Ramaphosa must bring ministers to heel
It’s Thursday October 10, which means the government has just 20 days to appoint an Eskom CEO, devise a plausible rescue plan for Eskom and for finance minister Tito Mboweni to top it all by delivering a plausible medium-term budget policy statement on the secondlast day of the month.
On the first day of November, Moody’s Investors Service will (OK, could) pronounce on its outlook, or possibly even its rating, of our sovereign debt.
If we fall, it’ll be hard. Sure, there’s life as a junk-status borrower, but it’s expensive and mean and the really weird thing is how little the government is doing to communicate with the public at a time of such high national anxiety.
In just the second of his weekly newsletters, on Monday President Cyril Ramaphosa went on at length about relations between us and Nigeria. What a waste of an opportunity to calm nerves.
He has the Eskom CEO shortlist. Surely he could have told us when to expect an announcement? He knows whether a financial package is in place for Eskom. Why not tell us when to expect it? Why do South Africans have to wake up every morning and not know what’s going to happen?
Between them, Ramaphosa, Pravin Gordhan and Gwede Mantashe are scurrying about trying to keep lids on boiling pots while the rest of us are in the dark. It’s not right.
When I was a correspondent in Bonn, then the capital of West Germany, in the 1980s, there was a full government press conference every day. All the spokespersons were there, and if they thought their ministers needed to be there too, they were. You could ask anything, and the result — near perfect expectations management — was palpable. Everyone knew everything at the same time.
Not here. My growing conviction is that Ramaphosa’s problems are not with the Zuma faction or Ace Magashule. They are within his inner circle, where not only different ideas clash but where individual ministers have lost their heads.
Minerals and energy minister Mantashe would always lead a list of the headless. He has been pressing coal miners to cut the prices of their coal to Eskom. Unless they do, he warns, the economy will collapse. But at the same time he has been championing a huge deal in the coal industry that could raise, rather than lower, the cost of coal to Eskom.
Black-owned Seriti Resources is now in an exclusive negotiation to buy South32’s coal mines in SA, many of which supply Eskom power stations.
“My dream remains to create a national champion,” Miningmx reported Mantashe saying in September. “Why is it an issue that a black-owned business is a major supplier of coal when nothing is said when Glencore and Anglo American supplied all the coal?”
Trouble is, there are real concerns about Seriti’s gearing. The group, headed by former Chamber of Mines president Mike Teke, borrowed heavily to buy the Anglo American coal mines that supply Eskom, even more to buy New Largo, a vast Anglo coal asset that would supply Medupi and Kusile if they ever get off the ground.
Even if it paid just $1 for the South32 coal assets it would hardly be in a position to cut its prices. Power expert Chris Yelland was quoted in The Citizen this week saying it is already costing (that is to say, it is a loss) South32 R90m a month to deliver coal on a longterm contract at favourable prices to Eskom’s Duvha power station near Witbank.
The chances are that Mantashe’s champion would in fact have to raise prices rather than lower them.
Mantashe, famously able to contradict himself, seems oblivious to the problem. But if it gets the go-ahead from the competition authorities, Seriti could end up supplying more than 40% of Eskom’s coal.
Given that coal spot prices are low, that the fuel has almost no future, and that Seriti might become financially stretched, there is debate now about whether the proposed deal poses a threat not only to Eskom but to national security as well.
The point isn’t Seriti’s bona fides — they are impeccable. The point is Mantashe’s judgment. The point is whether the minister responsible for Eskom (Gordhan) can have the minister for mining and energy (Mantashe) put Eskom further at risk. The big point is whether Ramaphosa can bang their heads together on this and a range of issues (deep state involvement in the economy, at whatever the cost, forcing mines to finance empowerment deals as new beneficiaries come and go, much the richer).
If the president can’t bring his ministers to heel and get them aligned behind a clear plan for growth, there is no point in him being there other than to keep actual criminals and lunatics away from high office. That in itself may be a laudable reason for being, but even on the madness spectrum it is hard to be certain.
As I write, rumour is that communications minister Stella Ndabeni-Abrahams has let virtually the entire board of the Post Office go. All that experience, just lost. Vain and conceited, she’ll fill it with her friends. And off we go again. Unless her boss does his job.
MY GROWING CONVICTION IS THAT RAMAPHOSA’S PROBLEMS ARE NOT WITH THE ZUMA FACTION OR ACE MAGASHULE
THE BIG POINT IS WHETHER RAMAPHOSA CAN BANG THEIR HEADS TOGETHER ON THIS AND A RANGE OF ISSUES