Finance Minister withdraws Eskom irregular and wasteful expenditure exemption

William Brederode • 5 Apr 2023

Enoch Godongwana

Finance Minister Enoch Godongwana has withdrawn the gazette that offered Eskom an exemption from reporting irregular, wasteful, and fruitless expenditures in its financial statements.

On Friday, Godongwana announced in a Government Gazette that Eskom would be exempted from disclosing irregular, wasteful, and fruitless expenditure in their financial reports.

The Public Finance Management Act requires Eskom to keep full and proper records of its financial affairs and publish annual reports and financial statements.

The Act forces Eskom to “disclose any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year”.

However, Godongwana has removed the need for Eskom to play open cards about irregular expenditure and wasting money in it’s financial statements.

“I hereby exempt Eskom Holdings from the provisions of the [Public Finance Management] Act and the regulations made in terms thereof,” Godongwana said.

The decision caused a severe backlash from various quarters, and Afriforum decided to launch a legal challenge to the decision to award Eskom the exemption.

TimeLive reported that the Democratic Alliance was also gearing up to launch a legal challenge against the exemption.

This morning, Godongwana backtracked on the decision and announced that the exemption was being withdrawn.

He told Parliament that the exemption is withdrawn “for now” while there is further consultation with the auditor-general and Eskom’s auditors.

South Africa terminating Eskom state of disaster

MyBroadband reported that President Cyril Ramaphosa’s administration is withdrawing the declaration of a national state of disaster over South Africa’s energy crisis.

Civil action group and trade union Solidarity said that it had received a commitment from the State Attorney’s office with a request to withdraw its legal action against the government.

Solidarity launched its legal action on 14 February 2023, arguing the state of disaster was unlawful as it doesn’t meet the definition of a disaster in terms of the Disaster Management Act.

Sipho Mathebula, on behalf of the State Attorney, informed the litigants that government intends to end the state of disaster through notices in the government gazette.

“We are instructed that 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,” the State Attorney said.

“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.”

With the legal case rendered moot, the State Attorney invited Solidarity and the Organisation Undoing Tax Abuse to withdraw their applications to declare the state of disaster unlawful.

The State Attorney said, “The state respondents do not intend to file 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.”

Source: Daily investor 5 April 2023