Cape Town - The National Treasury’s omission of the Auditor-General in its decision to exempt Eskom from disclosing irregular, fruitless and wasteful expenditure in financial statements would have made their audit process onerous and rendered them irrelevant.
This, coupled with the possible litigation over the National State of Disaster at Eskom is what pressured the government to abruptly abandon some of the plans it had hoped would address the persisting power cuts.
In moves that shook industry on Wednesday, Finance Minister Enoch Godongwana withdrew the recent exemption granted to power utility Eskom, in order to undertake further consultations.
Godongwana, however, now plans to come with a revised exemption before Eskom submits its annual financial statements for auditing purposes in two months’ time.
“Yes, I am confirming the withdrawal and by tomorrow (Thursday), we will have a gazette withdrawing the current one.
“The other confirmation I want to do is that we will definitely come back and I would advise honourable (DA MP Dion) George not to go to court, to give us a submission of how we achieve the fiscal sustainability we talk about and Eskom balance sheet and at the same time deal with accountability, transparency and so on,” Godongwana said.
Hours later, the National State of Disaster on electricity supply constraints was terminated with immediate effect, the Co-operative Governance and Traditional Affairs (Cogta) ministry said.
The litigation of civil organisations and progress including the procurement of emergency power to tackle the energy crisis was among the factors that led to the national State of Disaster being terminated with immediate effect, Cogta said.
Cogta Minister Thembi Nkadimeng, joined by her deputy Parks Tau and Electricity Minister Kgosientsho Ramokgopa, briefed the media on Wednesday regarding the decision, which was also published in a gazette.
Tau said it was determined that there was no need for extraordinary measures to intervene in the electricity crisis.
“We also determined the level of outages that we are currently experiencing and while indeed we still have an issue of load shedding, the mitigation measures in place are able to mitigate and reduce the levels of power cuts,” he said.
Tau acknowledged that the legal action by Solidarity and Outa was also considered to end the state of disaster.
“We look at litigation and ask ourselves, if we don't need a state of disaster do we need to be in court?
“If you don't need the state of disaster you do not then brief senior counsel and say ‘take me to court just so we can be in court.
“It doesn’t make sense.
“The point of the court becomes moot but you don’t need to be having a state of disaster.
“We factored a range of considerations in arriving at this determination,” he added.
A legal letter seen by the Cape Times that was sent by the State attorney to Solidarity and Outa, read: “There is no live controversy for determination. We invite the applicants to withdraw their applications.
“The state respondents do not intend filing an answering affidavit addressing the merits of either application. We propose that the parties address a joint letter to the Deputy Judge President to inform him of these developments and, if necessary, to cancel the meeting scheduled for April 12, 2023.” Ramokgopa said: “The fact that we are terminating the State of Disaster does not degrade our ability to accelerate the delivery of new generations.
“We can draw from the provisions of the Infrastructure Development Act. We designate those strategic integrated projects and we are able to roll them.
“What we know from an Eskom point of view is that the Public Finance Management Act does make provision.
“If there are issues around emergencies and if as a result of inaction, we are likely to see loss of life, harm to the environment. Those provisions from a procurement point of view are made possible in the PFMA and therefore, the termination of the State of Disaster has no impact on that.
Outa’s executive director, advocate Stefanie Fick, said : “This is a huge win for civil society. Civil society showed that we have a voice, and our voices matter.”
Solidarity chief executive, Dirk Hermann, said the withdrawal of the state of disaster was an indication that they were right from the outset in contending that it was a mere political theatre.
“All the instruments that are needed to solve the energy crisis have been in the government’s hands for years.
“The government’s incompetence or unwillingness to use those instruments is the greater disaster,” he said.
The office of A-G said Maluleke welcomed Godongwana’s announcement and believes it allows for sufficient consultation with the National Treasury, Deloitte and Touche as Eskom’s appointed auditors and the AG of South Africa to address any technical issues that may have arisen.
Energy expert Lungile Mashele said the state of disaster on its own was never going to end load shedding.
“It needed an implementation plan which is what was being carried out by Dr Ramokgopa through the electricity action plan.
“The government itself had relied on the constitution to give powers to the minister of electricity, they didn’t rely on the state of disaster.
Commenting on the exemption, she said: “Fruitless and wasteful expenditure does not always indicate corruption.
“It is sometimes related to deviations from the PFMA in terms of procurement guidelines e.g. Procuring from an OEM instead of the cheapest quote.
“The aim of the exemption was to provide leeway to Eskom in such a way that it would not cause harm to their credit worthiness.
“This gazette however was poorly worded and gave blanket powers of limited disclosure to Eskom.
The mistake that was made by the National Treasury was not to include all relevant stakeholders.
The omission of the AG in the exemption process would have made their audit process onerous and rendered them irrelevant.”
Political parties also welcomed the withdrawal but they remained critical of the initial granting of the exemption.
The ANC MPs did not spare Godongwana any criticism when they quizzed him on the exemption, saying it was their considered view that the exemption was irrational and unjustifiable.
Cape Times