Eskom gets yet another boss

Warnings of too many chiefs and too little clarity on what’s to be done appear to be going unheeded.

The country’s struggling power utility, Eskom, will soon benefit from yet another boss – this time, a “chief turnaround officer”.

This is over and above the group CEO André de Ruyter, the chief restructuring officer Freeman Nomvalo, and the operational head Jan Oberholzer.

The department of public enterprises confirmed the plans for this latest post.

However, Eskom was unable to answer questions about what the so-called chief turnaround officer would do, and how responsibility would be divided between the four top bosses of the organisation.

A spokesperson said the details would be worked out in the coming weeks.

De Ruyter will take over some of the reins at Eskom in January.

It is unclear whether the chief turnaround officer will report to De Ruyter or not.

“We are looking at a number of options regarding how we organise ourselves to execute on the turnaround strategy and the reforms stipulated in the special [Eskom] paper,” said the Eskom spokesperson.

But Peter Attard Montalto, the head of capital market investments at Intellidex, warned of having too many bosses who end up either falling over each other or “simply sitting there with no real power”.

While the Eskom road map had given a good indication of the broad direction, he said, one of the key problems was that about 50 people would have to be found to fill various roles, including in the project office, which was meant to implement the plan.

“It is far from clear where all these people who would be willing to do the job would come from, without causing a ‘too many cooks spoil the broth’ problem,” said Montalto.

The chief restructuring officer was appointed in July, after Finance Minister Tito Mboweni made the appointment a condition for bailing out Eskom to the tune of R23 billion in immediate government aid.

This was announced in his February budget speech.

At the time, Mboweni said that, in reality, the person would fulfil the role of an administrator.

Nomvalo was appointed to his post in addition to remaining in his full-time position as CEO of the SA Institute of Chartered Accountants (Saica).

Sipho Pityana, president of Business Unity SA, described Nomvalo’s appointment as “underwhelming”.

Nomvalo’s appointment was also only meant to be for an interim period of six months, while a restructuring office was established.

RESTRUCTURING

The Eskom task team are understood to have recommended that Nomvalo be responsible for all aspects of the restructuring and unbundling of Eskom, but at the end of the day, his mandate appears to have been limited to the restructuring of Eskom’s debt.

He has been silent ever since, and did not answer questions last week about what he had managed to accomplish since his appointment.

The appointment of De Ruyter as CEO, whereby he replaces Jabu Mabuza – who is currently chair of the board as well as the CEO – has also had a lukewarm reception.

This is primarily because he has no demonstrable experience in the electricity industry.

In a note to investors last week, Montalto said it was still unclear why De Ruyter had been appointed and why he would be able to make any difference at Eskom.

“At best he can manage the decline, if he is given the space to do so properly,” said Montalto.

The plans for yet another strategic boss came to light after City Press’ sister publication, Rapport, asked questions about Eskom’s turnaround strategy, which was published by Minister of Public Enterprises Pravin Gordhan in October. Shortly thereafter, it was quietly amended.

The department confirmed that the plan had been amended, but said these were small changes meant to ensure that their message was clearly understood by all role players, as well as by the public.

In comparing the undated road map with Gordhan’s initial plan, some of the key amendments include:

• The plan said that consideration should be given to setting up generation subsidiaries to create internal competition between Eskom’s various departments. This would include Eskom’s “participation in renewable energy”. In the updated version, the participation in renewable energy was omitted.
• Minor amendments were made to the timelines for the unbundling of Eskom’s transmission division, but the department said they remained essentially the same. The practical unbundling must take place by March 2020, and the legal aspects by December 2020.
• With regard to the transition from coal to cleaner energy – a process that trade unions are vehemently opposed to – the new plan ostensibly takes a different direction.

The original plan said that, given the urgency of the crisis, Eskom should obtain the buy-in of “social partners”.

The updated version does not speak about this at all, merely stating that Eskom would “consider” an agreement.

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