Eskom’s Limpopo housing shame - how management squandered R250m on property now left derelict

While the country has endured consecutive days of Stage 6 load shedding, and newly appointed electricity minister Kgosientsho Ramokgopa warning that worse is yet to come, Daily Maverick can reveal how Eskom management has wasted hundreds of millions of rands on unused and now derelict property in Lephalale, Limpopo.

Hundreds of properties owned by Eskom in the mining town of Lephalale, home to the Matimba and Medupi power stations, are now dilapidated and have been picked apart by looters. Daily Maverick visited three sites in Lephalale where Eskom-owned housing has been neglected and abandoned – amounting to a squandering of millions of rands in value for the cash-strapped parastatal.

“Eskom’s properties have been looted for copper wire down to the door handles,” a Lephalale estate agent, speaking on condition of anonymity, told Daily Maverick. The estate agent had photographs to prove it: she flicked through picture after picture of an Eskom complex called Marula Estate, showing how the houses have been stripped bare of fittings with any resale value.

When Daily Maverick visited Marula Estate, we found a sprawling complex that had become a ghost town. Nobody was in the security office at the entrance to the boomed-off estate. Windows had been boarded up and the grass had grown knee-high.

An unoccupied Eskom housing development called Marula Estate in Lephalale which is currently for sale but which has already been looted within an inch of its life. (Photo: Rebecca Davis)

More than 500 vacant properties

Questioned about its property holdings in Lephalale, formerly known as Ellisras, Eskom told Daily Maverick this week that 561 of the total 1,566 residential properties it owns in the town are currently unoccupied. An unnamed spokesperson for the electricity parastatal said the total value of Eskom’s residential property register in Lephalale is “estimated [at] R697-million”.

With an average value of R445,083 per unit, this means that the cumulative value of the vacant property in Lephalale is likely to exceed R250-million. The bulk of the housing – about 1,280 houses and apartments – appears to have been built for Eskom between 2008 and 2010 by developers BKS-Palace Consortium, a project initiated during the leadership of former Eskom CEO Jacob Maroga.

In a response to our questions from Eskom’s Media Desk email, an unnamed Eskom spokesperson told Daily Maverick that there were “various reasons” Eskom properties might lie vacant, ranging from “a previous tenant has decided not to renew their lease” to “changes in SARS tax directives with regard to the property rented to staff made many employees vacate Eskom properties for cheaper options in order to avoid paying higher taxes”.

Eskom added: “Generally, the property market in Lephalale has taken a knock with the completion of some of the major work at the Medupi site. As a result, there are vacancies in many estates around Lephalale.”

This was confirmed to Daily Maverick by Lephalale estate agents, with one saying: “The bottom dropped out of the rental market when the contractors moved out.”

But what Eskom was unable to explain was why no attempt has been made to secure or maintain these properties – meaning that millions of rands in property value have been needlessly lost.

Some properties never lived in

Daily Maverick was informed by three sources – two estate agents and one member of local government – that in multiple instances, Eskom flat blocks and housing complexes have never had a single occupant since construction.

Daily Maverick was taken to see a particularly bizarre example: On Gompou Street in Lephalale, Eskom houses are literally sinking under water. Grass had grown to head height, making the waterlogged dwellings unreachable. Daily Maverick was told that this problem was the result of inadequate site inspection prior to building.

Although the idea of Eskom using taxpayers’ money to build permanently empty houses is shocking, it is not unprecedented. In 2019, it was revealed that Eskom had spent R300-million on incomplete and unused flats to house workers in Wilge, about 15km from the Kusile Power Station in Mpumalanga. Two years later, Parliament would hear that the total cost of the Wilge housing project was actually R840-million. In that situation, too, nobody ever took occupancy of the units.

An Eskom housing development on Gompou Street in Lephalale which apparently nobody has ever lived in. (Photo: Rebecca Davis)

Properties sold to raise money

Eskom told Daily Maverick that the vacant Lephalale properties will be sold: “Eskom has begun a programme of disposing [of] some of its noncore or un-utilised or underutilised immoveable properties.”

It is unclear what timelines are associated with this project, as Eskom has been touting this plan for at least two years, seemingly initiated under the leadership of former CEO André de Ruyter. Eskom announced in 2021 that its “noncore property stock” was being evaluated for sale. In 2022, the parastatal’s annual Integrated Report stated that the “disposal of underutilised buildings is being undertaken”.

It is also unclear what the resale value will be of the now-derelict Eskom properties in Lephalale. An estate agent told Daily Maverick: “Because the Eskom properties are in such bad condition, they are being sold off for next to nothing.”

One irony of the situation is that Eskom’s hold over this town has already warped the local property market. A 2020 report on Lephalale produced by the Public Affairs Research Institute found that “the construction of the Medupi Power Station fuelled a steep rise in property prices, making it difficult for local households to keep up with the municipality’s rates and taxes”.

Electricity prices set to rise again

This week, energy regulator Nersa released its latest proposed municipal tariff hikes – which would see a 15.1% rise for municipal customers from 1 July 2023.

This news emerged as the country entered consecutive days of Stage 6 load shedding, and Ramokgopa has warned that worse is yet to come. Speaking to the media this week, Ramokgopa said: “I’ll be brutally honest – it’s going to be an exceptionally difficult winter.” DM168

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.