(Bloomberg) -- 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 Holdings SOC Ltd. 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.
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-industrialized 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.”
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 bought 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.
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, 69-billion rand ($4.8-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 politicized and demoralized organization,” he said.
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