Former Eskom CEO Brian Dames had little choice but to recuse himself yesterday from the task team President Cyril Ramaphosa established last week to advise him on how to proceed with Eskom.
Dames was too conflicted and it must have dawned on him that he could spoil the effort Ramaphosa is trying to make. Not only is he a former Eskom boss but he now runs African Rainbow Energy & Power, a renewable-energy play, for billionaire miner Patrice Motsepe, Ramaphosa’s brother-in-law. There was no way he could stay.
The unions are already agitating about the future of coal (as if it will miraculously secure the futures of their children).
The EFF waded in with a string of wild assertions when the task team was announced, and even some sane people questioned what the task team is supposed to do.
How would it relate to the board? Does it replace it? Or, as usual, "oh no not another task team/commission of inquiry/ special cabinet committee"? What a lot of moaning minnies we are. Someone comes along to try and fix the mess we’ve all been wailing about for years and because it doesn’t happen overnight it’s another catastrophe.
The head of the IMF, Christine Lagarde, was in SA yesterday. She met SA Reserve Bank governor Lesetja Kganyago, and Ramaphosa. That she did not have a (publicised) meeting with finance minister Tito Mboweni is probably a good thing. When that happens it’ll be to negotiate the surrender of our sovereignty because of the debt we (and mainly Eskom) are in.
Dames’s departure leaves the task team with seven people, all pretty impressive. Mick Davis is probably one of the smartest CEO's in the world, former Eskom too. Tsakani Mthombeni is a vice-president at Gold Fields and chairs the Energy Intensive Users Group. Anton Eberhard teaches energy policy at the University of Cape Town and drafted the energy chapters of the national development plan. Frans Baleni, former National Union of Mineworkers general secretary, brings a union view and also sat on Eskom’s board.
Grove Steyn is a highly regarded regulatory economist and has what one source close to the group calls "the best independent financial model of Eskom". Busisiwe Vilakazi is a senior researcher at the Council for Scientific and Industrial Research with an Oxford PhD.
Sy Gourrah is a former East London city electrical engineer and a former Association of Municipal Electricity Utilities of Southern Africa chair.
Their job? Tell the president what to do. Obviously he doesn’t want more load shedding in the run-up to what look like elections in May. He has just been given a report from the chairman of the Eskom board, Jabu Mabuza, on what the board thinks should happen to Eskom. But he wants the task team to evaluate the board’s advice. Who wouldn’t?
The pressure is tremendous. It is holidays now but by January 10 the country will be back at work. Factories and mines will kick in. Will the lights be on? Also, Ramaphosa wants at all costs to avoid a downgrade of our debt by Moody’s, the last of the big three ratings agencies to hold us at investment grade.
So he cannot afford any unexpected financial shocks like Mabuza’s public suggestion the other day that the Treasury take R100bn off Eskom’s books, and he needs some fast and creative thinking from the team. The board is drowning in day-to-day crises and the task team will be able at least to step back — not for long though. Ramaphosa’s deadline for them is the end of January. They are meeting now at holiday homes. Merry Xmas ...
One task team thought is to create a massive green energy finance package among international development institutions with links (through Brics and the World Bank perhaps) to SA, based on an accelerated closure of old coal plants.
The pressure is tremendous. It is holidays now but by January 10 the country will be back at work. Factories and mines will kick in. Will the lights be on?
Or perhaps not. Some thinking is that it’s Eskom’s generating plants that are bankrupt. They have plenty of spare power if properly maintained, but a limited future.
Eskom’s transmission business and the system operator, on the other hand, are world class and if they were hived off into a separate business could quickly see their investment grading and their ability to raise funds improve.
That could rapidly solve one of the real problems bedevilling Eskom — the cost of coupling new renewable energies onto the existing grid is extraordinary. Reasonably-priced international development funding could do the trick as more comes on stream.
At its core, the team’s job is to propose measures that will create a more sustainable power market in future. Ramaphosa doesn’t want Eskom fixed and then returning to him cap in hand in a few years’ time. It isn’t something the board can do. If anything, the board is slightly out of its depth — it is financially sharp and operationally not so sharp.
Hence the load shedding earlier in December. The task team, though, is pure Ramaphosa. It is both a technical and a political construct. He wants to be seen to be getting the best advice. He did it on the appointment of a new head of the National Prosecuting Authority, and he’s now doing the same at the SA Revenue Service.
As long as the board’s advice to Ramaphosa is made public, as promised, and the same again with the task team’s proposals, we’ll probably be the better off for it.
• Bruce is a former editor of Business Day and the Financial Mail.
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