Public procurement in SOEs a cesspool of corruption
5 March 2021
The Democratic Alliance (DA) will submit a written question to the Minister of Public Enterprise, Pravin Gordhan, to enquire how much State Owned Enterprises (SOEs) spend on procuring goods and services compared to normal wholesale or retail prices.
This is in light of the recent revelations at Eskom pertaining to the disparity in procurement costs, where, for instance, a wooden mop was purchased for a staggering R238 000. This brings to the fore the impact the Public Finance Management Act and related regulatory procurement frameworks have on the spending levels of our public entities.
In the lone example of the wooden mop, the difference in costs is of the order of R237 900 and accordingly it is reasonable to assume that the total procurement costs may well reflect cost inflation of that magnitude – if the procurement in this instance is in line with the purchasing framework.
Even if the mop example is an outlying aberration, other purchases at Eskom (which spends R140 billion procuring goods and services) include the payment of R28 for a roll of single-ply toilet paper and R56 for a two-litre bottle of milk. These are clearly indicative of a significant disparity between market prices and the prices SOEs pay to preferred suppliers.
It is common cause that containing costs, halt corruption and help free up resources to service SOE debt and operational requirements, the procurement regime, as it stands, at SOEs merits scrutiny.
It is with this in mind, that the DA will present these written questions to Minister Gordhan, so he can provide us with a reasonable data-driven estimate on how much more each one of our seven Department of Public Enterprises SOEs (notwithstanding that the total list of SOEs runs to over 700) spends as a result of the application of the current procurement regime as against normal wholesale or even retail prices and how the quantum of the difference might impact cash flow and profitability.
We hope that the answer is unambiguous and not shrouded in the usual obfuscation which the Zondo Commission of Inquiry recently highlighted as a failing in parliamentary accountability
Statement issued by Ghaleb Cachalia MP, DA Shadow Minister of Public Enterprises, 5 March 2021
