It would be inappropriate to diminish the significance of the appointment of new nonexecutive directors to the board of Eskom. Equally, it would be naive to underestimate the odds they face to succeed in restoring the embattled power utility to its former glory as one of the top state-owned suppliers of cheap electricity in the world.
After years of hand-wringing and cast-iron excuses, government finally announced a whole new set of nonexecutive directors to the Eskom board, but it offered no explanation for the delay. The government and the ruling ANC are to blame.
The announcement was met with “could have” and “should have” instead of a sigh of relief. Many good people could have and should have been picked to serve on the board, especially during the current electricity crisis.
However, it is a fruitless exercise to question the composition of the board. What is required now is to give this leadership team full support, space and time to do its thankless job.
The new board, chaired by old Eskom hand Mpho Makwana, is facing a multiplicity of challenges. At its simplest level, the board has to oversee management’s plans to keep the lights on. Ordinarily, this should not be difficult — after all, the new post-state capture executive team under André de Ruyter has had more than two years on the job. It should know what needs to be done.
Unfortunately, Eskom is no ordinary company. Not anymore, anyway. It is an organisation at war with itself. It remains unclear whether the bulk of employees have bought into the new vision. Morale is low and an environment of fear is pervasive. Mid-level managers are afraid of making decisions in case they get accused of undermining the new leadership or facilitating capture of Eskom anew.
Progress in turning Eskom around — to be able to keep the lights on and factories, mines, banks, small businesses and households running — has been slow. This year, SA has seen an escalation of load-shedding. Diesel, which has kept the lights on, is in scarce supply, as is the cash to buy it.
Plants that have been fixed routinely break down, triggering the need for load-shedding. Like Transnet, Metrorail and Telkom, Eskom remains the target of criminal syndicates that steal and trade on its infrastructure.
The process of bringing independent power producers onto the national grid has been as frustrating as having to squeeze toothpaste back into the tube. And wrangling among ministers hasn’t helped to implement the promised measures to stabilise the utility and resolve the power crisis, which is putting many small businesses out of business.
After many years of watching Eskom’s crippling debt balloon, all eyes are on finance minister Enoch Godongwana’s medium-term budget policy statement later this month to provide a durable plan to resolve the debt problem. The key thing to watch will be the conditions for Eskom’s leadership that will be attached to the debt-relief measures.
The proposed costly split of Eskom — into three subsidiaries (for generation, distribution and transmission) — has yet to be completed. On Friday, no clarity was provided on how far this process is, or when the boards of these entities will be appointed.
The other big challenge for the new board is reliable information from the Eskom system on which to make critical decisions. The organisation is littered with too many reports by various agencies and sources, both from inside and outside Eskom. This is mainly the legacy of the inertia of government’s decision-making. Instead of making a decision, the government prefers a task team or an advisory structure to analyse the problem. The board will quickly have to sift through these voluminous reports so that it gets on with the business of providing oversight and guidance to management.
The effectiveness of boards — especially during a crisis such as the one faced by Eskom — depends on the quality and accuracy of information they receive from management and other role players about the company’s performance. The poorer the quality, as happened during the days of the so-called war room, the poorer the decisions will be.
The new board needs to evaluate Eskom management’s priorities in getting the company’s coal fleet — still the only hope for the lights to stay on — to operate optimally.
Now that the board is in place, government needs to step back and give it space to oversee the company. As load-shedding escalated this year, the temptation by government to meddle grew as well. The department of public enterprises — which is responsible for Eskom (while the mineral resources and energy department is responsible for energy policy) — has critical vacancies it needs to fill to fulfil its oversight role.
Finally, from a policy point of view, government needs to resolve the perennial question of what is the best shareholder model, especially whether it is still desirable to have a stand-alone department, instead of a line function one, in charge of some of the largest state-owned enterprises.
• Dludlu, a former Sowetan editor, is CEO of the Small Business Institute.
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