Auditor-general flags SOEs in shambles

An Eskom power plant. Picture: Ayanda Ndamane/African News Agency (ANA)

An Eskom power plant. Picture: Ayanda Ndamane/African News Agency (ANA)

Published May 4, 2023


The Auditor-General has slammed the Department of Public Enterprises for failing to meet key targets for state-owned entities.

The senior officials from the auditor-general’s office said there was also no correlation between what the department had set to achieve and its performance.

Bongumusa Thabethe, who is the senior manager in the office of the auditor-general, told members of the portfolio committee on public enterprises this week that the department must get its house in order.

He said SOEs were deteriorating because of a number of failures by the department.

One of the key issues was that the department was saying the state was cracking down on the vandalism of infrastructure, but the situation was getting worse.

The Department of Trade and Industry said recently cable theft costs the country more than R40 billion a year.

Thabethe also said there were material irregularities in some of the SOEs that were audited by the auditor-general.

The annual performance plans of public enterprises must be aligned to their mandate and objectives.

This did not seem to be happening.

This was also reflected in how some of the SOEs had been struggling and at times needing financial support from the state.

The country was in the midst of an energy crisis. Eskom has been implementing various stages of load shedding for the past few months.

“When we evaluate the DPE performance year in and year out they say they are achieving their targets, but there is a gap.

“When you look on the side of the SOEs you and I will be on the same page that the state of SOEs is not improving, but deteriorating,” said Thabethe.

The auditor-general wanted to see the improvement of governance and accountability on the entities.

They also want to see the increased role and performance of the SOEs to the South African economy, said Thabethe.

This must also apply in resolving the energy crisis.

Thabethe said the set targets of the department were not linked to the outcomes.

“There is an expectation in terms of Section 54 of the PFMA (Public Finance Management Act) that DPE approves these key decisions that are taken by SOEs, like the new route that needs to be implemented, the sale of major transactions by SOEs and other various transactions that DPE is expected to approve. But the key element, which the SOEs are expecting, is the efficiency by DPE dealing with this. If they are applying for the new route they are expecting DPE to approve it timeously so that they can tap into that market and be able to achieve it,” said Thabethe.

“But when you go to their annual performance plans to see ‘is there a target DPE has set themselves for that thing? There are no targets. But this is part of the performance they are doing there’,” said Thabethe.

He added that state entities continued to play a key role in the economy and if they did not perform well this had a direct impact on the economy.

There must be clear targets that the department is able to achieve and deliver on, he said.

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