The top job at one of South Africa’s biggest and most troubled companies is open again for the 11th time in a decade.

Eskom will be looking to replace André de Ruyter, who announced a plan to quit as the power utility’s group CEO after three years in the post.

Replacing De Ruyter won’t be easy because his job was the toughest in South Africa and a poisoned chalice that most people don’t want. After all, it can ruin careers and reputations. In state-owned enterprises (SOEs), like Eskom, there tends to be political interference by the government, which makes the decision-making process difficult for CEOs and undermines it.

The process to hire an Eskom CEO in 2019, which ultimately led to De Ruyter being appointed from the private sector, was Herculean. At the time, a recruitment company hired by the Department of Public Enterprises identified 142 potential candidates to fill the Eskom CEO post. But most of the candidates who were identified and approached for the top job turned the opportunity down. Among those who turned down the Eskom post were 27 black executives who were approached as part of racial transformation requirements, which is an even more imperative objective in the SOE universe.

What will make the Eskom CEO job unappealing is that Eskom’s operational and financial position has deteriorated substantially since 2019.

An exhaustive to-do list

Whoever takes De Ruyter’s place will have to oversee a fleet of poorly maintained and old power plants that battle to produce enough power. South Africa has had almost 200 days of rolling blackouts so far in 2022, making it the worst year on record for blackouts in the 15 years that the country has been in the dark. Plus, Eskom is saddled with a total debt of about R400-billion, which the power utility cannot pay back from the electricity sales it generates. The to-do list of the new Eskom CEO will be exhaustive.

The new Eskom CEO will have to work with the government in reforming Eskom’s debt. The government recently announced a plan to take over a portion or “between one-third and two-thirds” of Eskom’s total debt and transfer it from the power utility’s financial books to those of the country.

Read more in Daily Maverick: “Mini budget – The government plans to take over a portion of Eskom’s debt to ease the burden”

The new Eskom CEO will also need to have credibility, a key requirement to earn respect and trust from the local and international business/investment community. It is crucial, considering that South Africa is embracing renewable energy sources and the Just Energy Transition programme.

De Ruyter had already worked to build credibility, respect and trust by championing the shift away from coal in favour of renewable energy sources — even if it meant that Eskom’s financial interests would be affected and its monopoly on energy generation and supply chipped away.

De Ruyter has been vocal about South Africa embracing the Just Energy Transition in a way that doesn’t disrupt the coal industry or lead to mass job losses across the industry’s entire value chain. He has also been pivotal in the formation of the Just Energy Transition Partnership with wealthy nations, including the UK, US, Germany, France, and the EU, which have so far pledged $8.5-billion for South Africa’s renewable energy ambitions.

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Credibility and trust — the kind that De Ruyter brought — are crucial in the climate financing world. Peter Attard Montalto, the head of capital markets research at research company Intellidex, says there is a dearth of candidates with the credibility and trust required for the Eskom CEO job.

“There is not another candidate who would want the job, be good at it, or who would be politically acceptable. This is the problem here; there is no succession plan and other executives [within Eskom] are leaving,” says Attard Montalto.

With De Ruyter’s exit from Eskom at the end of March 2023, there will be a vacancy at the CEO level; Eskom soon won’t have a chief operating officer because Jan Oberholzer is set to retire in April 2023; Eskom has no permanent head of generation, and there are rumours that Eskom’s chief financial officer, Calib Cassim, might be on his way out.

The possible successors

Names have already been suggested as possible successors to De Ruyter, individuals who all worked for Eskom and held senior positions at some point during their careers. They include the current South African Revenue Service (SARS) commissioner Edward Kieswetter, former Eskom CEOs Jacob Maroga​​ and Brian Dames, and Mpho Makwana (who currently leads Eskom’s board).

• Kieswetter might be a frontrunner, considering that he has helped reform SARS after it was nearly brought to its knees during the State Capture years. Kieswetter also has wide experience at Eskom, having worked as a senior manager in charge of the utility’s power stations and generation capacity from January 1992 to March 2000. He and his executive team were lauded for turning around Eskom’s operations by improving worker safety at power stations and rebuilding a 600MW generation unit from scratch — a huge engineering feat. And for such efforts, Eskom’s power stations were voted the best in the world for their engineering excellence and efficiency.
• Dames is also an Eskom insider, having started his career at the power utility in 1987 and rising through the ranks to become its CEO in 2010. But he left in 2014 when State Capture and looting forces became prevalent at Eskom. He also spoke out against State Capture. Dames would bring a stable pair of hands to Eskom because when rolling blackouts first started in January 2008, he led a team that ended them. He is said to know Eskom well and every generation fleet intimately. He’s also pro-renewable energy.
• Maroga has a long history working at Eskom, first joining the power utility in 1995 and rising through the ranks to be the CEO from 2007 to 2009. Maroga is viewed as being deeply suspicious of renewable energy, strongly advocating for coal’s place in the energy mix.

(Read more in Daily Maverick: “After the Bell: The way people misunderstand renewable power is shocking”

Intellidex’s Attard Montalto says Maroga would not be viewed as trustworthy by international funders that are supporting South Africa’s just energy transition programme because of his pro-coal stance.

• Makwana returned to Eskom in September 2022 to lead the power utility’s new board. He had a short stint as Eskom’s CEO from 2009 to 2010 and also became the power utility’s board chair over this period. His appointment as CEO in current times would be on an acting basis and as the last resort if the search for a permanent CEO is delayed once De Ruyter eventually leaves Eskom in early 2023. Controversy has already followed Makwana because as the current Eskom board chair he didn’t publicly defend De Ruyter when Mineral Resources and Energy Minister Gwede Mantashe recently accused him and Eskom management of “actively agitating for the overthrow of the state” by implementing higher stages of rolling blackouts.

The process to appoint a permanent Eskom CEO will be long and fraught with problems. Eskom’s board is expected to have a shortlist of candidates by early January 2023. Public Enterprises Minister Pravin Gordhan, who is the custodian of Eskom as its sole shareholder representative, will take the shortlist to Cabinet for approval. Then an individual will be selected as Eskom CEO from the shortlist, with Cabinet’s concurrence. Mantashe is a Cabinet member and Intellidex’s Attard Montalto says he will probably push against a candidate who is pro-renewable energy.

A candidate that will finally be selected as the 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”, says Business Unity South Africa (Busa) CEO Cas Coovadia.

Businessman and former Busa president Sipho Pityana agrees with Coovadia, saying the candidate must also have the guts to push against any political interference in Eskom affairs. “But the board must also have the CEO’s back.” DM/BM