Eskom chair deserving of suspension, says NUM
Suspension could leave leadership hole
JOHANNESBURG: The suspension of four top Eskom executives indicates a collapse of governance at the parastatal, the National Union of Mineworkers (NUM) said yesterday.
“Clearly, it means there is collapse of governance. We would have expected that the chairperson of Eskom’s board should have been the one who is fired,” said general secretary Frans Baleni, addressing reporters outside NUM’s national bargaining conference in Midrand.
“We did raise concern about the reinstatement of this chairperson when the new board had been established.
“We reject this because we’ve never been consulted. We think that there is a bigger picture rather than to gun for these four executives.”
Earlier in the day, Eskom chairman Zola Tsotsi said the four executives, including chief executive Tshediso Matona, had been asked to
‘‘ We think that there is a bigger picture than to gun for the four
step aside as the power utility embarked on a fact-finding inquiry.
The other three are finance director Tsholofelo Molefe, group capital executive Dan Morokane, and commercial and technology executive Matshela Koko.
Non-executive board member Zethembe Khoza would become interim chief executive.
“There is no intent or suspicion of wrongdoing, there are no charges against them,” said Tsotsi.
“There is no malice. There is no wrongdoing that is under consideration.”
It was an inquiry, not an investigation, into the poor performance of generation plants, delays in bringing plants on-stream, the high costs of primary energy and cash-flow problems.
The executives had been asked to step down for the duration of the inquiry, he told reporters in Johannesburg.
Tsotsi said the process would not last longer than three months. There was no hidden agenda behind the inquiry, but the board needed to establish a baseline of where Eskom was.
Baleni said the timing of the suspension was poor.
“We had just made a call of save Eskom, doing things differently including the involvement of labour,” he said.
“Couldn’t there be a better approach in dealing with the concerns they’re having? Because no one is saying that someone’s corrupt, no one’s saying someone has abused resources.”
He said government must take responsibility, rather than penalising certain individuals.
“They’ve just appointed this chief executive. What message are they sending to these individuals?”
Matona was announced as Eskom’s new chief executive in August last year and took up his position on September 1. – Sapa
THE SUSPENSION of Eskom’s top management yesterday could heighten the crisis at the power utility and leave a leadership vacuum when stability was required and crucial decisions needed to be made, analysts said yesterday.
Eskom chairman Zola Tsotsi yesterday announced that four executives had been suspended.
The suspended executives are: chief executive, Tshediso Matona; head of capital projects, Dan Marokane; technology and commercial executive, Matshela Koko; and finance director, Tsholofelo Molefe.
Tsotsi stressed that there was “nothing sinister” about the temporary suspension of the executives.
Matona was appointed in August last year to head the state-owned utility and started the job on October.
Eskom implemented almost daily rolling blackouts in February as it struggled to provide stable supplies because of technical faults that led to emergency repairs.
The rand was at R12.1591 at the time the Eskom media conference started and was at R12.2545 by 5pm.
Zethembe Khoza, an Eskom non-executive board member and ex-managing executive at Telkom, would assume the position of interim chief executive, said Tsotsi.
There was little confidence from analysts in the interim executives to be led by Khoza because they had been part of the decline at the parastatal.
Tsotsi said the probe would look at a number of the challenges facing the utility, citing “poor performance of generation”, delays in building new plants and cash flow issues.
Eskom said the inquiry would be conducted by “external parties, who will be selected within the next week”.
Loane Sharpe, an economist at the Free Market Foundation, said like Eskom, other stateowned companies, including South African Airways, the South African Broadcasting Corporation, defence company Denel, and Airports Company of SA were all lurching from one crisis to another.
“This is not a surprise, it is not specific to Eskom. Can you imagine a private enterprise that is managed by a commission of inquiry, with no confi- dence but hit by periodic crises?” Sharpe said.
He said a proper search for answers to problems besieging Eskom’s would take at least five years and R1 billion.
Sharpe said Eskom was shaving off between 1.5 percent to 1.7 percent of gross domestic product instead of the 0.3 percent estimated by Standard & Poor’s Ratings Services.
“Nothing can be achieved in three months, there is no single company in South Africa that can deliver credible results in that time,” he said.
Disinvestment
The consensus among analysts yesterday was that the inquiry was unlikely to solve Eskom’s problems but instead compound investor concerns and lead to disinvestment.
Johan Muller, a programme manager for energy and the environment at Frost & Sullivan, said: “The anecdotal rumours about Eskom’s general lack of efficiency has risen sharply over the past two years.
“However, the broader investment market will hold on to their wallets even more tightly now.”
Muller said that this inquiry and the message it sent to the market needed to be managed in a highly skilful manner to ensure that South Africa did not lose further global and local investor confidence.
“The timing of this inquiry is extremely unfortunate, given the knife’s edge Eskom is currently operating on,” he said.
“This has just been a confirmation to all businesses in South Africa that Eskom will never be fixed, that they have to make their own private arrangements for power supply and that it cannot be relied on at any time in the future,” said Sharpe.
Chris Yelland, an energy analyst and managing director at EE Publishing, said his impression was that Eskom’s executive had fiercely opposed an independent commission of inquiry and hence the new board of directors felt the need to put them aside to better deal with problems at the parastatal.
“This is clearly very bad timing, it is sending out a very negative signal about the management at Eskom at a very critical time when Eskom was to receive an equity injection from government and to raise further debt.
“It is sending a negative signal to the international financial community,” he said.
Yelland said it would be interesting to see whether the new commission of inquiry would be aligned to the goals of the state and would accept the recommendations of this board or if this new inquiry was just something required by the board of directors and not accepted by the shareholder.
South African Chamber of Commerce and Industry (Sacci) president Vusi Khumalo said the suspensions brought “an element of discomfort” because Sacci thought it was working in unison with Eskom, only to find out about such decisions at the same time as everyone else.
He said the removal of Eskom’s leadership cast doubt over its capacity to deliver. – With additional reporting by Reuters and Bloomberg
This is very bad timing, sending out a very negative signal about management at Eskom.