Finance Minister Enoch Godongwana and the Matla Power Station. Images: Flickr and Eskom.
Godongwana withdraws Eskom’s exemption from declaring irregular expenditure
Eskom was exempted from declaring its irregular expenditure. The decision was heavily criticised by many organisations and parties.
Finance Minister Enoch Godongwana and the Matla Power Station. Images: Flickr and Eskom.
Finance Minister, Enoch Godongwana has withdrawn Eskom’s exemption from declaring its irregular, fruitless and wasteful expenditure.
Godongwana exempted the embattled power utility from Section 55(2)(b)(i) of the Public Finance Management Act (PFMA) for the last financial year and the next two years, as per the gazette published on 31 March.
ESKOM’S EXEMPTION WITHDRAWN
The exemption was withdrawn temporarily pending a consultation with the Auditor-General. This was announced by Godongwana on Wednesday, 5 April.
The Minister said after this consultation, the exemption will be re-gazetted with the Auditor General’s considerations taken into account.
“National Treasury met with the AG on Tuesday where the AG made comments which will now be framed in the gazette. We have withdrawn the gazette temporarily so that the framing of the gazette is appropriate to ensure mismanagement and corruption are prevented,” he said.
TREASURY BREAKS SILENCE OVER EXEMPTION
In a statement, National Treasury explained that having irregular, fruitless and wasteful expenditure on annual financial statements may put further pressure on the public purse.
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“A major risk of having non-material, non-corrupt transactions reported in the annual financial statements include a higher likelihood of qualified audit opinion… that triggers loan covenants, which will likely further increase Eskom’s cost of borrowing and may result in additional fiscal pressure from Eskom’s debt burden should the entity be unable to negotiate lender waivers for these covenants.
“The exemption granted to Eskom will enable it to continue to fund its balance sheet and still maintain accountability, transparency and reporting requirements in its annual reports and annual financial statements. If the exemptions were not considered, it would place pressure on the fiscus and limit borrowing powers of the SOE,” the statement read.
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