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ESWACAA INCURS E1.348 BILLION LOSS

12/05/2022 09:04:00 Stanley Khumalo

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MANZINI – Eswatini Civil Aviation Authority (ESWACAA) has an accumulated loss of E1.348 billion.

This is one of the findings of the Auditor General, Timothy Matsebula, which he said threatened the ability of the parastatal to sustain delivery of services to the public and achieve its mandate. He said the indications of the existence of material uncertainties included a net deficit of E162 206 790 and accumulated loss of E1 348 832 659. Matsebula also said ESWACAA had not remitted taxes amounting to E12 335 642 to the Eswatini Revenue Services (ERS) and had current liabilities which exceeded its current assets by E17 514 632.
The findings by the AG are published in his Compliance Audit Report for the Financial Year ended March 31, 2021.

Matsebula said he reviewed the audited financial statements and audit report to management of ESWACAA for the financial year ended March 31, 2021, as required by the Public Enterprises (Control and Monitoring) Act 1989, PEU Circular No. 3 of 2008, and Section 21 (2) of the Audit Act of 2005. Upon doing so, he said his findings were communicated with the Principal Secretary (PS) in the Ministry of Public Works and Transport, Thulani Mkhaliphi, through a report referenced C37/23, dated March 18, 2022. He reported that the PS responded through letters dated March 24, 2022 and April 27, 2022 referenced WT/ADM/06. However, he said it remained unresolved that the Civil Aviation Authority incurred a net loss of E162 206 790 for the year ended March 31, 2021 and a net loss of E176 912 022 in the year ended March 31, 2020. As such, Matsebula said the accumulated deficit stood at E1 348 832 659.00 as at March 31, 2021. “This means that the entire investment made by the shareholder (government) is at risk of being drained and the shareholder might be indebted to rescue the public enterprise,” said Matsebula.

He raised a concern that ESWACAA was reliant on the subvention grant from government and in the financial year under review, the parastatal received a subvention grant amounting to E124 099 661 which indicated a decrease of E10 281 791 (8 per cent), from the previous year’s subvention of E134 381 452. The AG said Mkhaliphi concurred with his observation and the latter stated that ESWACAA’s reliance on the subvention grant from government was correct. He said the PS further stated that this was true for most of the civil aviation authorities all over the world particularly within Africa and ESWACAA was advised that the reduction (from the allocation in the Appropriation Act 2021) was necessitated by changing government priorities in the wake of the COVID-19 pandemic.

“The Authority suffered a reduction of about E7.5 million in landing, overflight, parking and permit fees while airport tax collections were reduced by about E2.3 million as a result of the reduced activity that was necessitated by the effects of the COVID-19 pandemic,” the AG reported. Matsebula reported that the PS further stated that they were convinced that with the relaxed restrictions, a timely and full release of the government subvention and the improved aviation activities ESWACAA should post better financial results, beyond the 2021 financial year, this item had been a source of concern even to the parastatal’s leadership hence the special mention of its ongoing concern.

Furthermore, he said Mkhaliphi said among the expenditure controls that had been implemented by ESWACAA in the financial year ended March 31, 2022 to improve the situation, included a restructuring, as recommended in a job skills audit report that was released in 2019. He said this exercise resulted in the merging of three directorates into one, while the fourth was incorporated into an existing one. Matsebula said the directorates that were merged into one (now corporate services) were legal services, human resources and marketing. He said the fourth was the Air transport directorate which was incorporated into the flight safety standards directorate. This restriction, he reported, would result in reduced manpower costs.
“All the Authority’s vehicles were ‘surrendered’ to the pool. These include the vehicles that were dedicated for use by the four directors and those that were used for staff travel to and from work,” he reported.

Matsebula said this initiative should result in reduced vehicle maintenance costs, hence an improvement in the operating deficit. The AG said the response of the PS was acknowledged; however, the issue of unsustainable service delivery and threats towards the ability to achieve its mandate still remained a concern.