Eskom doesn’t have to report wasteful and irregular expenditure anymore

South African finance minister Enoch Godongwana has gazetted a new regulation which exempts Eskom from disclosing any irregular, fruitless, and wasteful expenditure amounts in its annual financial reports until 2025.
Published on 31 March 2023, the gazette stated the power utility would be exempted from this requirement of the Public Finance Management Act (PFMA) and relevant Treasury Regulations for the 2022/2023, 2023/2024, and 2024/2025 financial years.
Under normal circumstances, the PFMA requires state-owned entities (SOE) like Eskom to report any material losses through criminal conduct and any irregular, wasteful, or fruitless expenditure.
Among its purposes, the measure ensures accountability when taxpayer money goes missing from SOE coffers.
Energy expert Chris Yelland appeared dumbfounded by the development.
“Is this really the way to deal with an electricity disaster in South Africa? Good grief!” he said.
After double-checking whether a screenshot of the gazette he received was not part of an April Fool’s joke, Eskom confirmed it was legitimate.
The power utility told Yelland that the amounts related to irregular, fruitless, and wasteful expenditure still had to be published in Eskom’s integrated reports.
The integrated report should include audited financial statements, but one Twitter user remarked it might now be impossible to conduct a reliable audit of Eskom’s financial results.
“Public accountability is removed. I doubt if this will pass constitutional muster in an open and democratic society,” they said.
Exemption not a State of Disaster measure
The minister or National Treasury are yet to make any public pronouncement on the motivation for the exemption.
While Yelland’s mention of a disaster led some to believe the exemption was being implemented under National State of Disaster regulations, this was not the case.
The Department of Public Enterprises previously requested National Treasury exempt Eskom and Transnet from the Preferential Public Procurement Framework Act (PPPFA) to allow the entities to procure equipment and services with greater efficiency.
However, it is unclear how that legislation relates to this particular exemption.
Wits School of Governance adjunct professor Alex van den Heever said there was no rational or proper purpose for the resulting loss of transparency.
“I doubt this is lawful. Exemptions cannot be granted on arbitrary and irrational grounds,” Van den Heever said.
Former Business Day and Financial Mail Editor Peter Bruce said the gazette was easily the most “macabre” thing he had read.
On the political front, Build One South Africa leader Mmusi Maimane said the exemption sounded like a “looting scheme”.
Embedded below is the latest gazette from National Treasury, which includes the exemption for Eskom to disclose irregular, fruitless, and wasteful expenditure in its financial reports.