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South Africa power shake-up looms as ailing Eskom welcomes new CEO

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Eskom, South Africa

Eskom’s new chief executive took charge of the crisis-plagued utility on Monday, embarking sooner than planned on the mammoth task of fixing a national power deficit and restructuring debts that have hobbled South Africa’s economy.

Andre de Ruyter, appointed by President Cyril Ramaphosa in November, will oversee a government plan to split state-owned Eskom into three units – for generation, transmission and distribution – in an attempt to make it more efficient.

Ramaphosa is trying to revive Africa’s most advanced economy, which is flirting with recession, and attract new investment.

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Eskom, which generates more than 90% of the country’s power, is in its current form widely viewed as the biggest impediment to growth, though the restructuring plan has taken shape against a backdrop of stubbornly high unemployment, and unions have pledged to fight it.

De Ruyter had been due to start work on Jan. 15, but the sense of crisis surrounding the firm, which has been leaderless since July and imposed the latest in a long run of power cuts at the weekend, persuaded him to take the helm early.

Saddled with unreliable coal-fired power stations, Eskom has struggled to meet demand since 2007, forcing it into several rounds of extensive power cuts. Outages last year dented economic output and shook investor confidence in Ramaphosa’s administration.

At the weekend, it cut up to 2,000 megawatts (MW) from the national grid due to a shortage of generating capacity.

TROUBLESHOOTER?

In a previous role as CEO of Nampak (NPKJ.J), de Ruyter steered the packaging company through financial difficulties, and part of his new brief is to restructure Eskom’s 450 billion rand ($31 billion) debt pile.

An Eskom spokeswoman said on Monday he had met some Eskom staff over recent public holidays and had been getting to know the business.

De Ruyter’s predecessor, Phakamani Hadebe, stepped down in July, citing health reasons. Sources told Reuters at the time that another reason was that he felt frustrated at being excluded from important decisions affecting the utility.

One of Eskom’s largest trade unions, the National Union of Mineworkers (NUM), opposed de Ruyter’s appointment, labelling it a setback to efforts to promote more black professionals into senior corporate posts.

The NUM plans protests as a “welcoming party” for him, and it and the National Union of Metalworkers of South Africa have said they will fight the plan to split Eskom, which they fear will lead to large-scale job losses and privatization.

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Eskom said in a statement on Monday that roughly 13,000 megawatts (MW) of its 44,000 MW nominal capacity were offline because of plant breakdowns.

It said it didn’t expect “load-shedding “ – a local term for power cuts – on Monday but that the system was “constrained and vulnerable”.

Source: Reuters

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