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Eskom's Chief Reorganisation Officer must transform utility in 2 years, says Treasury

Jul 24 2019 13:05
Lameez Omarjee, Fin24

Eskom's Chief Reorganisation Officer will have the task of transforming Eskom over the next two years, Treasury's Director General Dondo Mogajane said on Wednesday.

Speaking to journalists on the sidelines of a briefing to Parliament's select committee on appropriations, Mogajane shared some of the priorities the CRO will be tasked with handling.

Finance Minister Tito Mboweni on Tuesday told the National Assembly that he is engaging with Public Enterprises Minister Pravin Gordhan on the CRO and an announcement will be made soon.

Meanwhile, Eskom's Group CEO Phakamani Hadebe announced his resignation in May. His notice ends on July 31, 2019. Eskom has started advertising for the position.

The CRO will be instrumental in supporting Eskom's turnaround, and addressing debt and funding arrangements for the power utility, Mogajane said.

"In two years we need to see a serious move," Mogajane added. The CRO should be able to come up with options and plans to engage with lenders and ratings agencies.

"We need focused decisions an views on what we need to do," Mogajane said.

Eskom's CRO will have to oversee the unbundling into three entities – generation, distribution and transmission.

"The CRO will be finalising [the unbundling] in terms of taking forward the restructuring of Eskom. We need a detailed plan on it."

The second issue the CRO will have to address is funding. Eskom has been allocated R23bn for the current financial year. On Tuesday the finance minister tabled a special appropriations bill to Eskom granting it a R59bn allocation over the next two years.

Mogajane said that at least the CRO and other executives joining Eskom will know there is money to stabilise the entity over the next two years, as they deal with other issues. The R23bn is mainly for Eskom to pay its debt.

The CRO will also have to consider which non-core assets can be sold off. Along with that, Eskom's top level management increased tenfold over the last few years, and some need to be "sliced off", said Mogajane.

He said there is a greater need to have people at plants rather than at head office.

The CRO will also need to handle debt restructuring at Eskom.

treasury  |  eskom  |  dondo mogajane  |  bills  |  appropriations
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