Eskom exemption from full financial disclosure deeply concerning

3 April 2023

The Institute of Race Relations (IRR) has cautioned Finance Minister Enoch Godongwana against allowing load-shedding to be used to smokescreen further corruption, and recommends transparent post-BEE value-for-money transactions as the key to unlocking jobs and value growth.

These sentiments are conveyed in a letter sent to Minister Godongwana today, following a notice in the Government Gazette of March 31 that Eskom will be exempt from disclosing irregular and fruitless and wasteful expenditure in its annual reports for three years, starting from the financial year ending March 2023.

On 28 February 2022, the IRR wrote to the Minister requesting him to use his exemption power to allow all organs of state to put cost-effectiveness above racial preferencing. We wrote to Minister Godongwana again on 25 October 2022 urging him to consider making the case for a policy adjustment in the Medium-Term Budget Policy Statement (MTBPS). In particular, we urged him to grant to any organ of the state that requested it exemption from racial preferences in procurement processes. The Preferential Procurement Policy Framework Act (PPPFA) empowers Minister Godongwana to “exempt any organ of state from any or all the provisions” of the framing Act’s preferencing if “it is in the public interest”.

The Commission of Inquiry into State Capture found that either value for money or racial preferencing must be unambiguously prioritised in public procurement. The alternative confusion enabled corrupt exploitation. Chief Justice Raymond Zondo, who headed the Commission, said that value for money should come first in public procurement. We are in absolute agreement with Chief Justice Zondo.

On 8 November 2022, after Minister Godongwana announced new procurement regulations, we wrote yet another letter to him highlighting that sections 6 and 7 appeared to be unlawful and irrational. This was because they compromised value for money by rewarding the company that charged the most for providing the same goods or services as competitors.

It is deeply concerning that Minister Godonwana has decided to ignore this and instead opted to exempt Eskom from disclosing its irregular, fruitless and wasteful expenditure. The public needs more value for money, together with transparency. Proceeding with the adoption of this new exemption does exactly the opposite. It will only risk deepening the shadows in which corruption occurs.

Said Mlondi Mdluli, IRR Campaign Manager: “This decision by Minister Godongwana to exempt Eskom from disclosing its irregular, fruitless and wasteful expenditure will not only have a severe impact on Eskom, but on the South African economy as well. Less transparency and less value for money will only result in the continuation of corruption at Eskom.”

Issued by Mlondi Mdluli, IRR Campaign Manage, 3 April 2023