Mabuza’s shock exit points to new battle for control of Eskom

Eskom chair and former acting CEO Jabu Mabuza announced his resignation in a shock announcement late on Friday afternoon (10 January) – with insiders saying he jumped before he was pushed.

According to sources speaking to the City Press and its sister newspaper Rapport, Mabuza’s resignation has caused a stir at the struggling power utility, but is rooted in the most recent bout of load shedding and how it has embarrassed president Cyril Ramaphosa who assured the nation of no load shedding until at least the 13th of January.

After Eskom was forced to implement stage 6 load shedding in early December, Ramaphosa hastily returned to South Africa from a trip to Egypt, and – allegedly based on assurances from the Eskom board – promised South Africans a load-shedding-free festive period.

However, after an unexpected conveyor belt failure last weekend, Eskom was forced to implement state 2 load shedding to protect the grid, going against this promise.

Earlier this week, deputy president David Mabuza made the startling claim that the Eskom board had misled the president about the state of Eskom on the risks of load shedding. By Friday, the Eskom chair was out.

According to the City Press, the Eskom chair’s decision to bail at this stage was preemptive, with sources saying that with the new CEO Andre de Ruyter stepping in there is pressure from cabinet for the new leadership to work with a more qualified board.

Reportedly, there is a push for more technical skills, particularly engineering, to be represented by the board to save Eskom.

Battle for control

With expected changes afoot, Mabuza is said to have taken an early out before he would inevitably be forced to leave. However, other reports point to a looming political battle for control of Eskom as well.

While the City Press reports that Mabuza’s resignation was rejected by public enterprises minister Pravin Gordhan, sources speaking to Rapport also said that it was specifically done to protect Gordhan, with other cabinet ministers in line to take over control of Eskom’s path forward.

According to Rapport, despite Gordhan enjoying strong support from Ramaphosa to lead the changes at Eskom, there is pressure within cabinet to push him out – with several other ministers in the economic cluster waiting in the wings to take over the role.

Front of the line is energy minister Gwede Mantashe, with trade and industry minister Ebrahim Patel and minister in the presidency Jackson Mthembu also reportedly in line.

Some in cabinet also believe that former Eskom CEOs Brian Molefe and Koko Matshela should also be brought on in advisory capacities, the paper said, despite the controversies surrounding them.

Load shedding is here to stay

Analysts and economists have noted that Mabuza’s swift exit from Eskom was indicative of political factionalism once again at play at the power utility, noting that as long as political interference is woven into Eskom’s core make-up, chances of reform and turnaround at the group remains slim.

Intellidex analyst Peter Attard Montalto said this week that load shedding in 2020 will be broadly similar to that of 2019 – if not worse. The group sees longer periods of load shedding, and at least 16 days of stage 4 load shedding in the forecast.

“We see new energy capacity being procured exceptionally slowly given deliberate blockages combined with lack of capacity and technology biases at the Department of Minister Resources and Energy.

“We think investors underestimate the long lead times of approvals and planning required before construction can even start and as such H2 2021 is likely to be when any serious amount of power could realistically come on at the earliest.

“However given a 5GW gap and the fact that the coal fleet is rapidly declining (ie that 5GW grows each year) so we are looking at 3 years of problems,” Attard Montalto said.

Read: Jabu Mabuza resigns as Eskom chair

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Mabuza’s shock exit points to new battle for control of Eskom