WHO WILL TAKE
Eskom’s next CEO is likely to be another outside appointment because the most obvious successor runs the risk of inviting more scandals. The utility’s outspoken head of generation, Matshela Koko, has been flagged as a natural choice, which would see Eskom resume a tradition of internal promotion to the top.
He and outgoing CEO Brian Molefe have presented a common front in their increasingly vociferous arguments against Eskom’s obligation to buy renewable energy from private producers.
Molefe announced his resignation late last week after the release of former public protector Thuli Madonsela’s State of Capture report.
Molefe’s alleged interventions to favour the Gupta family’s coal business, along with his apparently close relationship to Ajay Gupta, left a cloud hanging over his head, despite the report making no definitive findings. He formally steps down at the end of the year. However, Eskom watcher and investigative editor at EE Publishers Chris Yelland says that Koko is unlikely to replace Molefe, except perhaps as an interim CEO.
“[Koko] heads generation, which is by far the biggest division. He would be a natural fit under normal circumstances,” said Yelland.
Promoting Koko would, however, be risky because he could face legal trouble on two fronts in the near future, said Yelland.
On the one hand, he might be implicated in wrongdoing in the coal contracts given to the Gupta family’s coal mining company, Tegeta, when the judicial inquiry gets off the ground.
On the other, he could soon face an adverse Constitutional Court ruling on Eskom’s awarding of a contract at the Koeberg nuclear power station to French vendor Areva.
Rival Westinghouse took that contract award to court and Eskom took it to the Constitutional Court.
If the highest court in the country found Eskom did wrong, the blame would fall squarely on Koko, said Yelland.
Eskom and its government shareholder representative, Public Enterprises Minister Lynne Brown, would probably want to avoid the risk of another CEO facing a public investigation, he said.
“It is unlikely that the CEO will be from the Eskom board or the executive committee.”
Thava Govender, currently head of transmission, is another candidate with the requisite experience who would earlier have been on track to the top.
He was head of generation before Koko, but “in effect got demoted” to a lessor position after having presided over a period of disastrous load shedding, said Yelland.
Molefe and Koko had encouraged a public narrative where they saved Eskom from ruin and South Africa from power shortages, said Yelland.
In this narrative, Govender was one of the villains of the piece, he said.
Brenda Martin, newly appointed CEO of the SA Wind Energy Association (Sawea), would not hazard a guess about who will lead Eskom.
Sawea is locked in a battle with the power monopoly about its antipathy towards connecting any more projects under the Renewable Energy Independent Power Producer Procurement (REIPPP) programme.
“You would like to think that the leadership does not have that massive an impact on long-term investment decisions, but we have seen that they are quite influential,” Martin told City Press.
Molefe and Koko, in particular, have forced the REIPPP to a halt by simply refusing to sign off on otherwise “shovel-ready” projects. They complained that the projects were too expensive and did not provide reliable base load energy.
Eskom has put on hold more than 30 power purchase agreements with renewable independent power producers, which in essence means it has intervened in the energy policy imposed on it by the government.
“I don’t think you want someone who will disregard ministerial determinations or a CEO that will flout the law and be afraid of energy diversification,” said Martin.
The way the REIPPP works is that preferred bidders are selected in windows. They then sign a 20-year power purchase agreement with Eskom.
Projects had been stalled by Eskom simply not signing off on quotations from the preferred bidders, said Martin.
Projects announced as preferred bidders in March and August 2014 are still not signed off, even though the entire process for earlier bidding rounds took only a year.
A lobby group representing Eskom’s major customers, the Energy Intensive Users’ Group, says it barely matters.
“It’s not even something we are concerned about. Our concern is with the energy coming out. Who drives Eskom is a small part of that,” said spokesperson Shaun Nel.
“The issue is the energy plan going ahead and what that will do to pricing.”
Molefe had been the third Eskom CEO parachuted in from the outside. Up to the resignation of Brian Dames in 2014, Eskom CEOs tended to be longtime Eskom staffers who worked their way up the ladder.
Dames spent 26 years at Eskom and, like Koko today, was head of generation before becoming CEO in 2010.
Before Dames, Jacob Maroga served two and a half years as CEO following more than a decade elsewhere in the company.
Thulani Gcabashe, Eskom CEO from 2000 up to 2007, had likewise been an insider. So was Allen Morgan, CEO from 1994 to 2000 and Eskom’s first CEO after it got turned into a corporation.
From 2014 onwards, however, Eskom had a public enterprises director-general, Tshediso Matona, a Nersa chair, Collin Matjila, and a “seconded” Transnet CEO Molefe put in charge.