Not even SA-born Tesla CEO Elon Musk can sort out Eskom’s power crisis and anyone considering the soon-to-be-vacant CEO job at SA’s failing state-owned power utility would have to be “crazy”.
That’s the view of former FNB CEO Michael Jordaan, founder of Montegray Capital and Bank Zero, who made the comments in an interview with Alishia Seckam during PSG’s Think Big webinar series on Tuesday. Jordaan described the power crisis at Eskom as “devastating” and said he was in regular contact with small business owners who wanted to “hand back the keys” due to the persistent load-shedding that makes it impossible to operate.
Asked whether he would consider stepping into Eskom CEO Andre de Ruyter’s shoes when he officially steps down at end-March, Jordaan said it was unlikely that anyone could succeed at leading the troubled state-controlled power utility. Instead, he touted the power of the free market to solve SA’s power woes and recommended the “rapid installation of solar” energy.
“You have to be crazy to do that job — you can only be successful if you have freedom to choose the best team around you and be supported by your shareholders,” said Jordaan. “If that’s not the case … you could put Elon Musk in there, he won’t succeed.”
SA has suffered power cuts every day so far in 2023 as Eskom battles a generating capacity shortfall of 4,000MW-6,000MW, prompting Eskom chair Mpho Makwana to raise the prospect of permanent stage 2 and 3 load-shedding. However, De Ruyter later said Eskom may require either higher or lower stages of load-shedding, depending on the number of generating units requiring maintenance at any given time.
“You need power to function, not just for the fourth industrial revolution, not just for the third industrial revolution … it was in fact the second industrial revolution that needed power,” said Jordaan. “The obvious [solution] is a rapid installation of solar. It’s already cheaper than Eskom if you use it in the daytime.”
Yet despite the dire power situation in SA against an increasingly pessimistic global economic backdrop, Jordaan said he remained positive about the country due to its “pioneering” and “resilient” spirit. He also said the private sector had the ability to step in and provide the services that the state was incapable of delivering.
“I remain positive on SA because I do believe the market is going to sort those things out,” he said. “I remain confident that the market is going to come with many more solutions than the state will. If you look at the amount of solar that was installed by the private sector last year outside the IPP [independent power producer] programme, that equated to one whole level of load-shedding. That is what the market by itself solved last year.”
Asked about the collapsed merger talks between Telkom and broadband provider Rain, in which he was an early investor, Jordaan said further consolidation in the telecommunications industry was inevitable. This is because small players in the industry do not have sufficient capital to build the infrastructure needed to provide the countrywide coverage that customers want.
Telkom said on January 11 that merger talks with Rain had ended as the two parties had decided that a suitable transaction was not possible “at this time”.
“While the Telkom merger for now, for reasons that I am not at liberty to disclose, hasn’t come off … that doesn’t meant it can’t happen in the future,” said Jordaan. “It’s clear to us from our reading of other markets that consolidation is likely to happen. That consolidation is less likely to happen with a very strong duopoly we have in SA. It will be the smaller players like Telkom, Cell-C and Rain that will have to make a plan to be able to compete against the big two.”
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