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Mabuza: De Ruyter was not a surprise candidate 

Eskom chair calls for the nation to stand behind the power utility’s incoming CEO.

Eskom chair and acting chief executive Jabu Mabuza has put his weight behind the appointment of Andre de Ruyter as its new CEO, saying he was not a surprise candidate but the right person for the job.

The announcement of De Ruyter as the man who will take the wheel at Eskom, as it puts its turnaround strategy into gear, was met with criticism from its major unions.

It was also met with general surprise, as the outgoing Nampak CEO had not been touted as a candidate in media reports. 

Speaking at the utility’s interim results presentation on Thursday, Mabuza said that De Ruyter’s appointment came after a credible and thorough process. 

Lightly joking about the number of people who applied for the post, Mabuza said the utility would have not been able to employ all 142 applicants who ranged from school leavers to 75-year-olds and “any and everything in between”.

Mabuza was part of the board that interviewed the final six candidates and said four were white and two were black. He mentioned that these candidates were not the ones listed in media reports, which speculated that the job could go to former Eskom CEO Jacob Maroga, energy expert Thembani Bukula or former executive Dan Marokane, with the preferred candidate being Andy Calitz, former CEO of LNG Canada

“It was also not our place to comment on that list, so the so-called surprise is because there was no leak,” said Mabuza. “Commentators had their own list and they were surprised when we did not use their list to choose the three we recommended.”

The Nampak factor

The issue with De Ruyter extends beyond him being a surprise candidate, with many calling into question his tenure at packaging company Nampak, which has seen its share price decline by more than 80% since he took over in 2014. 

Read: Nampak’s results: worse than the warning suggested

On Nampak’s performance, Mabuza said that while a company’s share price is an important indicator, it is not “the only indicator”. 

He said there are many South African companies that have lost a third of their value in one year for doing business in markets that Nampak went into before De Ruyter was appointed. 

“We also want to assure you that we are satisfied as the board of Eskom and are very grateful that the shareholder [government], having followed its own rigour, had come to the same conclusion that Andre de Ruyter is the most suitable, able, available and willing South African to take this job.

“I would like to plead with all South Africans, that not only does Andre need all the support he can get, he needs the space and the time to lead us out of all these challenges that are facing us,” he added.

And the challenges are grave. 

While Eskom reported a net profit of R1.3 billion in the six months to September – more than double compared with the same period last year – the power utility is far from being out of the woods in terms of its financial and operational difficulties.

It predicts a R20 billion loss by year-end. Eskom’s debt has increased to R453 billion, while the R5.6 billion in cost savings it was able to achieve is at risk of being negatively affected by spending on diesel to stabilise the grid due to breakdowns in the unreliable generation fleet. 

Savings will also be impacted by the escalating debt of non-paying municipalities, including Soweto. Collectively, this debt has increased by R5.2 billion since March to R25.1 billion.

Mabuza said that if municipal arrears continue on this trajectory the debt will escalate to R30 billion by its financial year-end in March 2020. By this time next year municipal arrears could be the second-largest cost to Eskom after coal – as high as R38 billion.

Herd mentality compounding the problem

“The worrying issue here is it’s new people that were paying that are no longer paying,” said Mabuza. “It’s people where the need for them to pay for services has just been taken away, because they are seeing their neighbour getting services even if they don’t pay.”

Eskom group chief financial officer Calib Cassim said the utility’s cost profile has changed significantly over the years – where coal at R55 billion per annum is its biggest cost item, interest on debt has become the second biggest, at R38 billion.

This is even more than the amount Eskom is spending this financial year on employee costs and capital expenditure, at R34 billion each.

“I think this is a clear signal that something needs to [be done to] address and restore this situation,” said Cassim.

“You cannot have your interest be more than your capex spend – it is just telling you that you are not sustainable.”

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Lets hope he asks someone how they can export power to neighboring countries (many of whom don’t pay) while we have to run on diesel to supply them. They are not paying a higher price for using diesel.

The taxpayer is paying for ESKOM to export power. US!!!!

If he still has time left he can also ask someone how they intend running ESKOM like a business with such a bloated overpaid workforce.

“I would like to plead with all South Africans, that not only does Andre need all the support he can get, he needs the space and the time to lead us out of all these challenges that are facing us,” he added.

This poor(rich) man… I hope he knows what he is putting himself up against.Let’s hope the board and government wont interfere but support his strategies…

Mathematically / simple accounting wise, no one will be able to fixed eskom with a loan debt of minimum R450 billion where money is borrowed just to pay interest – next month the interest is just higher and more cash is needed to pay the interest – for as long as eskom is not making a hard cash profit this wild financial circle repeats itself, every time with eskom deeper into debt and catapults the rest of sa’s economy down with them. The problem is crystal clear, the anc just does not want to / can not see / or does want to admit the big mess they have made of a once fully functional and prestigious entity.
On top of it the president fatally announced a week ago, at the opening of a portion of a “new”, now already old, power station:” eskom will stay a government entity, no one is going to lose his or her “job” whilst it forms one of the core problems for eskom of cadre employed people all at cost of the taxpayer.

I think the misnomer “workforce” needs some real work to be done

I think the other finalists mentioned some thing about labout cuts and they lost out.

Watch this guy, fat salary next June, health reasons and walks away. Just the money.

The only way De Ruyter can make any difference is if he has been guaranteed in writing by government that they will not interfere in ANY of his decisions, did he get such a guarantee in writing – with a very expensive golden handshake if they break this condition? Highly unlikely, so he is guaranteed to fail, just like Mark Barnes at the Post Office.
Escom needs a no nonsense Maggie Thatcher or Trump to root out all the BS and run it like a business, nothing less will succeed.

I don’t think white people need to be told to support the new CEO, it’s rather government must be told to support him and the government must decide whether he must be a jelly fish or toughen up and face the unions head on. What’s the Mandate take down the country (Eskom) or the unions.

De Ruiter is already dead in the water – Government could not give a clear indications where they stand on the unions, IPP and infrastructure resource plan – that is why top contender Calitz walked away.

Government is simply drifting from election to election.

As reported elsewhere that escom kindly has written off Soweto debt interest of 3 Billion I hope this man will get to the rest of us soon to do the same.

he is handed this time bomb. If it is so this is huge trouble, it means all outstanding debt has to be written off.

Why pay for anything? Just pay tax, that gets routed to the utility you use, Telkom, Water, Electricity, gas, fuel etc and you use as much as you want for free.

This precedent is huge trouble.

The culture of entitlement and non-payment is so deeply ingrained, together with the lack of political will and the absolute lawlessness of the unions, that ESKOM has no future, and De Ruyter’s about as capable to ‘fix’ it as the guy with the funny hat who is escaping. I hope it is unfair to say he used Eskom to escape the looming distrous Nampak results, time will tell. The one man who had all the qualities, experience, and highly successful experience in huge corporations, either walked away or was shafted. I wish Calitz well.

Look, if he can pull that hat off at a results presentation then he’s clearly the best man for the job. CV item No 5 – “Can pull off silly hat at a serious corporate event”. OK – employ him

How much say does a CEO have? If the Board is not behind him he will get nowhere.

In South Africa, the ruling political party should be not be involved in the running of anything commercial whatsoever , they do not have a commercial culture as is proven by the fact they they cannot even pay the Party’s rent, electricity, and water bills on time, month after month, year after year! That’s what Socialism breeds, is it not!?

So don’t place your bets on any success where they are involved, it ain’t going to happen!

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