Business Maverick

ENERGY CRISIS

De Ruyter’s resignation from Eskom a ‘major blow’ for power utility’s reform, warn business and investment experts

De Ruyter’s resignation from Eskom a ‘major blow’ for power utility’s reform, warn business and investment experts
Andre de Ruyter has resigned as CEO of Eskom. (Photo: Gallo Images / Brenton Geach)

The timing of André de Ruyter’s departure as the Eskom CEO is arguably terrible as SA is in the throes of unprecedented and sustained levels of rolling blackouts. There will also be a vacuum in Eskom’s top leadership structure.

The resignation of André de Ruyter as the Eskom group CEO has shocked business, investment and energy experts, who say it is a blow to efforts at reforming the power utility’s operations and ending rolling blackouts that in 2022 have reached their worst levels yet.

De Ruyter, who has been in the Eskom top job for three years, is the 10th CEO to leave Eskom in 10 years.

Eskom confirmed De Ruyter’s resignation in a media statement on Wednesday, but didn’t provide reasons for his move, saying only that he would serve a notice period until the end of March 2023. The power utility is “urgently” embarking on a search for De Ruyter’s successor.

The timing of De Ruyter’s departure is arguably terrible as SA is in the throes of unprecedented and sustained levels of rolling blackouts, with Eskom placing the country under Stage 6 in early December due to more breakdowns at its power stations. It was the fourth time in 2022 that Eskom had pushed rolling blackouts to Stage 6.

De Ruyter’s departure is also worrying because there will be a vacuum in Eskom’s top leadership structure, with the power utility not having a permanent CEO, head of generation (in charge of power plants), and soon no permanent chief operating officer (COO). Jan Oberholzer, the Eskom COO, is set to retire in April 2023.

Business Unity South Africa (Busa), SA’s largest business organisation, has described De Ruyter’s resignation as a “major blow for Eskom” and “efforts to address the energy crisis” that imperil any chances of the country’s economic recovery and development. At the same time, Busa CEO Cas Coovadia said De Ruyter’s resignation is “hardly surprising, given the irresponsible comments by some in government and some other sectors”.

In other business circles, there have been growing calls for De Ruyter to quit or be fired, with the Black Business Council repeatedly calling for him to resign and making him the scapegoat for rolling blackouts.

De Ruyter’s leadership trashed by Mantashe

In recent days, De Ruyter’s leadership has come under intense scrutiny and been trashed by Mineral Resources and Energy Minister Gwede Mantashe, who said Eskom was “actively agitating for the overthrow of the state” through the blackouts.

“Eskom, by not attending to rolling blackouts, is actively agitating for the overthrow of the state”, Mantashe was quoted as saying in a News24 article.

Mantashe has previously launched similar attacks against Eskom’s management (including De Ruyter). President Cyril Ramaphosa, Public Enterprises Minister Pravin Gordhan (the custodian of Eskom’s operations), and Finance Minister Enoch Godongwana didn’t respond to Mantashe’s allegations and failed to publicly support De Ruyter.

Chris Yelland, an energy analyst and managing director of EE Business Intelligence, said De Ruyter not receiving public support from his political principals might have been the last straw for him, pushing him to resign.

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“Without a single word of public support from the President, the finance minister, the minister of the Department of Public Enterprises and the Eskom board chairman after the attack by Minister Gwede Mantashe accusing De Ruyter of treason, I would expect nothing less than that De Ruyter should resign in disgust,” said Yelland.

He argued that what worsened De Ruyter’s resignation is that it came when the newly appointed Eskom board was still familiarising itself with the power utility’s operations.

Read more in Daily Maverick: “Pravin Gordhan announces new lineup of full 13-member Eskom board — with some expertise

The new board was mandated by Gordhan to achieve a 75% energy availability factor (EAF) for the power utility to end rolling blackouts. An EAF is a measure of Eskom’s available power plants to generate and dispatch energy. Yelland said that by Wednesday, Eskom’s EAF had fallen to 51%, which heightens the chances of SA being in a higher stage of rolling blackouts for a while.

“This is not a good time to lose the driver,” said Yelland, referring to De Ruyter’s resignation.

De Ruyter’s report card

Peter Attard Montalto, the head of capital markets research at research firm Intellidex, has a glowing report card on De Ruyter’s performance as Eskom CEO.

“André will probably be scapegoated for the current rolling blackouts, and we will probably have a new CEO coming in with promises to fix it, but I think we need to call a spade a spade when we see it.

“I think André did ultimately everything possible in that role, given the financial incapacity constraints. Rolling blackouts are going to get worse next year regardless of who you put in that role,” said Attard Montalto.

Over the past two years, De Ruyter’s time at Eskom has been premised on increasing the maintenance of ageing power stations, helping to split Eskom into three parts (generation, transmission and distribution), and leasing land that the power utility owns to independent power producers to start generating renewable energy that can be fed to the grid. 

“De Ruyter has also been a champion for the energy transition of the whole energy system, rather than only the narrow interests of Eskom, which is critical for SA. The risk with him going is further destabilising Eskom, if a wider exodus ensues,” said Dr Stuart Theobald, the executive chairman of Intellidex and a colleague of Attard Montalto.

De Ruyter’s replacement

The big concern is who will take over after De Ruyter. Being the Eskom CEO is arguably the most difficult job in SA as the CEO not only has to fulfil the fiduciary duties of leading with integrity, but must also be brave enough to push back against populist ideas of how to manage the power utility.

“I’m sure it’s going to take many months to recruit to replace these positions [not only De Ruyter, but others as well], which leaves Eskom and SA in a position of extremely high risk,” said Yelland.

Besides De Ruyter, no one else wanted the Eskom top job. When De Ruyter was in the Eskom recruitment process in 2019, as many as 27 top black executives were approached to apply for the job. All declined.

Busa’s Coovadia said the next Eskom CEO, “must have the skills and capability to continue all efforts to reduce rolling blackouts, accelerate the Eskom restructure, tackle ongoing corruption and sabotage, and work with business to diversify the energy generation and distribution environment, with the focus on cleaner energy”.

Intellidex’s Theobald said: “The key is who comes next. Will they pursue the conclusion of Eskom restructuring with vigour? Will they prioritise the interests of SA over the narrow interests of the utility? These will be key.” DM/BM

Gallery

Comments - Please in order to comment.

  • Bryan Macpherson says:

    some 25 years ago, Mantashe and his ilk took control of the finest power generator and distributor on the African continent. Then, Mantashe and his ANC cadres, fellow travellers like the Guptas, corrupt, dishonest and incompetent ANC appointees took over. They trashed Eskom in the same way that they trashed the SABC, SAA, the Post Office, the Railways, Armscor and the rest. Yes, the ANC has reduced South Africa to a near wasteland where nothing works and they have the shame to blame a guy like De Ruyter!

    • Neil Parker says:

      “Eskom, by not attending to rolling blackouts, is actively agitating for the overthrow of the state”. I think this idiotic statement needs to be challenged in court as it constitutes defamation of character direct against a man of integrity which is way more than can be said of his accuser. If such court action is successful, then Mantashe should be given zero option except to resign. He has already proved himself unfit for office on numerous counts – simply google “Manatashe blunders” and see what comes up. We do not need this cretin in government one second longer – heads must roll over de Ruyter’s resignation and his must be the first.

    • Rob Wilson says:

      Spot on. They have no shame.

  • Peter Doble says:

    This is worse than losing a President and the entire government. It is the final nail in South Africa’s coffin.

  • Miles Japhet says:

    The Black Business Council clearly has their eye on their members retaining overpriced contracts in order to continue to enrich themselves at the expense of the poor.
    Either that or they are simply unable to see beyond colour in seeking competence!!

    • Marianne McKay says:

      Mr Mantashe needs to apologise unreservedly and publicly to Mr De Ruyter, as does the President on behalf of his useless Cadre deployment officials, and beg Mr De Ruyter to come back.
      Then support him and let him do his work to sort out the mess he inherited.
      Why can’t people in government just be sensible and rational, and do the right thing?

    • John Counihan says:

      Yup, one of the saddest outcomes of the wasted Zuma years, the associated State Capture, and the emergence of the super-corrupt RET faction has been the tragic re-emergence of racism. After the glory of the Rainbow nation, we are back to black and white. Of course, it suits the RET fiends to stoke racism, as democracy then reverts to a simple numbers game, and with the vast majority of the Rainbow nation being black, the likes of Andre de Ruyter become persona non grata. So very sad, ANC. What a legacy. The noble Mandelas, Sisulus, Thambos must be looking down in horror!

  • Alastair Stalker says:

    Victory for the RET faction! They must be cracking open the bottles of single malt whisky. With De Ruyter gone, they will resume their crooked schemes until the grid fails and we are left with no power, water, fuel or food. This is the tradeoff for not voting for Ramaphosa’s impeachment. Mantashe has done more damage to our economy than any other corrupt ANC cadre.

    • Epsilon Indi says:

      Mantashe would have carried on being obnoxious whether Ramaphosa was impeached or not. He is too powerful for any of the potential “presidents” to alienate him, powerful and corrupt. He and his corrupt wife have too much to lose to allow renewables in. He’s just another cANCer cadre who prioritises personal profiteering over the needs of SA.

  • James Francis says:

    The executive exodus will be real. I have interviewed several people at the top who work under De Ruyter. They were there because of his leadership and they will leave when he leaves. I say, give the job to Mantashe or BBC head Bonolo Ramokele. They’ll do a terrible job, but at least they’ll get a reality check. If Eskom’s going down, might as well get some good out of it and get rid of some of these political blowhards who couldn’t run a lemonade stand in a drought.

  • Jane Crankshaw says:

    Evil flourishes when good men do nothing. Time to do something seeing our toothless Prez is not!

  • Teresa K says:

    Karpowership 3.0 busy loading. Gwede rubbing his greedy little hands together. Sickening to the core.

  • Jacqueline Hawson says:

    You can’t blame Andre for resigning, after all the abuse that he has taken from Mantashe (the poisonous dwarf), Gordhan and Treasury, which promised to take over half of the debt. Surely with the improved revenue this year they can afford to pay for the diesel required. ESKOM needs to be privatised to keep the cash grabbing government officials out of it.

  • Gregory Scott says:

    Does Mantashe have any formal qualifications?

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