Lerato Nage takes over as new board chair at City Power
Outgoing chair paints dire picture of utility's finances
Lerato Nage has been appointed the new chair of Johannesburg’s power utility City Power after outgoing chair Lael Bethlehem opted to not reapply for the job.
Bethlehem made the announcement at the utility's annual general meeting on Wednesday in Johannesburg. Boards of the municipal entities are appointed annually.
Among other functions, Nage was the board chair of City Power’s audit committee.
In her farewell address, Bethlehem painted a dire picture of City Power’s finances, which contribute a major chunk towards Johannesburg’s finances. The entity had not met its revenue targets and was no longer in the position of being Johannesburg’s “‘cash cow”, she said.
Bethlehem said City Power’s cash coverage at the end of the 2017-18 financial year was -33 days, as opposed to the three days cash coverage it had in 2016-17.
The challenges faced by the entity included its financial sustainability and the city’s billing system, which she described as “unreliable and fragmented”.
It was “impossible to improve revenue or resolve queries until this (the billing system) was addressed”, she said. “All attempts to address this in a systematic and sustainable manner have been unsuccessful so far.”
Infrastructure was also a massive issue faced by the entity, she said. The capital expenditure budgeting process was dysfunctional and made it difficult to manage infrastructure improvements or manage multiyear contracts.
Bethlehem said improvements have been made under City Power’s new CEO, Lerato Setshedi.
It was challenging being a board member of municipal entities because they operated under various types of legislation, she said. The entities were governed by the Companies Act, which assumed that boards were in full control of the company. But the Municipal Systems Act and the Municipal Finance Management Act made a different set of assumptions, she said.
“It gets very difficult for the board to take the responsibility the Companies Act requires you to take when so much of the decision-making and the day-to-day management is in fact outside of the workings of the board.”
Consideration should be given to make the boards of municipal-owned entities advisory boards, she said.