Maroga’s sad valedictory

Two weeks ago, when outgoing Eskom chief executive officer Jacob Maroga sat down to write a strategy document for the beleaguered power utility, he had no way of knowing that his tenure was about to end.

The document, delivered to the Mail & Guardian on Thursday by an anonymous source, is intended to ‘set the context for the new vision of Eskom that will result in a fundamental transformation of our organisation from one based on survival and problem-solving to an Eskom that is setting the energy foundation for the next 25 years of the development of our country”.

But Maroga’s chief executive’s strategy document does not do this. It reads more like the ramblings of a man who is seriously out of his depth in confronting the country’s energy crisis.

Maroga was seeking to provide a plan for a better Eskom, but all he has achieved is a sad valedictory. His tenure ends with his successor inheriting greater challenges than he did.

Maroga states that since 2005, when he managed the electricity crisis in the Western Cape arising from the ‘bolt” incident when Koeberg closed down, Eskom has been dominated by crisis management.

‘Firstly it was the Western Cape power disruptions, then the national load-shedding. Now we are managing a very tight cash situation,” he writes. ‘If we continue to do the same things, it is extremely unreasonable to expect to achieve different outcomes.”

He states that the 1984 scrapping of Eskom’s capital development fund was a mistake.

‘In hindsight, scrapping the fund without articulating a convincing alternative funding model for future growth was a major blow to the industry.”

Maroga states that the huge excess capacity which Eskom built up in the 1970s and 1980s meant that the strategy was built around the world’s cheapest electricity rather than on business and operational excellence.

‘This strategy did not factor in the cost and the provision for building new capacity for the future of the country.

‘This has contributed significantly to the current funding challenges of Eskom because the current electricity prices are not appropriate to fund new capacity.”

Commodity-linked aluminium contracts, designed to utilise spare capacity, did not envisage the end of excess capacity or the fact that the cost of power would rise: ‘While these contracts were seen as a stroke of brilliance at the time, they are now very painful to Eskom and the country.”

Maroga says that in 2005 Eskom committed to a massive build programme without ‘the full appreciation of the funding sources for the capital”.

‘The part of the organisation where the build decisions were motivated had no clue about the funding process for any of the capital requirements.

‘Today we are solving the funding model retrospectively.”

He says Eskom badly underestimated its cash flow position.

‘The current reality of cash flow clearly proves that our view four years ago was grossly inaccurate. Without deconstructing the root causes of this flaw and effectively correcting it, we are bound to repeat it to the detriment of the country.”

Maroga complains that Eskom’s organisational structure does not promote openness, frankness and transparency.

‘This has encouraged the culture of anonymous letters, leaked documents and ‘fake’ face-to-face politeness.”

There is also an over-reliance on business consultants and outside experts. ‘Traditional consultants do the work for the company, as opposed to creating a lasting capability in the organisation.

‘Given that most consultants work on billable hours, the more work they do, the more they get paid.”

He says that in some cases the over-reliance on consultants is seen as a counter to affirmative action. ‘The views of white outside experts have more weight in some quarters than the views of experienced black executives.”

Maroga says that while much has been achieved in increasing the number of black managers, the leadership paradigm is largely of the past.

This paradigm is ‘characterised by technocratic arrogance, apartheid-style supervisory mentality, lack of transparency and secrecy”.

Maroga sees a need for a new executive structure to empower the chief executive and exco team to be closer to the operations of the whole business.

He says the CEO should be allowed to get closer to the critical business units and that a fundamental break with the past is required, as is the reconstruction of the cultural DNA: ‘The country has adopted a new Constitution to make a fundamental transition to a full democracy.

‘Eskom cannot operate in the new democracy without a fundamentally reconstructed culture.”

And here’s the rub. Maroga may have identified what needs to be done, but in the board’s view he has not shown the leadership required to tackle the issues either quickly or energetically enough.

The result has been a breakdown in relations between the board and its chief executive.

Following the intervention of the shareholder in the person of Public Enterprises Minister Barbara Hogan, Maroga tendered his resignation, which the board accepted.

Race ‘not an issue’
Maroga’s resignation had nothing to do with race, said sources close to the unravelling of his tenure at the power utility, report Lynley Donnelly and Lloyd Gedye.

The sources, both black, pointed out that six senior black executives have left under Maroga’s watch, including former financial director Bongani Nqwabab, apparently because of unhappiness with his stewardship.

Said one: ‘My view is that if there is racism within Eskom it is immaterial. What is material is managing the operations.”

Documents supplied to the M&G point to a serious disconnection between Maroga and the Eskom board.

At the heart of the documents are the concerns of chairperson Bobby Godsell about management’s ability to handle the crisis Eskom faces.

‘We need a credible leader,” said the source. ‘For the past 18 months there has been paralysis at the top. Eskom has not been managed.”

A letter written by senior staff to Public Enterprises Minister Barbara Hogan in September was one of the clearest indications that cracks were showing in the upper echelons of the organisation.

The letter allegedly questioned Maroga’s ability to lead Eskom and called for his resignation.

The M&G‘s sources were adamant that Maroga’s ability to deliver was the problem. ‘As a black person I want to be known for delivery, not petty political posturing,” said the source.

Eskom needs a leader who won’t focus on politics but will run operations.”

The Black Management Forum (BMF) was the first to play the race card regarding the breakdown between Maroga and Godsell. However, internal Eskom documents in the M&G‘s possession show that Maroga also believes racism played a role. Maroga says a number of people in Eskom’s governance structures give more credibility to the reporting of white-dominated media than internal management reporting processes.

The ANC Youth League also joined the fray this week, claiming that it was ‘disgusted” by the Eskom board’s attempts to remove Maroga.

‘Blaming Maroga and getting rid of him is driven by the narrow interests of white businessmen whose intention is to use Eskom for their individual benefit,” said spokesperson Floyd Shivambu. ‘The ANCYL will never agree to the victimisation of Jacob Maroga and will do everything to stop Bobby Godsell’s hideous attempts to undermine African leadership in the economy.”

The BMF said this week that the key issue was the fact that Maroga was ‘a black African and therefore cannot be left in charge of about R400-billion of planned infrastructure expenditure”.

‘It is not surprising that this resistance is happening under the leadership of Bobby Godsell. Is this the case of supervision of ‘incapable’ blacks by ‘capable’ whites?”