Gordhan stands by his decisions on Eskom
Minister says as shareholder representative he may ‘initiate processes where necessary’
Public enterprises minister Pravin Gordhan has defended his “interference” at Eskom, saying that as a shareholder representative, he may “initiate processes where necessary“, especially at critical times.
This is the first time Gordhan has directly addressed his critics on alleged political interference.
In a written reply to a parliamentary question, Gordhan explained that a shareholder particularly a 100% shareholder as in the case with government and many state-owned enterprises - has a range of rights in relation to the governance of SOEs.
He said a shareholder compact prescribed the various performance targets expected to be met by an entity, while the memorandum of incorporation of companies sets out the responsibilities, duties and rights of the shareholder and directors.
“In the case of Eskom, targets will include plant performance (the level of energy availability factor to be achieved), financial targets (reduction in overall costs including primary energy cost) and implementation of various turnaround plans.
“Within these parameters, the board must hold management to account on delivery of these targets. Likewise, the shareholder department must hold the board accountable. Where necessary, usually at critical stages, the shareholder may initiate processes to assist both the shareholder and board to both diagnose a problem and suggest solutions,” said Gordhan.
He cited as examples the presidential sustainability task team which makes recommendations on the future direction of Eskom, given the challenges and changes in the electricity market, and the ministerial technical review team, which makes recommendations on improving plant performance.
Gordhan was responding to a question from EFF MP Veronica Mente, who wanted to know about the interventions he made that allegedly went against the plans of the Eskom board and management teams.
Mente based her question on a statement by Eskom board member Busisiwe Mavuso, who told a parliamentary committee that “government interventions are hampering proper management and turnaround of Eskom”.
Without naming Gordhan, Mavuso told a parliamentary committee meeting last October of an “interfering shareholder who exerted intense political pressure on the board to keep the lights on, irrespective of the cost.”
Gordhan, however, did not respond to Mente’s other question about his intentions when he warned Mavuso to be careful.