Wednesday was President Cyril Ramaphosa’s single worst day in office as the very point of his supposedly informed, careful, thoughtful administration was blown out of the water.
Left exposed was a confused and slightly panicky rump as both the electricity state of disaster so conceitedly declared in February was dropped, and a notice gazetted by finance minister Enoch Godongwana last Friday exempting Eskom from having to report irregular, fruitless and wasteful spending was pulled.
Ramaphosa buckled in the face of a legal challenge from the Organisation Undoing Tax Abuse. Godongwana was knocked over by public outrage on Twitter. Both men have been grievously damaged politically, but perhaps the president in particular.
On March 31 2022, the end of the financial year, Godongwana gazetted a notice regarding Transnet, exempting the transport group from provisions of the Public Finance Management Act so that it would no longer be required to record “any losses from criminal conduct, any irregular, fruitless and wasteful expenditure and any losses recovered or written off in the annual report”. This notice covered financial years 2021/22, 2022/23 and 2023/24. No-one said a word.
On March 31 2023 Godongwana issued an exact replica of that notice (though the years had moved forward to 2024/25), except this time in respect of Eskom. The country went wild.
It was proof, if any were needed, that theft is the order of the day in the state and here was the National Treasury spelling it out in black and white. “Treasury gives Eskom a licence to loot,” screamed a tweet on my phone. Another warned that “It’s like removing breaks [sic] so that your car can drive fast without hindrance. The purpose here is to pave a way for white owned corporations to claw back & secure lucrative contracts, who in turn will award the leadership with shares. Its a New Dawn for WMC & Dusk for Blacks.”
Social media is bonkers but you have to ask yourself how the Treasury would not know how a notice allowing Eskom, Eskom, not have to report theft, waste and criminality would land in public. On Wednesday, as Godongwana was retreating, he said he was pulling the Eskom exemption “for now”.
And Transnet? People don’t care, even though the waste and mismanagement there puts Eskom to shame. The idea, prompted by a begging letter from Eskom chair Mpho Makwana, was always to prevent Eskom having to publish details of wasteful expenditure in its financial statements, all of which are signed off by auditors, but to include them in the annual report, which follows a few months later — all of which is not audited.
The problem seems to be that audits with a qualification from the auditor-general (a necessary threat in the public sector, but one listed companies don’t face) may affect Eskom’s credit rating. And what really worries Godongwana as he readies to take over more than R200bn of Eskom’s debt, is what more qualified Eskom audits might do to the sovereign rating. Eskom doesn’t borrow in commercial markets like it used to. The state does every week.
State company managers hate the fruitless, wasteful, irregular and criminal expenditure line. It is all MPs talk about when they report to parliament and, because the police are so poor, much of the spending executives have to account for repeats year after year because cases are never closed. And, clearly, not all fruitless expenditure is criminal. How did Eskom have to account for the spend developing the pebble-bed modular nuclear reactor, for instance, before abandoning it in 2009?
But it is hard to shake off the sense that this has been a deliberate attempt to hide information. A News24 story a few days ago had both Nedbank’s chief economist, Nicky Weimar, and analyst JP Landman, predicting a total collapse at Eskom. Weimar said a Nedbank team was working on the possibility of a total blackout. “We need to get business, in general, to become prepared if that happens,” she was quoted saying. “How will we as banks continue to keep the lights on, keep people’s money safe, make sure that lending continues?"
Landman suspects load-shedding is being manipulated as Eskom’s reserve margin (the measure of how much capacity is available above peak demand) has been deteriorating. Eskom targets 15%. “I don’t like the fact that we don’t have as much load-shedding as we used to because the purpose of load-shedding is to avoid a blackout,” he said. “If you have less load-shedding, you increase that risk. And this reserve margin story for me is a bit disturbing.”
Ramaphosa’s state of disaster for electricity was supposed to prevent a collapse, but it is a measure of its futility right from the start that the immediate end of the state of disaster on Wednesday will make no difference at all to the amount of electricity we may or may not have available.
The disaster regulations were also going to be used to make new electricity minister Kgosientsho Ramokgopa’s job easier by allowing him to cut corners. Now he can’t, so we will soon get a clearer picture of how good he is. As for both Ramaphosa and his finance minister, perhaps they will better understand now that compromising financial transparency and cutting regulatory corners, in an era when trust in the state is at rock bottom, is borderline madness.
• Bruce is a former editor of Business Day and the Financial Mail.
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