MBABANE – The Eswatini National Petroleum Company (ENPC) has been flagged for allegedly overstocking gas cylinders and regulators valued at around E3 million.
This information is contained in a confidential document, which is yet to be made public.
The document states that there was an alleged excess inventory of gas cylinders and regulators at ENPC’s rented warehouse in Matsapha at a cost of E3 486 948.90.
It is mentioned that the ENPC purchased 4 000 units of 5kg Phephile gas cylinders.
However, only 1 198 units went to the market and the remaining 2 802 were being kept at the warehouse at the time when the investigation was conducted.
The finding was that the ENPC failed to comply with the provisions of Section 11 (2) of the Public Finance Management Act of 2017, which mandates the management or Board of an entity to put in place measures for the management of public finances consistent with the principles, standards, processes and systems required under the Act.
Additionally, Subsection (2) (d) and (f) requires the management to put systems in plate to ensure authorised, effective, economical and transparent use of the resources of the entity and make arrangements to prevent unauthorised or wasteful expenditure, or loss of public resources.
A recommendation contained in the document is that the ENPC should determine the demand for the products prior to procuring in order to minimise the risk of overstocking.
Notably, in his Compliance Audit Report, the Auditor General, Timothy Matsebula, said he uncovered that there was unlawful classification of revenue as deferred income and distributable in the audit operations of the ENPC.
The report was tabled in Parliament in September this year and he said he reported that to the controlling officer, that being the principal secretary of the respective ministry, which the ENPC falls under, that according to Section 33 (1) (b) of the Petroleum Act 18 of 2020, ENPC’s revenue includes a fuel levy of 35 cents per litre of fuel sold.
However, according to the AG, the ENPC Board resolved to prorate this levy, allocating 5 cents for operations and 30 cents for capital funding, which contravenes the Act.
Additionally, the AG said for the financial years ended March 31, 2022, 2023, and 2024, ENPC unlawfully classified E319 377 294.00 as distributable funds under non-current liabilities, instead of recognising it as revenue.
This amount corresponds with the 30 cents per litre portion.
The AG said capital expenditure during 2023 and 2024 utilised E60 676 440 of these funds, leaving a net balance of E258 700 854.
He said ENPC only recognised as revenue the five cents per litre plus the utilised capital funds, understating total revenue.
Furthermore, the AG said he noted that surpluses totalling E52 359 047 for the years ended March 31, 2022, 2023, and 2024 were incorrectly classified as deferred income under non-current liabilities rather than as part of net surplus.
This classification, he said, created a fictitious liability of E311 059 901 and understated accumulated funds or omitted a Capital Fund.
Matsebula made reference to Paragraph 15 of IAS 1, which requires financial statements to fairly present the financial position and performance of an entity, following IFRS and the Conceptual Framework.
(IAS) is an acronym for International Accounting Standards (IAS), which by definition are a set of rules for financial statements that were replaced in 2001 by International Financial Reporting Standards (IFRS).
They have since been adopted by most major financial markets worldwide.
Both standards were issued by the International Accounting Standards Board (IASB), an independent body based in London.
IFRS has been widely adopted with 160 of 168 nations and reporting jurisdictions committing to these accounting standards for domestically listed companies.
Experts argue that globally comparable accounting standards can help promote transparency, accountability and efficiency in financial markets.
They help investors and market participants make more informed economic decisions regarding investment opportunities and risks.
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