Ac­tion man talks tough about Eskom’s cri­sis

Business Day - - The Bottom Line -

SA’s econ­omy and the coun­try ’ s 55-mil­lion peo­ple are hear­ing Eskom man­age­ment yet again make ex­cuses for its dis­mal per­for­mance in sup­ply­ing the coun­try with un­in­ter­rupted elec­tric­ity, show­ing how lit­tle has changed in a decade since the power util­ity brought the coun­try to a halt in 2008.

In that year, Valli Moosa, then Eskom chair, used the word “cri­sis” after Eskom de­clared a “na­tional elec­tric­ity emer­gency” in Jan­uary.

In the decade that has passed since then, Eskom has been com­pletely un­con­vinc­ing in its abil­ity to sus­tain­ably de­liver the elec­tric­ity the econ­omy needs.

At a me­dia con­fer­ence on Eskom, pub­lic en­ter­prises min­is­ter Pravin Gord­han used the word “cri­sis” on Thurs­day and con­ceded that the prob­lem had been more than a decade in the mak­ing. That a min­is­ter who was un­spar­ing in his crit­i­cism of Eskom’s past ac­tions and who ap­pears to want to get things done has taken full con­trol of a state-owned en­tity’s self­in­flicted dis­as­ter is heart­en­ing.

His prom­ises of con­se­quences for mis­man­age­ment, mas­sive cost over­runs ben­e­fit­ing peo­ple and or­gan­i­sa­tions, shoddy work, cor­rup­tion and hold­ing lay­ers of man­age­ment to ac­count to fix prob­lems are hope­ful. His talk of re­duc­ing out­ages over the rest of De­cem­ber and giv­ing busi­nesses con­fi­dence that the worst will be be­hind them by the time the year end hol­i­days are over and the econ­omy restarts from midto end-Jan­uary is an­other sliver of hope to cling to.

To have a min­is­ter speak­ing as frankly and openly about the prob­lems and talk­ing tough when it comes to fix­ing the prob­lems and restor­ing con­fi­dence is long over­due. The econ­omy needs more than talk and it is lucky to have Gord­han driv­ing the process.

Gov­ern­ments in ma­jor economies are snub­bing Huawei, the Chi­nese firm that pro­vides net­work equip­ment to telecom­mu­ni­ca­tions play­ers. The pres­sure could now be on the SA gov­ern­ment to fol­low suit.

Coun­tries in­clud­ing the UK, Ger­many, the US, New Zealand and Aus­tralia are grow­ing in­creas­ingly wary about Huawei’s equip­ment over cy­ber­se­cu­rity con­cerns.

Ac­cord­ing to re­ports, New Zealand and Aus­tralia have even banned the com­pany from par­tic­i­pat­ing in fu­ture 5G net­works.

In the UK, Bri­tish Tele­coms is strip­ping Huawei equip­ment out of its core 4G net­work, the Fi­nan­cial Times re­ported.

To make mat­ters worse for the Shen­zhen-head­quar­tered group, its fi­nance chief, Meng Wanzhou, was ar­rested in Canada this week at the in­struc­tion of the US. This was be­cause the com­pany al­legedly vi­o­lated Ira­nian sanc­tions.

SA tel­cos work closely with Huawei, which means they will be keep­ing a close eye on the lat­est de­vel­op­ments.

Im­por­tantly, Cell C is try­ing to cobble to­gether a R1.4bn loan from Huawei and other in­fra­struc­ture providers, in­clud­ing ZTE. If Huawei loses its ap­petite for such things, Cell C may have to turn to share­hold­ers, in­clud­ing Blue La­bel Tele­coms and Net1. Blue La­bel, for its part, says it has not set aside any more cash for its 45%-held as­so­ciate.

Mean­while, given SA’s grow­ing ties with the East, it seems un­likely that the gov­ern­ment would jeop­ar­dise its re­la­tion­ship with China by shut­ting the door on Huawei.

The com­pany is also a ma­jor in­vestor in the SA mar­ket and its in­fra­struc­ture runs deep.

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