EXCLUSIVE | De Ruyter: No forced retrenchments for now – we can save on diesel | Fin24
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EXCLUSIVE | De Ruyter: No forced retrenchments for now – we can save on diesel

Jan 21 2020 17:48

New Eskom CEO Andre de Ruyter has vowed not to implement forced retrenchments at the beleaguered power utility, saying there is an opportunity to save billions in diesel costs instead.

"The president [Cyril Ramaphosa] has been very clear that there will be no forced retrenchments at Eskom, and that mandate is very clear and we will obviously respect that," he told Fin24.

However, he did not rule out voluntary severance packages, saying these would be assessed case by case, depending on the cost versus the benefit. Additionally, he said, natural attrition would contribute to employee numbers trending downwards.

"[A]s we go round assessing those options, we may offer those opportunities to employees who wish to exit the organisation," he said. "Having said that, we have to be careful that we don't lose scarce or critical skills in that process. So you've got to be very careful and selective how we go about that."

"My preference would not be to be confrontational, I want to build partnerships," he added.

According to De Ruyter, his initial engagements with members of organised labour had been "constructive".

De Ruyter - who stepped into the role as CEO earlier in January, to a visit shortly thereafter from unions - says a key area for cost savings lies not in employee headcount, but first and foremost in the money spent on diesel.

Late in 2019, then-chair and acting CEO Jabu Mabuza acknowledged that the power utility had spent R6bn on diesel in the year to March 19 as it battled to meet demand.

"The biggest opportunity that we've got is on the procurement side, where we are paying a lot of money for goods and services that we procure, and if we renegotiate those contracts, I think we will be able to deliver some very substantial savings," De Ruyter told Fin24 on Tuesday.

"In addition, if you look at what we spend on diesel because of a lack of reliability of our generating assets. Restoring those assets to a state where they can predictably and reliably supply the electricity needs of SA will put us in a place where we can back out of R6bn of diesel purchases a year."

This was a "huge opportunity" to reduce costs without a negative social impact, he argued.

"[T]hose are the opportunities I think one should look at, rather than focus on labour as a primary driver of cost. There are many other buckets of cost that we should look at very carefully."

Alluding to the level of scrutiny Eskom has faced, he argued that the issue was "not one-sided". "It is about: is Eskom doing what Eskom is supposed to be doing? If Eskom does that and we don’t have load shedding, well, it is not necessary for [our board and shareholder] to take a close interest in our business," he said.

Interview by Phillip de Wet. Compiled by Marelise van der Merwe



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