Eskom CEO chaos

Following Public Enterprises Minister Pravin Gordhan’s rejection of the Eskom board’s chosen CEO candidate, it already appeared unlikely that a permanent replacement for André de Ruyter would soon be found.

Now, contradicting statements from Eskom and Gordhan have cast doubt and confusion over the entire process, City Press reports.

Gordhan said on Thursday that he had vetoed the appointment of Eskom’s recommended candidate because the board had only sent him one name for the post.

According to the Ministry, citing Eskom’s memorandum of incorporation, the state-owned power utility must provide three choices.

However, Eskom board chair Mpho Makwana told journalists in August: “The [memorandum of incorporation] of Eskom requires that once the board is done with the selection process, they have to obtain the shareholder’s concurrence.”

Then, on Friday, Eskom told City Press that after a global search, it had whittled down 150 candidates to a clear number one, with two candidates jointly in second place.

Eskom also specified that in alignment with section 14.3.2 of Eskom’s memorandum of incorporation, it had sent the names of all three candidates to Gordhan so that he could make a final decision.

This was in stark contrast with Gordhan’s statement.

Curiously, two hours after Eskom’s statement on Friday, it issued a correction stating that the board had only presented the name of one appointable candidate — not three.

Mpho Makwana, chairman of Eskom Holdings Ltd., listens at the 2011 CERAWEEK conference in Houston, Texas, U.S., on Thursday, March 10, 2011. Photographer: F. Carter Smith/Bloomberg

Section 14.3.2 of Eskom’s memorandum of incorporation states: “The Shareholder may request the Board to identify, nominate and evaluate potential candidates for appointment as the Group Chief Executive in accordance with the Guidelines and to submit a shortlist of candidates to the Shareholder to assist the Shareholder with the appointment.”

The “Guidelines” are defined earlier in the memorandum as: “the ‘guidelines for the appointment of a Chief Executive for a State Owned Enterprise’ as issued by the Minister from time to time.”

Previous reports had indicated that there were five front-runners for the job, four of whose names became publicly known.

They are former Eskom manager and chemical engineer Dan Marokane, NRS Association chair Vally Padayachee, former Eskom Rotek Industries director Ayanda Noah, and former Eskom CFO Paul O’Flaherty.

According to City Press, word on the street was that the Eskom board wanted to appoint Dan Marokane, but Gordhan was opposed to his candidacy because Marokane was likely to resist political interference at Eskom.

Citing ANC sources, the paper also reported that the ruling party wanted Ayanda Noah. However, Gordhan was concerned that she may be too close to his Cabinet colleague and energy policy rival, energy and mineral resources minister Gwede Mantashe.

Kgosientsho Ramokgopa, Minister of Electricity

Eskom’s big plans

The uncertainty surrounding Eskom’s leadership comes at a critical time, with electricity minister Kgosientsho Ramokgopa preparing to present a plan to the cabinet next month on how to fix and expand South Africa’s transmission grid.

It would have been preferable to have a new Eskom CEO form part of this planning, particularly considering that Ramokgopa’s plan is expected to include the intervention of private partners.

This is because the amount of transmission equipment needs to be quadrupled over the next decade at an estimated cost of about R250 billion.

“That money is not sitting with Eskom,” Ramokgopa said.

“It’s unlikely that we’re going to get that out of National Treasury so it’s important that we look to the private sector to help us resolve that question.”


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Eskom CEO chaos