It is probably too early to applaud Eskom executives for keeping the lights on during much of this winter. But after a dreadful 2023 a word or two of praise won’t hurt.
Eskom is headed for 150 days without power cuts. The weekly briefings by the Kgosientsho Ramokgopa, the colourful electricity minister, have almost become redundant as the Eskom fish continues to do what it was meant to do: swim.
Many economic operators and households remain in a state of disbelief about this relief. The pause in load-shedding, exemplified by continuous improvement in the energy availability factor measure, has made ANC leaders look ridiculous. Ahead of the May 29 general elections Luthuli House high-ups were ready to blame Eskom for the impending loss.
André de Ruyter, Eskom’s last white CEO, was blamed by ANC and government leaders for all sorts of things, including trying to sabotage the ANC’s electoral fortunes. When he left, an embattled President Cyril Ramaphosa created the electricity ministry in a desperate bid to end load-shedding, positioning it between two political allies who were engaged in unhelpful wrangling — then mineral resources & energy minister Gwede Mantashe and public enterprises minister Pravin Gordhan.
The ministry was — and still is — seen as a public relations gimmick to create the impression that something was being done to resolve the single biggest problem strangling SA’s fragile economy. It was only last month that Ramaphosa made it a stand-alone ministry and department. Until then it was housed in his super-presidency, with ill-defined powers.
After Gordhan’s retirement from active politics and the scrapping of the public enterprises department, Ramaphosa hived off energy from Mantashe and gave it to Ramokgopa, but inexplicably left petroleum in the mineral resources portfolio under Mantashe.
A school of thought believes making electricity a fully fledged ministry was informed by the need to spread patronage to Ramaphosa’s partners in the new unity government rather than because there was a real business case.
This raises a number of questions: what worked in the past few months, and is this a sustainable course correction or another false start? It is hard to point to one magic wand. Instead, a few factors are emerging to paint a picture that explains why the fish is being praised for swimming.
Without a clear job description, Ramokgopa chose to write his own. He defined his job as strictly being the political boss of generation, Eskom’s main problem child. In his weekly briefings, he is always accompanied by Bheki Nxumalo, Eskom’s unassuming head of generation. The pair immediately struck up a bromance based on what appears to be mutual admiration.
Bad appointments could still stymie the emerging success at Eskom
That chemistry has spread throughout the power stations — the core business of generation. Significantly, they have affirmed Eskom’s employees and treated them as assets rather than thieving saboteurs. Morale at Eskom’s power stations has improved markedly as a result.
It is not clear how much political air cover Nxumalo has sought and received from Ramokgopa. Those close to the minister say he deliberately chose to stay away from politics with his colleagues, including the National Treasury, the other cook stirring the contested pot that is Eskom. This choice made him less threatening to his cabinet colleagues, so he was able to get things done.
That approach was also adopted by Dan Marokane, the Eskom CEO who returned to the parastatal early this year from the private sector. A few months ago Marokane, who holds regular but low-key briefings of his own, told an audience of business leaders that he wouldn’t spend time in the media engaging in the unwinnable war of words with Eskom’s detractors.
The strategy has freed him to focus on operations. But it has also had the unintended effect of making his nonexecutive chair, Mteto Nyati, a de facto executive chair who takes set-piece interviews with journalists.
The work of Marokane and his team, notably Nxumalo, has won rare praise from unlikely quarters, including Matshela Koko, the former Eskom CEO.
The other factor explaining Eskom’s apparent recovery is that its unions have become more docile. The National Union of Metalworkers of SA is consumed by internal battles to dislodge Zwelinzima Vavi, the founding general secretary of the SA Federation of Trade Unions, while the once-powerful National Union of Mineworkers has lost its militancy.
A lot may yet go wrong at Eskom. An economic rebound, especially in the energy-guzzling mining and manufacturing sectors, would put renewed strain on the grid given that the shrinking economy has been one of the factors that have made life easier for Eskom’s management and workforce.
The complex unbundling of Eskom — into subsidiaries for generation, transmission and distribution under a holding company — also has the potential to distract management’s attention from operational imperatives. To date, only transmission, a state monopoly, has been corporatised. Sort of.
Like Transnet’s National Ports Authority, the job of setting up Eskom’s National Transmission Company is half-baked. A board has been appointed, but no real separation has happened. No CEO or other managers have been appointed, which allows Transnet’s units to continue with cross-subsidisation.
Bad appointments could still stymie the emerging success at Eskom. For example, overlooking Nxumalo, widely considered the presumptive CEO of Eskom Distribution, would in all likelihood see him back in the hands of the private sector. Uncertainty of these subsidiaries’ leadership would lead to low employee morale.
Despite all the help it is receiving from the fiscus, Eskom still faces the problem of municipal debt. For this there is no durable solution other than to start thinking the unthinkable: writing it all off.
Perhaps more important, the scrapping of the public enterprises department and its partial replacement with the yet-to-be formed Eskom holding company create a cloud of uncertainty over the utility. The unbundling task, including naming the entities that will fall under the new holding company, has moved — albeit temporarily — into the presidency, which risks politicising management.
Those unknown unknowables should keep Eskom’s leaders awake tonight.
• Dludlu, a former editor of Sowetan, is CEO of the Small Business Institute.
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