After the Bell: The problem with Eskom is that it’s not just Eskom

A lot has been said and written about André de Ruyter leaving Eskom and I don’t want to unnecessarily draw us further into the morass. But there is one very important consideration and it is this: the problem with Eskom is that it’s not just Eskom. The problems Eskom faces are eerily similar to the problems confronting Prasa, the Post Office, the Land Bank or SAA. Name the SOE, its challenges, the broad state of the organisation and the pressures it is under and you’ll find they are directly comparable.

They all boil down to one thing: control. Oddly enough, there is one parastatal doing fairly well. Not brilliantly, but better in the circumstances, and that parastatal is Telkom. It’s because Telkom is a listed entity, and while the government owns a large stake, it is a minority stake, just over 40%. Telkom qualifies as a parastatal because another parastatal, the Public Investment Corporation (the government employees’ pension fund), owns another 14%. But that is hardly consequential since the PIC owns a large stake in most of SA’s big listed companies.

The point is that Telkom’s mandate is mixed between public and private shareholders. That has given the management room to manoeuvre, the ability to make its own decisions within the law and to operate along conventional lines.

The distinction is not available to Eskom, which means it’s essentially a political plaything. For De Ruyter, the parlous state of Eskom when he took over gave him some leverage over the politicos. But when rolling blackouts increased to such an extent that they became a political liability for the ANC, the party’s leaders had a simple choice to make: they could support the person they had entrusted to fix Eskom, or they could try to save their own butts by pinning the blame on him.

The choices were between honour, logic, good sense, fortitude, honesty, and grace, or the particular madness of South African politicians. Mineral Affairs Minister Gwede Mantashe chose to publicly accuse Eskom management of “agitating for the overthrow of the state”.

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On the one hand, SA politicians could examine their own failures, come clean, roll up their sleeves and pitch in to consult widely for solutions. On the other hand, they could blame the failures on someone else. Which one would you choose, particularly on the eve of an elective conference when all eyes are upon you?

The botched choice illustrates a simple point: the problem is not De Ruyter, it’s parastatals. Even the Chinese government doesn’t hold majority stakes in most of the country’s largest companies, and this is not an unthinking decision. Majority-owned state companies have such an unusual and complex accountability system — partly accountable to government policy, partly accountable to what people imagine government should be doing, partly accountable to its own staff — it’s just unworkable.

Compare the problems faced by Eskom with those faced by Prasa, just to take one example. A string of completely incompetent executives; monumental expectations; heavyweight corruption; gradual under-performance and decline; poor maintenance of infrastructure; a crisis of confidence; continual state bailouts; collapse.

DA MP Jacques Maree has tweeted a rather devastating three-ringed Venn diagram, with the rings marked “ANC Incompetence”, “ANC Corruption” and “ANC Ideology”. Incompetence and corruption overlap with Gupta coal contracts, Chancellor House, Hitachi boilers and cost overruns, among others. Ideology and corruption overlap with state monopoly, IPP bid delays and fossil fuels. And ideology and incompetence overlap with cadre deployment, overstaffing, high salaries, and BEE, among others.

It’s a punchy diagram, and I do like the overlap idea. But actually, the syndrome is not confined to the ANC; all over Africa and in many places in the rest of the world, governments are following the same rough ideological prejudices. From India to Brazil, the same mistakes have been made for the same reasons with the same results.

So here is a suggestion: At the ANC’s elective conference this weekend, where decisions about important policy issues are also made, what about — and this would be really mind-blowing — making a policy decision for the government to disinvest from state-owned enterprises on the basis that it seldom works anywhere in the world, least of all here? How about that? Anyone want to take a bet on the likelihood of that happening? Didn’t think so. DM/BM