CLEANER ENERGY AT ESKOM
As the weeks edge closer to Eskom’s reporting period in July, newly appointed CEO Phakamani Hadebe and his team will have to convince sceptical markets that they have a solid plan to save the utility and put it on a sustainable path. More immediately, however, the results for the year ended March must show that the new leadership team has ended the endemic corruption with which Eskom has become synonymous.
This will be an indicator of whether the utility can again be trusted with investors’ money. The signs so far are good. A lot has been done to root out the most prominent criminals in the state capture project. The result is that Megawatt Park now not only looks clean — which it always did — but it also feels clean. The stench of corruption is largely gone.
Still, no fewer than six teams of investigators are combing through the books to weed out those corrupt elements still clinging to their undeserved jobs.
More than half-a-dozen executives and senior managers have resigned or been fired, or suspended pending disciplinary processes. The most recent suspensions are those of Ayanda Nteta — head of primary energy, Eskom’s biggest cost centre and the one most ravaged by corruption — chief procurement officer Jay Pillay, and the bosses of three power stations.
Hadebe and the board led by Jabu Mabuza have only been in place for just over three months. Their biggest achievement so far is that no new incidents of the rampant corruption on which their predecessors thrived have been reported. And new criminal charges have been laid with the police.
During my visit to the head office this week, I noticed a determined discipline that had not seemed to be there before. Of course, this is not to say all is well with Eskom. The harder part of fixing what was deliberately plundered still lies ahead.
Last week Eskom started lifestyle audits of its top 15 executives, which will be completed by September. These will be followed by lifestyle audits of the next level of managers, the “E-band”, comprising about 400 people. Because of the amount of work required, the probe will take about eight months. There will be quarterly reports on progress.
Hadebe says it is not just the affairs of utility employees that are being probed to ferret out conflicts of interest and criminal wrongdoing, but also those of their immediate relatives and close associates. Of course this is where most of the corruption lies. Relatives and friends of well-placed people have in the past benefited illegally from Eskom business negotiated with insiders.
Expect a fierce rearguard action
While the wind of change is sweeping the whole country, I do not expect the corrupt elements to let go of their privileged positions without a fight. Hadebe and his board can expect many nasty battles with their colleagues, and some political pressure from the wellconnected ones among them.
The real political fight, though, will be when Eskom finally tackles its bloated staff complement. In 2007 it employed just over 32,000 people to manage its installed capacity of 40,000 MW. Today it produces 48,000 MW of electricity, yet it employs nearly 48,000 people. What are all those other people doing there? A good 40% of Eskom’s workforce needs to go for it to survive.
In case you see no problem: in 2008 you were paying 25.24c/kwh for electricity. Today you are paying 93.79c/kwh.
If Hadebe and Mabuza have the appetite and political support for this massive cleanup, Eskom will thrive; if not, it will continue to drain public resources and be the enabler of corruption it has long been.
During my visit to Eskom this week, I noticed a determined discipline that had not seemed to be there before