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Featured image: Eskom

The failures of governance, leadership and financial management at Eskom are of grave concern,” Finance Minister Malusi Gigaba said in Parliament on Wednesday while delivering his first Medium-Term Budget Policy Statement (MTBPS).

However, acknowledging the connection between electricity infrastructure and economic growth, Gigaba noted that state-owned enterprise Eskom is critical to the countries development.

Minister Gigaba highlights concerns

The Minister cited President Zuma during the Presidency Budget Vote on 31 May 2017, who re-affirmed the view that: “With regard to nuclear energy, we reiterate that the programme will be implemented at a pace and scale that the country can afford.”

Gigaba emphasised that this will necessarily take the economic climate and electricity demand into consideration.

“It is Eskom’s governance issues which are of major concern to government,” he said.

As government is guarantor over a significant portion of Eskom’s debt, it has become a significant risk to the entire economy.

Resolving leadership issues

“Eskom is simply too important to the country to fail, and we will not allow it to,” Gigaba reassured.

A team from National Treasury with the necessary expertise will work closely with the Department of Public Enterprises to address the governance, management and financial management challenges at Eskom and report back periodically.

He concluded: “Government commits 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.”

Read the full Medium Term Budget Policy Statement here.

 

Featured image: Dean Hutton/Bloomberg