Finance Minister Enoch Godongwana on Wednesday told parliament, that he has decided to withdraw the exemption of Eskom from the Public Finance Management Act “for now” to have further consultation with the auditor-general and Eskom’s auditors.
The exemption, which was designed to help Eskom obtain an unqualified audit and raise its credit ratings, has received extensive condemnation.
Additionally, Eskom’s loan conditions may be triggered by a qualified audit opinion, which would raise Eskom’s borrowing costs, according to Treasury. Transnet received a comparable exemption the previous year.
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Eskom was exempted from reporting in its annual financial statements on wasteful and irregular spending that did not result from corruption by a special government gazette issued by Godongwana on Friday.
Godongwana said the decision to approve the exemption application by Eskom was informed by Eskom’s financial position becoming so constrained that it undermined the entity’s ability to raise capital,
“Yesterday we had intensive discussions with the auditor-general (AG) and in that discussion there were some contributions from the AG that need to be part of the framing of the gazette,” Godongwana said.
“In the light of those comments and comments from the public, we have decided to withdraw the gazette for now and have more detailed discussions with the AG and Eskom’s auditors so that the framing is proper and the checks and balances are tightened.”
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