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Business leaders to De Ruyter: Get a grip on Eskom debt, reorganisation

Nov 18 2019 22:02
Khulekani Magubane

Business Leadership South Africa has urged newly-announced Eskom CEO André de Ruyter to immediately get to grips with the power utility's grim financial situation and prepare the beleaguered parastatal for its path to recovery.

He would need the support of business leaders, the body added.

Eskom is beset with financial, governance and operational challenges, notwithstanding its R450bn debt, the return of load shedding earlier this month and a fresh reorganisation campaign aimed at improving efficiencies and mollifying investors as well as sovereign credit rating agencies.

De Ruyter previously led JSE-listed packaging company, Nampak, and will spearhead the restructuring of the ailing power utility, which has not had a full-time chief executive officer in five months.

BLSA stressed that government, staff and business had to provide optimum support while De Ruyter grapples with the work of stabilising the energy grid, restructuring Eskom and dealing with the power utility's debt issues.

"With Eskom revenues under pressure and costs rising [...] [y]ou face headwinds of not only a weak economy, but a falling demand for Eskom’s services from some of its largest clients," the open letter said.

The letter said financial stability is as urgent a crisis as the operational challenges at Eskom, but that business supported him, offering up the deployment of expertise and resources as a "sounding board".

Be transparent, embrace renewables

"On Eskom's operational and debt restructuring, we'd advise that the process not be shrouded in secrecy as this serves to raise the anxieties of stakeholders about the long-term future of one of the country’s most important institutions," the letter continued.

The letter urged De Ruyter to be mindful of the need to broaden space for renewable energy as South Africa continued with its transition away from fossil fuel dependence into a more diverse energy mix.

"Eskom cannot do 20GW of renewable energy alone, but instead you must find Eskom's strengths in transmission, systems planning and market operation to work with partners.

"Another one of your many tasks is to implement the process of managing the decommissioning of old coal power stations before they become stranded assets," the letter said.

BLSA hailed De Ruyter for taking on what it called one of the most important of challenges in the country, one it said raised the question of what the future would hold for the South African economy.

UPDATE: The South African Chamber of Commerce and Industry (Sacci), welcomes the appointment of De Ruyter, but warned that fixing Eskom's problems is a mammoth task which cannot be handled just by one person.

"The problem of what happens to labour efficiency at Eskom is going to be one of the major decisions that needs to be taken urgently, as Eskom is human resources top heavy. Eskom needs to operate within an optimum structure for its size and mandate," commented Sacci in a statement.

"The shareholder needs to show serious intent in creating the necessary enabling environment for the board and executive team of Eskom to succeed. This should start with maintaining a high level of corporate governance where the separation of powers exists between the Eskom board and the shareholders."

blsa  |  eskom  |  andre de ruyter  |  south africa
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