Those who have been fortunate enough to receive correspondence from Transnet in the past few months will have noticed that the letterheads of the state-owned company are now made up of a mere handful of nonexecutive directors. This untenable situation would not be tolerated by shareholders of a publicly listed company. Unfortunately, it has become the order of the day in SA’s failing state-owned enterprises (SOEs).
Eskom, the electricity monopoly that supplies more than 90% of all power to households and businesses, operated for years with a depleted board. This occurred amid the deepening economic hardship caused by the utility’s failure to keep the lights on. For years, Eskom’s board was led by an academic with no experience in leading a large company of Eskom’s complexity.
It was only late last year that the so-called shareholder representative — Pravin Gordhan’s department of public enterprises — finally named a new board chaired by Mpho Makwana. It is only now starting to find its feet as load-shedding escalates to unprecedented levels.
Meanwhile, Eskom has lost a CEO; continues burning cash to complete Medupi and Kusile, the two new power stations; and is far behind in stated plans to unbundle its generation, distribution and transmission divisions under a holdings company.
While all eyes were trained on the Eskom disaster, another less publicised crisis was developing at another SOE, Transnet. In the past three years, the performance of the state-owned monopoly that owns and operates SA’s rail freight, pipelines and ports network, has been declining faster than before and at a huge cost to SA’s commodity exporters.
Overcharge customers
Quite rightly, the new management and board — appointed in 2018 — focused on arresting state capture. But this cleanup focus appears to have come at the expense of operational improvements. Now, it is moving a far smaller volume than it did decades ago. More than 100 of its relatively new fleet of diesel and electric locomotives are parked due to a lack of spares stemming from a long-running, ineptly managed dispute with CRRC, the Chinese state-owned locomotives manufacturer.
Its finances are in tatters despite continuing to overcharge customers. In 2022, it received a fiscal injection for the first time in decades.
Thieves are having a ball stealing its cables.
Worse, amid the unfolding freight logistics crisis, in the past few months Transnet has lost most of its nonexecutive directors. The few who remain — including chair Popo Molefe and presidential national security adviser Sydney Mufamadi — have no logistics experience or expertise in the complex task of overseeing the involvement of the private sector in Transnet’s rail freight and ports infrastructure. As it is, the board of the Transnet National Ports Authority, which is supposed to be corporatised and turned into a 100% Transnet subsidiary, has yet to be appointed.
The delay in strengthening the Transnet board is grossly negligent, irresponsible and reckless on the part of the so-called shareholder. Transnet is too important to be led by a skeletal board.
Despite protestations that it values meritocracy over party allegiance, the ANC continues to hobble our SOEs through its policy of cadre deployment.
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