Finance minister Enoch Godongwana has granted Eskom an exemption from regulations under the Public Finance Management Act (PFMA) requiring state-owned companies to disclose any expenditure that does not comply with the provisions of the act.
According to a notice in the Government Gazette of March 31, Eskom will be exempt from having to disclose in its annual reports for three years any irregular, fruitless or wasteful expenditure, starting from the financial year that ended on March 30.
In its interim results for the 2022/23 financial year published on Friday, for the six months to end-September, Eskom noted that the Treasury had issued an instruction limiting the disclosure of irregular expenditure and fruitless and wasteful expenditure.
However, Eskom said all information required under the PFMA that was previously disclosed in the financial statements would be included in its integrated report.
Eskom recognised that it “[continued] to face various challenges that resulted from mismanagement and corruption that could have an influence on stakeholder sentiment”.
According to the board, while progress had been made in cleaning-up irregularities, improving processes and strengthening controls, it would take time to “identify all issues and take appropriate corrective action and implement consequence management”.
The utility’s previous financial statements showed that in the year to end-March 2020 it recorded irregular expenditure of R11.2bn (mostly due to modification of contracts), fruitless and wasteful expenditure of R2.3bn and losses due to criminal conduct of R2.2bn.
Overwhelmingly the losses due to criminal conduct related to non-technical energy losses, including energy theft. There were also incidents of fraud and theft of equipment such as cables that contributed to these losses.
Fruitless and wasteful expenditure included an amount of R840m incurred on the construction of residential flats to accommodate artisans working at the Kusile power station project as the building could not be used for the intended purpose.
For the year to end-March 2021 irregular expenditure of R11.7bn was incurred and fruitless and wasteful expenditure amounted to R1.3bn, mostly from overpayments relating to a fuel oil contract. Losses due to criminal conduct of R2.5bn were reported.
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