When former Eskom chair Reuel Khoza, along with four other former executives of the state-owned power utility, approached the entity’s management five years ago with solutions to resolve its ever growing list of problems, they were met with a cold shoulder, Khoza says.
“They would not listen to us because they had other intentions about Eskom [being] one of those cows that could be milked [and] we were brushed aside with gusto,” he said on Thursday.
At the time, the power utility was struggling to emerge from multiple corruption and governance scandals which led to its debt swelling to R419bn from R40bn in 2007. The power utility’s debt burden and inability to provide sufficient energy supply to meet demand, requiring it to implement intermittent load-shedding, has been flagged by market watchers as a threat to the country’s growth.
“Somebody has to save Eskom,” Khoza said during the chairman’s conversation hosted by MSG Afrika chair Given Mkhari.
Khoza joined Eskom as it chair in 1997 when the company was highly indebted; its 3.1:1 debt to equity ratio (measures how much of a company’s finances goes towards repaying its debt) means “for every rand of equity the company had it was owing R3.10. By the end of 2001 the debt to equity ratio had reduced and the utility was voted the global power company of the year at the Financial Times Global Energy awards, he said.
Khoza said what made the company one of the best at the time was that “the finance and Treasury was actually superior to most banks [and] the electricians that we had were among the best but all they needed was a catalytic agent to catalyse that.”
“[Rating’s agency] Moody’s had rated us above the sovereign, in other words the state-owned enterprise run along business lines was rated as more creditworthy than SA incorporated.”
He, however, will not be returning to the power utility because he does not want to “rule from the grave”.
To resolve Eskom’s energy supply challenges, the government plans, among other things, to unbundle the utility into three units — transmission, generation and distribution — and to allow for private sector participation to secure additional power supply to meet demand.
Despite this Eskom and other state-owned entities are expected by the Treasury to be a burden on the fiscus because of continued underperformance.
Khoza, who has served on various boards of public and private companies also bemoaned the failure of the government to meet its targets outlined in various policy proposals.
“Our leadership don’t have timelines, they don’t have monitoring ... The implementation apparently is something that they believe can drift and from that drift we can get somewhere and that is where we make a big mistake as a nation,” he said.
“There is a sense, which the current leadership does not comprehend, that we can’t stand still or just mouth platitudes and explain things ... and not inspire and implement.”
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