OUTA on Eskom PFMA exemptions: where’s the transparency?

OUTA Media Statement

Who can blame South Africans if they don’t trust government’s latest move to exempt Eskom from adhering to the PFMA?

The Organisation Undoing Tax Abuse (OUTA) is concerned that Eskom has been exempted from disclosing irregular and fruitless expenditure in its annual financial statements for 2022/23 and the following two years. This exemption goes against the prerequisite of Section 55 (2) (b) (i) of the Public Finance Management Act (PFMA), which is an important law that regulates the financial management of government departments and public entities in South Africa. The notice of the exemption was gazetted on 31 March by the Minister of Finance, Enoch Godongwana.

As a state-owned entity (SOE), Eskom plays a critical role in providing electricity to South Africa, and any decision that affects its financial management could have significant implications for the country’s economy and its citizens. “Exempting Eskom from complying with certain sections of the PFMA sends a clear message that government is not serious about transparency and accountability when it comes to Eskom’s financial management practices,” says Wayne Duvenage, OUTA’s CEO.

OUTA says the exemption creates opportunities for corruption and/or financial mismanagement, which would harm the public interest.

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Given government’s history of excessive corruption and maladministration, there is an extremely high level of mistrust in government. “Whilst a number of SOEs have been exempted in similar matters in the past, the current level of distrust does not bode well for this decision. And with good reason, if you look at recent statements by Kgosientso Ramokgopa, the Minister of Electricity, that corruption is not a key issue in the dismal performance of some of Eskom’s power plants. Given the well-documented history of looting at Eskom, this is clearly untrue. Who can blame the public if they don’t trust government’s latest move to exempt Eskom from adhering to the PFMA?” says Duvenage.

Duvenage says if this is done to cut back on red tape in an effort to sort out the electricity crisis, one could possibly argue for some exemptions. “But we are very concerned that this decision will lead to even more fruitless and wasteful expenditure, something that Eskom, our country and we, the citizens, can ill afford. Even if the exemptions come with conditions, how can we be sure that there will be accountability, as that was clearly lacking in the past?”

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OUTA is writing to Minister Godongwana to understand the purpose of these regulations and ensure that they align with the principles of transparency, accountability, and good governance in the public sector. “Once we receive an answer from the minister, we will decide on our next steps. We cannot allow even more deviations from regulations,” says Duvenage.

OUTA is still proceeding with legal challenges opposing the Karpowerships and the electricity state of disaster. “We believe the decision to declare the disaster was irrational, arbitrary and unlawful. We already have all the laws necessary to enable urgent action to address the energy crisis, something generated over the last 15 years by government’s poor planning, brazen corruption and a total lack of accountability. Our country also cannot afford the extremely expensive Karpowership deal,” says Duvenage.

Read more about OUTA’s legal case against the state of disaster here and here
Read more about why OUTA is challenging the Karpowership deal here and here.

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