19 November 2019

BUSA on Eskom new CEO appointment

The appointment of Andre de Ruyter, as chief executive officer of Eskom, is important for stabilising the management, operations and finances of the utility, who’s debt poses the single biggest threat to the South African economy.

Although, the position of chief executive officer of Eskom is probably one of the most difficult in the country, Business Unity South Africa (BUSA) is confident that De Ruyter is the best person for this challenging position. He is a South African, with extensive experience in the energy industry with Sasol before he took up his present position at Nampak. He was selected after a thorough interviewing and consultation process. His willingness to accept the position in these trying times and under difficult conditions, speaks to his commitment to the country. He can count on the support of BUSA as he seeks to undo years of mismanagement and corruption and turn the company into a sustainable business that is able to provide the country with the reliable power supply it needs for inclusive economic growth.

Eskom has R450 billion of debt, an ageing fleet of power stations and new plants that have been malfunctioning from the start, due to mismanagement and maladministration. The R59 billion bailout that Eskom will receive over the next two years will result in South Africa’s fiscal deficit worsening and could impact on our sovereign rating, but this appointment brings about a degree of certainty in the steering of ESKOM, which must be welcomed.

Extensive work has been done in identifying how Eskom can perhaps be restructured into a viable entity. Key among these are the plan to split Eskom into generation, transmission and distribution units; improving its efficiency and sustainability of its operations; restructuring its crippling debt and negotiating with suppliers to reduce its costs; as well as getting its customers, especially municipalities, to pay their bills.

The appointment of Mr De Ruyter must be seen within the context, also, of the Integrated Resource Plan (IRP) released recently. One of his roles will be to manage a “just transition’ from substantial reliance on coal to a more diversified energy mix, in which workers and communities are supported and reskilled, as older power stations are closed down and renewable energy becomes a bigger part of the national power supply.

As he deals with Eskom’s financial, business and labour challenges, De Ruyter must be able to count on the support of government, when he makes difficult operational decisions. Members of the board and management of Eskom have recently complained about the government putting short-term political interests above the sustainability of the business. It is precisely this kind of interference under the Zuma administration, which created the crisis at Eskom in the first place.

If government is committed to turning Eskom into a sustainable business and maintaining its credibility as a responsible steward of the country’s finances, it must let De Ruyter do his job to the best of his ability and without interference, and in the National interest instead of in the interests of particular constituencies. The country cannot afford to lose another Eskom chief executive due to interference in its operations.