Will the Sustainability Task Team really solve the problems at Eskom?
THE APPOINTMENT of the Eskom Sustainability Task Team is a positive step towards resolving the problems at Eskom.
In my opinion, the president is unable to make head or tail of the briefings he receives from Minister Pravin Gordhan. On the other hand, the minister is frustrated by the board led by his friend, Jabulani Mabuza, whose explanation at the recent press briefing on Eskom’s operational problems could only say something along these lines: “This is a problem for all in South Africa” – as if the whole population sits on the board.
The board is irked by chief executive Phakamani Hadebe and his “management team”, who are unable to explain “load shedding” and chaos at Eskom and do not even have a “communication strategy”, according to Minister Gordhan.
In fact, Hadebe has no idea what he is doing at the utility, which is something most people say in the market.
The deep fear from the public is that Gordhan, Mabuza and Hadebe really should have things sorted out by now, and is it not great and inescapable that President Ramaphosa appointed the task team to tell them what they should be doing?
It will be disappointing, though, if the president has some pre-determined outcomes, such as breaking up Eskom or privatising the utility as suggested by some.
President Ramaphosa then decided to seek counsel from the public, which will be co-ordinated by the task team, which must report by the end of January 2019.
If the president takes action, such as firing the minister and the board, including the chief executive at the end of January, he will justify the decision as the outcome of a legitimate process.
The question is whether the task team consists of independents and people with no particular interests in Eskom. “Garbage in, garbage out” as they say when they write computer code.
Upon the appointment of the task team, there were comments on social media that went like this:
“This is a slap in the face of the Eskom board, management and Public Enterprises Department. This means no confidence in their ability to turn the situation around.”
“It’s like another with vested interests and conflict of interest! I wonder how the conflict of interest is going to be managed.”
According to the ESI Africa Journal, former Eskom chief executive Brian Dames leads an energy and power company, African Rainbow Energy and Power.
“And what is the board and the DPE doing? Then they must be removed!”
“Are these people going to be recused from doing business with Eskom?” According to the Financial Times, the former Eskom executive Mick Davies and Xstrata chief executive, now Sir Mick, sits on the board of London-based coal start-up Arq backed by oil trader Vitol and miner Peabody.
President Cyril Ramaphosa indicated that the job of the Eskom Sustainability Task Team is to advise the government on actions to resolve Eskom’s operational, structural and financial challenges. The team is to submit initial recommendations by the end of next month, which will address the following issues:
Assessing the operational, structural and financial viability of Eskom, including key assumptions around life of the plant, impact and cost of environment commitments and demand assumptions.
Reviewing the turnaround strategy submitted by the Eskom board of directors. This will include a review of key assumptions, impact on tariffs and industry, and viability of proposed solutions on the future role of Eskom.
Assessing the appropriateness of the current Eskom business model and structure.
Presenting a view on the current energy trends and the evolution of global energy to take advantage of the confidence that President Ramaphosa has in them.
Presenting a view on the role, positioning and structure of energy utilities and provide proposals.
Proposing alternative business and financial models appropriate for the South African context.
Proposing how the structure of the electricity industry in South Africa can adapt to evolving changes in this sector, including the harnessing of new technologies.
Making proposals to resolve the debt burden.
There is a concern that most of the people on the task team are conflicted and that unlike the board and executive management, there is no legislation or code of ethics that will hold them accountable if they go on a feeding frenzy for themselves, their companies or friends. One is not much concerned about that, because these are men and women of integrity and will not take advantage of the confidence that President Ramaphosa has shown in them.
One other opportunity is that the task team will consult with various role-players, including labour and business. Individuals and companies must actively participate in this process that “arise from the government’s concern that the lack of adequate electricity has a negative impact on economic recovery and there is a need for intervention in the short and medium term to restore the supply-demand balance.”
The president has also alluded to “severe financial constraints at Eskom, which impact on the fiscus, and where operational and financial issues have become inter-related and need to be addressed simultaneously.”
Again we hear that the board of Eskom would like the tax-paying public to assume Eskom’s debt after mulling the failed idea of converting private sector loans into equity.
One of the hallmarks of President Ramaphosa’s administration is the formation of commissions and committees for decision-making.
I am not sure if this is as a result of the style and type of advisers surrounding President Ramaphosa. It comes out as a lazy way out. President Ramaphosa must avoid “extreme” group decision-making.
According to Ronda Muir, a senior consultant with Robin Rolfe Resources, “in behavioural science, there is a well-documented propensity for small committees to drift toward ‘extreme’ decisions; that is, a group of individuals acting as a committee often makes a decision that none of the individuals acting alone would make, given the same information.”
Maybe it is time for President Ramaphosa to crack the whip and fire some people, albeit not at the rate that US President Trump has fired and caused people to resign.
Sello Mashao Rasethaba is the member of the Gas Agency & Trading Exchange (GATx) which is in the business of transmission infrastructure planning, energy market maker, gas wholesale and retail market development. The views expressed here do not necessarily represent those of Independent Media.