EDITORIAL: The Eskom falling knife

Since the dawn of all-race democracy in 1994, the National Treasury has stood out as a bulwark of good governance among state departments. Through nearly three decades of post-apartheid governance, it has built a solid reputation for its measured approach to public finance management.

During the state capture years, it stood its ground. Memorably, it refused to bankroll Jacob Zuma’s nuclear build procurement. And once the former president failed to strong-arm the Treasury’s political leadership to fund the costly energy plan, he then tried – and failed – to usurp its budgeting power by attempting to move this to the Presidency.

For years, to the annoyance of other state departments, the Treasury has maintained a hawkish eye on public finances. We are grateful for this, and to the many officials who have endured years of abuse by politicians.

It is against this background that this newspaper has learned with disappointment that the Treasury has granted exemptions to Eskom from fully disclosing the scale and extent of billions irregularly, wastefully and fruitlessly spent. This is a highly technical accounting issue.

It emerged that sometime last month Eskom applied for this measure and, without thoroughgoing consultation and consideration, finance minister Enoch Godongwana acceded to this request. It was only after news of this leaked that a public outcry ensued.

Understandably, parliamentarians and advocacy bodies such as the Black Business Council were horrified at this exemption.

Eskom has just begun its long and arduous journey to recovery. Transparency has to form the core of this journey, especially during the debt-relief period, the terms of which have yet to be agreed upon and publicised.

More concerning is the fact that Eskom, which has been plagued by governance, leadership and capital structure problems, has yet to regain the public’s trust before expecting support from taxpayers.

Seemingly, at play is the fact that the new clean-up regimes at Eskom and Transnet are reluctant to shoulder the blame for the legacy sins of their predecessors. That is a bad rationale for what effectively amounts to a wider exemption.

It is true that state-owned enterprises have much more onerous compliance requirements than their listed peers: over and above having to comply with the Companies Act and JSE listing requirements for their bonds, they also have to contend with enabling legislation, public procurement policies as well as the Public Finance Management Act.

Still, this compliance burden has not hobbled well-run ones from raising money in the debt capital markets. Importantly, most are monopolies. 

For days, the government has struggled to deal with the public fallout arising from the disclosure. Good officials have been made to defend the indefensible.

When he finally emerged this week, Godongwana told irate MPs that the exemption would be withdrawn, for now. This is pending consultations with the auditor-general’s office — the only intervention that seems to have stopped this bad move. The consultations must go beyond technical issues; be longer than the 10-day period; and should include disclosure of Eskom’s application.

If anything, Eskom’s affairs have been shrouded in secrecy. Now more than ever, Treasury should be vigilant enough in stopping the Eskom falling knife. And Treasury’s reputation should be defended.