Eskom welcomes exemption on annual reporting of irregular, fruitless and wasteful expenses

Eskom on Monday welcomed the National Treasury's exemption on the annual reporting of irregular, fruitless and wasteful expenses, saying it will abide by the conditions and monitoring requirements.

Finance minister Enoch Godongwana has exempted Eskom from regulations under the Public Finance Management Act (PFMA) requiring state-owned companies to disclose expenditure that does not comply with the provisions of the act.

According to a notice in the Government Gazette of March 31, the power utility will be exempt from having to disclose in its annual reports for three years irregular, fruitless or wasteful expenditure, starting from the financial year that ended on March 30.

“PFMA compliance remains a priority as Eskom continues to address irregular, fruitless and wasteful expenditure, including appropriate consequence management proceedings. This exemption will assist in the dialogue with credit ratings agencies, the lender community and key stakeholders.

"Eskom will abide by the conditions and strict monitoring requirements imposed by National Treasury in granting the exemption,” said Eskom’s acting CEO Calib Cassim.

The utility said it had been engaging stakeholders from the Treasury and the department of public enterprises for several months on its proposal to seek the minister’s approval about the exemption and departure application.

Eskom said with the exemption, irregular, fruitless, and wasteful expenses will be reported in Eskom’s annual report, as opposed to its annual financial statements.

The integrated report is tabled by the minister of public enterprises in parliament.

It will respect and co-operate with supervisory authorities, including the minister of public enterprises as its executive authority, the Treasury, the auditor-general, parliament and other relevant ministries

Eskom’s chief procurement officer Jainthree Sankar said the utility continues to work with various regulatory bodies to support delivery on the procurement of goods and services affecting its key operations.

“Eskom is committed to a procurement system that is fair, equitable, transparent, competitive and cost-effective. Any exemption or departures are seen as an exception, not a norm,” said Sankar.

The utility said it has made positive strides in the past three financial years to establish systems, procedures, checks and balances designed to reduce the extent and risk of fraud, corruption and irregular expenditure.

“The 2021/2022 audited financial statements show a marked reduction in the incidence of irregular expenditure that originated in that year. Though more work is required, the systems and mechanisms implemented to address the causes of historical issues have proven largely successful,” it said.

Meanwhile, the Institute of Race Relations (IRR) has cautioned Godongwana against allowing load-shedding to be used to a smokescreen for further corruption.

The IRR said on February 28 2022, it wrote to the minister requesting him to use his exemption power to allow organs of state to put cost-effectiveness above racial preferencing.

It said it was concerning that Godonwana had decided to exempt Eskom from disclosing its irregular, fruitless and wasteful expenditure.

The institute said proceeding with the adoption of new exemption will risk deepening the shadows in which corruption occurs.

“This decision by minister Godongwana to exempt Eskom from disclosing its irregular, fruitless and wasteful expenditure will not only have a severe impact on Eskom, but on the South African economy as well. Less transparency and less value for money will only result in the continuation of corruption at Eskom,” said Mlondi Mdluli, IRR campaign manager.

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