Eskom, South Africa’s state-owned power utility, has initiated a forensic investigation into a sophisticated electricity theft operation involving illicit prepaid meter tokens.
The scheme is believed to have cost the company billions of rand, equivalent to hundreds of millions of dollars, in lost revenue.
The probe also extends to Eskom’s IT systems and potential collusion by some of its employees. Speaking at a media briefing on Thursday, Eskom board chairman Mteto Nyati confirmed that the investigation was among the reasons for the delayed release of the company’s 2024 financial results.
“Collusion is suspected between Eskom staff and illicit operators who breached controls within the prepaid ecosystem to facilitate the creation and sale of fraudulent prepaid electricity tokens,” Nyati stated.
Eskom estimates that it lost 13.9 terawatt hours (TWh) of electricity to theft in 2024, amounting to approximately $1.2 billion. While illegal connections and meter tampering account for some of the losses, CEO Dan Marokane described the fraudulent token scheme as more sophisticated, involving breaches of Eskom’s internal IT systems and alleged employee involvement.
The company acknowledged its inability to determine the full extent of the losses from the illicit tokens, as it is uncertain how many fraudulent tokens are in circulation or the corresponding value of the electricity they represent.
Marokane highlighted the urgent need to overhaul Eskom’s online vending system to address vulnerabilities caused by outdated software.
“We need to free [the system] of legacy software, bolster cybersecurity, and give the utility the flexibility to counteract new methods of fraudulent token generation,” he said.
However, he admitted that Eskom’s approach to cybersecurity has been inadequate. “We’ll be visiting this subject early in the new year to detail exactly what we’re going to be doing in response to a number of reportable irregularities,” Marokane noted.
Eskom is implementing several reforms to address the issues:
- Consolidating forensic, security, and investigative functions into a single entity that reports directly to the CEO.
- Establishing a dedicated project management office to handle findings from data analytics and external investigations.
- Enforcing discipline and adherence to internal controls, ensuring that routine procedures are properly followed.
Marokane stressed the importance of cultivating a culture of accountability and control within the organization. “A number of these issues are really about the lack of doing what needs to be done as a routine on a regular basis,” he remarked.
As Eskom grapples with its financial and operational challenges, the outcomes of this investigation and the measures being implemented will be pivotal in restoring trust, securing infrastructure, and curbing revenue losses in the future.
