GETTING ESKOM ON TRACK

A new-look board and sweeping changes – the embattled state-owned enterprise is undergoing a much-need makeover. And it’s not too little too late, experts say

FOR years it’s been an albatross around our necks; a giant black hole that just gobbles money. Mired in corruption, mismanagement and allegations of cronyism and nepotism, Eskom – or Eishkom as it’s disparagingly known – has been a hopeless basket case.

But at last there appears to be light at the end of the tunnel. When he won the race to be the ANC’s new president, Cyril Ramaphosa vowed one of his first acts would be to stop the rot in South Africa’s largest state-owned enterprise (SOE). And it seems he intends to keep his promise.

Within the past few weeks there have been several sweeping changes: there’s a new acting chief executive cracking the whip and a new 13-member board and the axe has been falling on several top execs who allegedly helped President Jacob Zuma’s cronies, including the powerful Gupta family, to treat South Africa’s most important SOE as if it were their personal piggy bank.

Meanwhile parliament’s inquiry into state capture looks set to expose more misdeeds. So at last it seems the chickens have come home to roost. But what needs to be done to get Eskom back on track? LEFT: Eskom’s Johannesburg headquarters, Megawatt Park. RIGHT: New chairperson Jabu Mabuza is tasked with turning the power utility around. THE NEW ESKOM TEAM News of Phakamani Hadebe’s appointment as acting CEO was widely welcomed. He was formerly deputy director general in the national treasury and also helped to shake things up at the Land Bank.

He’ll be reporting to a new board consisting of seasoned businesspeople. They include Sifiso Dabengwa, former MTN CEO; Mark Lamberti, founder of retail group Massmart Holdings and currently CEO of Imperial Holdings Limited; and Sindi Mabaso-Koyana, a director at Toyota South Africa.

But the appointment that’s causing the most excitement is that of Jabu Mabuza as chairman of the board. He’s previously served as chair of Telkom South Africa, SA Tourism and Anheuser-Busch InBev. He’s also president of Business Unity SA and chair of Business Leadership SA.

Mabuza “has a reputation for being an honest, strong, hard-working and intelligent leader”, Efficient Group chief economist Dawie Roodt says.

Changing the management is a good start, Roodt adds. “These seem like very competent people.” THE MESS THEY NEED TO FIX Last year public enterprises minister Lynne Brown acknowledged Eskom was on the brink of insolvency. This is the result of years of mismanagement at the utility, says Chris Yelland, a well-known analyst in the energy sector who’s based in Johannesburg.

There have been so many concerns about governance and corruption that the financial community would not grant new loans or roll over existing debt anymore, he adds.

Adding to the utility’s woes, the National Energy Regulator of SA (Nersa) awarded it modest tariff increases (5,23% compared with the 19,9% Eskom demanded).

So the SOE is trying to juggle salary costs, the cost of corruption and unauthorised expenditure, according to Yelland – all while electricity sales volumes are declining, brought on partly because of the economic slump but also because several big users, fed up with being left in the lurch by Eskom, have opted for alternatives such as renewable energy.

Eskom’s total long-term debt runs to more than R350 billion, Roodt says. That means its financial problems dwarf those experienced at SAA and the SABC.

After bailing Eskom out to the tune of R23 billion in the past five years and also writing off debt of R60 billion, the government has had to face the fact that more