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The toughest CEO job in SA is open. Who wants It?

Eskom will be seeking a replacement for Phakamani Hadebe soon.

The top job at one of South Africa’s biggest and most-troubled companies is open again for the 11th time in a decade and it’s unclear anyone is ready to fill it.

State power utility Eskom will be seeking a replacement for Phakamani Hadebe, who announced plans to quit after just 16 months in the post. The role came with “unimaginable demands” that had taken a toll on his health, he said, and he was leaving in the interest of his family and the company.

Read: Eskom CEO resigns for health reasons 

Whoever takes his place will have to oversee a fleet of poorly maintained, old plants battling to produce enough power to supply Africa’s most-industrialised economy. Plus, Eskom is saddled with more than $30 billion of debt, has about 16 000 more workers than it says it needs and wants massive bailouts from a government that doesn’t have the money to spare.

“I can’t think of anyone within Eskom who has the political savvy and technical knowledge required of the CEO, or who would want the position,” said Peter Attard Montalto, the head of capital markets research at research company Intellidex. “It’s an impossible job.”

Power blackouts

Eskom supplies about 95% of the nation’s electricity, mostly by burning coal. Less than two decades ago it was ranked one of the world’s best power companies, but the government initially stymied it from investing in enough new capacity to keep up with demand and blocked private companies from investing in generation. That’s led to intermittent blackouts since 2008.

Eskom’s woes increased after Jacob Zuma took over as South Africa’s president in 2009. Testimony given at official inquiries suggest Zuma’s allies worked with the utility’s top managers to loot billions of rand. Zuma and the former executives deny wrongdoing.

Hadebe, who previously worked at the National Treasury and headed the state land bank, and a new board were brought in to sort out the mess shortly after Cyril Ramaphosa replaced Zuma as leader of the ruling African National Congress in late 2017. While they made headway in repairing financial controls, the accounts continued to deteriorate as electricity sales failed to generate enough cash to cover operating costs and interest payments.

State bailout

Ramaphosa, who went on to succeed Zuma as president, announced plans in February to split Eskom into generation, transmission and distribution units — a move he said should make it easier to manage the utility and raise financing. Later that month, finance minister Tito Mboweni allocated a three-year, R69-billion bailout for Eskom, way less than the utility said it needed.

Hadebe was the 10th CEO or acting chief executive since 2009. His departure appears to have been on the cards for a while.

“What has been known behind the scenes since April is now official and public,” Anton Eberhard, a professor at the University of Cape Town and part of a government task team set up to get Eskom back on track, said on Twitter. “Now we need urgently to strengthen both executive management and the board.”

What does the candidate need? Being able to run a complex organisation and have a deep understanding of the global power sector, as well as being an expert in politics and motivating people, according to Iraj Abedian, head of Pan-African Investments and Research Services, who has advised the government on economic policy.

The person needs “a clear appreciation for leadership and decisiveness in a highly politicised and demoralised organisation,” he said.

© 2019 Bloomberg L.P

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Is there anything left to steal or do you just work for a salary?

If there was a thing such as fairness. My hubby will be such an amazing candidate for this position. Highly intelligent, always has a back up plan always thinking ahead, just amazing. But this would be a long shot, is worth a try. His resume speaks for itself. Stay blessed

Why would any serious person apply for this job? He will not be allowed to reduce the number of employees, forced by the minister to give in to workers when they are demanding salary increase, could not employ the best persons for the job, etc. On the other hand I would not mind the job for a few months, I could use a few millions. I probably would not be worse than most of the last dozen CEOs.

Any incoming new CEO is bound to require a 5 yr contract, a huge salary and handsome pension plan, and upfront payment of the lot in the event of early termination.

As the saying goes, I would stand in line for this. Odds are excellent you won’t last out the year.

You’re probably referring to Brian Molefe. The current CEO, Hadebe, who just resigned is very different from Molefe.

The ANC president is the de facto manager at Eskom. Luthuli House is the de facto board at Eskom. They do not want a manager, they want a fall guy with verbal diarrhoea to act as a smokescreen to hide the incompetence and criminality. The job description includes the ability to obfuscate, lie, list excuses, shift blame and if all else fails, cry.

Eskom is the prime example of how the worst scum in society rises to the top in a socialist system. The intelligent and competent people who have a career and a future, will not do what it takes to hide the all-encompassing incompetence and criminality. Such an honest person will therefore not be promoted in the ranks of such an organisation. Those who do rise to the top in a socialist organisation are those who are willing to do everything immoral, unethical and criminal to please Luthuli House.

Eskom’s business model is not about giving power to the people, Eskom is the primary vehicle for the theft of the purchasing power from the people. Eskom is our Berlin Wall. The crumbling of Eskom signals the end of socialism in South Africa.

Hey Sensei, great comment as usual.

Here’s a link to a brilliant presentation I think will resonate with you and which I think you’ll really enjoy….

https://youtu.be/5WPB2u8EzL8

Be interested to know what you think if you get around to seeing it…

Navigator, we read countless articles and books, looking for groundbreaking insights, and then, once in a blue moon, we come across magnificent sagacity like this. Thank you for the link. The concept is relevant to the financial system and markets.

Well said Eskom and SAA just huge ATMs for the feeders. There must be many comrades who want a high up job there.

Until SIU’s starts looking at employing business orientated and minded competent people to run these entities we will have more of the same. The new CEO needs the total autonomy to implement measure that will make the entity sustainable and viable in the longer term, and, if that means downsizing, rejigging competencies etc. then that needs to happen with some haste

Business Times pointed out last year in June that despite Hadebe’s strong track record at government institutions and the private sector, he had never lead an organisation where unions wield such power.

Perhaps something for any new incumbent to bear in mind…

Not only that Louise but he knew zero about electricity production; as does Gordhan so both are completely at sea. This means that the one eyed crook in Eskom can tell the blind CEO etc anything they like and it can’t be evaluated. Some of the constraints (ANC ongoing plundering and the unions) cripple a CEO who is hamstrung by the crooked clowns above him.

As noted I reckon it is simple to turn Eskom around. Cancel incompetent contracts, appoint honest and competent contractors, retrench excess and incompetent staff. Problem is that you need a staff of competent people to do this as well as the will to do it. Both are non-existent.

Sure Paul, but what about people like Andrew Etzinger, head of Power Generation and COO, Jan Oberholzer, which is apparently a new post to support the CEO. They surely form a team?

To turn an organization around, no matter how big or small, it does not help to snip at the frilly edges. Very often some of the highest earners are snipped, that makes the biggest difference quickly.
This is what Escom needs, 20000 extra people, cut. Then go for a few big earners to clean up the wage bill. This would be equal to the R20 billion loss just posted.
How to do it?? NO unions allowed.Do not tie his hands behind his back. And the guy tasked to do it must have protection, ANC justice will be tried.

“who has the political savvy and technical knowledge required ”

Therein lies the problem. If government is serious about sorting out Eskom they need to get a technocrat or at least a businessman – same applies to all the SOE. Appointing Mark Barnes at Post Office was a good move for example. He has a mountain to climb and it will take years to undo the damage, but he is fixing : eg state benefits payments seems largely sorted.

To deal with the politics of Eskom, get a german from one of their big utilities and give him a mandate to start by daring the various contracting firms to prove their claims and forcing them to fix their work.

But maybe first split off Transmission & Distribution. Bite-sized portions…

I would like to wager that Hlaudi Motsoeneng will throw his name into the hat. In his mind he is the best candidate.

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