22 August 2014
When this week new Minister of Public Enterprises, Lynn Brown was asked – at a press conference at parliament held after she formally announced the appointment as Eskom’s new Chief Executive – whether Tshediso Matona would be driving the state power monopoly in a new direction – her reply was interesting.
Brown, a former Western Cape premier, is a cheerful sort of person. She chuckled a number of times at the line of questioning taken by the parliamentary press corps. She said that Matona, the outgoing public enterprises director general, was well schooled in the current debates surrounding Eskom. While she carefully avoided all use of the P-word – privatization or even semi-privatisation – she did confirm that he was required to take the entity “in a new direction”. She was also asked whether she was fond of the man. “I love him,” she said, rather refreshingly.
She quickly pointed out that he had been the management boss at public enterprises when she was the political boss, so they were good friends and allied to the same causes – but in his new position as chief executive of Eskom, he would fall under the authority of the board. All decisions and/or instructions from her office, would have to go through the board to him. The division between church and state – or should one say, political party and state – appears to be well understood by this minister. That augurs well for the future of the state power monopoly. Maybe at last there are signs that the ANC’s rigid adherence to democratic centralism – where everything in the public sector is ruled from the top, from the president and his cabinet downwards, is starting to change. Albeit at snail’s pace.
Brown noted that the ratings agencies, which have just downgraded South Africa’s biggest four banks, were due to announce their rating of Eskom in September. So there is not a lot of time for Matona to make a difference. She acknowledged that a new direction was a long term concept, but that Matona would have to make some swift, significant changes before mid-September. She gave no hint of what she thought he could achieve in this time, stating simply that Matona had “a clear understanding”; he understood “the present debates that are raging in our environment”. He would have to make a decision on which way Eskom “is going to go in the next while” and deal with “what is wrong with Eskom” from the inside.
“All of this has to happen before the middle of September when we go to the ratings agencies.” By mid-September “there must be a plan for Eskom".
Noting that there was a funding gap of R219 million, Brown was quite candid about the Eskom problem: “We haven’t come up with a solution,” she acknowledged. She explained that the funding gap resulted not only from the shortfall in revenue as a consequence of Eskom only getting an eight percent tariff hike accepted last year – as opposed to the 16 percent it had sought, but also the cost of the current build programme (including Kasule and Medupi) and estimates of the future build programme.
It seems more and more likely that one of the first things Matona will need to do when he assumes office on September 1 is to seek a hefty power tariff hike. If that is so, he is likely quickly to become one the most unpopular people in South Africa. But at least he has a minister who loves him.
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