Finance minister Enoch Godongwana says Eskom need no longer disclose irregular and fruitless expenditure in its annual financial statements.

According to a report in the Daily Maverick, the minister granted the power utility this exemption for a period of three years.

Irregular and fruitless expenditures are those expenditures which do not assist in the running of the operation and should have been avoided.

Considering the financial bind the power utility finds itself in, with mounting unpaid arrear debt from municipalities and end users, and its massive debt load from borrowings to build new power stations, one would think that the utility would seek to keep all expenditure directly tied to the costs of generating, transmitting and distributing electricity. Furthermore, one would expect Government to hold Eskom accountable for all expenses, especially since Treasury has had to bail the power utility out numerous times in recent years.

Surely taxpayers have a right to know how much money Eskom employees waste each year. Afterall, the money the government administers comes from taxpayers. It has no money of its own. Afterall, the amounts involved are not trivial. According to Eskom’s 2022 annual report, irregular expenditure exceeded R67-billion, and fruitless and wasteful expenditure amounted to R5-billion.

What would follow if irregular, wasteful, and fruitless (unnecessary) expenditure is not reported? Would it mean that Eskom will not be held accountable for how it spends its money?

Should it continue to fund those individuals and organisations which overcharge the utility for goods and services? And do Eskom’s procurement personnel who place the orders for such things receive back-handers to ensure that the orders are placed at inflated prices?

Or are these irregular, wasteful and fruitless expenses to be simply “swept under the carpet”? For, as a certain politician is quoted as saying recently “sometimes you have to let people eat a little bit”.

Afterall, money lost through corruption and theft was often classified as “irregular and fruitless expenditure”.

Some have suggested that state-owned companies (SOEs) need a “level playing field” with private companies in order to be competitive. But private companies are profit driven. And wasteful expenditure erodes profits. They don’t need to be monitored by Government. State-owned companies, including Eskom, which operate from the public purse, do need to be held accountable for every cent they spend.

The section of the PFMA requires that SOEs provide particulars in their annual financial statements and annual reports of “any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year.”

While it's not clear what conditions, if any,  the minister will attach to this exemption, it is comforting to see that the minister’s decision is being challenged by OUTA, the Black Business Council (BBC), the EFF, and the DA, all of which question why financial transparency at Eskom should be removed. The BBC and EFF both called the minister’s decision “irrational”.