Eskom Exemption Update: Controversial Decision Withdrawn Temporarily

In a recent announcement, Finance Minister Enoch Godongwana informed MPs that he has withdrawn the controversial Eskom exemption from the Public Finance Management Act, at least for the time being. This decision was made to facilitate further discussions with the auditor-general and Eskom’s auditors.

Why was the exemption granted in the first place? The exemption, published in a special government gazette, allowed Eskom to bypass reporting on wasteful and irregular expenses in its annual financial statements, as long as they weren’t connected to corruption. The goal behind this move was to:

  • Help Eskom achieve an unqualified audit
  • Improve its credit ratings
  • Prevent triggering loan covenants
  • Avoid increasing Eskom’s borrowing costs

Note: A similar exemption was provided to Transnet last year.

Reasons for the temporary withdrawal The decision to withdraw the exemption came after intensive discussions with the auditor-general (AG) and in response to public backlash. Godongwana stated:

  • New input from the AG needed to be considered for the gazette
  • Further discussions with the AG and Eskom’s auditors are necessary to refine the framework
  • Tighter checks and balances must be implemented

Reactions to the Eskom exemption The exemption sparked widespread criticism, with the DA’s finance spokesperson, Dion George, revealing that the party had already consulted its legal team to review the exemption’s legality. Meanwhile, ANC alliance partner Cosatu denounced the exemption as “a green light to criminals that they can go feast and loot with impunity.”

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In light of the backlash, further consultations will be held to ensure a more balanced and responsible approach to the matter.

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