It is with a great sense of loss and regret that the board of Eskom last Friday announced the resignation of Eskom group chief executive Brian Molefe to step down in the interest of good corporate governance.
In an effort to clear his name following the release of former public protector Thuli Madonsela’s report on her “observations” about so-called state capture, Molefe has decided to voluntarily step down to reflect and take time off. The decision taken by him was regrettable, but understandable.
Eskom will soon announce the interim leadership arrangements once agreed on with our shareholder representative, the honourable Minister Lynne Brown.
Read also: Eskom leadership: Koko tipped to succeed Molefe
Since joining Eskom in April 2015, Molefe and his executive management team have turned around the company’s operational and financial performance, with 15 months of no load shedding, the impact of which has been enjoyed by every South African citizen.
The improved performance of the power generating units, coupled with additional capacity from some of our new build projects, has resulted in a stable power system, with excess capacity being exported to neighbouring states.
Going concern
The company’s liquidity position has also improved significantly, with liquid assets increasing by 81.6 percent from R24.1 billion a year ago, to R43.8bn at September 30, 2016, in the face of consumer price inflation growth reported to be 5.1 percent as at April 1, 2016. The group has access to adequate resources and facilities to continue as a going concern for the foreseeable future.
The Eskom board sincerely thanks Molefe for his relentless dedication to turning Eskom around, solidifying a capable executive team and putting it on a sound growth trajectory. This team of capable men and women will carry the baton and help move the company forward.
A few years ago, the country came face to face with the consequences of an energy shortage. Although not unique to our country, South Africans came to terms with a new word in our vocabulary - “load shedding”, a controlled way to avoid a total electricity blackout.
At the time, customers were often experiencing stage 1 load shedding that now and again was extended to stage 2 or stage 3. Eskom was unable to meet demand, especially during peak times due to unavailable power from generation units that were out for planned and unplanned repairs.
Additionally, shortage of diesel to power up the open cycle gas turbines and water reserves to run pumped storage schemes meant the risk to implement load shedding increased as these were used to quickly ramp up supply to meet the peak demand.
Back then in December 2014, the cabinet was so concerned with the effects of the daily load shedding and the impact this had on households and businesses across the country that it devised a five-point plan to deal with the electricity crisis and set up a War Room to implement it.
New board
That was Eskom before the new board was appointed, which later appointed Molefe as the group chief executive.
Minister Brown similarly raised concerns about the instability of Eskom’s power plants; the financial liquidity of the utility; the lack of credible information; the unreliable supply of electricity and its dire impact on the economy; progress with the build programme; overruns at Medupi and Kusile; delays of the investigation into incidents at Majuba and Duvha; and the issue of coal and diesel pricing.
These were the issues Molefe and his executives faced head on and have been dealing with since his secondment from Transnet in mid-April 2015 and eventual permanent appointment in September 2015, just over a year ago.
It is under leadership that we have had no load shedding for more than 15 months.
Despite its outstanding business performance, the Eskom board and Eskom executives are taken aback at the continued condemnation of this company.
Eskom has continuously explained its coal contracts position.
And Eskom regularly engages all its coal suppliers on the required volumes and qualities as the demand varies from time to time and contracting relationships are concluded on sound commercial principles and considerations.
The coal supply market is in need of major transformation as it has, and continues to benefit a small monopoly of companies. This phenomenon is now under review as requested by Minister Brown and Eskom is determined to ensure that emerging black miners also benefit from Eskom’s buying power.
Our intention to challenge convention should not be misjudged. Where we believe that policies or decisions are not in the best interests of the South African consumer, Eskom will take bold actions. Where we believe that savings in any area of the business can be optimised, we will take the decision to do so.
Today, South Africa’s power system has progressed to a position of surplus capacity. This will have a profound impact on the South African economy as Eskom is now once again able to accommodate new electricity connections.
Eskom’s quest to achieve universal electricity access is gaining momentum with almost 5 million households connected since inception. We are also able to cater for domestic needs while supplying electricity to neighbouring countries.
This year has been a defining moment for Eskom, and through its corporate strategy, the company will no doubt grow from strength to strength from here on.
I thank Molefe and his executive team and every staff member who contributed to achieving these sustained and pleasing results.
* Dr Baldwin Ngubane is chairman of Eskom.
* The views expressed here do not necessarily reflect those of Independent Media.
BUSINESS REPORT