By Lehlohonolo Lehana.
National Treasury has exempted power utility Eskom from disclosing irregular and fruitless expenditure in its annual financial statements.
The exemption was published in a government gazette issued on Friday.
Finance Minister Enoch Godongwana on Friday issued a special government gazette that exempted Eskom from providing particulars in their annual financial statements and annual reports.
The gazette was published on the final day of the cash-strapped utility’s financial year.
“In terms of section 92 of the Public Finance Management Act, 1999 (Act No. 1 of 1999 – the Act) I, Enoch Godongwana, Minister of Finance, hereby exempt Eskom Holdings SOC Ltd from the provisions of the Act, and the regulations made in terms thereof, specified in the first column of the table below to the extent and for the period specified in the second and third columns of the table below, respectively”, Godongwana said in the gazette.
The gazette also exempts Eskom from a Treasury regulation that deals with the same requirement.
Treasury said on Sunday that it had issued the gazette in response to a letter from Eskom chairperson Mpho Makwana. Eskom would still be required to disclose all information required by IFRS and general debt listing requirements. In granting the exemption, Godongwana will also set conditions, which will be laid out in a letter to Makwana. The conditions will include:
- All irregular, fruitless, and wasteful expenditure must still be detailed in the Eskom annual report;
- Irregular expenditure that occurs through criminal activity or losses must still be disclosed in the financial statements and the annual report
The group’s latest Generation Adequacy Report provides an outlook for energy supply over the next 52 weeks, including the risk of shortages over the period.
The forecast covers demand versus the available generating capacity for each week and is colour coded to indicate what the utility expects – this goes from green (no shortage) to red (worst case).
Unfortunately for South Africa, the group’s outlook is red across the board.
The latest outlook differs greatly from previous reports, in that the unplanned outage assumption has been pushed higher to 15,000MW (from 13,000MW before), while the planned risk level and likely risk scenarios have also been pushed higher – to 17,200MW and 18,700MW, respectively – indicating a deterioration in the situation.
Under the previous assumptions, if Eskom was able to keep outages below 13,000MW, the country would not be experiencing load shedding at all. With outages at 16,000MW or above, Eskom projected that load shedding would be at stage 4 load shedding for most of the year.
In reality, Eskom has struggled to keep unplanned outages below the 16,000MW level; hence the elevated levels of load shedding for much of the year so far.
According to the Bureau for Economic Research (BER), load-shedding returned to sustained higher stages last week, with sudden, unannounced escalations likely aggravating the extent of the disruptions associated with power cuts.
Load shedding is destroying the South African economy. All major banks, including the SARB, as well as analysts and ratings firms have flagged load shedding as the main cause for downward revisions of South Africa’s growth prospects for this year – just a hair away from causing a full-year recession.
The South African Reserve Bank has revised its growth projections to just 0.2%, with the bank estimating 250 days of load shedding this year. Eskom’s outlook is far bleaker than that.
On top of the sea of red, Eskom’s projections on its Energy Availability Factor (EAF) is also missing the targets set up by its board.
Makwana told the nation in January that the group would restore its Energy Availability Factor to 60% by the end of March. This did not happen.
According to Eskom’s latest projections, the group will barely scrape past 55% by the end of the year, and will likely average 53% for 2023 – down from the average of 58% in 2022.
The EAF is a critical aspect of determining the amount of load shedding South Africans can expect.