EDITORIAL: Eskom’s André de Ruyter is likely to shine at the coalface
As a senior Sasol executive he gained a deep understanding of the fossil fuel business
As the revolving door of Eskom executives spins around, there is often a predictable routine. They come into the organisation bright eyed and optimistic, ready to understand the problems, find the solutions and take decisive action. But slowly, as the sheer size and complexity of the issues dawn on them, their resolve fades.
Weary and defeated, they eventually exit the organisation, only for the cycle to start once more. All the while the utility goes from bad to worse, as evidenced by the persistent threat of load-shedding.
Next up is André de Ruyter. At the outset though, something is already different. After just two weeks in the hot seat at Eskom he does actually appear reasonably up to speed on the issues. That’s a bonus considering there is no time to waste.
In his first set of media interviews in the job this week, De Ruyter spoke decisively about the problems facing the utility, though he admits they aren’t particularly new or surprising.
De Ruyter wants Eskom to get a handle on its operations and restore them to stability. While much money has been spent on maintaining SA’s ageing fleet of power stations, according to De Ruyter’s diagnosis it has not been done optimally. His plan to remedy this will be presented to the board by month’s end.
It is here too where he will be truly tested should he run into patronage networks that will resist being dismantled
While more stable operations will reduce the R6bn annual bill for emergency diesel supplies, the real cost savings are expected to be on the coal bill on which Eskom, in many instances, is said to be overpaying.
Much of the analysis about De Ruyter’s career focuses on Nampak’s disappointing performance when he was CEO. Less has been said about his experience as a senior executive at synthetic fuels giant Sasol, where his 20 years endowed him with a deep understanding of the coal business.
Armed with this knowledge, tackling the coal bill is where De Ruyter is most likely to shine. Through tough commercial negotiations he is confident he can reduce the bill.
It is here too where he will be truly tested should he run into patronage networks that will resist being dismantled. De Ruyter claims he is a business person and not a politician, but he appears happy to work within many of the political confines of the job.
A common criticism is that the powers that be lack the political will to take tough decisions that will truly help Eskom. One of these is thought to be the bloated workforce at the utility, which the World Bank believes is 66% overstaffed. Though the unions were concerned that De Ruyter had been brought in to deal with this, the Eskom CEO says he has no intention to retrench anyone.
True, there are many levers he can pull to help bring operational stability, but without addressing overstaffing De Ruyter’s determination to run Eskom like a business will be tested.
Many commentators have warned that any new CEO would have to ensure no political interference takes place. De Ruyter, however, sees phone calls from the shareholder as par for the course, though he believes it will improve over time once Eskom proves it can perform.
One of his biggest tasks is to manage Eskom’s colossal R450bn debt pile, which he says he has no intention to restructure or refinance, but he wants to reduce the interest bill.
On the unbundling of the utility into three separate units, De Ruyter favours a phased-in approach to understand and mitigate any potentially negative implications.
For the moment, De Ruyter is saying the right things, showing that he understands the challenge and is willing to work within the limitations that have frustrated those before him. Despite these challenges, he still believes Eskom can be turned around.
SA is so despairing over the problem that is Eskom, it desperately wants to believe that a hero can still swoop in and save the utility, and in turn the economy. But the question is not really whether De Ruyter can do it, but rather — can anyone?