'It will take a long time for Eskom to recover fully from the damage caused by state capture' - Gordhan

2020-01-17 07:06
Minister of Public Enterprises Pravin Gordhan. (Lulama Zenzile/Foto24/Gallo Images/Getty Images)

Minister of Public Enterprises Pravin Gordhan. (Lulama Zenzile/Foto24/Gallo Images/Getty Images)

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Public Enterprises Minister Pravin Gordhan has conceded it will take a long time for Eskom to recover fully from the damage caused by state capture.

Gordhan also explained that, in response to allegations of political interference at Eskom, the Memorandum of Incorporation of Company explicitly laid out the responsibilities, duties and rights of the shareholder.    

He was responding to a parliamentary question from the newly inducted chairperson of the EFF in her capacity as an MP.

COLUMN | Adriaan Basson: Who is really running Eskom?

EFF MP Veronica Mente, who replaced advocate Dali Mpofu in the role of party chairperson in December, asked Gordhan about statements attributed to Business Leadership South Africa chairperson and Eskom board member Busisiwe Mavuso. 

TimesLIVE previously reported Mavuso had told members of Parliament's standing committee on appropriations that "Eskom has experienced intense political pressure over the past year to keep the lights on irrespective of the cost".

She said board members were stymied and largely unable to make hard decisions because of an interfering shareholder. Gordhan is the shareholder representative at Eskom.

"There are decisions that we know we have to be making as this board, but the shareholder quickly comes in and says that you can't do that because it is politically inconvenient," she added.

TimesLive reported Mavuso said: "I think therefore if we were given the latitude to actually make decisions without political interference as this board, I would tell you what we would do: I would actually go to South Africans and say honestly, we need to load shed at least for the next eight months."

READ | Eskom, land and state capture: Ramaphosa delivers more of the same at ANC's 108 celebration

IOL reported that in an interview on Cape Talk at the time, Gordhan seemingly hit back saying: "I haven't heard completely what she's said, but I think she has to be careful about what she says as a board member because she was part of the collective decision-making process and accounts to the shareholder which is the government."

Mente referring to Mavuso's statement that government intervention was hampering the proper management and turnaround of Eskom, asked: "What were the interventions that he made that were against the plans of the board and management teams at Eskom and what was intended with his warning that Ms Mavuso must be careful?" 

To this, Gordhan responded: "At the outset, it must be noted that it will take a long time for Eskom to recover fully from the damage caused by state capture."

He continued: "The Memorandum of Incorporation of Company [including Eskom] sets out the responsibilities, duties and rights of the shareholder and directors. The shareholder, particularly the 100% shareholder, as in the case of the government and many state-owned companies, can have a range of rights in relation to the governance of SOEs. The shareholder compact prescribes the various performance targets expected to be met by an entity.

"In the case of Eskom, targets will include plant performance [the level of energy availability factor to be achieved], financial targets [reduction in overall costs including primary energy cost] or implementation of various turnaround plans.

"Within these parameters, the board must hold management to account on delivery of these targets. Likewise, the shareholder department must hold the board accountable.

Where necessary, usually at critical stages of an entity, the shareholder may initiate processes to assist both the shareholder and board to both diagnose a problem and suggest solutions: examples being the Presidential Sustainability Task Team [to make recommendations on the future direction of Eskom given the challenges and changes in the electricity market] and the Ministerial Technical Review Team [to make recommendations on improving plant performance]."

Read more on:    eskom  |  pravin gordhan  |  state capture
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