It might take some by surprise, but it’s rather interesting to remember that Jacob Zuma was president and Lynne Brown public enterprises minister when the current Eskom board was put in place about 16 months ago.
By this time Zuma was well on his way out and Cyril Ramaphosa would be president the following week, leading to the hapless Brown’s departure, having overseen the total collapse of governance and financial probity at SA’s biggest state-owned company. Pravin Gordhan took her place and soon became the face of Ramaphosa’s clean-up agenda across the state-owned enterprises (SOEs).
While things changed at the political level, the board stayed. We all assumed it had full backing from the top. With the fallout from the resignation of Phakamani Hadebe as CEO, perhaps it is time to rethink this as we wait for the way forward and the appointment of a new leader.
More was at stake than just Pravin Gordhan’s career or even the health of the SOEs.
The speculation going around about Gordhan’s interference with the work of the board having led to the CEO’s departure may or may not be true. But it’s been clear for some time that Gordhan’s faith in the board wasn’t absolute. In fact, three months ago he told parliament he wanted to strengthen it by adding members who possess the necessary engineering skills and have some record of turning around businesses.
“The board of Eskom has a few vacancies. Within a month or so we will strengthen the board with more engineers,” he said. That was back in February. But this is the government and nothing happens within the expressed timeframes, no matter how urgent the crisis. This board probably needs more than a few engineers, considering its record so far and the fact that the minister seemingly doesn’t have faith in its collective abilities.
I’m assuming I wouldn’t have been the first person to react with some relief to news that Ramaphosa had resisted pressure, primarily from the EFF, not to reappoint Gordhan after the curiously timed report from the public protector accusing him of violating the constitution. It was also curious that those who were most vocal about the need to exclude Gordhan, despite his decision to contest Busisiwe Mkhwebane’s report, were not willing to do the same in their own defamation case brought by former finance minister Trevor Manuel.
Giving in on this particular point would have given the impression of Ramaphosa being bullied by the EFF and sapped him of all authority before he’d even got started with the business of governing. So more was at stake than just Gordhan’s career or even the health of the SOEs. We may well have the EFF to thank for Gordhan’s appointment, and his readiness to serve.
Getting a new minister to come in at this stage to try to get to grips with Eskom and provide political direction to the board would have been a guaranteed route to yet more delays. Eskom is the single biggest risk to the economy and it’s time the government started treating it as such.
It could start by deciding what kind of CEO it wants. What the experiment with Hadebe showed is that it’s not a finance person that it needs. Even there the situation has only got worse, so much so that it’s unclear how long the company can continue operating without rescheduling its debt, which is now well north of R400bn. How his efforts to deal with this were undermined by the government is well recorded.
Some accounts suggest that the former CEO wasn’t exactly hands on with regard to the operational issues, and you wouldn’t often find him going out and motivating the troops in faraway power plants. Like in any profession, it shouldn’t come as a shock that engineers didn’t take too kindly to an outsider, with no operational experience, telling them what to do. So it almost goes without saying, just like with the board, that Gordhan will need to find someone who knows something about engineering.
What is not clear is how the new person will work with the chief reorganisation officer who finance minister Tito Mboweni promised more than three months ago. If anyone remembers, the creation of this position was supposed to be the precondition for Eskom getting R23bn a year from the state. We know the acute financial crisis has led to some of that assistance being front-loaded, yet there has been no sign of the said chief reorganisation officer.
Bank economists almost unanimously approved of Mboweni’s return to cabinet after the May 8 elections. It’s not surprising that he’s popular with that particular constituency. Whether it’s about Eskom or talking up the futility of funding SAA, which will also have to find a new CEO after Vuyani Jarana resigned at the weekend, he almost always says the right things.
The problem is with the doing. While there has been a lot of grandstanding about SAA, the lack of execution left the CEO frustrated. On the chief reorganisation office for Eskom, Mboweni promised to “make announcements in this regard in the coming weeks”. That was on February 20, and a reason why it’s hard to be optimistic about Eskom’s prospects.
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