Minerals and Energy Minister Gwede Mantashe’s appointment on Friday of former Eskom chief nuclear officer David Nicholls as chair of the troubled Nuclear Energy Corporation (Necsa) was a surprise move.
It followed the resignation of the previous board a week ago, leaving the organisation rudderless, though Ayanda Myoli continues as acting CEO. A week ago the remaining four members of the Necsa board who hadn’t already jumped ship (there were 10 board members in 2018), sent a letter to the minister berating him for his lack of support. The four directors who resigned were Dr Pulane Kingston, Dr Pulane Molokwane, Matlhodi Ngwenya and Bishen Singh.
Mantashe fired back on Twitter: “We must reinstate Necsa into a functional state. We can’t allow dysfunctional governance. We must appreciate that correcting governance is painful.”
Necsa has been in turmoil since late 2018 when former energy minister Jeff Radebe sacked the previous board, including Dr Kelvin Kemm (chair), CEO Phumzile Tshelane and finance director Pam Bosman, on dubious grounds of “defiance”. In August last year the Pretoria High Court overturned Radebe’s suspension of Kemm and Bosman, but made no ruling on Tshelane’s status as a disciplinary process was still ongoing.
Moneyweb is in possession of an invoice from MNS attorneys, Necsa’s legal advisor, for R1.7 million related to Tshelane’s disciplinary hearings. This may explain why Necsa’s legal battles with former staffers seem to have no resolution, says a company insider.
Hopefully, Nicholls can bring some sorely needed stability to the company and resolve the mess initiated by Radebe.
Nicholls is highly respected in the industry and regarded as a non-nonsense leader who gets things done. As chief nuclear officer at Eskom he was responsible for the new build programme at Koeberg power station in recent years – and was always fair and diligent in his dealings, says an industry insider who asked not to be named.
While at the utility he revitalised the Pebble Bed Modular Reactor (PBMR), an area in which South Africa was a world leader.
Nicholls was one of nine executives let go as part of a programme to cut Eskom’s wage bill, according to a 2018 Eyewitness News report.
He had worked his way up through the ranks at Eskom, working in its nuclear engineering department in the early 1980s before being appointed as technical support manager at Koeberg in the early 1990s. He headed up the PBMR project before it was put on the back burner during former president Jacob Zuma’s tenure. He was later appointed chief nuclear officer at Eskom, and has experience managing Koeberg, which is the lowest cost provider of electricity to the grid.
Others appointed to the Necsa board are Dr Namane Magau, James Maboa, Senamile Masango, Joseph Shai, Letlhogonolo Noge-Tungamirai and Dr Gregory Davids.
Maboa is reportedly well respected by the largest trade union at Necsa, the National Education, Health and Allied Workers’ Union (Nehawu), and some on social media endorsed Masango as a progressive nuclear scientist. Davids has a background in human resources.
Zolani Masoleng, branch chair of Nehawu at Necsa, said the union welcomed the appointment of the new board.
“This is a very important step in restoring governance and stability in the organisation. It gives all of us another chance to turn Necsa around from the destructive path under the previous board, and place it once more in the path of growth and sustainability.
“We are making a clarion call to the board to lead by example in inculcating a culture of good corporate governance and to at all times place the interests of Necsa above those of their own. None of them should individually or collectively act in a manner that dishonours the organisation.
“As the majority union we will work with the board to make Necsa a prosperous organisation. We wish them all the best.”
There is lingering uncertainty over the fate of the board members sacked by Radebe – Kemm, Tshelane and Bosman – all of whom remain in legal dispute with Necsa.
In August last year the Pretoria High Court ordered the reinstatement of Kemm as chairman and Bosman as head of audit and risk. The effect of the judgment was to dissolve the replacement board, according to legal experts.
In October last year the Portfolio Committee on Mineral Resources and Energy chimed in, saying there was no board at Necsa. It told management and labour to work out their differences in the interests of the company.
The replacement board’s letter of resignation claimed Necsa had been technically insolvent since 2014 and had been making losses since 2014 – a claim that Kemm refutes: “In the last year that I was chairman, before being removed by Radebe, we made a R300 million profit. This resignation letter is a load of nonsense that attempts to shift blame to my board. It is also an insult to the Auditor-General which gave us a clean audit report as well as to the Institute of Directors which gave us an award for our outstanding governance.”
Kemm continued: “It is such a pity what has happened to Necsa. We had a stable, profitable company under my board and then Jeff Radebe was appointed minister and started to give us operational instructions, which we objected to.
“Political interference in the running of a state-owned company just does not work. I wish Mr Nicholls all the best in his task ahead’.”
Necsa has been dipping into funds ring-fenced for rehabilitation of the nuclear reactor. Kemm says under his chairmanship, Nedbank demanded collateral of R100 million from the ring-fenced funds for a loan of R60 million to tide it over a cash flow shortage. The R60 million was repaid and the collateral released.
Last week’s resignation letter to Mantashe appears to suggest the company has had to find as much as R554 million from loans, overdrafts and borrowing from emergency funds to meet its liabilities.