Relaxed procurement rules mean Eskom can move faster to deal with operational obstacles

Eskom expects to be able to move faster to get what it needs. Photo: Gallo Images / Reuters

Eskom welcomed the Treasury’s easing of some supply constraints, a move she believes will help move faster to solve some of the utility’s pressing operational challenges.

In a statement on Friday, Eskom noted the loosening and exemption by the National Treasury on some key principles of the Public Finance Management Act (PFMA) supply chain management processes, as contained in an instruction note, and came into effect in April.

Eskom said the amendment now allows it to approve contract changes without approval from the National Treasury and engage directly with original equipment manufacturers and maintenance providers of the most critical equipment and services required in the electricity generation process. The amendments also provide Eskom with flexibility and agility regarding expansions, diversions and handling of pressing issues in its procurement processes.

The move comes as Eskom’s operational performance continues to deteriorate and overall plant performance, measured by the Energy Availability Factor (EAF), dropped to 55.5% at the end of March, compared to a historic target of 80. %.

“The new instruction note will help Eskom provide agility and control in the procurement and supply management process, which will help unlock some of the bottlenecks in our efforts to quickly resolve some of the pressing operational challenges,” said the utility.

Eskom said the overall intent of the relaxation is to ensure rapid and flexible implementation of procurement processes, but in a way that takes into account the core principles of the PFMA while ensuring fairness in procurement processes.

“Eskom will continue to uphold the principles of Section 217 of the Constitution as competitive bidding is the usual mechanism for procurement and deviations seen as the exception rather than the norm,” he said.

Eskom is also required to report on procurement activities under this exemption 14 days after the conclusion of the transaction in order to maintain ongoing oversight by the Treasury and the Auditor General.

To effectively implement this change, Eskom’s procurement team made changes to Eskom’s current procurement procedures. “This National Treasury decision indicates growing confidence in giving Eskom back control over the most critical and urgent procurements,” said Jainthree Sankar, Eskom’s Chief Procurement Officer. “This will also positively impact our ability to address procurement issues on the ground to make decisions that impact operations faster.”