MPs scold Eskom after AG report highlights little progress [VIDEO]

The Standing Committee on Public Accounts (Scopa) has raised concerns about Eskom’s exorbitant electricity tariff increases, saying that ordinary South Africans cannot afford it.

On Tuesday, Scopa was briefed by the Auditor-General (AG) on Eskom’s annual reports and financial statements for the 2023/24 financial year.

Eskom received a qualified audit opinion with findings for the 2023/24 financial year.

Electricity hike

During the briefing, the EFF’s Veronica Mente-Nkuna raised concerns about Eskom’s electricity tariff hike.

“Electricity is skyrocketing in terms of prices. People cannot afford it. No one can afford electricity in South Africa, and if they keep increasing tariffs with the hope that they are collecting revenue to strengthen their finances, that’s not a way to go.

“The problems in Eskom is not money or funding, problems at Eskom is systems. Their systems are a mess; leadership is a mess. Problems at Eskom are not dealt with; you have highlighted them under Financial Management and your outcomes in terms of the qualification,” Mente-Nkuna said.

The Standing Committee on Public Accounts (SCOPA) has raised concerns about Eskom’s exorbitant electricity tariff increases, saying that ordinary South Africans cannot afford the hike. This is the EFF’s Veronica Mente #Eskom #Scopa @TheCitizen_News pic.twitter.com/othqflb0vm

— 𝙵𝚊𝚒𝚣𝚎𝚕 𝙿𝚊𝚝𝚎𝚕 ⚡️ (@FaizelPatel143) February 11, 2025

Auditor-General’s concerns about Eskom

Business unit leader at the Auditor General of South Africa Madidimalo Singo said there are areas they are worried about in the Eskom audit report.

“There are three areas that we are worried about, and that also contributes to the question that Honourable Mente raised. The one is how the entity actually manages expenditures, and we’ve seen that they are struggling with irregular expenditures, fruitless and wasteful expenditures, as well as losses in criminal conduct,” Singo said.

“What we have noted in the environment is that the lack of consequence management in these areas contribute to these undesirable expenditures. What we do know in agreement with Honourable Mente is that there is an increase in the cost of electricity. And you would have seen when we were presenting that it was not reflected on the issue of the primary energy cost, and this is the cost to produce electricity.

“So, to the extent that the audit action plans are not effective in addressing these three undesirable expenditures, we will continue to see a rise in the permanent energy costs, and consequently a rise in the cost of electricity. So, again, here our recommendations to the board and to the management and audit committee is being that you’ve got to strengthen the internal mechanism of looking after these expenses,” Singo said.

Singo said Eskom’s management had not taken sufficient steps to detect, record and address irregularities, particularly in supply-chain management.

Nersa

Last month, energy regulator Nersa approved a 12.7% electricity tariff increase. Eskom had applied for a 36% tariff increase, along with additional hikes of 11.81% for 2026 and 9.10% for 2027.

Nersa also approved 5.36% and 6.19% hikes for each of the next financial years.

ALSO READ: Nersa approves 12.7% electricity tariff hike for Eskom

In total, over the three years, Nersa has reduced the allowable revenue by R247 billion instead of the R445 billion, R495 billion and R537 billion Eskom wanted.

While the allocation is less than South Africans feared, it may come back to bite them as taxpayers by necessitating further government bailouts due to the lower-than-anticipated revenue and the ever-growing debt from municipalities.

Audit outcomes

The audit outcomes presented to Scopa showed that Eskom has made very little progress in implementing recommendations made by auditors over the years to address the underlying root causes.

The AG’s report said the Eskom board should assess progress in implementation and impact of measures aimed at strengthening internal capacity, consequence management and the control environment.

The AG said the Eskom board has a responsibility to build an entity that is characterised by a “culture of performance, accountability, transparency and institutional integrity which will ultimately result in a sustainable delivery against the mandate”.

“While noting that Eskom is not the only key roleplayer in the energy value chain, its role is the most critical one in the ecosystem as a producer and supplier of electricity. Historical performance, as reported in the directors’ report, shows that generation continued to under-perform for the 2023-24 financial year.

“However, the post year-end generation performance shows great signs of improvement and evidence that the implementation of the generation recovery plan is bearing fruit,” the AG’s report stated.

Recommendations

The AG made recommendations, saying credible financial statements and performance reports are needed to transparently gauge Eskom’s performance.

It said legislation and policies are in place to regulate responsible and effective financial and performance management.

“The protection of public funds and resources; and the fiduciary duties of leadership and officials to behave ethically and act in the best interest of the state, and to ensure that there are consequences for transgressions and poor performance – these must just be implemented,” the AG’s report said.

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