Relaxed procurement rules mean Eskom can move faster to tackle operational hurdles

Eskom expects it can now move faster to procure what it needs. Photo: Gallo Images/Reuters
Eskom expects it can now move faster to procure what it needs. Photo: Gallo Images/Reuters

Eskom has welcomed Treasury’s relaxation of some procurement constraints, a move it says will help it to move more quickly to resolve some of the utility’s pressing operational challenges.

In a statement on Friday, Eskom noted the relaxation and exemption by National Treasury on some key principles of the Public Finance Management Act (PFMA) supply chain management processes, as contained in an instruction note, and which came into effect during April.

Eskom said the amendment now allows it to approve contract variations without National Treasury approval and to engage directly with the original equipment manufacturers and maintenance suppliers of the most critical equipment and services required in the process of generating electricity. The amendments also provide Eskom with flexibility and agility over expansions, deviations and handling of urgent matters in its procurement processes.

The move comes as Eskom’s operational performance continues to worsen and as overall plant performance, as measured by the energy availability factor (EAF), which sunk to 55.5% at the end of March, as opposed to a historical target of 80%.

"The new instruction note will assist in providing agility and control in the procurement and supply management process to Eskom, which will assist in unlocking some of the bottlenecks in our attempts to speedily resolve some of the pressing operational challenges," the utility said.

Eskom said the overall intent of the relaxation is to ensure the swift and flexible implementation of the procurement processes but in a way that takes into account the core principles of the PFMA while ensuring fairness in the procurement processes.

"Eskom will continue to maintain the principles of Section 217 of the Constitution in that competitive bidding be the usual mechanism for procurement, and deviations seen as an exception rather than the norm," it said.

Eskom is also required to report on procurement activities under this exemption 14 days after the conclusion of transaction in order to maintain continued oversight by Treasury and the Auditor-General.

To effectively implement this change, Eskom’s procurement team has made the amendments to current Eskom procurement procedures. "This decision by National Treasury indicates growing trust to give Eskom back control over the most critical and urgent of its procurement," said Jainthree Sankar, Eskom’s Chief Procurement Officer. "This will also positively impact on our ability to address procurement matters on the ground to make decisions impacting operations more swiftly."

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