Eskom’s revolving door, endless scandals cloud SA’s energy future

June 14th, 2017, Published in Articles: EE Publishers, Articles: Energize

 

Eskom’s revolving door and constant scandals have not only crippled the state power utility, but hampered any meaningful debate on what energy technologies could shape South Africa’s economy.

On Monday night embattled Eskom chairperson Ben Ngubane announced his exit, the latest in shock to hit the tumultuous state utility.

While Eskom and South Africa’s Department of Energy should be deliberating about South Africa’s energy future to set energy policy that will in all likelihood define its future for the next two decades, the state utility faces one crisis after another.

These are dark days for the enterprise entrusted with keeping South Africa’s lights on. But despite its problems Eskom still proposes to drive what will probably be South Africa’s biggest procurement programme, the proposed trillion rand new nuclear build programme.

Eskom has started the programme from scratch after the Western Cape High Court ruled at the beginning of May that the nuclear procurement processes to date have been declared unlawful and set aside.

While it is the energy department that must ultimately set South Africa’s energy policy, Eskom’s leadership has been paving the road for nuclear, while obstructing renewable energy’s progress.

Scandalised

The scandals and resignations have paralysed Eskom’s ability to function properly. The state utility is now into its eighth investigation, probing governance and operational mismanagement. Yet none of the investigations have led to prosecutions or convictions with reports never concluded or never released. Eskom’s financial position is also precarious, with the utility proposing tariff hikes of close to 20% to raise more money, angering consumers.

In the last two weeks South Africans have been bombarded with information showing how the Guptas manipulated Eskom, using political connections to score irregular coal contracts, and appoint allies to the board of directors. Email leaks show that the Guptas’ mining group, Tegeta, was at the centre of the questionable deals with Eskom.

Even before the revelations Public Enterprises Minister Lynn Brown admitted last month that “Eskom’s reputation has been torn to shred,” citing at least seven investigations into the utility that had been embroiled in the scandal.

Limping into the future

Without a CEO and board chairperson, the few executives left at Eskom will now have to limp along as best they can until new leadership is appointed.

The Eskom board itself faces a storm after the Tegeta coal scandal raised some serious questions about their conduct. Since 2015, after Brian Dames had left, one Eskom leader after another has exited under a cloud. In 2015, newly appointed CEO Tshediso Matona and three other executives were suspended.

Ngubane’s interim replacement, board member Zethembe Khoza, took over as CEO after Matona’s suspension. After Molefe tearfully resigned last year, Matshela Koko acted as CEO until he too was placed on special leave amid a nepotism scandal.

Koko had been a big proponent of nuclear power, and openly rubbished renewable energies. Apart from his nepotism scandal, Koko has now also been directly linked to the Guptas after the leaked Gupta emails revealed that Koko might have leaked Eskom legal opinions to the Guptas and that the Guptas paid for Koko to stay in a luxury Dubai hotel.

After Koko’s dismissal, Molefe made his futile comeback before he too was sacked again at the beginning of the month. And now Ngubane has left under a cloud.

New blood, new vision

Eskom’s scandalised executives, and especially Koko, have been quite vocal on their vision of what energy investment South Africa should make. This has drawn criticism from stakeholders who believe that Eskom should take its lead from the Department of Energy. But that department has simply left the debate in the hands of the compromised Eskom leadership.

Facing the future, there are also huge questions on how Eskom plans to fund nuclear with its already shaky financial footing. Similarly, given how risky an investment nuclear energy is, Eskom is likely to have difficulties finding other funders, especially with a vacuum in leadership.

Simply limping on with the current compromised leadership will be a grave mistake. If South Africa is to properly plot its energy future, new perspectives and new blood is desperately needed at Eskom.

Acknowledgement

This article was first published by Fin24 and is republished here with permission.

Send your comments to energize@ee.co.za

 

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