Eskom will no longer be exempt from reporting on irregular and wasteful expenditure in its financial statements, Treasury head Enoch Godongwana confirmed on Wednesday.
Why finance minister reversed Eskom’s PFMA exemption
Faced with gruelling questions during a Parliamentary portfolio committee meeting, Godongwana sent MPs into an uproar when he announced that following consultation with the auditor-general, a decision was made to withdraw the exemption “for now.”
As reported by News24, the finance minister struck controversy on Friday, 31 March 2023, when he issued a special gazette, which, in layman’s terms, absolved Eskom from accounting for wasteful and irregular expenditure in the hopes of achieving a boost in credit ratings.
The move, however, was wholly condemned by South Africa’s political sphere and commenters, including ANC alliance partners and opposition leaders, called it “a green light to criminals that they can go feast and loot with impunity”.
On Wednesday, five days after issuing the special gazette, Godongwana doubled back on the decision.
“Yesterday we had intensive discussions with the auditor-general (AG) and in that discussion there were some contributions from the AG that need to be part of the framing of the gazette.
“In the light of those comments and comments from the public, we have decided to withdraw the gazette for now and have more detailed discussions with the AG and Eskom’s auditors so that the framing is proper and the checks and balances are tightened.”
Report: Loadshedding-laden utility loses national state of disaster
In the midst of Godongwana’s tumultuous Wednesday morning, MyBroadband reported that the state-owned entity will also lose its status as a national state of disaster.
You might recall the kerfuffle that followed Ramaphosa’s decision to utilise the special powers of the Disaster Management Act as a response to rampant loadshedding, in February 2023.
Soon after the controversial announcement, civil groups Solidarity and the Organisation Undoing Tax Abuse (Outa) launched a legal campaign against the government, challenging the merits it used to determine Eskom’s status as a national state of disaster.
However, according to notices issued by Sipho Mathebula from the State Attorney’s office, “the Minister of Co-operative Governance and Traditional Affairs [Thembi Nkadimeng], in consultation with the relevant Cabinet members, has decided to terminate the state of disaster.”
“We are further instructed that the Head of the National Disaster Management Centre has decided to revoke the classification of the impact of the severe electricity supply constraint as a national disaster,” Mathebula said.
At this juncture, the government has no intentions of challenging the civil groups’ legal bid, and according to Mathebula, “state respondents do not intend filing an answering affidavit addressing the merits of either application.”
“We propose that the parties address a joint letter to the Deputy Judge President to inform him of these developments and, if necessary, to cancel the meeting scheduled for 12 April 2023,” he added.