In a sudden turn of events, Finance Minister Enoch Godongwana announced on Wednesday, April 5th, 2023, that Eskom will not be granted an exemption from disclosing information on fruitless and wasteful expenditure.
This came after the National Treasury had initially granted the power utility partial exemption from the Public Finance Management Act (PFMA), allowing Eskom to report irregularities only in its annual report, and not in its annual financial statements.
The decision to withdraw the exemption was made after an uproar from South Africans, who were concerned about the history of corruption at Eskom. During a joint meeting of Parliament’s Committee on Appropriations, the Standing Committee on Finance, the Standing Committee on Public Accounts, the Standing Committee on the Auditor General, and the Portfolio Committee on Public Enterprises, Godongwana explained that the decision was made in response to public comments and an intensive discussion with the Auditor General.
“The public has taken an interest in this matter precisely because of the history of corruption. We appreciate that South Africans are quite aggressive and vigilant against corruption, which is going to be an important point for our society. We take that as a positive step,” said Godongwana.
The initial exemption was granted on Tuesday, April 4th, 2023, with the National Treasury explaining that reporting irregularities would increase the likelihood of a qualified audit opinion, which could trigger loan covenants and increase Eskom’s cost of borrowing, putting additional fiscal pressure on the power utility’s debt burden.
However, Godongwana reiterated that the intention of the exemption was not to hide anything, but to allow Eskom to have a better financial statement and protect the fiscus, considering the government’s R254 billion debt arrangement with the power utility.
“We then said we should grant Eskom the exemption from disclosing those in the annual financial statement. But those should be disclosed in the broader annual report. In other words, we are not hiding them.
The intention is to allow Eskom to have a better financial statement but at the same time, create an environment where there’s transparency on corruption and irregular expenditure and all of those things,” said the Finance Minister.
The withdrawal of the exemption means that Eskom will now have to disclose all irregularities, fruitless, and wasteful expenditure in both its annual report and financial statements.
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