In a surprise move, Finance Minister Enoch Godongwana has exempted Eskom from disclosing irregular, fruitless, and wasteful expenditure.

Godongwana announced Eskom’s exemption in the Government Gazette published on 31 March 2023.

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 now removed the need for Eskom to play open cards about irregular expenditure and wasting money.

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

The government gazette specifically refers to Section 55 (2)(b)(i) of the Act and Treasury Regulations 28.2.1 made in terms of section 72 of the Act.

Simply put, Eskom now does not have to disclose any irregular expenditure and fruitless and wasteful expenditure that occurred during the last financial year and the next two years.

The change drew sharp criticism from energy analyst Chris Yelland who questioned whether it is “really the way to deal with an electricity disaster in South Africa”.

Eskom told Yelland that wasteful and irregular expenditure will still be reported in its integrated report but not its annual financial statements.

Business Day and Financial Mail editor-in-chief Peter Bruce said it is “easily the most macabre thing I have ever read”. “Why would the National Treasury do this?” he asked.

Professor Alex van den Heever, chair of social security systems administration and management studies at the University of the Witwatersrand, also questioned the decision.

“No rational or proper purpose can be served from the resulting loss of transparency. I doubt this is lawful. Exemptions cannot be granted on arbitrary and irrational grounds,” he said.

Others expressed concern about the motive behind the exemption, especially related to Eskom, which is riddled with fraud, corruption, and mismanagement.

Finance Minister Enoch Godongwana’s statement

The image below shows Finance Minister Enoch Godongwana’s exemption published in the government gazette.