The failures of governance, leadership and financial management at Eskom are of grave concern. This is according to the Minister of Finance, Malusi Gigaba, who delivered his Medium Term Budget Policy Statement (MTBPS)speech to parliament today.
“As government is guarantor over a significant portion of Eskom’s debt, it has become a significant risk to the entire economy. Eskom is simply too important to the country to fail, and we will not allow it to.
“National Treasury will work closely with the Department of Public Enterprises to strengthen governance and financial management at Eskom.”
Gigaba said that government had committed to the following urgent steps:
“We will appoint a new board at Eskom before the end of November this year. Working with the new board, we will ensure a credible executive management team is in place. We will ensure its financial management complies with the Public Financial Management Act (PFMA), and that irregular expenditure is accounted for.”
Government has extended its R350 billion guarantee from 31 March 2017 to 31 March 2023 because of
delays in Eskom’s capital investment programme.
The extension of the guarantee will allow Eskom to use the remaining portion to complete its planned capital expenditure programme, the MTBPS said.
“The regulator is expected to rule on Eskom’s application for a tariff increase for 2018/19 as well as its Regulatory Clearing Account application. If these applications are successful it would represent a step-change in Eskom’s future revenues. Combined with strong cost management, this could allow the utility to cover all its obligations without fiscal support.”