Finance Minister pulls the plug on Eskom’s exemption from reporting on irregular expenditure and the country’s state of disaster over the energy crisis has been lifted, but analysts fear there’s a lot more load shedding to come.
IN A surprising U-turn, South Africa’s Finance Minister Enoch Godongwana announced the withdrawal of the gazette on the Eskom exemption from reporting on irregular and wasteful expenditure for three years.
This came after a massive outcry in the country and the finance boss’s meeting with Auditor-General Tsakani Maluleke.
Godongwana told Parliament on Wednesday, after meeting Maluleke, pending further consultations on the matter, the National Treasury would be pulling the plug on the gazette.
Godongwana was appearing before the joint committees on the auditor-general, finance, appropriations and public enterprises.
He said that granting the exemption to Eskom was informed by its financial situation.
Godongwana said that when viewing the situation at the ailing power utility, the Treasury realised it would not be able to raise capital in the markets unless Eskom was exempt from disclosing irregular, wasteful and fruitless expenditure, in the annual financial statements.
These would have been disclosed in the annual report that the power utility tables every year in Parliament, like other state-owned entities, if the gazette had gone ahead.
“Yesterday, we had an intensive discussion with the auditor-general. In that discussion, there were some comments by the auditor-general, which have got to be part of the framing of the gazette. In light of those comments, we decided to withdraw the gazette for now and take all those comments into account and also have a detailed consultation with the auditor-general and Deloitte and Touche, the auditors of Eskom, so that the framing must be proper, checks and balances for corruption tightened,” said Godongwana.
Godongwana said it was never their intention to hide any corruption or malfeasance at Eskom.
He called on law enforcement agencies to move with speed and arrest those involved in corruption at the power utility.
He also urged the official opposition not to go to court to challenge the exemption after they withdrew it.
He said they would issue the gazette on Thursday, withdrawing the exemption for Eskom not to report irregular, fruitless and wasteful expenditure.
Adding salt to the wound, it was also announced that the country’s national state of disaster over the energy crisis came to a grinding halt as well on Wednesday, after the Organisation Undoing Tax Abuse (Outa) won its legal challenge in the Gauteng High Court, Pretoria.
President Cyril Ramaphosa announced that the state of disaster regulations came into play on February 9 this year, in a bid to curb the paralysing energy crisis at the state-owned entity.
Eskom has imposed daily power cuts in the country every day this year, which is having detrimental effects on the economy.
Outa said it was informed of the decision through a letter from the State Attorney’s office stating that government had not only abandoned the state of national disaster but would also not challenge the Outa legal case.
Outa executive director advocate Stefanie Fick said: “This is a huge win for civil society. We are delighted. Civil society showed that we have a voice, and our voices matter. In principle, this case is done and dusted.”
The state of disaster gave the government additional powers to respond to the crisis, including permitting emergency procurement procedures with fewer bureaucratic delays and less oversight.
The government would work through its Energy Crisis Committee to reduce the impact of power cuts, using existing legislation and contingency arrangements, Cooperative Governance and Traditional Affairs minister Thembi Nkadimeng said.
Economists and analysts are fearing the worst. The “Cape Argus” reported on Wednesday that Eskom’s energy forecast showed that the country would have to contend with rolling power cuts every week for the remainder of the year.
Energy policy specialist Anton Eberhard said: “So much for quick fixes to end Eskom power cuts. Here’s the power utility’s outlook for the year. More or less constant stage 2 or 3 or worse load shedding (unless you have your own solar PV panels and batteries).”
Energy analyst Chris Yelland said: “The likely risk scenario for the next 52 weeks (is) taken directly from the latest Eskom system status report published on the Eskom website on Friday, March 31 (note: this is not an April fool’s joke, it is for real).”