• National Treasury has decided not to grant Eskom an exemption from reporting irregular expenditure.
• Finance Minister Enoch Godongwana says that Eskom needs to ensure it’s anti-corruption strategy is credible.
• Treasury received just 56 comments from South Africans regarding the proposed exemption.

Back in April Minister of Finance Enoch Godongwana gave Eskom, which has a history of deep set corruption, exemption from disclosing irregular and fruitless expenditure.

This exemption was short-lived with Godongwana quickly retracting his gazette saying further discussions would be had.

Now, the National Treasury has officially decided not to grant Eskom the exemption it was seeking. While Treasury recognises the commitments made by Eskom’s board and management to fight and expose corruption, more needs to be done to earn the trust of all South Africans.

“As Eskom attempts to recover from the devastating impact of state capture, and take steps against past and current corruption, it needs to ensure that its anti-corruption strategy is credible and has the support of key stakeholders like investors, lenders, suppliers, customers, and the public,” Treasury said.

Furthermore, state-owned enterprises, and Eskom more specifically, have more onerous accounting and reporting standards compared to private ones. This makes sense as public funds are used to keep these companies operational and as such, greater oversight should be expected.

Treasury received 56 comments from South Africans regarding this proposed exemption. Many of those comments highlighted that irregular expenditure reporting helps provide insight into how state-owned enterprises are spending their money.

Treasury does appear to have rejected this exemption begrudgingly given the language it made use of.

“This in turn has the perverse effect of making SOEs more likely to require funding, or a guarantee, from the fiscus,” writes Treasury.

As the finance minister suggested in April, reporting on irregular expenditure could trigger loan covenants and increase the cost of borrowing money for Eskom.

Of course, if Eskom showed that it deserved our confidence and the confidence of investors, it would likely have an easier time getting access to the funds it needs.

Treasury has noted that it will work with the Auditor-General to revise the “irregular, fruitless and wasteful expenditure framework to form part of the PFMA [Public Finance Management Act] reforms and address these and other financial and compliance reporting challenges”.

With that in mind, it’s best to keep an eye on these discussions should there be attempts to give untrustworthy organisations scope to hide their questionable actions.

To do that, bookmark the SA Government document portal here and look out for gazettes and proposals that catch your eye and comment on those you feel affect you. Proposals often allow you to email, post or submit your comments directly to government.