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Ferial Haffajee: Does Eskom really need a Chief Restructuring Officer?

Jun 27 2019 13:15
Ferial Haffajee

The electricity utility, Eskom, is in a worse position than it was in the recent past, if such a thing is possible. Despite significant attention to the detail of fixing it, by macro-economic variables, Eskom is getting worse, not better.

Yes, Stage 4 load-shedding is a thing of the past, but that is probably because the utility is burning diesel to keep the lights on. That, in turn, is adding to its debt position, which required an early appropriation (or bailout) announced by President Cyril Ramaphosa in his State of the Nation Address last week.

Vital diagnostic work has been done, and the work of transferring skills to the power stations, thus allowing more autonomy at that level has paid dividends: the energy availability factor is stable and in the jaws of winter, there has not been load-shedding.

This has required a gargantuan effort and attention to detail by both the Department of Public Enterprises and by Eskom itself. For this, a round of applause is important.

Silver bullet

But everybody now hopes that a magician styled as a Chief Restructuring Officer (CRO) will be Eskom’s magic bullet. A global search is on to find the right person to restructure Eskom quickly and efficiently into its constituent parts of generation, transmission and distribution. At the same time, the utility is looking for a CEO to take over from Phakamani Hadebe, the talented executive who threw in the towel last month.

Does the utility really need both, or will it add to the number of cooks who can spoil the broth? I don’t know but can guess that one reason Hadebe quit is because of the gainsaying he must have experienced.

When he decided that a salary freeze was necessary at Eskom and that he needed to start a retrenchment process, Public Enterprises minister Pravin Gordhan stopped him. Two different task teams – one appointed by Gordhan and another by President Cyril Ramaphosa – were developing diagnostics and plans he was not part of. The lines were an almost impossible scramble for any CEO to work through, and with.

Gordian knot

Now, Gordhan wants another executive to undertake restructuring while a CEO will deal with operations: the distinction and division is a Gordian knot. The CEO should be in charge of restructuring because it has impacts on operations, all the way through from how people are managed to how electricity is generated and distributed into the homes and businesses who need it to keep the country going.

Instead, it is better to equip the CEO with a world-class and temporary team who can run the restructuring under his or her authority.

To do it in the way now being envisaged is sloppy and potentially disastrous for the already beleaguered Eskom, as it puts the two incumbents in difficult roles as it will not be clear who is in charge and whose say goes in often contested decisions that the utility will have to undertake.

There is a real danger that instead of a focus on the work at hand, what the dual headed structure will set up is a battle of wills that will suck up energy and attention.  

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