Matona tipped for Eskom hot seat

Tshediso Matona, head of the Department of Public Enterprises and former director-general of Trade and Industry, is expected to be announced as Eskom's new CEO this week, one of the toughest jobs in South Africa.

Public Enterprises Minister Lynne Brown has handed a shortlist of candidates to the cabinet, and an announcement on the position is expected by Wednesday.

Eskom is also trying to fill other executive positions in an extremely challenging period for the utility.

Brown has urged Eskom's board to move rapidly to fill all the other critical vacant executive positions, including the top finance job.

Pan African Investments CEO Iraj Abedian said Eskom needed a top-notch team of CEO, chief financial officer and chief operating officer with full knowledge and experience in the energy sector.

After a 26-year career at Eskom and nearly four years as the CEO, Brian Dames resigned in December, shortly after chief financial officer Paul O'Flaherty, as pressure mounted over the escalating budget and perpetual delays at Medupi.

Initially, Medupi was meant to cost R70-billion and be finished by 2011. But the cost has since soared to R130-billion and it will only begin operating in December, at best. Medupi and Kusile are the centrepiece of Eskom's wider R350-billion build programme.

Collin Matjila, who already had a cloud over him relating to his tenure of Cosatu's investment arm Kopano ke Matla, became acting CEO.

Matona has worked almost two decades in government, and could be viewed as a political appointee.

Abedian, who was previously adviser to former minerals resources minister Susan Shabangu, said Matona would be an "interesting" appointment.

"To the best of my knowledge, Matona has no experience of running a business, never mind running a complex and broken business as specialised as Eskom," he said.

Abedian said that if Matona can fix Eskom, he will earn the accolade of the ' CEO of the 21st century'. "If the appointment is made already, all we can now do is wish him the best," he said.

Whoever is appointed will have to fill an enormous funding gap of about R225-billion and plug an immediate hole of R50-billion.

In addition, the new CEO will have to implement the correct energy mix for the country, and decide what role the private sector could play in future projects.

If Matona is appointed, one of his first duties will be to announce a further unpopular tariff increase.

According to Eskom spokesman Andrew Etzinger, South Africans can expect to pay more for electricity from next April as Eskom tries to recoup a R7.8-billion revenue loss.

Abedian said political interference brought Eskom to its knees over the past five to six years, and the paralysis at the utility was likely to cause a massive headache for Treasury too.

"The only option left for Eskom is to get either a huge equity injection from the Treasury, or secure additional Treasury guarantees to enable it to borrow more. Either way, the Treasury's credit rating is bound to suffer," he said.

Abedian said Eskom's problem was not solely one of money, however.

"T he more money you inject into it, the more you promote its unproductive and inefficient operations. The funding gap is, in fact, a reflection of its debilitating corporate and operational efficiency gap," he said.

Anton Eberhard, a professor at the University of Cape Town, said the most elegant way to solve Eskom's financial and funding crisis would be to sell its power stations.

Eberhard said that Eskom's power stations should be sold with long-term fixed power-purchase agreements to provide a guarantee of specified revenue to investors. This would make it an attractive, low-risk investment.

However, many of Eskom's power plants are older than 30 years, so refurbishment costs would be high.