Eskom: R3-Billion Payments Outside Contract Acknowledged

• Eskom admitted to R3-billion in irregular payments to diesel suppliers, made outside of contractual terms.
• These payments occurred between January and April 2025 to three suppliers during a period of intense load shedding.
• The admission followed an 18-month investigation into R21-billion worth of diesel contracts.
• Eskom acknowledged past prepayments but stressed that operational pressures do not excuse non-compliance with governance requirements.
• The utility's disclosure referred to the funds as 'advanced payments' rather than 'prepayments' as alleged by an external investigation.

However, operational pressures do not diminish our obligation to comply fully with internal controls and governance requirements.

South African power utility Eskom has acknowledged making R3-billion in irregular payments to its diesel suppliers, a revelation stemming from an 18-month internal investigation into R21-billion worth of diesel contracts. The admission was contained within a seven-page press release issued on the evening of Thursday, August 27, 2026. While the utility stopped short of categorizing these as 'prepayments' — a term used in an investigation by amaBhungane — it instead referred to them as 'advanced payments' and 'payments outside of contractual terms'.

These significant Eskom R3-billion payments outside contract were disbursed to three distinct suppliers over a concentrated period between January and April 2025. This timeframe coincided with a critical resurgence of load shedding across the country, placing immense pressure on the national power grid. The utility's CEO, Dan Marokane, addressed the operational challenges of the period, stating that the months from January to March 2025 demanded swift operational responses and difficult decisions from both employees and executives to maintain supply security and grid stability.

However, Marokane underscored that such operational pressures do not absolve the utility of its fundamental obligation to adhere strictly to internal controls and established governance requirements. This statement highlights a critical tension between urgent operational demands and the imperative for sound financial management and compliance within state-owned enterprises, particularly concerning South Africa public procurement.

Eskom's statement also shed light on historical practices, acknowledging that it had, on occasion, made prepayments to diesel suppliers in the past as a measure to avert load shedding. The utility suggested that this historical precedent might have contributed to the perception of advance payments as a readily available operational mechanism. This insight points to potential systemic issues within Eskom governance failures, where expediency may have overshadowed strict adherence to procedural protocols.

Despite any past informal acceptance, Eskom explicitly clarified that prior instances of such payments did not negate the necessity of obtaining prescribed approvals. Furthermore, the utility emphasized that even when actions were taken before formal approval, there remained a clear requirement to promptly complete the necessary ratification processes, as stipulated by its governance frameworks. This indicates a recognition of a lapse in formal procedure, even if previous actions had set a precedent.

The disclosure of these Eskom irregular payments, particularly the R3-billion made outside of contractual terms, signals heightened scrutiny on public procurement practices and corporate governance within South African state-owned enterprises. The utility's investigation into its R21-billion diesel contracts and the subsequent admission underscore the challenges in balancing urgent service delivery with stringent financial oversight and compliance. This situation brings into focus the need for robust internal controls to prevent similar occurrences in the future.

The fact that Eskom's disclosure was not deemed 'full and frank' by external observers, despite the utility's own 18-month investigation, suggests ongoing concerns about transparency. The distinction drawn by Eskom between 'advanced payments' and 'prepayments' — a term used by amaBhungane's investigation — further highlights the nuanced language often employed in such disclosures, which can sometimes obscure the full extent of non-compliance. This incident serves as a critical case study for understanding the complexities and vulnerabilities inherent in large-scale public sector contracting.

This development signals heightened scrutiny on public procurement and corporate governance within South African state-owned enterprises. Legal and compliance professionals should review internal controls and contract approval processes for engagements with SOEs to mitigate risks of irregular payments and ensure strict adherence to statutory and internal compliance frameworks.

Source: Original reporting via AllAfrica