Andre de Ruyter’s three years from hell

Former Eskom CEO André de Ruyter shocked South Africans in December 2022 when he announced his resignation after three years at the helm.

Most people knew it was not an easy position, but new information shared by De Ruyter and media publications shed light on just how challenging his time at Eskom was.

In January, Chris Yelland revealed that De Ruyter was poisoned at his office in Megawatt Park in Johannesburg.

The alleged attempt on the former Eskom CEO’s life made people take notice, but it was nothing compared to what was to come.

Last week, in an explosive interview with ENCA’s Annika Larsen, De Ruyter revealed widespread corruption at Eskom involving cabinet members.

He lifted the lid on organised criminal cartels linked to politicians stealing around R1 billion per month from the power utility.

De Ruyter added that the power utility is a feeding trough for the ANC and the party is stuck in outdated communist ideologies.

In an interview with BusinessDayTV, Financial Mail deputy editor Natasha Marrian said De Ruyter described his job as “unforgiving” and “dangerous”.

The latest revelations revealed why the Eskom CEO job is a poisoned chalice and why the power utility has had 11 Eskom chief executives in 11 years.

Below are some factors that have made De Ruyter’s time as Eskom CEO particularly challenging.

Load-shedding boom

Despite Eskom and De Ruyter’s promises to “significantly reduce” load-shedding when he first took the helm in 2020, many will remember him as the CEO under which load-shedding skyrocketed.

Load-shedding has been implemented in South Africa on and off since 2007. However, South Africa experienced the worst load-shedding the country has ever seen under De Ruyter. 

Load-shedding under De Ruyter did not only go up in frequency. It also intensified as the country faced higher stages of load-shedding than it had in the past.

De Ruyter described this increase as a “black mark” on his legacy at Eskom on the Money Show with Bruce Whitfield. 

The chart below shows the rapid increase in load-shedding under De Ruyter in red.

Poor maintenance

The reason for the uptick in load-shedding was mainly maintenance-related.

Performing maintenance on a power plant requires Eskom to take it offline, which removes generation capacity from the grid.

When he took over in 2020, De Ruyter said he faced a significant maintenance and construction backlog.

He often pointed to “unreliable and ageing infrastructure” as the reason for implementing load-shedding.

He blamed the ageing infrastructure for the deterioration in Eskom’s energy availability factor (EAF), as it is more susceptible to breakdowns.

However, when compared to power stations of a similar age in other countries, Eskom’s EAF is still much lower.

It shows that Eskom’s poor performance is likely related to poor maintenance, mismanagement, and a lack of skills rather than ageing infrastructure.

Under De Ruyter, Eskom started implementing what is known as “reliability maintenance”.

Reliability-centered maintenance is “a process used to determine what must be done to ensure that any physical asset continues to do whatever its users want it to do in its present operating context”.

Following De Ruyter’s appointment in 2020, there was a notable uptick in maintenance, which has since slowly dwindled.

Moneyweb recently reported that “in the year prior to [De Ruyter] joining, the annual average for planned maintenance was 9.94% of installed capacity. In 2020, this jumped to 11.24% before declining to 10.8% in 2021 and to 10.61% last year [2022].”

However, the Covid-19 pandemic prevented some maintenance from taking place.

In addition, Eskom only completed 47 of the 84 outages planned in its reliability maintenance recovery programme in its last financial year (to 31 March 2022). 

“By the end of September, it had completed 16 and was busy executing 13 of its 79 outages under the programme,” reported Moneyweb.

Finicky finances

During his time as Eskom CEO, De Ruyter improved the enterprise’s income statement to make it profitable on an operating level. However, Eskom still made a loss when adding debt servicing costs.

A R254 billion debt bailout was recently allocated to the power utility in the 2023 budget, which many hope will set Eskom back on the path to profitability.

This allocation means that the government will take over more than half of Eskom’s current debt, but the bailout does not come without strings attached.

Bungled unbundling

Eskom has been in the process of unbundling the utility into three divisions – transmission, generation, and distribution – for the past 30 years.

Earlier this year, De Ruyter expressed his frustration with the speed of this process, saying that Eskom has done “everything in its power” to complete the unbundling. Still, not one division has been fully separated.

Poisonous politics 

De Ruyter inherited a deeply corrupt Eskom, as the enterprise was riddled with the remnants of the state capture.

There has also been a political target on De Ruyter’s back since he took over as CEO.

News24 reported, “in the week that De Ruyter walked into Megawatt Park, he was confronted by executives who were about to commit the broke power utility to a dodgy R14-billion oil contract“, which he cancelled.

As CEO, De Ruyter recovered billions in overpayments to contractors, including more than R1 billion from ABB South Africa, a R30 million illicit pension payout to former Eskom CEO Brian Molefe, and over R3 million paid to suppliers for overpriced goods.

These achievements set the tone for De Ruyter’s tenure as CEO, as he became known for his hard anti-corruption stance – much to the dismay of many government officials.

In particular, energy minister Gwede Mantashe accused De Ruyter of running Eskom like a “policeman” – fighting criminals rather than fixing the energy crisis. 

Mantashe also accused De Ruyter of treason, saying that, in failing to reduce load-shedding, the CEO was “actively agitating for the overthrow of the state”.

The president, the finance minister, the department of public enterprises minister and the Eskom board chairman did not come to De Ruyter’s defence.

De Ruyter told Whitfield that their silence was “the final straw”, and he handed in his resignation soon after.

Life-threatening position

A few days after De Ruyter announced his resignation, News24 reported that the departing CEO had allegedly been poisoned. He opened a criminal case regarding the matter, but no further details have been made public.

De Ruyter’s ENCA interview also landed the CEO in the ruling party’s bad books.

In this interview, he revealed that the enterprise is rife with corruption, with criminal syndicates stealing around R1 billion a month from Eskom.

He also said the government is not interested in fixing South Africa’s electricity crisis but is, rather, more interested in winning the next election.

De Ruyter accused the ruling party of being caught up in outdated communist ideologies, revealing that this is often an embarrassment for South Africa in front of foreign diplomats and investors.

It has also been revealed that two serving cabinet members are allegedly implicated in a corruption investigation that De Ruyter launched in early 2022.

It is not over yet

Since the interview aired, many officials have come forward and attacked De Ruyter, with some also threatening legal action against him.

ANC secretary general Fikile Mbalula and public enterprises minister Pravin Gordhan have chastised De Ruyter following the interview.

Although the departing CEO said he would leave the country for a while for safety, the ANC has threatened to file charges against him if he does not prove and report his corruption allegations in the next week.