Eskom exemption: Transparency triumphs

8 June 2023

Solidarity today welcomed the Minister of Finance’s announcement to suspend Eskom’s exemption from section 55(2)(b)(i) of the Public Finance Management Act, dealing with reporting on wasteful expenditure.

After the exemption was published in the Government Gazette on 31 March, Solidarity expressed its opposition to it on 21 April 2023. According to Solidarity’s reaction to the announcement of the exemption, the implication of such exemption would have had a direct impact on fundamental principles such as accountability and transparency and it could have created a loophole to cover up crimes such as corruption. Solidarity was also of the opinion that this would have created an unbalanced and false impression about the state of affairs at Eskom, which would have deterred investors and would have had more negative consequences for the economy.

“The importance of public participation should never be underestimated. Revoking this exemption is a prime example of how pressure on the government can yield the desired outcome. It is important for the South African government and its institutions to be transparent at all times. Especially in the case of Eskom, which is in urgent need of investors, we cannot afford people being misled about what is happening there,” Theuns du Buisson, economics researcher at the Solidarity Research Institute (SRI) said.

Solidarity’s comments particularly emphasised the importance of transparency for potential investors, precisely to ensure the entity’s viability. He believes it is of crucial importance that state entities such as Eskom are protected against further looting and state capture. According to Solidarity, the withdrawal of this exemption ensures that Eskom will no longer be able to conceal any irregular spending.

“When Minister Godongwana was sworn in as minister, he undertook to be more transparent and to restore the public’s trust in the government. Allowing Eskom to conceal misappropriation and blatant corruption runs counter to this undertaking and creates an erroneous impression among the public and potential creditors,” Du Buisson continued.

“Allegations of deep-rooted corruption have been making the rounds for years, and for culprits to be prosecuted, they must be held accountable at all levels, including in the financial statements. It was an absurd proposal that had to be nipped in the bud, not only to protect Eskom from itself, but to protect the South African society as a whole. Corruption and aggravated corruption in our state enterprises will no longer be tolerated,” Du Buisson concluded.

Issued by Theuns du Buisson, Economic Researcher: Solidarity Research Institute, 8 June 2023