by Alan Mukoki, SACCI CEO


On Board with Energy

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The South African Chamber of Commerce and Industry (SACCI), welcomes the appointment of Mr. Andre de Ruyter as part of the Eskom board’s attempt to stabilize the executive team at Eskom.

The power utility poses the biggest risk to SA’s economy and every effort should be made to fix the problems faced by the power utility.

Whilst Mr De Ruyter’s appointment signals a good intent by the Eskom board, we should not delude ourselves into believing that the mammoth task facing Eskom can be handled by one man.

Eskom faces significant problems in managing change, the large capital debt on its balance sheet, aging fleet of power stations and other plant and equipment, backlogs in deferred maintenance, and cash flows that are restricted from a revenue generation side.

The problem of what happens to labour efficiency at Eskom is going to be one of the major decisions that needs to be taken urgently, as Eskom is Human Resources top heavy. Eskom needs to operate within an optimum structure for its size and mandate. A major decision on this significant item is unavoidable.

The shareholder needs to show serious intent in creating the necessary enabling environment for the board and executive team of Eskom to succeed. This should start with maintaining a high level of corporate governance where the separation of powers exists between the Eskom board and the shareholders.

What has historically bedevilled many SOE’s is the blurring of these lines on operational responsibility and accountability, between the board and executives on one hand, and the board/executives and ministerial oversight on the other.

We hope that corporate governance will prevail at Eskom to allow an independent non-executive board, operating with the highest level of integrity, to execute its mandate through competent, and experienced executive management, to turn Eskom around.

Without this supportive and necessary governance environment, it will be difficult for any executive team to succeed.

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