Home PodcastAshraf Garda Eskom exemption is not as evil as it is made out to be

Eskom exemption is not as evil as it is made out to be

by Luqmaan Rawat
The exemption will not exempt Eskom from accepting accountability and punish those involved in corruption Photo Aidc

South Africa – On Friday the Minister of Finance, Enoch Godongwana, granted Eskom an exemption from reporting irregular, wasteful and fruitless expenditure until 31 March 2025. While this came as a shock to South Africans, the bigger shock is that Transnet, another underperforming state-owned enterprise (SOE), was granted the same exemption last year.

While this may seem like a sinister plot to most people, Professor Sam Koma, Governance Expert, guaranteed that everything is above board. However, the minister should take the blame for not providing context immediately and letting imaginations run wild.

“There’s nothing sinister around this particular decision. There was a due process that was followed, informed by the request that was made by Eskom through the chairman of the board asking the national treasury through the Minister of Finance to consider exempting Eskom from reporting irregular, wasteful and fruitless expenditure in their financial statements but then they will report on this particular matter in their annual report.” 

 

Exemption from reporting but not from being held accountable

This exemption is already provided in the Public Finance Management act section 55 which allows SOE’s to be granted this exemption. However, although Eskom and Transnet are exempt from reporting wasteful expenditure, they are not absolved from accountability.

“Eskom will not be absolved from accountability, transparency and also consequence management. Eskom is not exempted in terms of taking steps and measures to prevent irregular wasteful and fruitless expenditure as part of ensuring that they put proper internal controls and also they ensure that there is proper financial governance within the entity.”

SMread: Eskom Given Green Light to Keep Expenditures Secret

 

What does it mean for Eskom

While the exemption doesn’t look good from the outside, it is meant to try and improve Eskom’s credit. Eskom is R450 billion in debt and while the government is chipping in, it cannot always be there to save them, explained Koma.

“They are trying to enhance the chances of Eskom improving its credit status and thus being able to access funds and also loans plus investments from lending institutions and also potential investors. Eskom is sitting on R450 billion debt and the government has chipped in … In the last decade the government has spent close to R420 billion on bailouts and 80 % of the R420 billion has gone to Eskom.”

In essence, the exemption is to make Eskom look better than they are to the global market to attract investors. Fruitless and wasteful expenditure has costed Eskom R12 billion and seeing this figure scares foreign investors from Eskom, said Koma

According to Koma, the letter written by Mpho Makwana, Eskom Chairperson, to Godongwana, stated that investors of Eskom had asked for the exemption. They felt that it would give Eskom a better chance of getting a clean audit in the future and thus the SOE could attract more investors.

Koma understands the uproar from the public about being left in the dark for so long. However, the exemption was one of the recommendations made in the Zondo report. While the exemption does not sound good, Koma has maintained the stance that it will be beneficial for Eskom and the country.

To hear more from Professor Sam Koma on how the exemption is good for Eskom, listen to the podcast here:

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