• Eskom has been exempted from disclosing irregular expenditure or fruitless and wasteful expenditure for three years.
• This is not an attempt to evade transparency according to the Treasury but rather a way to address technical accounting issues.
• The exemption is in place until the 2024/25 financial year.

The National State of Disaster that was declared in February gives government the power to take action as regards the energy crisis without having to get bogged down by its own bureaucratic processes.

These measures are outlined in the Disaster Management regulations published at the end of February but further action from other spheres of government is something we’ve been curious to see.

At the weekend, Minister of Finance Enoch Godongwana gazetted an exemption for Eskom. The exemption relates to provisions of the Public Finance Management Act of 1999[PDF].

The exemption is for Section 55(2)(b)(i) of the act which refers to the submission of annual reports. Eskom isn’t exempt from submitting annual reports entirely, rather certain parts of a section of the Public Finance Management Act.

Read in full, the relevant section directs South African public entities to submit annual reports including details of material losses from criminal conduct as well fruitless and wasteful expenditure.

As regards the exemption, Eskom won’t have to disclose irregular expenditure or fruitless and wasteful expenditure. This exemption has been granted for 2022/23, 2023/24 and 2024/25 financial years.

While this is concerning, we’re thankful that Eskom hasn’t been exempted from declaring material losses sustained from criminal conduct. With that having been said, giving Eskom this amount of freedom when it has been shown to be untrustworthy in the past could be a very dangerous game, especially if there is now zero oversight as regards wasteful expenditure.

Treasury will provide clarity on these exemptions “soon” according to a report from News24 with the entity going on to say that this is not an attempt to evade transparency. Rather, these exemptions are being introduced to address technical accounting issues that would likely create problems for Eskom as it tries to right the ship.

Details regarding this exemption are currently thin on the ground but once we hear more from government, in particular the Treasury, about the technicalities, we recommend South Africans keep a sharp eye on this news.

[Image – CC 0 Pixabay]