Can new Eskom CEO Dan Marokane fix broken power utility mired in corruption?

11 Dec 2023

Marokane returns to an infinitely more broken Eskom, this time as the power utility’s new CEO. The true test will be whether he is bold enough to push back against political interference, fight corruption at the facility and manage a very complex crisis.

Dan Marokane is the new Eskom CEO, becoming the 11th person in a decade to be appointed to the top job.

A chemical engineer with master’s degrees in petroleum engineering and business administration, Marokane will return to Eskom at the end of March 2024 — ending an almost year-long search for a CEO.

Marokane is no stranger to Eskom, having served as an executive at the power utility from January 2010 to June 2015.

His exit from Eskom was unceremonious. Along with three other executives, he was suspended on 15 March 2015 to make room for people who would collaborate with members of the Gupta family to capture Eskom.

In fact, according to reports of the Zondo Commission of Inquiry, the plan to suspend Marokane and his fellow executives was engineered at the Durban residence of former president Jacob Zuma, a few days before it was executed.

Former Eskom board chair Zola Tsotsi was “at pains” to assure Marokane that “there were no allegations of misconduct against him”, but the board nevertheless went on to institute an independent inquiry into the affairs of the power utility.

This inferred there was no clear or rational reason for suspending Marokane.

However, Tsotsi told him it was necessary to “create a conducive atmosphere that would enable the inquiry to get to the bottom of the issues”.

Marokane (50) initially fought to regain his position at Eskom as head of the group capital division but decided to leave as he felt the relationship between him and the board (led by Tsotsi) had broken down.

He accepted a R6-million settlement and left.

Marokane led the division which oversaw major projects including the construction of the Kusile and Medupi power stations – key sites of State Capture and the fleecing of millions (if not billions) of rands.

Marokane left Eskom four days after the first unit at Medupi was connected to the grid. In his testimony at the Zondo inquiry, Marokane said it was “painful” to be suspended just days after Medupi went online.

Move to Tongaat

From Eskom, Marokane moved to the private sector, joining Tongaat Hulett, the sugar company that imploded under the weight of accounting fraud.

Marokane first joined Tongaat’s sugar division as an executive in January 2018, before the company publicly admitted that its profits were falsified and investors were lied to — much like Steinhoff.

This is what PwC’s forensic team found at Tongaat: “Undesirable accounting practices that resulted, among others, in revenue being recognised in earlier reporting periods than it should have been, and in expenses being inappropriately capitalised to assets.”

Put simply, the financial books were cooked at Tongaat under former CEO Peter Staude.

After PwC completed its probe, Marokane was appointed to Tongaat’s board in November 2019, and, later in February 2023, he became acting CEO of the company.

His exit from Tongaat is being finalised so that he can take on the top job at Eskom next year.

Public Enterprises Minister Pravin Gordhan, who announced the appointment of Marokane at Eskom, praised him for his experience in working in distressed organisations and stepping up to the task of trying to fix Tongaat.

One Johannesburg-based analyst quipped that using Tongaat to demonstrate Marokane’s dexterity “is a bad example considering that the company is a mess and his turnaround efforts are hardly a success story”.

Tongaat has been in business rescue since October 2022. The company is facing a smothering debt of R7-billion and cannot persuade its funders to support its restructuring process. The livelihoods of about 25,000 people, mostly in KwaZulu-Natal, who depend on Tongaat, remain at risk if the company does not turn its financial situation around.

Marokane’s Eskom return

Marokane will return to an even more broken Eskom.

Blackouts, which began in 2008, have worsened, with 2023 being the worst year in terms of the number of days South Africa has been in the dark.

Eskom is loss-making (it posted a record financial loss of R23.9-billion in 2023). More losses are expected.

The government gave Eskom a bailout of R254-billion over three years, with strict conditions, including the power utility embarking on cost-saving measures and not taking up new borrowings.

Eskom wants to run units at its coal-fired power stations beyond their scheduled retirement dates to avert an even bigger electricity supply gap.

Corruption, crime and sabotage are still a big problem at Eskom.

The work to reorganise Eskom into three parts (generation, transmission and distribution) since 2019 has moved at a glacial pace but is gaining momentum.

These are all tasks that will be on Marokane’s to-do list when he walks into Eskom’s headquarters in Sunninghill, Gauteng.

So, is Marokane a good choice for Eskom and does he have the chops to push through much-needed reforms?

Peter Attard Montalto, the managing director of consultancy firm Krutham, reckons that Eskom “ended up with the least bad candidate” in Marokane.

This is because Marokane knows the power utility well, brings institutional memory and will probably be admired by Eskom workers — some of whom he has probably worked with in the past, which is good for morale.

Attard Montalto stressed that a large number of stronger candidates did not apply for the Eskom CEO job, making the pool of choices small.

Other individuals who were considered for the top job include Central Energy Fund chairperson and former Eskom executive Ayanda Noah and Association of Municipal Electricity Utilities special adviser Vally Padayachee.

Marokane is seen as not being more politically connected than other candidates.

The true test will be whether Marokane and the relatively new Eskom board, chaired by Mteto Nyati, are bold enough to push back against political interference and corruption at the facility.

About Marokane’s staying power, Attard Montalto said: “As with previous incumbents, it seems unlikely he would last more than a few years.”

After all, the energy issue is highly complex and political, with five ministers overseeing it. There is Pravin Gordhan (in charge of Eskom’s governance affairs); Mineral Resources and Energy Minister Gwede Mantashe (who has powers to procure additional electricity from coal, nuclear and renewable energy sources); Finance Minister Enoch Godongwana (in charge of funding Eskom’s operations); Minister of Forestry, Fisheries and the Environment Barbara Creecy (in charge of the environmental impact of Eskom’s operations and SA’s decarbonisation plans); and Electricity Minister Kgosientsho Ramokgopa (involved in all functions). DM

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