Public Enterprises Minister Pravin Gordhan said Eskom still made use of manual record-keeping because it did not have a fully automated record-keeping system, which caused delays in its auditing process.
Gordhan also said that a “shortage of internal capacity to deal with the volumes of disciplinary actions” was one of the reasons for the poor consequence-management at the state-owned entity.
He was replying in writing to parliamentary questions posed by IFP MP Mzamo Buthelezi on several matters regarding Eskom’s management.
Buthelezi asked Gordhan about plans to get rid of the R402 billion debt hanging around the national electricity provider’s neck.
He also enquired why the SOE had such a poor method for handling fruitless expenditure.
In his response, Gordhan said Eskom did not not have a fully automated record-keeping system, which resulted in records being maintained manually.
“During our annual audit processes, there are limited audit turnaround times which are not always adhered to. However, Eskom is focusing on addressing the automation issue.
“We acknowledge the fact that at times it takes (a long time) to finalise some matters. This is mainly due to the complexity of the matters and the shortage of internal capacity to deal with the volumes of disciplinary actions.
“The process to outsource some of these matters is rigid due to the governance process required by the National Treasury. This notwithstanding, there has been significant progress made in addressing these matters,” Gordhan said.
He also said that Eskom’s reliance on State funds would decrease in the future if it could receive a cost-reflective tariff, recover municipal debt in arrears, manage internal costs, and deal with its current excessive leverage.
Eskom is currently insolvent.
The utility is set to benefit from $8.5 billion (R130.59 billion) in loans and grants pledged to South Africa by countries such as the US and the UK at the COP26 climate change meeting in Glasgow, Scotland, last year.
But it wants the government to cut out more than half of its debt before accepting the Western aid.
Gordhan said Eskom’s current debt-service costs could not be adequately covered by the amount left over from operations: “Eskom can afford to service a debt of approximately R200 billion. This means that the balance sheet needs to be de-leveraged by R200 billion.”
He also said Eskom had communicated the need to reduce its debt by at least half of its current level to its shareholder representative.
“A significant proportion of funding offered by the international partner group countries (the so-called $8.5 billion) is expected to be used for Eskom’s just transition plans. In particular, these funds will be utilised to support Eskom’s plans to repower and repurpose coal plants that are shutting down with renewables, battery storage and gas.
“This financing will not (and cannot) be used for financing the legacy coal debt. The (Department of Public Enterprises) has been fully supportive of Eskom’s JET (Just Energy Transition) plans,” Gordhan said.
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