Africa-Press – South-Africa. Eskom and the Electricity Minister believe the utility has created a template for the successful turnaround of state-owned enterprises (SOEs) in South Africa.
This comes on the back of Eskom’s remarkable turnaround from record load-shedding in 2023 to consistently going more than 100 days without any power outages.
While much of this progress is down to the Eskom-specific Generation Recovery Plan, chairman Mteto Nyati believes there are lessons for all SOEs in the utility’s recovery.
Eskom’s turnaround has been impressive, with it recording an energy availability factor (EAF) of 48% in early 2023. Just over two years later, its EAF is sitting at 64%.
Nyati explained to Newzroom Afrika that the utility has created a template that can be used more generally to guide the turnaround of South Africa’s SOEs.
“We need to take a step back and look, in general, at how we can turn around SOEs in South Africa,” Nyati said.
“The starting point is to have a board that is fit for purpose and has experience in dealing with the challenges facing that entity. That is what we have at Eskom.”
Nyati admitted that this is heavily dependent on having the right minister in charge of the SOE, as they have the final say in who is appointed to the board.
“That was great work done by the ministry to make sure that they appointed people whose experiences speak to the problems of Eskom,” Nyati said.
“Then that board has the responsibility of building a leadership team that, again, has a good understanding of the environment Eskom operates in.”
He explained that this can take time. For example, Eskom’s board took over six months to find the right CEO in Dan Marokane.
Nyati said Marokane stood out as soon as he was brought to the board’s attention, beating out global candidates for the top job.
Crucially, Marokane had experience working at Eskom and the broader electricity sector, giving him a natural advantage in knowing what needed to be done at the utility.
Having prior experience also ensures that the CEO is not learning on the job and can hit the ground running from day one to implement the necessary changes.
“But, you also need to have a board that holds the leadership team accountable. We had a two-year turnaround plan, and we held them accountable in implementing that plan,” Nyati said.
“When things did not work out, you have to be open about it and hold people accountable. You have to say, ‘You were supposed to do X and you did not do it’.”
Nyati admitted that the utility failed to reach its target of an EAF of 70% by the end of March. Eskom has now reached this point, a few months later.
“All elements of the equation have to work together from the Ministry to the board to the leadership team and the management team working directly with the individuals on the ground,” Nyati said. “All of that is important, and that is what we have at Eskom.”
Template for success
Kgosientsho Ramokgopa
Electricity Minister Kgosientsho Ramokgopa has heaped praise on Eskom’s board and leadership team, which have led the turnaround since being appointed less than two years ago.
Ramokgopa said it is not enough to have individuals with the right skills in the right positions, as these skills have to be relevant to the challenges the company faces.
“At the board level, we have Mteto Nyati at the top and a competent set of men and women with exceptional credentials, who have cut their teeth in the electricity sector,” Ramokgopa told Newzroom Afrika.
These individuals, who know the electricity sector, are coupled with business leaders who have successfully operated complex organisations.
“They understand the issues of governance and how you steer an organisation the size of Eskom into calmer waters and out of a period of turbulence,” the minister explained.
In the past, Eskom did not have this when it was led by former CEO Andre de Ruyter, with Ramokgopa believing that the utility made a poor choice in appointing him to the top job.
“I think we misdirected ourselves previously when we got someone at the helm who does not have an appreciation of how to run a utility of this nature,” he said.
Ramokgopa explained that Eskom has designed a template for resuscitating and rescuing South Africa’s ailing SOEs.
“Obviously, the nuances will be different moving from one SOE to another, with each having a unique mandate and some specific challenges. But all have high-level problems that are similar,” Ramokgopa said.
Ramokgopa laid out some basic principles that have driven Eskom’s turnaround and formed the basis of a template that can be used to save other SOEs.
“I think the first key principle is competent leadership at both a board level and within the management team,” Ramokgopa said.
These leaders are also crucial in directing Eskom’s resources towards the right endeavours and renewing organisational morale and good work ethic.
“At the administrative level, you must get individuals who are technically competent and who can be trusted to run power plants,” he said.
The second element of the turnaround plan was cleaning up the mess left by years of mismanagement and reimposing the correct operational procedures, from running power stations to financial management.
Ramokgopa said enforcing consequence management is a central part of this. This means putting the right people in the right jobs and holding them accountable.
It does not only refer to punishment and discipline, but also to rewarding individuals who perform well and do the right things.
The third key pillar is addressing corruption and crime at the utility, which is partly tackled through the appointment of competent leadership.
“You have to address the challenges around corruption, malfeasance, and crime to hold those who soil the good work Eskom does to account,” Ramokgopa said. “They have to be called to order and put through the necessary processes.”
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