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Business chamber calls for independent directors on boards of state companies like Eskom

Dec 10 2019 21:02

The South African Chamber of Commerce and Industry has said the time has come for the state to reevaluate whether it has the "necessary competencies, skills and experience" to manage an organisation as complex as Eskom.

The chamber, which represents 20 000 enterprises, said rolling blackouts were having a devastating effect on its members. Mines have been forced to halt operations and telecoms groups were struggling to prodive electricity to towers, while businesses in the retail and manufacturing sectors could not fulfill orders.

On Monday evening Eskom instituted stage 6 load shedding for the first time. This was downgraded to stage 4 load shedding at 10pm on Monday. The stage 4 electricity rationing - which allows for just under 10% of Eskom's nominal capacity to be cut form the national grid - was further downgraded to stage 3 at 8pm on Tuesday.

Eskom has said that there is a high chance of power cuts for the rest of the week.

"The government’s promised plans in revitalising the economy by building infrastructure and driving policies for industrialisation will now come into question, as energy is the biggest enabler for any of these plans to come to fruition," said Sacci, adding that it feared further downgrades by credit rating agencies.

"In this regard, the ability to make a dent on unemployment and to stop the economy from going into a recession, will become a mammoth task. The result is likely to be adverse, inflationary and interest rate pressure."

The chamber said that state-owned entities, like Eskom, needed independent directors on their boards. It argued that the decision on who to appoint should be decided on an "independent structure that can be fashioned to be similar to the Judicial Services Commission".

"We believe that such a step- change in the appointment of directors, will eliminate a lot of the governance dissonance normally associated with the poor performance of SOEs," said Sacci.

The chamber added that its members had little insight into the latest developments at Eskom, saying there was a lack of transparency. 

"As business, we are yet to be advised of the progress made with regards to the nine point plan committed by Eskom in November 2018 on the turn- around of Eskom. Business had planned around those commitments and we are uncertain about the implementation and progress made with that plan," it said.

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