Eskom: now for the really bad news

18 January 2015 - 02:00 By Chris Barron
Businessman Christo van der Rheede says anyone claiming the Eskom situation is not critical is either stupid, or doesn't care a damn
Businessman Christo van der Rheede says anyone claiming the Eskom situation is not critical is either stupid, or doesn't care a damn

Afrikaanse Handelsinstituut's CEO says politics is steering SA to disaster

The head of one of South Africa's largest business chambers, the Afrikaanse Handelsinstituut, says the government's fixation with ideology and politics is steering the country to disaster - and nowhere is this more apparent than in the collapse of Eskom.

Christo van der Rheede was part of a delegation of business leaders who were briefed on the energy crisis by Eskom this week. At the meeting, Eskom CEO Tshediso Matona told them his parastatal needed an immediate R20-billion bailout to keep the lights on.

But Matona couldn't tell them why Eskom was not collecting the billions owed to it by municipalities.

This failure to pay Eskom has contributed significantly to the electricity provider's cash crisis. "We were told it is a government issue and their hands are tied," says Van der Rheede.

These municipalities are in effect "sabotaging" the country, he says, but the government will not do anything about it for political reasons.

"This is simply not good enough. Someone must be called to task. Ministers must put pressure on cabinet and cabinet must put pressure on the head of this country to clamp down on people who are completely disregarding the laws of this country."

Putting Politics Ahead of SA

Another example of the government putting ideology and politics ahead of South Africa's interests, he says, is its refusal to use readily available private sector expertise to fix the power crisis.

"Why the state is so fearful of the private sector boggles my mind.

"I am very perturbed by this idea that ideology or politics will solve our problems. We sit with a business challenge and we need a business solution driven by expertise from the business environment."

The government is contributing to the looming crisis by "trying to downplay the situation", Van der Rheede says.

"This is no use at all. The CEO clearly stated that we sit with a national emergency. Not my words, his words."

But then the government contradicted Matona's statements.

Van der Rheede also questions the government's seriousness in ending the crisis, considering that it put someone with Matona's limited experience in charge. Although he praised Matona for being "frank" about the problems facing Eskom, Van der Rheede was clearly not filled with confidence about Matona's ability to lead Eskom to safety.

"When [senior executive] Dr [Steve] Lennon, who is a top-class guy, spoke at a previous meeting, I immediately sat up because here's a guy who knows the ins and outs of Eskom. He's an engineer, he's got a strong business background," he says.

Lennon announced his resignation after the appointment of Matona, a former director-general in the Department of Public Enterprises, and will be leaving Eskom in March.

"Why they bring in somebody from outside with very, very little experience, especially at a time like this, is mind-boggling," says Van der Rheede.

He thinks it would be naive not to relate the present crisis to the "massive, massive brain drain from Eskom over a period of time".

The really bad news is that it is about to get even worse.

Van der Rheede says he can't believe that, at this stage, Eskom is offering pension packages to its staff.

"Of course it is experienced people who are taking those packages. So we sit with a massive, massive crisis. At a time like this you need to rally your best troops. You don't tell them to leave the organisation."

A former school principal on the Cape Flats who became a developmental economist, Van der Rheede, 50, describes as "nonsense" the claim by Public Enterprises Minister Lynne Brown that Eskom needs to remain out of private hands in order to implement the government's developmental agenda.

"You don't use a state-owned enterprise for developmental purposes. You use a state-owned enterprise to provide the best service at the best price to communities, to businesses. You have schools to develop communities, you have NGOs to develop communities, you have state departments to serve as instruments for development. SOEs are first and foremost businesses and they must be run like businesses. If it serves a developmental agenda, then you go the wrong route. That is not their purpose."

Van der Rheede represents the interests of 20000 businesses, from giants such as Absa to the small and medium-sized businesses on which, he believes, South Africa's prospects for economic growth and employment largely depend.


The power cuts predicted by Matona will be "disastrous" for them, he says.

They don't have the money to buy generators or invest in alternative power supplies. Many are farmers who need a constant supply of electricity to keep their storage facilities going.

Matona made it clear to business leaders that South Africa is balanced on a knife edge.

Van der Rheede believes that if there is a repeat of the infrastructure failures of last year, such as the silo collapse at Majuba power station, "we will face the possibility of a complete blackout. If that happens, the entire economy of this country will come to a standstill."

His "biggest fear" is that infighting and factionalism as the 2016 local government elections approach will further reduce the already seriously limited capacity of municipalities to manage the power cuts that lie ahead.

"You need them to implement load-shedding schedules properly so that businesses and factories can plan around them. You already have dysfunctional municipalities which don't have the expertise to do this, never mind maintain the infrastructure and collect money from the local populace."

Many in the government and the ANC condemn this kind of talk as ridiculously, even treasonably, alarmist.

Van der Rheede doesn't agree.

"I've studied risk management. We call it heat mapping, where you sit and say: 'What are the probabilities and what will the impact be?'

"If you look at the current state of affairs and at what has happened over the past year, we're already in the red part of that heat map.

"If you try and brush over that as being alarmist, then you must either be very stupid or you don't care a damn. We cannot afford that type of attitude."

Van der Rheede says South Africa is rather like the frog placed in the pot of water that is slowly being brought to the boil, unaware of what is happening.

"The water has started to boil. We're going to discover too late that it has reached boiling point. Unless business rises to the occasion now and makes its voice heard."