Publications
Partners
There will be no carving and selling of any part of Eskom, or letting private players assist in the running of the new companies that will be formed as the power utility unbundles, new Eskom CEO, André de Ruyter, told the media on Friday.
His remarks, and the announcement that the power utility will install new boards for its generation, transmission and distribution divisions, formed part of a feedback session to the public on what progress has been made so far in the unbundling process first announced by President Cyril Ramaphosa in his state of the nation address last year.
However, not all stakeholders have been convinced the new plan will work. First, the term of the restructuring officer, Saica CEO Freeman Nomvalo, has ended, and De Ruyter said he’s not aware of any discussions about extending his contract.
Nomvalo was tasked with leading the restructuring of Eskom, and his report - which was supposed to make recommendations on how best to go about dividing the company into three, how to build capacity at Eskom and how the utility should restructure its debt - is yet to be published. From De Ruyter’s remarks, however, it appears that the new businesses will be run by current Eskom management.
'Divisionalisation' not unbundling
De Ruyter said the three companies born out of the restructuring process would either be “divisions of Eskom or wholly-owned legal entities underneath Eskom SOC” which is why he preferred calling it “divisionalisation” rather than unbundling of Eskom.
“I think that’s more reflective of the intention rather than the impression that may have been created that we are somehow going to carve up and sell,” said De Ruyter.
Eskom will not be bringing any fresh blood in the creation of these new legal entities either, at least not in the beginning. Boards of the generation, transmission and distribution divisions that Eskom plans to announce next week will be populated by existing Eskom management to avoid duplicating costs, said De Ruyter.
“We will not go out and appoint external directors at this stage. But as we mature, obviously we will migrate, particularly on the transmission side of the business to get that independence in management and governance of the business,” he added.
This “divisionalisation” is also not going to be complete any time soon. “This is a long difficult, complicated process to make happen,” De Ruyter said, pointing to the unbundling of Old Mutual as an example.
As the restructuring officer’s term comes to an end, Eskom will put in place its own “transformation management office” and this too will be made up of internal people.
Not everyone is convinced
But energy expert, Chris Yelland, MD of EE Business Intelligence, said putting current Eskom management in charge of the new divisions will NOT work because there had been a lot of resistance in the past, internally from Eskom to restructure.
“I don’t have a lot of confidence in a company restructuring itself. The restructuring of Eskom has been on the cards since 1998 government white paper on energy policy and it hasn’t happened,” he said.
Yelland said there was shifting of the goal post on Eskom’s side. “When the capital injection was first announced, it was conditional on the Treasury putting in a chief restructuring officer, to ensure that preconditions for the bailout were being met by somebody appointed by Treasury,” said Yelland.
