Eskom’s 12 CEOs and executives have cost R514 million: Manuel

Former finance minister Trevor Manuel says that in the last decade Eskom has had 12 chief executive officers, six chairpersons, 60 directors, and 30 executives, which cost the state company a whopping R514 million.

Manuel was testifying before the Zondo commission into state capture on Thursday, the morning after Eskom again warned of possible load-shedding due to poor performing power units.

He added that the collapse of state-owned enterprises (SOEs) in the last decade reflected the fact that the powers given to state companies were exercised without care and attention to detail. He said that reckless spending denied the poor basic access to services.

Eskom in its history was an extremely strong institution, one of the top utilities in the world, the former minister said.

“Eskom had a stronger credit rating than we had as a sovereign, and we would look to Eskom with a sense of jealousy about the fact that they could borrow more cheaply.”

Manuel pointed out that the state company, which accounts for 95% of the country’s power, had surplus capacity to a point where its power stations were mothballed. He said that if you look at what has happened over the past decade, “all of that has come apart”.

He said that Eskom previously never imposed a burden on the fiscus. “If you look at the position of Eskom now … it is clear that Eskom sits as an albatross around the neck of the fiscus,” he told the commission.

Manuel warned that the risk of losing its investment grade rating, means that South Africa will need to borrow at much higher costs. He also pointed to a cavalier attitude by management over the past decade.

“If decisions are taken with a focus of ‘short-terminism’ for the benefit of private individuals, then I think the costs are born by all of society.”

Eskom Debt

Bloomberg reported that the state-owned power utility may need as much as R230 billion ($16.5 billion) of financial assistance over the next decade, citing finance minister Tito Mboweni.

Eskom needs immediate help and it can’t await restructuring of its business, Mboweni said.

“It is R150 billion amortised and that makes it R230 billion, or R23 billion a year,” National Treasury director-general Dondo Mogajane said.

In his budget speech earlier this month, Mboweni announced a R69 billion cash injection over the next three years to help the loss-making electricity producer service its debt and free up money for operations.

That’s the biggest bailout in the nation’s history, though it falls short of Eskom’s request for the government to take 100 billion rand of its debt onto its own balance sheet, Bloomberg said.

Eskom currently has R419 billion of debt and isn’t selling enough power to cover its interest payments and operating costs, a legacy of years of mismanagement and cost overruns on new plants. The government warned recently that the utility “will cease to exist at current trajectory by April 2019”.

The government has had to show its long-term support for the utility, and this help will equate to a minimum of 150 billion rand, Treasury Acting Deputy Director-General Ian Stuart said at the same briefing. “We had to signal our support for Eskom immediately by penciling in the numbers,” Stuart said.

Overstaffed

To compound matters, Public Enterprises Minister Pravin Gordhan is currently in talks with unions over Eskom’s bloated workforce.

The utility’s workforce soared by about a third to more than 48,000 people in the decade through 2018.

A World Bank study in 2016 found that South African utilities pay workers more than double the norm in 35 other countries on the continent, and that Eskom is potentially 66% overstaffed.

Eskom chairman Jabu Mabuza last year stressed the need for the state entity to shed jobs. Mabuza reportedly said that Eskom has “33% more people than was necessary”.

Energy expert Ted Blom, said that Eskom is overstaffed by as many as 30,000 employees, with the utility only needing 14,000 to operate, while currently employing close to 48,000 people. The 30,000 Eskom workers are also four times over-paid compared to global averages, he said.

“If we get everything cleaned up at Eskom like we should, we could sacrifice 30,000 jobs at Eskom and create three million more.”

The company reportedly aims to employ fewer than 37,000 people by April 2023. This will be down from its current staff complement of 48,628.

These are the CEOs Eskom has had over the years

CEO Years active Status Reason
Allen Morgan 1994 – 2000 Term ended Change in Eskom structure – became a company under the companies Act.
Thulani Gcabashe 2000 – 2007 Term ended Contract came to an end.
Jacob Maroga 2007 – 2009 Resigned Claims to have been illegally removed. Court ruled in favour of the Eskom board.
Mpho Makwana 2009 – 2010 Acting term ended Served as acting CEO between Maroga and Dames.
Brian Dames 2010 – 2013 Resigned “Personal reasons”.
Collin Matjila 2013 – 2014 Acting term ended Served as acting CEO between Dames and Matona.
Tshediso Matona 2014 – 2015 Suspended Investigation into load shedding, and why the company was unable to prevent it.
Brian Molefe 2015 – 2016 Resigned Resigned after allegations of being involved in State Capture. Later claimed he retired.
Matshela Koko 2016 – 2017 Acting, was suspended, then resigned Links to State Capture, while facing allegations of nepotism, leaking confidential information and misleading Parliament.
Johnny Dladla 2017 Acting term ended, then resigned “To pursue private business interests”.
Sean Maritz 2017 – 2018 Acting, was suspended, then resigned Links to State Capture, while facing charges of maladministration relating to Trillian and a Hong Kong company.
Phakamani Hadebe 2018 – present Current CEO N/A

Read: Eskom looting could be as much as R500 billion – report

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Eskom’s 12 CEOs and executives have cost R514 million: Manuel