Fault line: Mineral Resources and Energy Minister Gwede Mantashe said there had been 10 black chief executives at Eskom before André de Ruyter who had let the country down. Photo: Waldo Swiegers/Bloomberg/Getty Images
Eskom chief executive André de Ruyter and the board may not have the skills needed to revive the ailing power utility, according to Gwede Mantashe, the mineral resources and energy minister and the ANC’s chairperson.
During an interview this week on the ANC policy conference at the end of this month, Mantashe said that “Alpha CEO” De Ruyter would have been better suited at the power utility after the appointment of a “fixer”.
De Ruyter, who took to the helm of Eskom in 2020, has been criticised for failing to turn the embattled utility around. Eskom, hamstrung by its huge debt and years of poor maintenance, recently implemented stage six load-shedding for the second time in its history of power cuts, pummelling an economy already in the doldrums.
“I happen to read a lot about classification of managers. In Eskom you send an alpha. An alpha is a top manager who walks on the water, who when he comes in, investors look up to him. I’ve seen many of them … in an institution that requires a fixer,” Mantashe said.
“When that alpha is not performing in that position, it is not the alpha who is not performing, it is the mismatch of the skill to the requirements of the institution. Eskom needs a fixer, a person who focuses on what is broken, and [who will] try to fix what is broken, and once he or she fixes it, moves on. Then you can have an alpha. And therefore if we don’t look into those things, we are going to discredit many top managers in the country and in the system.”
According to the minister, the former chief executive of Harmony Gold, Bernard Swanepoel, was an example of the kind of fixer Eskom needed.
Swanepoel was brought in after the hostile takeover and break-up of Randgold & Exploration in the 1990s, according to Miningmx. Buoyed by the rising gold price, he grew Harmony from a single mine to the fifth-largest gold mining company in the world in 12 years, with a market capitalisation of $5.5-billion. He resigned in 2007.
De Ruyter holds various qualifications, including a law degree. His detractors have often questioned why a lawyer, not an engineer, was appointed to lead Eskom — which De Ruyter was charged with restructuring.
Prior to De Ruyter’s appointment, Eskom had 10 chief executives in as many years. Before his appointment was announced, there was speculation that Andy Calitz, who started his career at Eskom, was the frontrunner for the job.
Other possible candidates were Jacob Maroga, a former Eskom chief executive, Thembani Bukula, the former head of electricity regulation at the National Energy Regulator of South Africa, and Dan Marokane, also a former Eskom executive.
Mantashe said the reversal of the Eskom capacity crisis — which has seen South Africans endure close on 15 years of load-shedding — required “discussions”, with complaints about the board needing to be ventilated.
“How was that [board] composed? How do you ever [have a] board in Eskom with no accountant when one of the biggest issues is a debt-equity ratio? And you don’t have an engineer when the problem is the performance of the units. There’s a gap between 28 000MW available capacity to the 47/48 000MW connected capacity. That gap is an engineering problem. And we have a board that has no engineer. We must discuss that and correct it.”
Amending the utility’s technical and financial performances would require top skills, he said. Eskom’s debt currently stands at R392-billion.
“You must analyse the executive of Eskom. Look at it, analyse it and check if that capacity is there,” Mantashe said.
“For example, if you go to Eskom [and] you talk to the chief executive, at a theoretical level it’s good. But when you talk to the chief operating officer [Jan Oberholzer], who is an engineer, you feel the difference, because that engineer understands issues, he understands that to deal with loadshedding you need to maintain and service units that are not decommissioned, but not giving us megawatts.”
Speaking earlier this week, De Ruyter said the Eskom board appointed in 2018 had since been depleted and did not have an accountant, engineers or members that were experienced industrialists. “That, I think, detracts from good governance. You need the wise heads in the room to give advice to management and to oversee management. I think that is a gap that remains.”
Mantashe said this was a serious admission by De Ruyter, who is a “lawyer running a technical machinery that requires technical skills, that is the issue that we must debate without saying De Ruyter or what”.
When asked why the government had appointed a chief executive without the skills to fix Eskom, Mantashe replied: “The reality of the matter is that here I am running 15 entities of state in the department. One of them is not Eskom and therefore when the selection [takes place for Eskom, I am not part of that].
“Whether it’s for the CEO or it’s for the board, it’s an issue that we should look into when it is brought to our attention as government and we must pay attention to it. That’s what is needed.”
Mantashe’s admission comes after the ANC’s national executive committee again recently debated the fate of Eskom.
President Cyril Ramaphosa and Public Enterprises Minister Pravin Gordhan have proposed a boost in the skills component, as well as using prior executives who could act as mentors to help resuscitate Eskom.
Gordhan asked Dirk Hermann, the managing director of Solidarity, for a list of people with engineering and maintenance skills, as well as senior artisans and plant operators.
He was responding to a letter written on 25 May by Hermann after the minister said in his budget speech on 20 May that Eskom had a shortage of people with the relevant skills.
Mantashe and Gordhan are widely viewed as being pitted against one another in a battle over control of Eskom, which some have argued should be put under the energy minister’s department.
The debate in the governing party about the possibility of Eskom being shifted to Mantashe’s department is expected to continue at the ANC’s policy conference next week.
Mantashe refused to be drawn into that conversation, saying it was a decision that could only be made by Ramaphosa. “All I can say is that a crisis point managed in a fragmented way, makes it more complicated. That’s all I’m saying. It may be here, it may be anywhere, but the consolidated management of that crisis space is required.”
In an opinion piece published by Mail & Guardian earlier this month, ANC national working committee and national executive committee (NEC) member Nonceba Mhlauli said De Ruyter and the board should resign.
“However, we as ordinary South Africans do not know how to fix the power crisis we are faced with, and that is why ‘professionals’ like De Ruyter are brought in; they are brought in because they ought to fix these problems and turn the power utility around.
“Four years with the current board and two years with the current chief executive, the situation continues to deteriorate. The board and the executive must vacate those positions and make room for those who can get the job done,” she wrote.
Mhlauli is among ANC leaders who believe that De Ruyter has been spared serious criticism by the media and the cabinet because he is white. In an interview with Eyewitness News, NEC member Nomvula Mokonyane said that Gordhan was turning De Ruyter into an untouchable.
But Mantashe noted that De Ruyter had come into the fray after 10 black chief executives had let down the country.
Mantashe has spoken of establishing another state-owned enterprise to compete with Eskom, something to which Ramaphosa said he was amenable.
At the South African Communist Party conference last week, the president said he agreed with Mantashe that a second entity would “decrease risk”. The idea has been greeted with derision outside of ANC circles.
The president has also said the dysfunction at Eskom would soon be over and that a swathe of accelerated interventions would in the near future be announced to this effect.
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