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It is the toughest job in South Africa. And whoever takes the helm of Eskom will not only have to lead a rescue of the stricken electricity monopoly, they will also have to tip-toe around a gaggle of squabbling politicians.
President Cyril Ramaphosa’s government is nearing the end of a search for a chief executive for the state-owned utility, which is deep in the red and unable to sustain its $30bn debts, despite selling nearly all the power in South Africa.
Ravaged by graft under Mr Ramaphosa’s predecessor, Jacob Zuma, the many failings of Eskom imperil Africa’s most industrialised economy. Strong leadership is needed to oversee the proposed break-up of one of the world’s largest utilities.
Tito Mboweni, finance minister, is among those demanding separation into more manageable units to ensure that R128bn ($8.6bn) of state bailouts for Eskom in the next three years will not be wasted money.
But Mr Ramaphosa’s African National Congress is deeply divided over how, or even whether, to pursue the break-up. Eskom has gone through ten chief executives in as many years because of political meddling and corruption scandals.
“We have literally run out of people” to run Eskom like a normal business, said Khaya Sithole, a political analyst.
The job has attracted applications from experienced Eskom alumni such as Andy Calitz, the South African former head of a vast LNG project in Canada. Mr Calitz began his career as an electrical engineer at Eskom. He has declined to comment publicly on the Eskom process.
However, “it is not just your business clout or acumen [that is needed] but your ability to navigate the stormy waters of politicians and unions”, Mr Sithole said.
As Phakamani Hadebe, previous chief executive, said when he resigned in May after just over a year in the job: “It is no secret that this role comes with unimaginable demands.”
When Mr Hadebe took on the task of fixing Eskom’s parlous finances, he had a reputation as a skilled former bank executive and civil servant.
But his fate was effectively sealed after his political masters overrode a plan to contain Eskom’s spiralling wage bill. It had angered the ANC’S trade-union allies. They are also opposed to any form of break-up.
Eskom suffered severe power blackouts towards the end of Mr Hadebe’s tenure that underlined the scale of its debt crisis. The outages were caused by lack of maintenance for ageing plants
after money was diverted to paying debts and spent on expensive projects that were crippled by corruption.
“If we do nothing, Eskom will collapse and bring down South Africa,” Jabu Mabuza, Eskom’s chairman who has temporarily taken on the chief executive’s duties, told managers in a recent leaked presentation.
“Eskom ran out of cash and came close to complete collapse on multiple occasions in 2019 . . . Eskom’s importance to South Africa is the only reason why [it] still exists,” he said.
Despite Eskom’s crucial role in driving the economy, there has been no urgency in finding a replacement for Mr Hadebe. His post was only advertised in August, months after he left. It has infuriated business leaders.
“That means another three months, at best, without a permanent CEO. This lack of urgency is disturbing,” said Sipho Pityana, president of Business Unity South Africa, a representative group.
At stake are fundamental decisions on Eskom’s break-up, such as whether it should begin with the relatively well-run transmission grid, or first tackle the huge debts attached to the power plants.
“It is still unclear how the unbundling would happen, but I suspect that generation will be prioritised,” economist Thabi Leoka said. “What will be tricky is the segregating of debt because creditors extended loans to Eskom as an entity.”
Last month Mr Mboweni’s Treasury shook up the debate with a paper on economic reforms that advocated the outright sale of Eskom’s coal power stations.
The paper argued that a selloff could raise R450bn, enough to clear Eskom’s debts. It would mean convincing outside investors to take on the risk of ageing coal power stations as well as newer plants that have serious faults.
“In reality this is completely unworkable . . . there would be no buyers,” said Peter Attard Montalto, analyst at South Africa’s Intellidex research firm.
However, the Treasury’s proposal might be “useful as a political baseball bat” to end the torpor in government regarding Eskom’s fate, Mr Attard Montalto said.
Next month Mr Mboweni will deliver an updated medium-term budget that is set to reveal more of the damage done to state finances by the bailouts.
He will be under pressure, particularly from rating agencies, to link the cash to tougher demands for Eskom’s separation.
But if Mr Mboweni cannot even point to a new chief executive by then, Mr Sithole said, “it will simply tell the markets and everyone else out there that they still don’t know what to do with Eskom”.
