Business Unity South Africa's President Sipho Pityana is "underwhelmed" by government's choice in appointing Freeman Nomvalo to lead the turnaround at Eskom, and has expressed concern that Nomvalo does not have track record in "restructuring".
In BUSA's August newsletter to its members, Pityana shared views on the latest developments at the debt-ridden power utility. Public Enterprises Minister Pravin Gordhan announced last week at Eskom's results briefing that South African Institute of Chartered Accountants CEO Freeman Nomvalo has been seconded to serve as Chief Restructuring Officer (CRO) at the state entity.
The CRO will oversee Eskom's unbundling, and he will work with Eskom's board and management to carry out the recommendations of the Presidential Task Team, appointed in 2018.
Nomvalo is Chief Executive Officer of the South African Institute of Chartered Accountants, and was seconded to Eskom to lead a team of specialists in establishing a CRO office.
According to SAICA, the secondment aims to help Eskom tackle its debt and avoid a potential ratings downgrade. The accounting body cited its track record in assisting government with "similar requests", including helping the Department of Higher Education and Training with resourcing finance and human resources functions to improve the efficiency of Technical and Vocational Education (TVET) colleges.
Before joining SAICA, Nomvalo was South Africa’s accountant-general at National Treasury for nine years, where - among other things - he set up financial reporting standards for SOEs.
'Lack of urgency'
But according to the newsletter penned by Pityana, BUSA's leadership is not happy with the way government has handled the crisis at Eskom, and particularly what it branded a "lack of urgency" in the search for a new CEO.
The position was advertised near the end of July.
"We are not satisfied, for example, that Eskom only started last week to look for a new CEO, despite having two months’ notice from the outgoing CEO. That means another three months, at best, without a permanent CEO. This lack of urgency is disturbing," Pityana said.
Eskom most recently announced that board chairperson Jabu Mabuza would serve as interim CEO, while the search for a permanent CEO continues. Former CEO Phakamani Hadebe stepped down on July 31, 2019, citing the negative impact of the job on his health. He had been in the position for just over 18 months.
"We are equally disturbed with the proposed arrangement around the Chief Restructuring Officer… We expected the CRO to be someone with a proven track record and who would create an impression that government means business and anticipated the appointment of someone who would make us sit up and say 'wow.'
"But the proposal put forward by Public Enterprises Minister Pravin Gordhan is underwhelming, to say the least," Pityana added.
Pityana said it appeared there is "no political will" to take hard decisions at the entity, with debt over R440bn.
"There is no other choice for government now: it needs to confront the risk posed by the current malaise and the crises in SOEs and come to terms with the fact that it probably won’t be able to save all of them."
IMF to step in
Pityana also opined that if government did not take difficult decisions, the International Monetary Fund might have to intervene and "make decisions for it (government)".
"The risk of needing an IMF bailout is already a very real one. And if that happens, decisions will be taken beyond our control, and out of our control.
"The choice is stark yet simple: either we prescribe our own medicine, or someone else will prescribe it for us. And it will be bitter, bitter medicine," he warned.