Nomvalo to lead creation of Eskom CRO 'office' as search for new CEO intensifies

30th July 2019

By: Terence Creamer

Creamer Media Editor

     

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Public Enterprises Minister Pravin Gordhan announced on Tuesday that Freeman Nomvalo, who is currently CEO at the South African Institute of Chartered Accountants (SAICA), has agreed to assist government in the establishment of a Chief Restructuring Officer (CRO) office at debt-laden power utility Eskom.

Nomvalo, who will report to the ministers of finance and public enterprises, as well as the Eskom board, will not leave SAICA, but has agreed to “lead efforts to establish the CRO office".

Speaking against a backdrop of a record R21-billion loss by Eskom in 2018/19, a warning of a further R20-billion loss in 2019/20 and a recent commitment by government to transfer a further R59-billion to Eskom in 2019/20 and 2020/21, Gordhan said the CRO office would include individuals with a diverse set of skills including expertise in corporate finance, debt management and balance-sheet optimisation.

“The immediate tasks for the CRO office will be to interrogate Eskom debt and various proposals to resolve Eskom’s burden and to engage investors with the Eskom executive,” Gordhan told a packed Megawatt Park auditorium, in Johannesburg.

Eskom confirmed that its debt had risen to over R440-billion and that its debt-servicing costs, which surged to R69-billion in 2018/19, would rise to R84-billion in 2019/20.

Gordhan said various options had been proposed for dealing with Eskom’s “unsustainable” debt and that the CRO office would be expected to interrogate the various options to determine what the best solution would be for Eskom and the country.

In a separate statement, SAICA said it had agreed to assist government in the following manner:

  • SAICA is to assist government with a programme aimed at reorganising the operational and funding structures of Eskom for the purpose of making it profitable, while at the same time meeting the country’s energy needs.
  • The project will be part of SAICA's Nation Building Initiative.
  • For this purpose, a team of appropriately qualified resources will be sourced by SAICA from its membership base and elsewhere as appropriate.
  • The project would be led by the SAICA CEO who will spend some of his time on this project, which is currently estimated to conclude within a period of six months.
  • And the resources SAICA secures will be funded by the Department of Public Enterprises and the National Treasury. 

At the same time, Eskom would intensify its search for a new CEO in light of Phakamani Hadebe's departure from the organisation at the end of June.

In the interim, Jabu Mabuza would act as both chairperson and CEO for a three-month period.

Mabuza insisted that the three-month time horizon was determined based on the selection processes governed under the Public Finance Management Act and that every effort would be made to secure a permanent CEO earlier.

He said the board would be in a position to provide government with the names of three candidates by September 30.

Eskom placed advertisements calling for prospective candidates to reply by August 2 and Mabuza confirmed that headhunters had also been appointed in parallel, to identify suitable candidates for the position.

Edited by Creamer Media Reporter

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