Recap: Here’s some of the mess the new Eskom CEO will try to fix

20 November 2019 - 05:01 By Unathi Nkanjeni
Andre de Ruyter has been appointed chief executive of Eskom, and he faces many big challenges when he starts work at the state-owned entity next year.
Andre de Ruyter has been appointed chief executive of Eskom, and he faces many big challenges when he starts work at the state-owned entity next year.
Image: Supplied

Embattled power utility Eskom has appointed a new CEO, Andre de Ruyter.

De Ruyter, who is the CEO of packaging group Nampak, will take over from Phakamani Hadebe, who resigned earlier this year, on January 15, 2020.


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Here are the biggest problems he will face:

Overseeing Eskom's division

BusinessLIVE reported that apart from the immediate financial and operational crises, De Ruyter’s task will be to oversee the division of Eskom into three separate functions and parts, as outlined in the road map for Eskom’s sustainability tabled by the government in October.

The three separate functions and parts are:

  • Generation
  • Transmission
  • Distribution.

Financial crisis

The loss-making utility has R450bn debt and is struggling to fix ageing power stations and correct defects in new ones.

Saving the business is a key goal of the government, which is sustaining Eskom with R138bn worth of bailouts over the next three years alone.

Earlier this year, finance minister Tito Mboweni allocated R23bn a year over the next three years to Eskom. The rescue plan includes a further R23bn for the seven years after that, which is part of the government’s long-term borrowing plans.

 Restructuring crisis

There’s a risk that restructuring could worsen some of the underlying causes of the crisis.

TimesLIVE reported that crisis itself is a function of a complex set of factors.

These include an inappropriate tariff regime in the 1980s and 1990s, policy indecision in the post-apartheid era, bad infrastructure planning and poor project and human resource management.

There has also been large-scale corruption and a failure in government’s implementation of the oversight model for state-owned entities, as well as problems with the model itself.

Load-shedding 

South Africans have found themselves in the dark in the past few weeks due to Eskom’s decision to bring back scheduled power cuts to ease generating capacity.

Last week, Eskom warned that the power system remained under strain.

The age of the power stations and maintenance of the plants were the main reasons for load-shedding.

“Eskom wishes to remind customers that any unexpected shift, such as additional unplanned breakdowns or the unavailability of diesel for open cycle gas turbines or low water levels at the pumped storage schemes, could result in load-shedding at short notice.”

Workers

Last month, BusinessLIVE reported that union federation Cosatu warned of mass strikes if Eskom workers are retrenched during the turnaround of the utility.

This after it was reported that Eskom planned to let go some of its 48,000 employees in what was regarded as an essential part of any drive to reduce costs and put the utility on a sound financial footing.

However, Cosatu's parliamentary liaison officer, Matthew Parks, said: “Any attempt to retrench workers will be an unmanageable provocation. It will force workers to go on an unprecedented mass strike.” 


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