Eskom’s board of directors has long been distinctly underpowered in terms of both quantity and quality. The appointment of a new board is therefore welcome. So too is the clear mandate that public enterprises minister Pravin Gordhan seems to have given it to keep SA’s lights on. But it is not yet clear whether this is the board to enable a turnaround at the power utility. Certainly it is no quick fix.
When Gordhan finally announced the new appointments on Friday, he was doing no more than he should have done many months, if not years, ago. The old board had shrunk to just a handful of nonexecutive directors whose terms of office had technically expired at least 18 months ago. The board and Eskom’s own executives had repeatedly urged Gordhan and his government colleagues to appoint new and more nonexecutive directors, without success. The reasons for the long holdup are not clear, but contestation within the ANC over who should be deployed was surely part of it.
It seems to have taken the stage 6 load-shedding crisis to focus the government’s collective mind on the matter. And when Gordhan did start seeking out potential nonexecutive directors with the requisite expertise and experience in recent weeks, some rejected him outright. This is hardly surprising given how poisonous are the politics around boards at state-owned enterprises, and how meddlesome Gordhan and others in the government have traditionally been in their affairs. It’s hardly surprising too that few would want to risk the fiduciary responsibility of being on the boards of bankrupt entities. That good people don’t want to serve on SOE boards should give Gordhan and his colleagues pause for thought.
In the event, the minister has managed to persuade a selection of new people that has been quite widely praised. It doesn’t look too much like the work of the ANC’s deployment committee. There are some engineers and some chartered accountants. There are a couple of standout appointments such as outgoing Altron CEO Mteto Nyati, who is credited with having done an excellent job at the company. The reappointment of Mpho Makwana as Eskom chair is heartening too. He is credited with having rebuilt morale at Eskom after the power crisis and leadership ructions of 2008/2009, when he took over as executive chair for a year after serving for several years as a nonexecutive director.
However, he is one of the few new board members who has seen the inside of a power station or knows anything about Eskom from the inside. For the rest, it will take quite some time to go through the induction process needed to get new board members up to speed on the power utility’s complex operations and issues. It will be months before the new appointees have enough knowledge and insight into this crisis-ridden, complicated entity to exercise useful oversight. It could take even longer until the new board members feel ready to demand any major changes. Gordhan no doubt needed to be seen to replace the entire board, replacing all the nonexecutive directors bar one (Rod Crompton). But he has in the process lost their accumulated knowledge.
He has gained a number of new directors with impressive CVs, many of them in technical fields. But here again this is no quick fix. Eskom’s board did need technical skills, and not necessarily just in engineering, but also in metallurgy or nuclear physics or finance or any and all of the other skills its operations depend on. The list of new board members is encouraging. But it takes more than a qualification and a career in engineering or commerce to make a good board member with the experience to ask the right questions and exercise the appropriate oversight. Time will tell whether the new board has the people Eskom needs.
Even if it does, boards do not run companies — executives do. The role of the board, in theory at least, is to make the high-level strategic decisions, enable the executives to implement them, and hold them to account if they don’t. In the case of SOE boards, they should play an important role too in supporting executives and buffering them from undue political interference.
Time will tell too whether the new board is the right one and whether the government and governing party will give it the freedom to do what it needs to do — and put in place the policy measures needed to enable Eskom to do better. The new board is a step in the right direction. But on its own it can’t keep the lights on.
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