After the Bell: The revolving door on Eskom’s top floor

Eskom continues to face a leadership crisis as the power utility hasn’t had a permanent CEO in seven months following the resignation of André de Ruyter. The CFO position is not fully occupied because the incumbent, Calib Cassim, is the acting group CEO. And the COO position has not been permanently filled since Eskom veteran Jan Oberholzer retired. 

There are also many vacancies to fill at the middle-management level. 

The leadership crisis came to a head on Monday evening when the Department of Public Enterprises announced that Mpho Makwana had resigned from his position as board chairman. When Makwana leaves at the end of October, he will be replaced by Mteto Nyati, the former MTN South Africa and Altron CEO who currently sits on the Eskom board as an independent non-executive director.

Nyati has become Eskom’s seventh board chair since 2011 – possibly a record for any company. 

Makwana’s departure was surprising for several reasons, chief among them how sudden it was. He was on the job for just over a year, becoming the shortest-serving board chair since Eskom was established in the 1920s. 

Makwana’s exit is also surprising because, just a few weeks ago, during a press briefing with journalists, he was waxing lyrical about the support the board was receiving from Public Enterprises Minister Pravin Gordhan about various initiatives to turn around Eskom’s operations and fortunes. 

During the briefing, Makwana said efforts to restructure Eskom into three subsidiaries (generation, transmission and distribution), and appoint new leadership were progressing well. 

https://www.youtube.com/watch?v=hpTc16T-Oi8

Those close to Makwana say he’s all about diplomacy, doggedly portrays a nice guy image and rarely rocks the boat. After all, in a statement announcing his departure from Eskom, he said the matter had been handled in a “positive, amicable” manner. 

But behind the scenes, Makwana’s relationship with Gordhan was breaking down, which likely pushed him to resign from the Eskom board.  

Gordhan is the shareholder representative for Eskom, overseeing its governance, and has the powers to appoint leadership, including the board and CEO. The process of appointing an Eskom CEO was a thorny and contentious issue, which led to a conflict between Gordhan and Makwana. 

The Eskom board and Makwana looked far and wide (even around the world) for a CEO and interviewed candidates since May. The board recommended former Eskom head of group capital, Dan Marokane, for the top position. 

Ayanda Noah, who also worked for Eskom for a long time, was the second choice. 

Marokane and Noah were seen as strong picks, considering that they have sufficient management experience and the required technical knowledge gained as part of their engineering background. 

They are also seen as a safe bet owing to their lack of political connections, which has compromised previous Eskom CEOs. 

Eventually, Makwana and the Eskom board recommended Marokane for the position after seven months of searching for a candidate. However, Gordhan dithered after receiving the recommendation, and four months later, he wrote to the Eskom board asking them to submit a shortlist of three candidates, stating that this was a requirement of Eskom’s memorandum of incorporation, a Companies Act-governed document that outlines the roles and fiduciary duties of directors and executives. 

The effect of this is that the Eskom board and Makwana would have to start the CEO search from scratch.  

In his recommendation to the board, Gordhan also said candidates above the age of 60 should be considered in the CEO search. Gordhan said these candidates were previously excluded.

But Makwana hit back, saying the board had concluded that Marokane was the only “appointable candidate”. By the time Makawana’s resignation from the Eskom board was announced, this impasse had not been resolved. 

An argument that has emerged since Makwana’s resignation is that the slowness in how things move in the state-owned enterprise (SOE) space and dealing with government bureaucracy tested his patience, informing his decision to leave the power utility. 

But the appointment of Makwana in October 2022 was not his first rodeo in the SOE space. He served previously on the Eskom board from 2002 to 2011, first as a director and later as chair from 2010 to 2011. He also was the acting CEO in 2009. Arguably, Makwana, who also spent years working for the private sector, knows the pressures of the job at Eskom. 

What is clear now is that Eskom is an SOE that is now in more trouble. 

Eskom lenders/bondholders, who are owed billions of rands, are probably becoming nervous about the power utility regarding its leadership and governance crisis. 

They are already nervous about Eskom missing the deadline of 30 September to submit its annual financial statements as they remain in the dark about the power utility’s financial predicament. DM