Eskom downgrade 'not due to suspensions only'

29 March 2015 - 02:00 By CHRIS BARRON
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Eskom's recent credit downgrade by Standard & Poor's to "junk status" will have an impact on "the whole value chain of the energy industry", says former CEO Jacob Maroga.

"The downgrading of a major player in the economy is a very serious issue.

"The consequences will go way beyond Eskom, and I hope it is receiving high-level attention because it can have systemic implications across the economy," he says.

Though S&P said the governance cloud due to the suspension of Eskom's four top executives, including CEO Tshediso Matona, was the reason for the downgrade, Maroga says these suspensions were not the only factors.

"The financial issues leading to the downgrade have been coming for a long time. I don't think it can be one issue only," he says.

For one thing, the prodigious cost overruns at Medupi power station would have been a strong contributory factor.

Although some observers blamed Maroga for not doing enough himself to address the problems with Medupi, he refuses to accept blame.

"The problems with Medupi are well known. The decision to go ahead with the build was delayed. There was an expectation that private players would come in and build the new power stations. When that didn't happen, Eskom was asked to go ahead and build Medupi," he says.

"The second problem is that Medupi is late in terms of its initial timeline."

He concedes, however, that weak project management contributed to the disaster.

Could Maroga himself not have done more when he was CEO to avert the present crisis?

"Obviously in hindsight you learn some things, but you can never learn them forwards. You can never learn what you are going to learn," he says.

The problem for CEOs of Eskom, he says, is that they are expected to carry out an "industry mandate" without being given the power to do so. Decisions about building and funding new generating capacity, for example, are out of their hands.

"These were not Eskom issues, but Eskom is having to deal with the implications now," he says.

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