Video: Parliament’s Standing Committee on Public Accounts hearing, 11 February 2025
- In parliament yesterday, South Africa’s Auditor General, Tsakani Maluleke, highlighted Eskom’s lax internal controls, lack of consequence management and accountability concerning ‘undesirable expenditures’ which adversely affects primary end user energy costs.
- Last month the Auditor General raised concerns over a lack of ‘controls’ following the discovery of major pre-paid fraud at the utility.
- Eskom reported a loss of R55 million and debt of R397 billion in its most recent Annual Financial Statement.
A forensic investigation uncovered the bulk generation of illegal prepaid electricity tokens on Eskom’s online vending systems, for both Key Revision Number (KRN) 1 and KRN 2 prepaid meters. Indications are that this is only likely if there is collusion between Eskom staff and illicit operators who breached controls within the prepaid ecosystem to facilitate the creation and sale of fraudulent prepaid electricity tokens.
A forensic investigation is still underway to identify the root causes and make recommendations for improvement as it progresses. An update from the investigation will be provided once it is finalised. The matter is also being handled by the relevant state investigative authorities. The extent of the problem remains unknown.
Mr Calib Cassim is Chief Financial Officer of Eskom. Image credit: Eskom
Delayed publication of results
The publication of the FY2024 results was delayed by investigations into legacy management control issues. The qualified external audit opinion received for FY2024 was a result of PFMA records that were not complete or accurately maintained in line with legislative requirements relating to irregular expenditure, fruitless and wasteful expenditure, and losses due to criminal conduct. Except for this qualification, the financial statements are considered to be fairly presented in terms of the International Financial Reporting Standards (IFRS).
The audit findings call for appropriate steps to hold officials accountable, and this action is underway. The steps that are already being taken to address the control issues include a strengthened executive team that has the appropriate skills and leadership to drive adherence to internal controls, risk management and PFMA oversight. A resourcing drive to adequately capacitate the finance, internal audit and forensics functions to address key skills lost over the years will commence shortly.
Eskom has consolidated its forensics, security and investigative functions under the Group Investigations and Security function reporting directly to the Group Chief Executive. Additionally, a dedicated project management office has been created to address findings from data analytics as well as internal and external investigations and to address the backlog in investigations and consequence management both internally and externally with law enforcement agencies.
Unsustainable Debt
Eskom’s municipal debt has reached R74-billion by the end of the reporting period. By November 2024, this debt had snowballed to R95-billion and is likely to reach R120million by next month (March 2024). Read more
Eskom is also challenged with smothering debt and interest costs, which are weighing on its money-generation potential. By October, its debt stock reached R397-billion, and it paid about R90-billion every year in interest rates, largely due to the weakening rand.
Eskom reported a loss of R55 million in its most recent Annual Financial Statement. Read more
Author: Bryan Groenendaal
