Ah . . . fresh blood

29th August 2014

By: Terry Mackenzie-hoy

  

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The appointment of news Eskom CEO Tshediso Matona has not resulted in a round of applause from the Eskom-watching fraternity – as far as I can see.

City Press reported: “Public Enterprises Minister Lynne Brown announced in Parliament today that Matona would be at the helm of the power producer for five years. Matona is the first Eskom boss in ten years to not come from within the utility’s ranks . . . Matona is from a policy background. His career spans policy planning in international trade.”

I could not have put it better myself. What all this means is that Matona, unless he sits up at night with a textbook, has no idea how, technically, electricity is produced or distributed. This is good, in a way, since it means that he and Brown both know as little as each other about the subject and can sit in meetings playing 'truth or dare' with Eskom and electricity as the subject. Brown reports to top government and the President, so we can say that the appointment of Matona leads to a situation where government and Eskom top management know nothing about the actual electricity business, apart from the accounting side.

Since Eskom has group executive Steve Lennon saying, “The entire country’s blackout recovery time is two weeks, assuming everything goes smoothly”, we perhaps need to look to the accounting side since the generation side looks so dismal. On the accounting side, whoever is appointed will have to fill an enormous funding gap of about R225-billion and plug an immediate hole of R50-billion. These gaps are all Eskom and government fault.

Andrew Kenny, writing on Moneyweb, records: “Eskom botched up its coal supply, which generates 92% of its electricity. Previously, there had been an excellent arrangement where tied collieries supplied Eskom on long-term contracts .. . Eskom received cheap, reliable coal of consistent quality. From about 2002, Eskom sabotaged this successful supply for the worst political and financial reasons. It began to use small suppliers in the spot market, moving the coal by road. In a 'hierarchy of procurement', suppliers were chosen by race, sex and size, rather than price or reliability of coal. The financial managers reduced the coal stockpiles to save money. Expensive, unreliable, inconsistent coal was dumped onto low stockpiles. The waiting disaster happened in January 2008, when the rains came down, turned the low coal heaps into slush and shut down a large number of coal stations. During all these events, there was no leadership or direction from the Eskom bosses. They either slumbered or panicked. There was no long-time planning or consistent policy.”

So, I think even the dimmest of observers will grant that the new CEO has to be a person of vision. Of clarity. Should know the business. But what we have is a person who has no engineering degree, has a BA in economics from the University of Cape Town (UCT) and has a great knowledge of trade.

Anton Eberhard, a professor at UCT's Graduate School of Business, is quoted as saying: “I would’ve thought you would’ve wanted a CEO who has some experience running a large and complex organisation . . . someone who is going to bring a real hard edge, someone from the private sector who’s going to have to deal with huge issues of cost containment, improved efficiencies.”

However, Brown says: “Eskom has a leadership problem that would be addressed through other management appointments. One of the things Matona has is a clear understanding of which way government would like to go.” There you have it – go where government wants, which, we have seen, is a corrupt and enriching direction.

Personally, I am glad. The quicker they stuff it up, the better. Bring on the inappropriate and inexperienced leadership. Eskom is fundamentally a great organisation. It has been government messing with the top management and the supply chain that has stuffed things up. Bring it on. Let it collapse and break down. Then it can be rebuilt, hopefully, having gotten rid of the infecting stupidity of government influence. Tshediso Matona, good luck. Try to succeed. I will sit here and hold my breath.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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