What does Brian Dames’ resignation mean for the Eskom task team?
Brian Dames — the chief executive of Patrice Motsepe’s African Rainbow Energy and Power — has stepped down from the Eskom Sustainability Task Team.
The team, set up on December 14, was meant to recommend what action the government should take regarding Eskom’s operational challenges.
In a statement released by the presidency on Wednesday, Dames noted a “perceived conflict of interest relating to the scope of work and terms of reference of the Eskom Sustainability Task Team.”
Dames is a former Eskom chief executive and resigned from this position in 2014 for “personal reasons”. He held this position for four years.
Prior to Dames’ announcement that he will be stepping down from the task team, analyst Khaya Sithole had raised concerns over “some strange issues” over Twitter on Tuesday evening.
One of the key concerns, Sithole explained, was that it appeared the government had created a parallel Eskom board.
The task team will report to President Cyril Ramaphosa.
Eskom’s new board was appointed in February this year and was tasked with handling strategy and governance issues at the power utility. The task team will be looking into operational issues.
“It would have made sense for the task team to fit into the current structure” by reporting to the current board said Sithole.
In his tweets, Sithole detailed that Eskom has R569-billion in liabilities and, with R93-billion due in 12 months, he believes that the entity does not have the wherewithal to meet its current liabilities. Eskom’s assets are valued at R739-billion as of March this year.
According to Sithole, Eskom has a funding issue. Of the assets that could be turned into cash within 12 months, there are only R72-billion of such assets, which Sithole said would leave Eskom short by R21-billion.
“The municipalities legally owe R11.9-billion, but Eskom expects R7.8-billion to be paid. That’s 66% recovery rate — if Eskom is lucky enough to collect it,” Sithole tweeted.
Sithole told the Mail & Guardian that his other concern is Eskom’s growing liabilities. Over the past year, Eskom has received loans from China ($2.5-billion; R33-billion) and France (R1.5-billion), but the extent of these loans conditions will only be made public in the power utility’s financial statements.
Energy expert Chris Yelland said it was not true that the task team was a parallel structure to the board and this was made clear in the Presidency’s statement.
Yelland said it was critical for the state to draw on the skills and resources available from all spheres of society to fix Eskom and the task team allowed for that.
“The future of Eskom should not be decided by Eskom itself who have a complete vested interest in the status quo. Remember their status quo is that of a monopoly generator and transmission company. I think it is vital that the other stakeholders should be engaged,” said Yelland.
And that’s where it starts going wrong for #Eskom. It currently has R569 billion in liabilities. R93bn is due in 12 months. Which means that in that period, they need to sell enough to cover their daily costs plus another R93bn to deal with current liabilities. Do they have it?
— Khaya Sithole (@CoruscaKhaya) December 18, 2018
Sithole said that Dames should have foreseen that there would be a conflict of interest by being on the task team.
There may be more conflicts of interest within the team, Sithole told the M&G, as not all of the members full CVs are available to the public, whereas “Mr Dames’ CV was well known to the public.”
Last year, Dames presented evidence to the parliamentary portfolio committee of public enterprises which was looking into state capture at the power utility.
He said he could not with confidence deny meeting with a member of the Gupta family and that interference in the power utility began in 2011 with the flouting of procurement processes.
When Dames left, he said he had not investigated any of the irregularities that he had noticed, but that he did speak up about the issues.
Yelland said although Dames is not perfect, it was not surprising that he was chosen to be on the task team given because he brought a unique wealth of experience given his history as the chief executive and employee at Eskom.
“A lot of people in business have got directorships in different companies and interests in a lot of companies. For me, it is not the conflict of interest that is the problem it is if the conflict of interest is not declared or is hidden or is not common knowledge, and that cannot be said about Brian Dames,” Yelland said.
Yelland added: “ I think it is a loss that he is no longer on the task team but certainly, that is by no means the end of the task team there are some exceptional people on the task team who bring a wealth of knowledge and experience coming from labour, the municipal sector, mining and the regulatory sector and economics - the highest calibre”.
The other members of the task team are energy policy expert Professor Anton Eberhard, chairperson of the Energy Intensive Users Group Tsakani Mthombeni, general manager at Actom Power Systems Sy Gourrah, infrastructure and regulatory economist Grové Steyn, former National Union of Mineworkers general secretary Frans Baleni, mining magnate Mick Davis and Council for Scientific and Industrial Research senior researcher Busisiwe Vilakazi.
In a statement after the task team was announced, the Economic Freedom Fighters (EFF) expressed “regrettable concern” over Dames’ appointment and said he is incompetent and has no “capacity to make any recommendation that will stabilize Eskom”. According to the EFF, Dames “left Eskom in a far worse position than he found it as its chief executive”.
The party also described Ramaphosa’s appointment of the team as confirmation that “there is a bigger, more sinister and more corrupt project to concentrate the power to produce electricity in the hands of few private hands”.
The @EFFSouthAfrica is the only political party that raise Brian Dames’ conflict of interest in this parallel Board of Eskom, so it’s good he fell. There are still others though and there is no rational basis to establish a parallel governance structure when there is a board. pic.twitter.com/3Azp34aF8r
— Floyd Shivambu (@FloydShivambu) December 19, 2018