South Africa’s government withdrew an exemption granted to its beleaguered power utility from reporting irregular spending in its annual financial statements, after a public outcry against the move.
(Bloomberg) — South Africa’s government withdrew an exemption granted to its beleaguered power utility from reporting irregular spending in its annual financial statements, after a public outcry against the move.
The National Treasury on Friday granted a request by Eskom Holdings SOC Ltd. to lift some disclosure requirements and move the category of irregular, fruitless and wasteful expenditure to its annual report for three years. Exempting the company from reporting those costs in its financial statements may reduce the risk of a qualified opinion from the utility’s auditors and, in turn, protect the company’s credit rating, according to the Treasury.
“We have decided to withdraw the Government Gazette notice for now,” Finance Minister Enoch Godongwana said in a briefing to lawmakers on Wednesday, referring to the official announcement published on March 31. The government plans to seek comment on the proposal from the public and other stakeholders, he said.
The exemption drew severe criticism because the utility and South African other state-owned companies were targets of corruption — known locally as state capture — during former President Jacob Zuma’s nine-year rule. In the period that followed, Eskom’s management began reviewing contracts dating as far back as 2012 to check for expenditure that contravened or fell outside applicable laws.
The utility reported a balance of 67.1 billion rand ($3.8 billion) of such expenses in the 2022 financial year.
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