Eskom is set to face a rigorous examination before the Portfolio Committee on Electricity and Energy this Friday to explain dismal findings presented by the Auditor-General, Tsakani Maluleke and Deloitte executives on Wednesday on the utility’s 2023/2024 financial year.
The implications of the audit are serious, calling into question the utility’s ability to remain a viable entity amidst escalating municipal debts and findings of glaring disregard to implementing recommendations made by auditors over the years to address the underlying root causes of its underperformance.
In the report, which precludes Eskom’s now more than 300 days of no load shedding, Maluleke said commitments made over the years by those charged with governance to address these matters have not materialised due to a lack of accountability at various levels in the organisation.
She also cited inadequate oversight, monitoring processes and ineffective consequence management as a cause for this troubling narrative of governance.
“Adequate action is not taken against officials who contravene the supply-chain management prescripts, resulting in continued non-compliance and irregular expenditure, Maluleke said.
“In certain instances, slow progress was made in the process of investigating and following through on consequence management proceedings. Failure to implement consequence management encourages a culture where the disregard for legislation, policies and procedures thrives.”
As if reflecting a costly reality, Eskom reported distribution energy losses of 13.9 TWh as a result of electricity theft in 2023/24, when it reported operating losses of R57 billion.
Eskom’s current liabilities exceed its assets by R50bn, putting into perspective the utility’s dire financial footing.
Maluleke said Eskom was unable to place a value to the prepaid electricity tokens generated illegally, nor could it provide certainty on whether and where these token had been used.
This, owing to a lack of available data logs, which the office of the Auditor-General said reflected a breakdown of controls in the underlying business processes.
While the Auditor-General said that State-owned company remained a going concern, this was purely dependent on continued government debt-support and the utility’s ability to resolve municipal debt, which was at R86bn at the end of 2023/24 and projected to rise to R110bn by the end of March this year.
Maluleke noted that Eskom’s overall audit position had deteriorated in 2023/24 compared to the year prior, with an improvement in only one area and a decline in three others.
Eskom has targeted cost savings of around R10bn over the next two years (R5bn each in 2024/25 and 2025/26).
However, Maluleke said that current and historical audits have found that Eskom did not have the appropriate systems, processes and controls to quantify irregular, fruitless and wasteful expenditure, nor recover the losses due to criminal conduct.
The report is on the back of Eskom’s 2024 performance in which 329 days of load shedding occurred from 280 days in 2023, characterised by an extremely high usage of Open Cycle Gas Turbines (OCGT)
In 2024 the OCGT load factor was at 17% Energy Availability Factor (EAF), up from 14.3% in 2023 , dropping to 54.56% from 2023's record low of 56.03%.
Maluleke noted that post-year-end plant performance improvement with no load shedding since 26 March 2024 may improve these stats for 2024-25 financial year.
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