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AfrElec COMMENTARY AfrElec
Eskom appoints new CEO to push forward reform agenda
Andre de Ruyter is seen as professional and technocratic, but the ANC and unions are unhappy with the choice
SOUTH AFRICA
WHAT:
Andre de Ruyter was the CEO of Nampak and a former SASOL executive
WHY:
He has a reputation as a reformer with attention to detail
WHAT NEXT:
The government wants to see reform of Eskom before taking over some of its debt
THE choice of Andre de Ruyter, CEO of pan-Af- rican packaging company Nampak and a for- mer Sasol executive, as the new Eskom boss is controversial.
He was hailed as a professional and tech- nocratic choice, although as the company’s first white permanent CEO since 2001 he faces immediate opposition from the country’s trade unions and the ruling ANC.
The new incumbent will have to negotiate close media and government attention, as well as pressure from staff, creditors and investors.
“I think he’s a highly astute, and a very capa- ble and competent manager,” Martin Kingston, executive chairman of Rothschild & Co.’s South African unit, told Bloomberg. “He hasn’t grown up in the system, which can compromise peo- ple’s independence.”
Local media highlighted that he had already contributed to a 2017 report on boosting employment, where he recommended break- ing up Eskom as one way of boosting economic growth. With no experience in the power sec- tor but 20 years at Sasol, he was described as a strategic choice, with the ability to make decisive decisions without the luxury of time.
“I know there have been comments about the fact that he’s a non-engineer, but I think the period Eskom is in at the moment is one that needs more strategic guidance,” said Ayanda Mngadi, chairwoman of the Manufacturing Cir- cle, where De Ruyter is still a director.
“I’ve dealt with him in instances where he didn’t have the luxury of time,” she said. “I do believe he’s decisive and that’s what you are going to need.”
Political role
As well exerting a huge influence on the South African economy, Eskom is a highly politi- cal company and the appointment of a white executive without any experience in power is controversial.
Both the National Union of Mineworkers and the National Union of Metalworkers of South Africa said De Ruyter’s appointment was a set- back for the country’s racial transformation.
Although not an Eskom insider or an engi- neer by background, he did develop a knowledge
of coal and the wider energy business at Sasol. De Ruyter has at least two years to turn around the company by driving forward the gov- ernment’s restructuring plans and by reducing its crippling pile of debt of ZAR450bn ($30.5bn). Major issues include reducing expenses – crit- ics claim the company is 66% overstaffed – and improving maintenance at power plants and the
stability of power supplies.
The government in its recent budget ring-
fenced ZAR59bn ($4bn) per year for two years to keep the company going, as well as a ZAR230bn ($15.7bn) injection spread over the next decade.
However, the government has made no deci- sion on how it will manage Eskom’s debt in the longer term.
However, Finance Minister Tito Mboweni said in his recent budget statement that a restruc- turing plan must be implemented before the gov- ernment could consider debt relief.
As well as a new CEO, the restructuring plan calls for unbundling Eskom into separate transmission, generation and supply compa- nies under the umbrella of a state-run holding company.
Crucially, the break-up of Eskom would be accompanied by more liberalisation of the power market, creating a more level playing field for independent, often renewable, generators.
The appointment of a new boss steadies the Eskom ship somewhat, but the company now faces a difficult path through uncharted waters. It must deal with a government that has yet to make crucial decisions, and foreign and domes- tic investors that want the company to stop bleeding money before they commit to any new cash injections.™
Eskom is a highly political company and the appointment of a white executive without any company experience
in power is controversial
Andre de Ruyter
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w w w . N E W S B A S E . c o m
Week 46
21•November•2019