Eskom board reshuffle on the cards this week

FIFI PETERS: Let’s shift the focus back on the problem child in the state-owned enterprises space. That is Eskom, and the spotlight is on Eskom’s board right now. They have enough light to spotlight the board in this time where[as] most of us are being load-shed.

Nonetheless, there have been quite a few changes in that board in recent years, and now it looks like another one is on the cards. This was confirmed by Public Enterprises Minister Pravin Gordhan today, who said he will ‘restructure and reconstitute the Eskom board’ and he’ll make that announcement in due course.

We have Dr Iraj Abedian, the CEO of Pan African Investments and Research Services, on the Market Update for more on the story, joining us from Rome. Dr Abedian, what’s happening in Rome?

Dr IRAJ ABEDIAN: There is an interesting conference here, a global conference called Ethical Business Building the Future – not unrelated to what we are going to discuss. That’s what I’m here in Rome [for], to participate in this very important conference.

FIFI PETERS: Hopefully there’s some light there, although I know that Europe has its own power struggles right now. Nonetheless, in terms of this looming board reshuffle, what is your understanding of the words ‘restructure’ and ‘reconstitute’ – what do you think the minister meant by that?

Dr IRAJ ABEDIAN: I think the minister doesn’t know what he’s talking about, quite frankly, because how many times has he told us ‘We now [have] rearranged the corporate governance, we’ve done the best, watch this space, things are going to happen’?

This time around is no different. And none of these terms are business terms – restructure, rearrange, none of that.

What you need to do in business is very simple, and he’s learning on the job.

In fact, all cabinet is learning on the job at the expense of South Africa and the expense of the economy.

Five years ago he could have done it – if he didn’t want to, in his own words, ‘not connect the dots’.

And the cabinet is trying to protect entrenched interests in Eskom, as opposed to saying this entity needs to be rebooted, literally, rearranged once and for all – not every six months, not every two years, not every three years.

It’s just not right.

It means that you don’t know what you’ve been doing for the past 15 years that we’ve had this problem, this ‘problem child’, as you refer to it, which has now become the tail that wags the dog.

It’s an entity that has destroyed the credibility of the government.

It has destroyed a lot of our economic structures, but it has become a political football among a bunch of ministers and advisors who have no clue, absolutely no clue – not because I’m accusing them, [but] because their own actions have shown that they don’t know what they are doing.

So what is Eskom? Eskom is not a political structure, is not an ideological structure, is not a social structure.

It’s a very highly technical business that requires a mix of three things.

It needs heavily experienced engineers – and by experienced engineers [I mean] as opposed to well-educated or well-degreed [engineers] because about 80% of the capacity of Eskom is customised by South African engineers mostly retired from Eskom, for the type of quality coal South Africa had. It’s not a template that you can take and take it everywhere. Those guys know how these things should operate, and their trainees. So that’s a very specific set of engineering expertise that we need.

The second component that Eskom needs is very competent financial experts, not a bunch of Anoj Singh and a bunch of crooks like that. They may have CAs, they may be this and that, but that is not what Eskom needs. It doesn’t matter whether they’re South Africans or not, whether they are black or white. We need to get the best of breed to run that organisation.

Read: DPE welcomes Molefe; Singh’s arrests

The third very important part of the requirements of Eskom is management restructuring, not of the board.

Remember, Eskom is not run by the board, it is run by regional managers, it is run by station managers. It is run by the procurement managers, and so on and so forth.

FIFI PETERS: Are you saying that the CEO must go?

Dr IRAJ ABEDIAN: I don’t know. But if the CEO goes and nothing else changes, we will be exactly on the same spot. It’s not about [whether the] CEO goes or stays.

It is about do we have the right complement of technical, financial and organisational experts and – very important, that was going to be my fourth point – no political interference.

Pravin Gordhan, [President Cyril] Ramaphosa and the rest – they know nothing about electricity. They only know how to extract resources – that’s all of them. What does Gwede Mantashe [Minister of Mineral Resources and Energy] know to say anything about electricity?

So they must keep out after the lion leapt [and] not put more damage on this economy every two or three years. So whether [Eskom Group CEO] André de Ruyter goes or stays is quite irrelevant, actually; if the rest of the complement are not there, you are not going to have success.

So those are the four things. Every six months the minister comes and makes a promise. The market gets excited, the nation gets [aspirational] and hopeful, only [for them] to come back and say, sorry, I made a mistake, I’ve appointed the right board [now].

I don’t understand the politics of it. How many more times should they make the mistake, cause damage, and not learn from it?

FIFI PETERS: I was going to say, it has become really difficult to keep up with the board changes there over at Eskom in our recent past.

But Dr Abedian, I’m going to leave you to enjoy that beautiful city right now and hopefully catch up once we know who’s on the board, what this new board is going to look like. I’d really be interested in your views on that change. Until then, sir, ciao. What do they say?

Dr IRAJ ABEDIAN: Yes. Thank you, ciao.

FIFI PETERS: That was Iraj Abedian, CEO of Pan African Investments and Research Services.