Eskom still fumbling in search for new CEO
Delay in naming a successor highlights poor planning
ESKOM CEO Brian Dames will leave the utility tomorrow after nearly four years at the helm, leaving an organisation in desperate need of fixing its reputation, coal supply chain and credit ratings.
The departure of Dames, who has worked at Eskom for 26 years, comes less than a year after the resignation of Paul O’Flaherty, Eskom’s respected former financial director.
While the two played a crucial role in raising capital and stabilising Eskom after an ugly boardroom row in 2009 that led to the resignations of then CEO Jacob Maroga and chairman Bobby Godsell, much work remains to be done.
Dames’s departure brings the number of vacancies in the executive team to four. Three of the remaining executives — Erica Johnson, Mongezi Ntsokolo and Dan Marokane — now carry out two roles each, covering vacancies for human resources, group capital and customer service.
The new CEO would have a tough job “halting the decline” at Eskom, said Iraj Abedian, CEO of Pan-African Capital Holdings.
He said that the top priorities should be improving the financial position and credit ratings of Eskom, which relies on guarantees from the Treasury to raise external funding; improving the management and efficiency of its coal supply chain; improving its capacity; and reducing political interference at the state-owned utility.
Coal-supply problems led Eskom earlier this month to declare a national emergency and institute rolling blackouts for the first time since 2008.
Shaun Nel, director of the Intensive Energy User Group, said the new CEO would have to focus on two key issues: fixing generation performance, which had “gone down the tubes”, and ensuring there were no further delays or cost overruns with Kusile and Medupi, the two mega coal-fired power stations Eskom started building after the 2008 blackouts.
“Eskom needs better management of primary energy, which has been an issue. Things like coal contracts, the quality of coal deliveries — it is such a crucial element — need attention,” Nel said.
The delay in appointing a replacement for Dames, who resigned in December, is a huge concern and demonstrates a lack of succession planning at Eskom, Nel and Abedian said.
Eskom produces 95% of South Africa’s electricity.
Despite assurances by Public Enterprises Minister Malusi Gigaba last month that Eskom was “close” to finding a replacement for Dames, the board was this week forced to appoint non-executive director Collin Matjila as acting CEO while recruitment efforts continue.
Dames’s job was advertised as recently as two weeks ago.
The outgoing CEO refused to be drawn on his plans. He said, however, that South Africa “can’t keep on reviewing plans. We need to make decisions”.
“If we decided to build Medupi in 1998, it would’ve been done in 2008. Instead, we waited until 2008, and now it will only be completed in 2018. This demonstrates the importance of early decision-making.”
Eskom warned the government throughout the late 1990s that new power stations needed to be built to avert the shortage of supply the country experienced over the past six years.
Dames said this week that Eskom and its contractors had learnt important lessons at Medupi, where labour unrest and strikes delayed the project by a year, and at Kusile.
“The industry has changed in terms of how it treats workers, how they engage with workers, deal with disputes,” he said.
Companies needed to do more to equip middle managers and supervisors to manage workers, and shouldn’t rely solely on union structures to communicate with their workforce, Dames said. “I think there has been learning on all sides.”
Nel said that it remained to be seen whether Dames left Eskom a better organisation. “It almost seems a very short tenure since Jacob Maroga left, so it is difficult to determine what Brian’s legacy will be. Whether he’s left Eskom stronger or weaker remains to be seen,” he said.
“The real crisis will only be in the next 18 months to two years; that is when we’ll see whether Eskom is able to keep the lights on,” Nel said.