Treasury withdraws Eskom exemption on dodgy spending

Government has withdrawn an exemption granted to Eskom from reporting irregular spending in its annual financial statements, after a public outcry against the move.

National treasury on Friday granted a request by the beleaguered state-owned utility to lift some disclosure requirements and move the category of irregular, fruitless and wasteful expenditure to its annual report for three years.

Exempting the company from reporting those costs in its financial statements may reduce the risk of a qualified opinion from the utility’s auditors and, in turn, protect the company’s credit rating, according to national treasury.

“We have decided to withdraw the Government Gazette notice for now,” finance minister Enoch Godongwana said in a briefing to MPs on Wednesday, referring to the official announcement published on 31 March. The government plans to seek comment on the proposal from the public and other stakeholders, he said.

The exemption drew severe criticism because the utility and other state-owned companies were targets of corruption during former President Jacob Zuma’s nine years in office. In the period that followed, Eskom’s management began reviewing contracts dating as far back as 2012 to check for expenditure that contravened or fell outside applicable laws.

The utility reported a balance of R67.1-billion of such expenses in the 2022 financial year.  — (c) 2023 Bloomberg LP

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