In 1988, John Maree chaired the electricity council, which determined Eskom’s policy, planning and objectives and generally controlled the utility’s activities.
It also appointed the management board.
Unlike the newly appointed 12-member Eskom board chaired by Jabu Mabuza, the council had 20 members comprised of representatives of large electricity customer groups and independent experts appointed for their specialist knowledge in, for example, finance, industrial relations and technology.
Eskom’s priorities for 1988 included investigating privatisation; performance management; staffing, people development and quality circles; planning, budgeting and performance indicators; and internal communication.
In preparation for privatisation, study groups comprising Eskom executives and consultants from the private sector were formed.
Areas covered included legal aspects, human capital issues, options regarding structure and the implications of privatisation for financing and tariffs.
In 2018 Mabuza has been mandated by the government to restore Eskom to the respected, well-run entity Maree and his board created and get it back on the road they travelled.
Like Maree’s board, the Mabuza-led board was well received by the media and financial markets, which are enjoying the Cyril Ramaphosa honeymoon since his election as the leader of the governing ANC.
The positive sentiment is not informed by promarket policy changes but arguably by the sudden waking up from slumber of our prosecuting authorities, particularly the Asset Forfeiture Unit.
Ramaphosa’s intervention in Eskom’s affairs was externally driven rather than being a sudden discovery of decisiveness by him.
For example, only after a telephone call from the Development Bank of Southern Africa and the Public Investment Commission leadership to the finance minister was the public enterprises minister pressurised into acting on governance at Eskom. Pressure was also exerted by foreign banks on the finance minister to act on South African Airways, failing which they would recall their loans.
Eskom failed to produce its interim results in December and talk is that not only have its losses ballooned but the utility is technically insolvent. Asset management firms make their decisions based on a firm’s ability to service interest payments and repay the principal on maturity. When Eskom failed to release its results, lenders could not assess Eskom’s borrowing and servicing capacity, making it difficult for asset managers to assess its solvency and liquidity.
Moreover, the World Bank, which had approved a $3.75bn loan to Eskom, also faced questions relating to its complicity in corruption at the power utility.
It is pressure from asset management firms that has led to Ramaphosa acting, fearing that an Eskom collapse will undermine his presidency should the ANC win in 2019.
He did not want to be the first democratically elected president to have to ask the IMF and the World Bank for loans in the restructuring of the economy that would surely have to occur in the aftermath of an Eskom-led cross-default.
Mabuza could even outperform Maree by embracing Tobias Bischof-Niemz and Johan van den Berg’s rigorous recommendation, published in this newspaper, of embracing wind and solar to help resolve its woes (How to remove the Eskom albatross from around SA’s neck, January 22).
Ramaphosa should not get too much credit for any improvements at Eskom. He has, after all, watched over the looting of state assets under President Jacob Zuma.
• Mondi is a senior lecturer in the Wits School of Economic and Business Sciences.
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