In search of a radical solution to the dire crisis at Eskom

JUST when you thought it couldn’t get any worse at Eskom, it did. The quasi-suspension of four executives — CEO Tshediso Matona; head of capital projects Dan Marokane; technology and commercial executive Matshela Koko; and finance director Tsholofelo Molefe — turns a crisis of confidence into a national laughing stock. How the lights have stayed on as long as they have is anyone’s guess.

The executives are not suspended in the traditional sense, argued Lynne Brown, the public enterprises minister who inherited the Eskom mess from Minister of Crazy Visa Regimes Malusi Gigaba, who, in turn, had taken it over from someone else who’d been handed the poisoned chalice by someone else, et cetera.

There has been a clear breakdown in trust between the government, the new board and the management team put in place by them.

Chairman Zola Tsotsi, who narrowly survived being canned along with most of the previous Eskom board last year, did his best to fudge the reasons for the removal of the four executives.

There was no wrongdoing, he said — with a clear subtext that they could not be trusted to do the right thing by Eskom in its efforts to unpack the multiple layers of dysfunction that exist within it.

If state control of Eskom had one last shred of credibility, this put paid to it.

Effectively, the government is telling the management team it appointed that it has no clue about the business, that it is such a shambles that someone else will have to figure out why there is a crisis and they cannot be trusted to help.

The fact that Matona is a former director-general of public enterprises, Brown’s new ministry and the one tasked with oversight of Eskom, makes the situation even worse because it suggests former management teams at the utility kept him in the dark as well. (Sorry. But that was too good an opportunity to miss.)

It’s again leading to calls for the privatisation of Eskom.

The government is determined to push forward the agenda of the “developmental state”. It wants great control of the economy so that it can drive growth and create the jobs it keeps promising but is yet to deliver.

The great irony, of course, points out Renaissance Capital economist Thabi Leoka, is that without electricity generation there is no state to develop.

The government has proved itself incapable of managing Eskom but wants to continue flogging the horse long after it is dead and the vultures have picked the bones clean.

Listeners to The Money Show on 702 and Cape Talk this week came up with suggestions of management teams that would do a considerably better job of running Eskom.

These included the management of SABMiller, the small South African brewing company that became the world’s second-biggest in under 20 years. Others suggested the management teams at Discovery and PSG.

Others suggested placing the Shoprite management team in charge. It is used to doing more with less, and its focus on costcutting and efficiency would go a long way to addressing some of the parastatal’s cost issues. That’s not going to happen. What’s the next best solution? The most obvious is to get someone with a strong corporate history to hand-pick a management team to drive a turnaround.

There is precedent for this. This column has previously cited what can be achieved in a state-controlled company with the right people in charge. Telkom chairman Jabu Mabuza, CEO Sipho Maseko and a board of business people with a good grip on balance sheet management have done a remarkable job of reigniting investor, if not yet public, confidence in the business. So, who is available? Ketso Gordhan did himself no favours when he stormed out of PPC and launched his campaign against the board that appointed him, but his rare combination of high-level public and private sector experience and eight months to think about how he could have managed the boardroom conflict better may make him a prime candidate for the top job.

Besides, the collapse of the PPC share price to less than half what it was when he left and the fact that his personal wealth remains tied up in it may mean he needs a high-paying job to ameliorate his losses.

Outgoing Sanlam CEO Johan van Zyl, who was catapulted from an academic career to Santam and saved Sanlam from self-destruction, is retiring soon. He might be at a loose end and looking for a legacy project.

Sizwe Nxasana has overseen a 270% appreciation in the share price of FirstRand in the five years since he assumed control of the financial services group.

There is no shortage of local experience and top talent. Whether they’d want the job is another story. Given “Telkomstyle” carte blanche to do the right thing, they might be enticed.

They will, however, be cognisant of the fact that even Bobby Godsell, the guy credited with getting Anglo American to think differently about its future in South Africa in the ’80s, eventually chucked in the towel as Eskom chairman when it became impossible for him to do the job with which he had been tasked.

Some things are just too fiendishly complicated to be fixed by professional managers without political support.

Brown needs a radical solution to the crisis at Eskom. The government can keep doing the same things over and over.

But South Africans should not expect a different outcome.

Whitfield is an award-winning business writer and broadcaster

There’s no shortage of top talent. But do they want the Eskom job?