Eskom's new board is in a race against time
The new Eskom board will go a long way to restore confidence in the governance of the flailing utility, but it certainly has its work cut out for it.
The appointment of the new board, chaired prominent business leader Jabu Mabuza, has been widely welcomed by the business and labour communities alike. The appointments will send a strong signal to investors that governance at the utility will be tackled – and only just in time.
Eskom and its chronic poor governance pose the single greatest threat to the South African economy.
On Thursday finance minister Malusi Gigaba warned on Thursday that if not dealt with, Eskom could collapse the country’s entire economy by 26 January – next week Friday.
Continued poor governance at the utility has increasingly seen funding dry up. Banks and bondholders simply refused to lend anymore money to Eskom, despite government guarantees in place, unless it meaningfully cleans up its act.
Meanwhile, the utility this month warned it as in dire need of R20-billion to get it to the end of March. With a number of other demands on the budget, notwithstanding a tax revenue shortfall of some R50-billion, the state is not in a position to inject the utility with such a large amount of cash again.
Now Eskom is in a race against time to release its interim results by 31 January or face having its debt delisted from the Johannesburg Stock Exchange.
“The ramifications of Eskom failing to address this issue would be catastrophic for the entire economy,” the Federation of unions of South Africa (Fedusa) said in a statement.
Busa chief executive, Tanya Cohen, said organised business did not underestimate the challenge faced by Eskom in this regard but that the “calibre and credentials of the board finally shows intent from government to rid Eskom of the corruption and mismanagement that has brought this important driver of economic growth and social development to the brink of collapse”.
Raymond Parsons, a professor at the North-West University’s school of Business & Governance, said the appointment served to break the mould at the embattled public utility. “While there is no quick fix for the long-standing problems at Eskom, decisive leadership and action on a key public utility like Eskom now sends a strong message about what needs to be urgently done to turn Eskom around.”
The latest Eskom appointments come just six weeks after minister of Public Enterprises, Lynne Brown, announced a new board, the composition of which was strongly criticised.
According to reports, the first order of business for the new board is to remove controversial figures Matshela Koko and Anoj Singh from their positions at the utility. Over a year ago the two been pinpointed by the Public Protector as key players in the state capture of Eskom. Koko has said he will go to work on Monday as he awaits the board to advise him.