Eskom’s exemption from aspects of the Public Finance Management Act will do more harm than good, according to experts. Apart from exempting the utility from accountability, it will increase its risk of a potential credit rating downgrade and kill investor confidence in South Africa. Investors would have already noted Eskom’s system status report, which put its likely risk scenario at red alert of “2 001 [megawatts] short to meet demand and reserves” for the next year.
Investors would have already noted Eskom’s system status report, which put its likely risk scenario at red alert of “2 001 [megawatts] short to meet demand and reserves” for the next year. “Recording of any losses from criminal conduct, any irregular, fruitless and wasteful expenditure and any losses recovered or written off in the annual report,” according to a document on the government page under Public Finance Management Act: Exemption: Transnet SOC Ltd.This, according to Silke, has serious implications for the broader state-owned enterprise sector within the country; “for investor confidence in SA as well. I think it points to a lack of sensitivity”.
In a response letter to Eskom chair Mpho Makwana, Treasury noted challenges the power utility raised on the risks of a qualified audit opinion due to “inadequate systems of controls to timeously detect and record irregular and fruitless and wasteful expenditure”.“Inadequate controls to ensure completeness of assessment of expenditure linked to transgression of supply chain management processes, investigations and tracking of internal audit and forensic report findings,” Godongwana said.