Pravin Gordhan defends government’s role in Eskom
The minister says the government is within its rights to hold Eskom board members accountable — which is not the same as interfering
Under pressure public enterprises minister Pravin Gordhan says the government is within its rights to hold Eskom board members accountable amid suggestions that political interference is hampering the revival of the troubled state-owned power utility.
Gordhan also said it must be noted that it will take a long time for Eskom to recover fully from the damage caused by state capture. The power utility, which is seen as the greatest risk to SA’s finances, has struggled to keep the lights on recently, which prompted the resignation of its chair Jabu Mabuza earlier in January. Subsequently, there have been growing calls for Gordhan to step down with the EFF leading the charge, saying he, too, is at the centre of the “confusion, incompetence, paralysis and the lack of direction suffered by Eskom”.
Late in 2019, Eskom board member Busisiwe Mavuso said executives at the utility were hamstrung by political interference that made it difficult for them to get the entity back on its feet.
“If we were given the latitude to actually make decisions without political interference, as this board ... we would actually go to South Africans and say we need to load-shed at least for the next eight months,” Mavuso said at the time.
“I am saying that understanding that load-shedding for one day costs the economy R2bn, but that would be the honest conversation. Because you are sitting with units that are nearing 50 years old, if you are going to be given an instruction to say keep [the] lights on at all costs because we are nearing elections, it’s actually problematic.”
In a written reply to a question from the EFF in parliament published on Thursday, Gordhan said the memorandum of incorporation sets out the responsibilities, duties and rights of the shareholder and directors. The shareholder, particularly a 100% shareholder as in the case with the government and many state-owned entities (SOEs), can have a range of rights in relation to their governance, said Gordhan.
“The shareholder compact prescribes the various performance targets expected to be met by an entity. In the case of Eskom, targets will include plant performance (the level of energy availability factor to be achieved); financial targets (reduction in overall costs including primary energy cost); or implementation of various ‘turnaround’ plans.”
Gordhan said that within these parameters, the board must hold management to account on delivery of targets.
“Likewise, the shareholder department must hold the board accountable. Where necessary, usually at critical stages of an entity, the shareholder may initiate processes to assist both the shareholder and board to both diagnose a problem and suggest solutions, examples being the presidential sustainability task-team (to make recommendations on the future direction of Eskom, given the challenges and changes in the electricity market); and the technical review team (to make recommendations on improving plant performance).”
The minister said it must be noted that it will take a long time for Eskom to recover fully from the damage caused by state capture.