Eskom Welcomes New Flexibility in Treasury’s Procurement Rules

  • Eskom has welcomed the relaxation and exemption by National Treasury on some key principles of the Public Finance Management Act (PFMA) supply chain management processes.
  • The new instruction note issued by Treasury will assist in providing agility and control in the procurement and supply management process to Eskom, which will assist in unlocking some of the bottlenecks in our attempts to speedily resolve some of the pressing operational challenges.

The amendment allows Eskom to approve contract variations without National Treasury approval and to engage directly with the original equipment manufacturers (OEMs) and maintenance suppliers of the most critical equipment and services required in the process of generating electricity. The amendments also provide Eskom with flexibility and agility over expansions, deviations and handling of urgent matters in its procurement processes.

The overall intent of the relaxation is to ensure the swift and flexible implementation of the procurement processes in a way that takes into account the core principles of the PFMA while ensuring fairness in the procurement processes. Eskom will continue to maintain the principles of Section 217 of the Constitution in that competitive bidding be the usual mechanism for procurement, and deviations seen as an exception rather than the norm.

In the plan to drive efficient procurement and engaging with OEMs and maintenance suppliers, this measure supports the efforts for Eskom power stations and operating units to work faster and more efficiently on procurement of what they need at an operating level.

The existing oversight of Eskom’s handling of the public purse through the Standing Committee on Public Accounts (SCOPA) engagement and reporting to other committees of Parliament will be reinforced by the requirement to report on procurement activities under this exemption 14 days after the conclusion of transaction in order to maintain continued oversight by Treasury and the Auditor-General.

To effectively implement this note, the Eskom procurement team as led by Jainthree Sankar, Eskom’s Chief Procurement Officer, has engaged and clarified with National Treasury, sensitised the procurement staff and made the amendments to current Eskom procurement procedures. “We see this note as part of the integrated efforts of the Department of Public Enterprises, National Treasury and Eskom and this decision by National Treasury indicates growing trust to give Eskom back control over the most critical and urgent of its procurement,” said Sankar. “This will also positively impact on our ability to address procurement matters on the ground to make decisions impacting operations more swiftly.”

Author: Bryan Groenendaal

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