UPDATE: GOVERNMENT EXEMPTION FOR ESKOM THREATENS ACCOUNTABILITY
We are witnessing a concerning turn of events that has the potential to undermine accountability and transparency within our government. A recent Government Gazette notice initially granted Eskom an exemption from disclosing irregular, fruitless, and wasteful expenditure. This decision, met with public outcry, has since been retracted by the government. However, the threat still looms, as there is a possibility that the Treasury may attempt such an exemption again. OUTA, as staunch advocates for accountability and good governance, swiftly responded by submitting a formal objection to prevent this ill-advised exemption.
The stakes are high, as Eskom's existing debt of approximately R400 billion leaves no room for further financial mismanagement or the abandonment of necessary checks and balances.
OUTA considers any such proposed exemption as an acknowledgement by government of excessive irregular, fruitless and wasteful expenditure plaguing Eskom, and the lack of Eskom controls to address the underlying causes. By waiving reporting obligations, oversight entities may mistakenly interpret the absence of transparency as the absence of misconduct—a conclusion we find highly improbable.
It is our view that government is not addressing the root causes that create the prime environment for irregular, fruitless and wasteful expenditure to multiply, but instead chooses to continue feeding the problem when granting such an exemption.
Moreover, the implications extend beyond Eskom. Ratings agencies and investment houses scrutinize the company's ability to manage cashflow and honour debt obligations. Granting an exemption from reporting would raise significant concerns, potentially affecting Eskom's financial standing and inviting doubt from these critical evaluators.
Furthermore, exempting Eskom could establish a dangerous precedent, opening the door for other entities and municipalities to seek similar reporting exemptions. Should National Treasury ignore our request to grant Eskom exemption, OUTA will consider our legal options.
For a comprehensive understanding of OUTA's submission and our ongoing efforts, we encourage you to click here and read more.
A Government Gazette notice granting the exemption from the relevant section of the Public Finance Management Act (PFMA) and Treasury regulation was published on 31 March 2023, however, following public outcry it was withdrawn on 6 April 2023 and replaced by a call for comment on a proposed exemption. See OUTA’s statement of 3 May 2023 objecting to the exemption here. See the notice of 6 April here.