Love him or hate him, lights on or load shed, Minister of Public Enterprises Alec Erwin has been one of Cabinet’s most influential individuals.
The brain behind massive development projects and one of the government’s main sources of the ”really big idea”, Erwin’s announcement that he will resign come 2009 is likely to lead to a substantially changed economic landscape.
Some of the country’s most expensive and controversial projects, such as the Pebble Bed Modular Reactor (PBMR) and energy-sucking development at Coega, will find themselves without their champion.
This week the Mail & Guardian spoke to a number of people who have watched Erwin from close quarters. They generally admire his energy and intellectual rigour, but say he has a tendency to overestimate chances of success and lacks consistency. Most are critical of his handling of the fallout around Eskom.
Some significant rethinking of Erwin’s major projects could be required, said Jeremy Cronin, deputy secretary general of the South African Communist Party (SACP).
Cronin questioned whether some of the projects that Erwin has played a role in shaping are not white elephants, giving Coega and the PBMR as examples.
Coega has the potential to promote development, Cronin said, but ”not in the way it has been conceived.” The establishment of an energy-hungry aluminium smelter at Coega is unwise in Cronin’s view.
The PBMR planned project also faces problems. The small reactor ”does not address the base load problem”, that continues to stretch South Africa’s generation capacity.
Eskom’s decision to wash its hands of the project points to the fact that it is increasingly becoming a liability.
Cronin said that the technology used at both Coega and the PBMR is untested and it shows that the country has ”a tendency to punch above [its] weight.”
Erwin outlined ambitious plans for his department and the role of state-owned enterprises (SOEs) in his budget vote speech last week. His proposals — which criticised treasury’s control over the budgetary process and argued for less parliamentary oversight of SOEs — was met with a mixed reaction by observers. Erwin reportedly called for an independent ministry to govern the funding of SOEs, amounting to an expanded department.
”Parliamentary oversight of SOEs is crucial, especially with their increasingly important economic and developmental roles,” said Yunus Carrim, former chairperson of the public enterprises portfolio committee and current chairperson of the justice portfolio committee in Parliament.
”Of course, the form of this oversight may have to change.”
This could mean closed meetings to take into account market sensitivities, he said, as SOEs operate in an open market and public accounting damages their competitiveness.
Cronin said that to some extent the SACP agrees with Erwin’s assertion that the treasury exercises too much control. But according to him the ”answer to this is not what [Erwin] proposes”.
Cronin said Erwin’s call for a separate ministry responsible for the funding of SOEs will not address the issue and merely amounts to an expanded department.
He said that a drive towards development should lie with the state, ”not with a developmental ministry”, arguing that SOEs could fall under the control of individual ministries rather than collected under a single minister’s control.
Eskom’s catastrophic failure to provide the country with power has meant fellow parastatals are experiencing renewed public scrutiny.
Cronin agreed with Erwin’s assertion that SOEs are central to a developmental state. He said that what Erwin has inadvertently done is turn them into public companies with a private corporate ethos.
”The danger is that public objectives are lost to private, short-term goals, the prime example being Eskom. ”The big question mark, certainly in the SACP and Cosatu, is do we need a department of public enterprises?”
Cronin said the SACP would like to see SOEs situated and operating in relevant departments, for instance putting Transnet under the auspices of the Department of Transport.
The SACP would essentially like to see a significant change in policy and the configuration of the state.
But some observers say much of Erwin’s speech was misunderstood and misrepresented in the media. Exciting chief executive of state arms manufacturer Denel, Shaun Liebenberg, argued that much of Erwin’s budget vote speech was misinterpreted.
Erwin’s point, he said is that in a developmental state, such as South Africa — where investment is a 10 to 15-year undertaking that offers no initial return — the state must be heavily involved with infrastructure development.
Although Liebenberg supports privatisation, he argued that state-owned entities which move towards public-private partnerships and finally full privatisation are a way of growing the country’s economy. ”SOEs really can be a catalyst for the development of the state,” he said.
”There is no minister on this continent who could have added the value that [Erwin] did in the period he was given, having inherited what he inherited,” Liebenberg said.
Liebenberg put forward the example of Transnet as an exemplary state-owned entity that would not have seen the success it does today without Erwin’s leadership. The company has seen improvements in performance and profitability over the past few years.
Erwin has, however, shown a disastrous blind spot in not anticipating South Africa’s impending energy crisis. With regard to Erwin’s arguably misguided support for Eskom’s chief executive officer, Jacob Maroga, and his cohorts, Liebenberg said emphatically: ”I am flabbergasted that the Eskom board has not taken a hiding. Erwin doesn’t sit on the board, he doesn’t run the business.”
Liebenberg conceded that Erwin has perhaps ”stuck his neck out where he shouldn’t have” but is adamant that bad management on the part of the company’s leadership is to blame for the country’s current power crisis.
Cronin declined to name any likely successor to Erwin. He said that for too long debate around policy issues has remained subordinate to the discussion of personalities.
He argued that issues of both policy and implementation need to be addressed without surnames being attached.
