Controls proved too weak to stop Eskom irregular spend, auditors tell Scopa

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  • Eskom's auditors told Parliament that the utility managed to reduce its irregular expenditure from R14.3 billion in 2020 to R11.6 billion in 2021.
  • But it picked up weaknesses in record keeping and "consequence management" .
  • Eskom managed to make great strides in how much irregular expenditure it recovered: R1.1 billion in the past year, from R150 million in 2020.

While Eskom managed to reduce reduced its irregular expenditure from R14.3 billion in 2020 to R11.6 billion in 2021, its auditors noted that weaknesses in record keeping and consequence management persisted at Eskom.

However, Eskom managed to make great strides in how much irregular expenditure it recovered: R1.1 billion in the past year, from R150 million in 2020.

Still, the power utility got a qualified audit opinion for a fifth year from its auditor SNG Grant Thornton, which presented its findings on Eskom to Parliament's Standing Committee on Public Accounts (Scopa) on Wednesday.

"There was insufficient appropriate audit evidence that appropriate disciplinary steps were taken against officials who had incurred irregular and fruitless and wasteful expenditure. This was because investigations into some instances of irregular and fruitless and wasteful expenditure were not performed," SNG Grant Thornton partner Siyakhula Vilakazi added.

Member of Parliament for the Democratic Alliance Alf Lees asked if the delays in getting approval from National Treasury for expenses contributed to the surge in irregular expenditure as Eskom continues to scrambles to keep the lights on.

"Those delays in approvals also cause irregular expenditure. We did not really spend time figuring out why National Treasury is not approving requests from Eskom, but my view is that we have an issue around documentation and record keeping and when you have no proper record keeping explaining to an auditor and prove your case, it will be difficult to approve modifications," said Vilakazi.

It also warned that Eskom only secured R18.9 billion in terms of its borrowing programme for the current year, compared to R50.9 billion in 2020.

Vilakazi said delays in receiving government guarantees and limitation of foreign borrowing limit resulted in planned funding being postponed to 2022.

"Despite the postponement of funding, Eskom was able to navigate liquidity requirements through effective cost management and deferral of capital expenditure," said Vilakazi.

Eskom used R304.5 billion of the R350 billion available to it as part of a drawn-down facility against a government guarantee. This is compared with R324.2 billion in 2020.

"The debt repayment profile of existing debt is pressured over the short and medium term, with debt repayments of R152 billion and interest repayments of R125 billion over the next five years," Vilakazi said.

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