South Africa


Eskom, Maria Ramos and a big test for President Ramaphosa’s strength

Chief executive officer of Absa Group Limited Maria Ramos, March 01, 2018 in Sandton, South Africa. (Photo by Gallo Images / Sunday Times / Alon Skuy) / Finance Minister Tito Mboweni (Photo: Leila Dougan)

It can sometimes be forgotten, amid all of the election huff and puff, that the biggest test facing South Africa right now is electricity and Eskom. If its two related problems – the technical difficulties relating to power production and the financial implications of its incredible debt – are not solved, there’s a high chance of real disruption to society. It seems that those in charge of the problem are trying to get going with fixing it. Even if they hire the best possible people, they are likely to face incredible political blowback.

On Easter Sunday the Sunday Times reported that Maria Ramos may be appointed to head the resurrection of Eskom. It is a job, frankly, that no one should want. Eskom has a debt of more than R450-billion. That’s billion. Its interest payments alone are huge, and it battles to make its payments on time. The newspaper also reported that National Treasury had to hand over money from its emergency fund after the money from a loan from the Chinese Development Bank did not get through in time. This was for a figure of R7-billion, an indication of how close Eskom is to disaster.

In the middle of all of this, there is the grim cynicism of some voters that Eskom is running its power stations harder than it should, to prevent more power cuts before the elections. One can imagine the reaction of some if the lights go off literally the day after voting, or even just before the inauguration.

Either way, it would be the worst possible start to President Cyril Ramaphosa’s first formal term in office.

To fix all of this, to complete the president’s mission of breaking up Eskom into three, you need someone with special skills and experience. The person would need to know all about finance, accounting and general managerial expertise; someone who knows when a spreadsheet is BS and when they are being lied to. This person would also need to have spent some time running a state-owned enterprise, to be acute to the problems – they have unions, they can be inherently politicised, there may be people within who actively sabotage the entity, never mind the country.

In a perfect world, such a person would have experience at National Treasury, because this person will need to know how to deal with these officials and be familiar with them, and also know how much money is actually left in the kitty.

And then, you would want someone who has the financial independence to be able to make politically tough decisions, knowing that their own career and lifestyle won’t be at risk should things go horribly wrong.

If those are the criteria, it is tough to think of someone better than Maria Ramos.

She has the political nous and business experience. There are not many like her. She is financially independent (running ABSA for 10 years has made her so…) and has the experience of running, and restructuring, Transnet.

In short, if this were a simple exercise in ticking boxes from a technocratic and experience point of view, this kind of appointment would be a simple decision.

However, Eskom shows exactly how complicated our politics is.

It contains multiple constituencies which fight against each other and want different things. The managers want to save money and keep the lights on, the unions want to stop retrenchments and get more money for their members, the coal lobby wants to stop the march to renewable energy. The renewable lobby, with history on their side, are demanding big changes. In the middle of all of this are some workers who perhaps should not have been employed in the first place, and who are worrying about what could happen to their lives and families.

And then there is a group of people who seem determined to frustrate and sabotage Ramaphosa and those around him at every turn.

Whoever is appointed is always going to face huge opposition. The different constituencies will never agree. This may help Finance Minister Tito Mboweni to make a decision – he can point out that it is his to make, and that no one would be acceptable to everyone anyway.

However, Ramos does come with political baggage.

She became director-general of the National Treasury in 1996, just as then Finance Minister Trevor Manuel started to implement the Gear economic policy. This became known by those on the left of the ANC and the alliance as the “1996 Class Project”, and was widely criticised in those circles. This is likely to be used against her, especially by those who organise in the union space.

It should not be forgotten how close a grip the Finance Ministry is keeping on this process. It’s clear that this is Tito Mboweni’s appointment to make, in line with the way it was outlined during President Cyril Ramaphosa’s State of the Nation Address. This means that the break-up of Eskom is a Treasury process, not one driven by the Public Enterprises Ministry, which normally has political authority over Eskom, even though it seems unlikely that Minister Pravin Gordhan would object.

If Eskom is a microcosm of all of our problems, this appointment could well prove to be a test of the mettle of the current government.

While the Sunday Times headline about the appointment was fairly categorical, that Ramos was “being brought in to head the explosive process of unbundling Eskom into three components”, there has been some pullback from Mboweni.

The line is now that she is one of the people being interviewed. It is not yet clear whether this is paddling for air or real back-pedalling. But if it is the case that Ramos is the preferred candidate, and yet Ramaphosa and Mboweni are unable to make their choice stick, then it could show that Eskom is ungovernable – and thus its problems won’t be solved.

The consequences of that would be dark, indeed. DM


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