SA's power utility Eskom is facing R125 billion of interest payment woes, reveals report by auditor-general and audit firm
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POWER utility Eskom, currently putting on a charm offensive due to its shoddy performance in keeping the lights on, is battling behind the scenes with R125 billion in debt interest payments and meagre government subventions for operations, the auditor-general's audit into the parastatal revealed yesterday.
The auditor-general, in reports by SizweNtsalubaGobodo, in collaboration with Grant Thornton, revealed that the largest problems with Eskom's paper trail were hidden in documents that the utility would or could not supply to its auditors, dating back to legacy contracts from the 2017/18 financial year as well as current contracts.
Grant Thornton partner Siyakhula Vilakazi told Parliament's portfolio committee on public finances that samples obtained by auditors from Eskom's paper trail revealed a systematic overhang of procurement processes, both from a legacy perspective and the current administration under chief executive Andre de Ruyter, which were also not compliant with audit processes.
“It is our sense that management maybe is not be doing enough to address the issues.
“Eskom might indicate that its irregular expenditure is linked to irregular contracts from years back, but we have missing samples of issues under the current administration that we are not able to properly decipher for lack of appropriate documentation,” Vilakazi told parliamentarians.
Some of the missing documents not submitted to irregular expenditure relate to the Covid-19 period for which auditors were unable to relate the processes followed, including a R152bn Econ Oil overpayment currently before the courts.
The issue now lies with Eskom appearing before the standing committee on public accounts to present its issues on performance and supply contracts for scrutiny, though auditors have already washed their hands of clean audits from the utility.
Vilakazi said, in the current year, Eskom had secured a paltry R18.9bn against R50.9bn announced by former finance minister Tito Mboweni in the 2020 financial year while audit outcomes from the 2017/18 year, also known as the tail-end of the State capture years, received unqualified audits and discrepancies in corporate governance.
Eskom faces more than R350bn in drawn-down funding guarantees from the state.
“Irregular expenditure is not only related to legacy issues, but recent contracts as well,” Vilakazi said
He pointed out that there was a delay in Eskom submitting its inventory to the auditors.
It was only handed over at the end of May, which almost led the auditors to feature qualification paragraphs in the audit statements, barring the actual information Eskom should have submitted in good time.
Parliament has heard how Eskom is facing mounting debt pressure with the repayment of R152bn and interest repayments of R125bn.
This may force the company to hike electricity tariffs further. Vilakazi said Eskom had two options – borrow from the government or get the consumer to foot the bill through tariff increases.
BUSINESS REPORT ONLINE