Guest Column

Ghaleb Cachalia: Open letter to ESKOM CEO Andre de Ruyter

2020-01-10 12:35
South Africa continues to lurch from one electricity crisis to the next. (iStock)

South Africa continues to lurch from one electricity crisis to the next. (iStock)

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Dear Mr de Ruyter

Congratulations on your appointment as CEO of Eskom and welcome to your first week at work. On behalf of the Democratic Alliance (DA) I wish you well in this challenging role.

It is a pivotal position and in many ways the future of our country depends on it. The stable generation, transmission and distribution of electricity at fair prices are of vital importance to every single facet of society.

You are well equipped to do battle in this environment. You have an impressive business background, and while we have never met, I believe you to be an extremely capable businessman. Thank you for taking on such an important task. It will not be easy one. Many have failed in the past.

For success, I strongly believe, change across at least two dimensions is required: change of management – which, with you, has now arrived and will further deepen as you build your team, and change of structure – which has been discussed and promised for a long time, involving a  structural reform of Eskom and the energy sector, most importantly the splitting of the vertical and horizontal monopoly Eskom occupies.

In addition, as a third dimension, it will be important to figure out how to navigate the management of a SOE. This is also a structural issue and presents many difficulties different from the management of a listed company.

Typically we see more interference and transgressions of governance in such situations as the political class seeks influence for reasons other than business and mandated delivery.

This influence does not necessarily come from one specific source and the minister responsible is often subject to many political forces and is faced with the need to forge compromises. You will be tested and will need to demonstrate resolve  to counter these tendencies when the moment comes, particularly as it may not be clear who to stand up to nor which of these to stem.

Your track record at SASOL and NAMPAK evinces a sound understanding of issues that are central to key aspects of Eskom’s business – both technical and financial. Again, thank you for availing your services to our country in its hour of need.

At SASOL you opposed above-inflation Eskom tariff hikes and held that the utility should address its own inefficiencies before it recovers losses from its customers, and during your tenure at NAMPAK you succeeded in lowering the company’s net debt to below R4bn by last year, by selling assets and cutting costs.

Importantly, you have in the past championed the push for government to lower electricity rates to industry, and as a former chairperson of the Manufacturing Circle, you blamed high energy costs, in part, for the shrinking manufacturing sector, which currently contributes to around 10% of South Africa’s GDP, from 24% three decades ago.

You are now in charge of the largest and most important asset of South Africa, of the South African people. We look to you to help save this country and we stand beside you, ready to assist in whatever way possible.

I do not claim to be an expert on Eskom and the sector. I am certainly no expert on energy. You, however, are equipped with all the resources to make the right choices, possibly choices which have already been considered many times and perhaps it is the implementation which is proving difficult.

Maybe the single most differentiating item of support I can offer to you, as the Shadow Minister of State Enterprises, rests in my role of providing oversight to the Executive of the government of South Africa in general and the Department of Public Enterprises in particular. Here my role is in large measure to scrutinise the acts and omissions of the minister and his staff and to bring to attention of the public issues otherwise neglected.

I strongly believe in this fundamental element of design in a democracy.

From this vantage point let me openly invite you to reach out to us in a moment of need where you may  feel you are not getting the requisite support from your board or your superiors to get the job done.

For you to have a fighting chance of succeeding, I believe you will need to operate with significant degrees of freedom, unencumbered in your executive role from debilitating political interference.

It  has been made abundantly clear by many informed observers that the parlous state Eskom finds itself in is due in large measure to political interference, mismanagement, poor maintenance, and an opaque business model that has allowed for the infestation of graft in procurement, investment, construction and contracts.

As the official opposition, the DA – a substantial minority shareholder of government, and the entities it owns, we are ready to offer any and all assistance to you, via our representation of the Portfolio Committee for Public Enterprises, the various mechanisms open to us in parliament, and via interventions in civil society, to help you succeed.

Please accept this open letter as an attempt to reach out and genuinely provide assistance to all that are involved in fixing our country’s energy problem.

We believe that transparency, accountability and responsible oversight is vital and remain ready to engage with you and the team you will be assembling to facilitate and interrogate, as appropriate – the delivery of your mandate aimed at the provision of  an uninterrupted supply of electricity to support economic growth, and to improve the quality of life of the people of South Africa.

With all good wishes for success in the coming year. 

Yours sincerely

Ghaleb Cachalia

DA MP, Shadow Minister for Public Enterprises.

Read more on:    da  |  eskom  |  andre de ruyter  |  ghaleb cachalia  |  state owned enterprises  |  electricity


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