amounting to little more than the word "expansion," offering minimal insight into the rationale. A particularly egregious example of these Eskom contract management failures involves an engineering and project-management contract initially awarded in 2006 for the Medupi and Kusile power stations. This contract, which began at R114 million, has reportedly ballooned to approximately R2.5 billion. Further illustrating the scale of these incremental increases, an additional R437 million was appended to this specific contract in June 2025 alone. These developments surface as South African consumers face an impending 8.83% electricity tariff increase next year, prompting questions about the financial prudence of the utility.

Eskom's financial oversight has been a persistent concern, with its auditors consistently issuing qualified audit opinions for five consecutive years. These audits have repeatedly identified fundamental weaknesses within the utility's procurement and contract management systems. A key issue highlighted by auditors is the inability to verify whether certain contracts were awarded at reasonable prices, pointing towards potential Eskom procurement irregularities. The current situation, where Eskom has accumulated R41.4 billion in contract expansions over a mere two-and-a-half-year period, serves to underscore these long-standing and unaddressed concerns.

Under the Public Finance Management Act (PFMA), Eskom, like all South Africa state-owned enterprise contracts, bears a stringent legal obligation to maintain robust procurement controls and diligently safeguard public resources. While contract expansions can be legally permissible under specific circumstances, their legality does not automatically translate into necessity or cost-effectiveness. The DA contends that if contracts were repeatedly expanded primarily due to delays in completing replacement tenders, it signifies a severe breakdown in procurement planning. Such systemic failures, they argue, should not result in increased financial burdens for the nation's consumers.

In response to these findings, the DA is taking decisive action, announcing its intention to formally request that Parliament's Portfolio Committee on Electricity and Energy summon Eskom's leadership to account for these extensive contract expansions. The political party is seeking a comprehensive breakdown of each expansion, demanding specific reasons for their approval, the identities of the officials who authorized them, and concrete evidence demonstrating that the prices paid represented genuine value for money for the taxpayer.

Furthermore, the DA is pressing for clarity on whether any of this expenditure has been officially classified as irregular and, if so, what consequences, if any, have been imposed on those responsible. Before Eskom proceeds with the impending 8.83% electricity tariff hike, the utility must provide a thorough explanation for the R41.4 billion added to existing contracts. This explanation must be accompanied by verifiable proof that these expansions were indeed cost-effective and fully justified. This intensified scrutiny highlights the critical need for transparency and strict adherence to procurement best practices within state-owned entities, especially given their significant impact on public finances and services.

Lawyers advising state-owned entities (SOEs) or companies contracting with them should note the intensified scrutiny on contract expansions and procurement processes, particularly regarding value for money and adherence to the Public Finance Management Act. Compliance officers within SOEs must review their procurement and contract management frameworks to mitigate risks of irregular expenditure and ensure transparency, given the impending parliamentary oversight.

Source: Original reporting via Sunday Times and DA