EDITORIAL: Take us into your confidence, Minister

It is perfectly understandable that Pravin Gordhan, the public enterprises minister, would opt for a cautious approach when dealing with matters related to the deepening crisis faced by Eskom and Transnet. After all, South Africans are frustrated at the lack of credible plans to keep the lights on and to get the freight logistics system back on track.

Still, at some point — sooner rather than later — Gordhan will have to take the country and especially the country’s economic operators into his confidence about the results of his mission to Beijing a week ago.

For almost 15 years, South Africans have had to endure rolling blackouts thanks to Eskom’s ageing fleet of coal-fired power stations, botched plans to replace them and crime and mismanagement. Proposed solutions have yet to yield the desired results. For three years now, Transnet, the state-owned operator of ports, rail freight and oil pipelines, has teetered on the brink of collapse, costing SA’s commodity exporters — and by extension the fiscus — billions in revenues from the commodities price boom.

Gordhan’s visit to China came after a meeting President Cyril Ramaphosa held with the board and executive team of Transnet. At the centre of the visit was an attempt to resolve a long-running dispute between Transnet and CRRC-e-Loco, the Chinese state-owned locomotives maker. Transnet’s current leadership cancelled a tender contract for its 1,064 diesel and electric locomotives, the bulk of which were to be supplied by CRRC. The reason was that the contract was said to be tainted by state-capture corruption.

Unfortunately, the cancellation meant that CRRC couldn’t complete the supply of the order and, critically, it refused to supply parts. Consequently, more than 120 relatively new locomotives are out of service because of a lack of parts. Transnet’s management tried, and failed, to get other original equipment manufacturers to source the parts indirectly from CRRC.

Also, attempts to negotiate a settlement with  CRRC failed. Earlier in 2023, Transnet announced it had tentatively agreed on a settlement with CRRC, only to dash these hopes with another announcement of the collapse of talks.

Accordingly, Gordhan’s mission, ordered by Ramaphosa, is an escalated attempt to get the dispute settled between governments, as both entities are state owned. This is something that should have happened long ago — but better late than never.

Further, it emerged this week during a parliamentary inquiry by the standing committee on public accounts (Scopa) into Eskom’s affairs that Gordhan was accompanied on his Beijing junket by three Eskom executives, including Caleb Cassim, its acting CEO. Curiously, Gordhan’s delegation does not seem to have included representatives from the Reserve Bank or the SA Revenue Service — the two state institutions that have bearing on the CRRC-Transnet blockage.

When asked at Scopa about Eskom officials on his trip, Gordhan was guarded, only saying that the executives were there to assess offers of assistance from unnamed Chinese entities. It seems these offers were made to the government and, quite rightly, he felt these should be interrogated by subject matter experts.

There is nothing untoward in exploring solutions for assistance from various trading partners including China and the West. Indeed, China runs one of the biggest electricity grids in the world. It’s worth looking at what it can offer.

Gordhan was perfectly within his right to be cautious in his response as raising false hopes of a quick fix would be reckless. Also, in terms of established protocols, he will want to brief his boss, Ramaphosa, first before taking the rest of us into his confidence.

Given the scale of the energy crisis, especially Eskom’s signal on Thursday that the country could reach stage 8 of load-shedding — 12 hours a day — during the depth of this winter, South Africans will be keen to have sight of this offer to help. What is the nature of this help? Could it be technical, involving Chinese companies in fixing the broken plants? Could it include an accelerated plan to complete Medupi and Kusile — the two power plants that have missed numerous deadlines and cost billions in cost overruns and show no sign of ever functioning as designed? Or is it help with finance?

In accepting help, which might be wise, we should do so carefully and in a manner that adheres to the highest standards of corporate governance and ethics, does not do further harm to our international standing, and protects our climate-related commitments.

We look forward to Gordhan sharing more details about his trip. Both Transnet and Eskom are state-owned monopolies causing great harm and uncertainty in the heart of our economy. The case for secrecy is weak.