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HomeNewsAfricaEskom’s new board seems competent, but has a mountain to climb

Eskom’s new board seems competent, but has a mountain to climb

Mpho Makwana, who was on Eskom’s board from 2002 to 2011, kicked off a new three-year stint this month as the state enterprise’s chair. He served as CEO and chairperson of the company, before being hounded out in 2011, giving way to Zola Tsotsi.

A specialist in corporate strategy and change management, Makwana chairs several boards, including those of Nedbank and ArcelorMittal. He is widely considered a calm leader who is usually unfazed by populist political discourse.

“Convincing Mpho to come back to Eskom was a coup. He has a reputation of being calm and not […] shaken by [the] ANC [African National Congress’] rhetoric and RET [radical economic transformation faction of the ANC],” a source who spoke on condition of anonymity tells The Africa Report.

Eskom, which generates 95% of South Africa’s electricity, is being restructured, a process that will result in three operating units: transmission, generation, and distribution. The utility has been suffering a weak balance sheet, thanks to mounting debt, deeply ingrained corruption, and multiple operational challenges, including internal sabotage, which causes load-shedding or scheduled blackouts.

Who’s who on the board

The government has installed 11 new non-executive directors next to Makwana: Claudelle von Eck, Clive Le Roux, Bheki Ntshalintshali, Leslie Mkhabela, Tryphosa Ramano, Fathima Gany, Ayanda Mafuleka, Tsakani Mthombeni, Busisiwe Vilakazi, Lwazi Goqwana, and Mteto Nyati. Only one member from the previous board, Rod Crompton, stayed put, in addition to CEO Andre de Ruyter and CFO Calib Cassim.

  • Makwana, Von Eck, and Crompton are the three strategists on the board
  • Le Roux, Ntshalintshali, and Mkhabela are responsible for human resources (HR), labour relations, and legal expertise
  • Ramona, Gany, and Mafuleka have worked as CFOs in the public and private sector, at listed and unlisted companies. They are all chartered accountants. Collectively, the trio have valuable experience in capital markets, public finance, and corporate finance
  • Mthombeni, Vilakazi, Goqwana, and Nyati are engineers, which Eskom’s previous board lacked

Next to Makwana, Ntshalintshali, Mkhabela, Ramona, and Nyati are some of the more prominent names on the reconstituted board.

  • Ntshalintshali is the former general secretary of the Congress of South African Trade Unions and spent most of his career as a unionist.
  • Mkhabela, an admitted attorney of the high court, represented the Land Bank and PetroSA in two high-profile cases wherein individuals and companies with links to the ANC were implicated in financial impropriety. The PetroSA case, dubbed the country’s own ‘Oilgate’, was one of the biggest political funding scandals in the early years of post-democratic South Africa.
  • Ramona cut her teeth at the National Treasury where she worked at the Asset and Liability Management Division that manages the government’s funding programme and enforces prudent financial management at state-owned enterprises (SOEs). She has served as CFO at South African Airways (SAA) and listed cement producer PPC. She is also a former deputy chairperson at SAA.
  • Nyati is the former CEO of MTN SA and recently concluded a five-year stint at Altron, which he transformed from a family business into a diversified commercial entity.

Resistance

The new board formation took quite a few months to be finalised. This indicates that candidates approached by the government had been reluctant to take up leading roles at the beleaguered SOE, according to people familiar with the horse-trading behind the Eskom reshuffle.

“This thing [engagements on a new board] has been going on for 18 months. There was resistance. For those who have made the cut, many of them were convinced it is time to serve the country,” a source says.

The resistance stems from the fact that “people don’t want to be associated with SOEs”. Problems at Eskom are deep rooted and cannot be easily resolved, according to the sources, who think the new board members’ reputation would be in tatters should they fail in their new mission.

When asked on 30 September why it had taken so long to reform the new Eskom board, Gordhan refused to comment. However, the premier conceded that black professionals were reluctant to serve at SOEs because of the unfair treatment some of them had been subject to.

“In the early period of Eskom … he [Makwana], among others, was dismissed. He was on the Eskom board for several years at the time and also served, for a period of nine months, as Eskom CEO,” Gordhan said. “The only appeal we make to both those who might have turned us down today or those who are potentially willing to assist is: the country needs you right now. Offer your services for a few years to enable key institutions of the state […] to operate better.”

‘The right mix’

Cas Coovadia, CEO of Business Unity South Africa (BUSA), which represents the business community in the country, says the board “seems to have the right mix of expertise”.

“We welcome that. For years now, we’ve called for the Eskom board to be replenished with the necessary expertise that would enable the board to give strategic guidance and direction to the Eskom executive,” says Coovadia, a former MD of the Banking Association South Africa.

Eskom needs to be preparing to become a utility of the future – not a utility of the past

He says the board’s role should be to help guide Eskom carry out its restructuring plans and to enable the utility – over the next few years – to play a role in a diversified energy infrastructure mix in the country.

Chris Yelland, MD at EE Business Intelligence and an engineer who analyses Eskom, says balanced skills across management, accounting, finance, legal, HR, and engineering are important for the utility’s board. “The board does need to be credible,” says Yelland. “There has been mismanagement of Eskom for the last 40 years – it precedes 1994.

However, Yelland warns that the installation of the reconstituted board does not mean an end to load shedding nor does it signal a restoration of Eskom to its former glory. “The days of the former Eskom are over. Eskom needs to be preparing to become a utility of the future – not a utility of the past. Globally, the world of utilities has changed,” he says.

“The future of generation in South Africa is going to be one where there is a diversified and competitive generation sector, comprising thousands of generators – not one utility.”

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