New Eskom board’s impossible task – and misguided optimism

Pravin Gordhan

On Friday, Public Enterprises Minister Pravin Gordhan announced the new Eskom board with a mandate to increase the energy availability factor (EAF) to 75%.

President Cyril Ramaphosa backed the new Eskom board to address load-shedding and other problems at the power utility.

Many organisations and commentators also welcomed the new board because of its mix of relevant skills and expertise, especially in the engineering sector.

However, a few experts highlighted that the Eskom board has very limited powers to address the true challenges Eskom face.

Like the new board, the previous Eskom board was also tasked with increasing the energy availability factor (EAF) and decreasing load-shedding.

The previous Eskom board told Parliament in March 2021 that it was confident that management was executing its mandate to restructure the business and reduce the risk of load-shedding.

However, by October last year, Eskom’s EAF of 65% was already well below its target of 70% and its own estimate of 72%.

By January 2022, Eskom revised its energy availability factor to 62%. Fast forward to September, and the EAF is likely to be below 60%.

The old Eskom board – and the company’s management team – did not fully appreciate the dire state of the power utility.

But even if the Eskom board realised things were going south, it has such limited powers that it cannot address the true cause of load-shedding.

The blackouts are not a result of poor strategic direction and purpose, which are the main functions of a board. Operational problems are to blame.

Grant Pattison, the former CEO of Edcon and Massmart and a non-executive director on many South African boards, highlighted the problem with thinking the Eskom board can stop load-shedding.

Grant Pattison

Pattison said it is worth reflecting on the role of a board and how its success or failure will be measured.

He questioned whether the Eskom board has the power to raise capital or retire debt. He also asked whether it could hire, fire, give incentives to senior management, and restructure and retrench.

“Can they build new power plants, and are they in control of liabilities added to their balance sheet?” he asked.

“What role do they have in influencing the energy policy of coal, nuclear, and renewables?”

These questions strike at the heart of the misguided optimism that the Eskom board can change much at the struggling power utility.

The government and ministers are in charge of most of the things Pattison mentioned, while labour laws, unions, and government policy prevent significant progress at Eskom.

To fix Eskom, you must tackle politics around the state utility, poorly skilled staff, a lack of training, affirmative action, poor budgeting, and corruption. The board is toothless in addressing these issues.

It is why Connie Mulder, the head of Solidarity’s research institute, said the new Eskom board is essentially virtue signalling that would do little to change things at Eskom.

Connie Mulder, the head of Solidarity’s research institute

More important is a change in the directive to effectively manage and repair an ageing coal fleet whilst transitioning out of the state-owned, centralised electricity-generation model.

If the government is serious about ending load-shedding, it should allow Eskom’s management to address the problems without political interference.

At this stage, the new Eskom board is similar to a new lick of paint on Luthuli House. It looks great but will do little about what is happening inside.


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