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Eskom chairman under fire as power crisis deepens

Eskom chairman faces no confidence vote – sources.

CAPE TOWN – The board at Eskom will vote on Wednesday on whether to remove Chairman Zola Tsotsi, deepening a leadership crisis at the power utility as chronic power cuts hobble South Africa’s economy.

Minister of Public Enterprises Lynne Brown told parliament the power outages were costing the economy between $1.7 billion and $6.8 billion a month and that she was concerned about the management at the state-owned company.

Eskom’s board will hold a vote of no confidence in Tsotsi, a government source and a source atEskom told Reuters. Brown said she had not been “formally informed” about Tsotsi’s future.

The powerful National Union of Mineworkers accused Tsotsi this week of interfering with the award of tenders.

If Tsotsi is ousted, he would become the latest casualty at the troubled power utility after its chief executive and three other senior executives were suspended earlier this month.

“I am very worried because Eskom is a strategic asset, all of our lives depend on it,” Brown said.

The price of Eskom’s bond expiring in 2023 rose on Wednesday, pushing the yield down three basis points.

Credit downgrade

Eskom has implemented regular power cuts this year to prevent the national grid being overwhelmed as South Africa faces its worst energy crisis since 2008.

Standard & Poor’s downgraded Eskom’s credit last week to “junk”, saying it now regarded its management as ‘weak’, in another blow that will pile more costs onto its already creaking books in the form of higher interest rates.

Eskom’s funding gap to 2018 is estimated at R200 billion and it is getting a R23 billion cash injection from the government this year.

Government has said its economic growth forecast for 2015 could halve to 1% because of power constraints.

Brown said power cuts were likely to persist for another two years but by 2020 an extra 10 000 megawatts would be added to the grid as new power plants were completed.

Eskom expects its long-delayed Medupi coal plant to start generating 800 megawatts of extra electricity by June or July, when it could become South Africa’s first new power station to come online in 20 years.

Workers at Medupi, however, embarked on a one day strike on Wednesday over poor living condition and pay, threatening to further hamper construction at the plant.

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“Never in the history of electricity has so much been owed to so many by so few.” – Gwede clueless comunist Mantashe

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