South Africa may need to cast its net much wider for the successor of outgoing Eskom chief executive Phakamani Hadebe. Photo: Reuters
South Africa may need to cast its net much wider for the successor of outgoing Eskom chief executive Phakamani Hadebe. Photo: Reuters

THE SHAKE-UP: Any takers for the thankless Eskom job?

By Sechaba ka'Nkosi Time of article published May 29, 2019

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JOHANNESBURG – South Africa may need to cast its net much wider for the successor of outgoing Eskom chief executive Phakamani Hadebe, as local candidates are likely to be reluctant to get stuck in the highly politicised and toxic environment that characterises the executive suites at the power utility.

The probable requirements for the suitable candidate are so rigid that it would take a near miracle to find someone who has the right credentials to take up the position.

There are too many interests at play at any given time at Eskom: the government that wants Eskom to solve its liquidity problems as soon as possible; unions who will go to any lengths to defend their members and organised business, a group that sees the glass half-full on top dollar bailouts that the state continues to pour to keep the utility alive.

These are not just ordinary stakeholders. They are powerful lobbies that wield huge influence on the future of the utility, more so after President Cyril Ramaphosa announced plans to break Eskom into three separate units of generation, transmission and distribution.

If recent developments are anything to go by, the next person to lead Eskom would also have to possess a degree of madness to run such a chaotic institution.

That its debt has been largely left to climb continuously – it is now estimated at just under R500 billion – would require not only business acumen to stabilise, but a leader who can take Eskom into the 21st century supplier that embraces clean energy, instead of burning fossil fuels.

But this is much easier said than done, given that the turnaround of Eskom will have to delve into the crux of one of Eskom’s biggest problems, cutting coal and diesel usage that all the lobby groups would want to protect. Add to that the nearly R35bn municipal debt that has crippled Eskom’s financial position, then you will appreciate the real picture that Hadebe’s successor will have to deal with.

Soweto alone owes Eskom at least R17bn in debt. This is one area no one has thus far been willing to address, lest it results in a huge political backlash. There is now also that smallanyana issue of carbon tax that has recently been made into law, adding to Eskom’s future woes. All this makes the task of finding the perfect person to lead Eskom more difficult than Ramaphosa’s decision on who occupies what seat in his slim Cabinet.

Hadebe, one of the most intelligent and affable blokes this side of the equator, was hardly the person.

He was too nice for the toxicity that permeates the Eskom corridors.

His reasons for tending his resignation just 15 months into the job say as much: the position comes with unimaginable demands, which unfortunately had a negative impact on his health and family.

Returning Eskom into one of the leading companies that it was until at least two decades ago would, therefore, require something out of the ordinary.

The person would have to negotiate a fair premium from petroleum companies that have made a killing on supplying Eskom with coal and diesel.

In the 2018/19 financial year alone, Eskom spent R4.6bn on diesel to compensate for the political neglect of the maintenance of its coal-fired power plants due to the generation capacity shortages. The figure in the past 10 years is R47.4bn.

Then he or she will also have to find alternative sources to shore up the balance sheet that has also been eroded by inefficiencies that led to major clients opting for self generation and independent power producers who have taken advantage of the situation by selling at a higher price.

So in a sense what Eskom needs is a turnaround strategist with a clear understanding of the energy sector.

Hadebe brought that experience with him from his escapades of bringing the Land Bank back to life.

But when he scraped through the books and crunched the numbers, he discovered that Eskom was way too complex than he could even have imagined.

For starters, Eskom is technically insolvent, which makes any expansion on expenditure projects a nightmare. Its workforce is also too bloated to be sustainable.

Hadebe’s biggest mistake was perhaps to tell the country that Eskom, in its current state, could not afford salary increases, making even those who brought him to stabilise things to leave him out to dry.

No right-thinking person would want to subject themselves to such abuse. That makes the finding of the perfect candidate in our midst near impossible.

But even imports from other countries have left us with no better experiences.

SAA paid Coleman Andrews R220m (R3.17bn) in 20 months, effectively to cook its books and enrich himself.

Andrews salary was more than $1m a year, excluding perks such as an annual bonus of 125percent and options on 18 million shares at 1cent each.

When SAA discovered his shenanigans, it was forced to buy back the shares that he got for next to nothing at a more than 200percent increase.

This then brings us back to square one.

Who can perform a national resuscitation on Eskom without conning us like Andrews did, or the way Pastor Alph Lukau did when he claimed to have raised Brighton Moyo from the dead? We are not in shortage of such people.

The answer could be someone like Telkom chief executive, Sipho Maseko, who has quietly built a partly-state owned empire that has been the admiration of its peers in the private sector.

Under Maseko, Telkom has grown into a cash-flush company that has a market capitalisation of more than R43bn. Its operating revenue for the year to end March grew 5.3 percent to an impressive R41.8bn from R39.6bn in 2018 on a 58.3 percent increase in mobile service revenue to R8.5bn from R5.1bn in 2018.

Its data revenue jumped 34.7 percent to R8.9bn, buoyed mainly by the 60.7 percent mobile data revenue growth to R5.9bn from R3.6bn in 2018 on the back of company’s strategy to focus on data, which led to an increase in mobile data traffic.

This by all accounts is an impressive chief executive that many a company would be proud to have.

There are many other Sipho Masekos in South Africa who can do what others have failed to do at Eskom: turn the power utility from an embarrassment into a crown jewel of the nation.

But only if they can be given the space to do their jobs without any interference from the powerful lobbies that want Eskom to bend to their own interests.

That way Eskom can also experience its new dawn.


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