7 things the new Eskom CEO will need to turn the power utility around, according to experts

At the end of July debt-laden power utility Eskom advertised for a new CEO after Phakamani Hadebe stepped down citing the "unimaginable" demands of the job and its impact on his health.

The power utility has had 10 CEOs in as many years. 

The job ad said at the time that the new head would oversee Eskom's turnaround strategy, which includes restructuring of the power utility into three entities. Eskom was looking for a candidate to shape the company's future who could ensure financial and operational sustainability.  

Other requirements included a track record in leading a complex organisation with at least 20 000 employees, and an understanding of funding and managing large capital projects.

While the power utility seeks a new head, its chair Jabu Mabuza has been appointed as interim CEO.  At a briefing in late July, Mabuza said he would be a "placeholder" head for the next three months.  

Despite it being described as South Africa's toughest CEO job, EE Publishers reported earlier in August that a number of heavyweights were understood to have applied for the job, including well-known electrical engineer Andy Calitz. 

Over and above the job specs outlined in the advertisement, here's what energy experts say will be required of the new Eskom chief.

1.       They must look forward, not backward

Energy expert Chris Yelland told Fin24 the new Eskom chief must be far-sighted, visionary and forward-looking. He dismissed calls to "restore" the power utility to its former glory as "nonsense".

The new leader must understand changes in the energy sector globally, he said, noting that South Africa has fallen "behind the curve".

"There is no going back. The world has changed," he said, adding that Eskom should change with it.

2.       They must understand the global energy sector as well as the local one  

Yelland said the new group CEO must have a deep understanding of trends in the global energy sector, adding that it was unsustainable to "do things the same way for 90 years".

3.       They must inspire

Both Yelland and Athol Williams, a senior lecturer specialising in Corporate Responsibility and Ethical Leadership at the University of Cape Town's Graduate School of Business, said a key attribute would be the new Eskom head's ability to inspire.

"The Eskom organisation is ailing. We know about the financial and technical troubles but often miss the fact that the organisation has deep-seated ethical failings and low morale among staff. Eskom therefore needs an inspirational CEO with a record of unquestionable integrity.

"There are many CEOs with the financial and technical know-how, even the political savvy, to address Eskom’s obvious challenges, but what is needed for the organisation to lift itself out of the deep hole it finds itself in, is someone who can inspire a dispirited organisation and drive the kind of change needed to transform corrupted systems, processes and hearts," said Williams.

Yelland echoed this, saying hard skills alone would not be enough to move the organisation forward.

As an example, Yelland cited the contribution of former Eskom chief Ian McRae to South Africa's mass electrification programme, saying McRae "galvanised" the power utility during his time at the helm. McRae retired in 1994 and won numerous business and leadership awards.

4.       They must be politically savvy

Calling the job "highly politicised", Yelland said a key attribute of the incoming leader would be to have what he termed a 'political sponsor' – or an ally with significant political clout.

Normally this would be the minister of public enterprises, Yelland said, but cited the minister's ongoing legal battles as a possible distraction. "Unfortunately, Pravin Gordhan has to watch his own back," he said.

It would be unrealistic to expect the position to be depoliticised, Yelland added, given that it is intimately linked to economic and social development.

Williams added that the CEO would need the support of a strong board that could provide strategic guidance and governance oversight, but "otherwise stay out of the way of the management team".

5.       They must have financial expertise

Arguably one of Eskom's most widely reported problems is its R440bn debt. It has received a total of R128bn in support from government over a three-year-period.

Williams flagged the entity's financial status as possibly the biggest challenge facing the incoming CEO. "Eskom is a drain on our fiscus which means it is a drain on the economic development of our country.  It has to become a net positive contributor to our society - keeping the lights on is not enough if this bankrupts our Treasury," he said.

6.       They must be agile – even when goalposts shift

A key challenge for the new CEO will be working with the newly-minted Chief Restructuring Office. Freeman Nomvalo, CEO of the South African Institute of Chartered Accountants, has been appointed to head up the team.

Both Williams and Yelland questioned what the role of the office would be going forward, and how the CEO and CRO would liaise.

Describing the role of the CRO as currently "very unclear", Yelland said there had been a shift in focus from organisational restructuring to what appeared to be, primarily, a restructuring of debt.

Williams questioned the need for a CRO at all, saying restructuring could have been overseen by the Chief Financial Officer's team. "The impending restructure will impact low morale even further, accentuating the need for an inspirational leader as mentioned above," he said.

7.       The capacity to make tough or unpopular decisions

Yelland said a key issue was overstaffing at the power utility, saying President Cyril Ramaphosa had effectively tied the CEO's hands by making it clear there would be no job cuts.

A 2016 World Bank policy research working paper found that Eskom had the largest workforce out of the electricity sectors in all 39 countries studied, and by its calculation, Eskom was overstaffed by over 65%.

2018 saw Eskom employees striking after the power utility offered 0% increases. A wage agreement was eventually signed for increases of 7.5% increases for 2018‚ 7% for 2019 and 2020. Although staff numbers were reduced by 4% in the last financial year, costs of staffing went up 13%.

Fin24 recently reported that talks had begun between Eskom and labour unions in order to strengthen relationships as the entity out its turnaround plan.

Williams said that the power utility's high personnel costs could ultimately result in job losses in other sectors as the impact of unstable electricity supply was felt. "The company’s primary mission should centre around being an energy generator, not a jobs creator.

"Job protection and skewed employment practices have choked the organisation, which in turn have had devastating negative impacts on our economy, including job losses," Williams said.

Acting CEO and board chair Jabu Mabuza has said Eskom is committed to "frank and robust" talks with labour unions.    

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 837 votes
It depends on how the funds are used.
74% - 5556 votes
No. We should have gotten the loan elsewhere.
15% - 1111 votes