JOHN DLUDLU: A deadly combination has triggered the backlash at Eskom

The president is angry. His public enterprises minister has assumed a de facto executive role in trying to get Eskom to stop power outages. 

If he had known or had been told that there would be load shedding this week, President Cyril Ramaphosa would have done what Thabo Mbeki did in 2008: apologise to South Africans for the economic calamity that would follow load shedding.

Since Ramaphosa announced last Thursday that Eskom would be split into three entities — generation, transmission and distribution — a lot of finger pointing has been taking place and unlikely alliances formed.

Union federation Cosatu and former affiliate the National Union of Metalworkers of SA (Numsa), now part of Zwelinzima Vavi’s SA Federation of Trade Unions, have been up in arms about Ramaphosa’s announcement. Cosatu’s Gauteng constituency is threatening to withdraw its support for the ANC in the upcoming elections, and Irvin Jim, the firebrand general secretary of Numsa, is on the warpath.

Eskom has two serious problems: leadership and information management.

As often happens, truth has become the casualty. Eskom’s management is pointing fingers at design problems at the new power stations, Medupi and Kusile, which have suffered huge cost and schedule overruns. Their availability is embarrassingly low, and, inexplicably, some of the legacy generators have also failed, worsening the problem. Still worse, the independent power producers, which are costing the country billions, were nowhere to be found to save the day.

The unions are correct in crying foul about lack of consultation in respect of Ramaphosa’s plan. In fact, all South Africans should be fuming. The fact is no compelling case has been made for why splitting Eskom into three subsidiaries will solve its problems. South Africans are sophisticated enough to understand complex arguments, and drip feeding them information is not only patronising but plainly contemptuous.

Eskom has two serious problems: leadership and information management. As Ramaphosa knows from his days in the so-called war room, getting reliable information from Eskom is as painful as undergoing open-heart surgery without so much as a shot of brandy. Pravin Gordhan’s predecessor, Lynne Brown, was a victim of misinformation, as was former CEO Tshediso Matona.

Over time Eskom has developed a deviant culture wherein information is used for manipulation. This, in part, is what is going on right now. It is more prevalent when there is a change at the top. A deadly combination of weeding out the old regime and talk of a jobs bloodbath has triggered the current backlash.

Also, the unions’ concerns have not been addressed. There’s no certainty that splitting Eskom will not result in job losses; nor is there certainty that this will not amount to backdoor privatisation of the state-owned enterprise.

Insiders at Eskom believe the unbundling plan is actually a costly way to address the leadership problem. According to this theory, the real problem is the incompetence of the leadership at both board and executive management level.

In terms of this narrative, the year-old board and CEO would be retained at the holding company level, where they can do no further harm. Put differently, Phakamani Hadebe, the CEO, will assume the role of group CEO — an old SA invention — and the board will migrate to the holding company level. The three subsidiaries can then be run by competent professionals and effective boards.

In effect, Hadebe’s role would be mostly ceremonial. An attempt has already been made to strengthen his effectiveness as CEO. Soon after his confirmation in the position last year, Eskom created a new job for a COO and appointed an Eskom lifer, Jan Oberholzer, to the job.

At the interim stage last year the utility confirmed chartered accountant Calib Cassim as finance director and began a piecemeal restructuring that purged remnants of the old regime. Wholesale retrenchments have, for now, been held off.

The trio has been ineffectual. Eskom is in no better a position now than it was a year ago. Governance might have improved, but this has not translated into better operations. That this week’s rolling load shedding couldn’t be foreseen is just one of the signs of ineptitude at the top.

The board has tried and failed to get operational improvements. Late last year Gordhan had to order executive management to forgo their vacations and personally visit power stations to keep the lights on. South Africans were spared load shedding during the Christmas break, but now the lights are out again.

Breaking Eskom into three subsidiaries will not resolve its fundamental problems. Eskom has a leadership problem, not a design problem. Until and unless this is addressed, the next five years will continue to be characterised by load shedding.

• Dludlu, a former Sowetan editor, is executive for strategy and public affairs at the Small Business Institute.