Eskom's new CEO, André de Ruyter, has wasted no time puzzling out that government's plan to "unbundle" Eskom is a high-risk strategy which may not be appropriate given President Cyril Ramaphosa's promise not to privatise any of it.
But while De Ruyter emphasised at his first press conference on Friday that he is "100% aligned" with the government's plan to split Eskom into generation, transmission and distribution arms, he has diplomatically repositioned it as a divisionalisation which, he says, will achieve the same "end state" - just by a different route.
Where unbundling would require investment bankers doing corporate finance deals and legal separation of the three entities, De Ruyter will instead simply do what many large and complex businesses do - which is to run Eskom as three separate divisions, each with its own board and management, which will bring accountability and transparency to the group's operations.
He will start implementing as early as this week, appointing new boards for generation, distribution and transmission which will enable the three divisions to start operating independently - as they used to do in the Eskom of two decades ago.
We have to fix our
— André de Ruyter, Eskom CEO
operations and run
this like a business
Unbundling posed risks to the power utility's tax position as well as its covenants with lenders and its employment relationships with people who would have had to be shifted to the new businesses.
Instead, said De Ruyter: "We can start with running those three divisions like businesses with full bottom-line accountability and also operational accountability, which will put me and the rest of the members of my management team in a far better position to get our arms around this business and ensure that there's proper accountability throughout the organisation."
De Ruyter has made it his No 1 priority to bring operational stability to Eskom so that it can provide SA with a reliable supply of electricity. But he realised soon after he joined that the maintenance Eskom was doing was not having the desired outcomes and he has moved to change the whole way in which Eskom does maintenance, with a view to fixing its clapped-out power stations over the next 18 months.
This is likely to mean regular load-shedding while Eskom takes units off the grid for long stretches to conduct "philosophy maintenance" - complying with the service plans the original equipment manufacturers provide rather than simply doing emergency repairs.
De Ruyter said Eskom was in talks with the original equipment manufacturers to enter into long-term partnerships which would ensure the resources needed to get the maintenance work done properly.
SA has had 21 days of load-shedding since September 2019 as the availability of Eskom's power station capacity fell to just 68%. De Ruyter's more realistic approach means load-shedding is likely to continue into 2021, but on a more predictable basis, with Eskom aiming to work with large electricity users and independent producers to plan around the maintenance schedule. It has established a project management office, under senior executives Andrew Etzinger and Tom Skinner, and is filling critical vacancies. But, said De Ruyter: "It's premature to give a definitive signal on where we want to go with load-shedding."
Eskom's R440bn of debt has also been the subject of much attention and many plans over the past two years, with the government having committed to providing R250bn of funding over the next 10 years. De Ruyter said Eskom could not rely on continued bailouts unless it could discipline its costs and manage its capital spending wisely and responsibly. "We have to fix our operations and finances and run this like a business if we want to deserve the trust of the shareholder and lenders," he said.
Though he has had talks with the government on proposals to restructure Eskom's debt, he seems in no rush to do this, saying discussions were continuing with the National Treasury on the debt while Eskom drove a harder bargain with lenders.
It's not clear what, if any role, is being played by chief restructuring officer (CRO) Freeman Nomvalo, who was appointed last year to oversee the restructuring of Eskom's debt and operations, but whose contract expired last week. De Ruyter said he had met with Nomvalo on Thursday and the CRO intended to finalise his report soon.
Friday's briefing also saw new timelines on Eskom's two new power stations, which have bust their budgets by billions and their deadlines by years: Medupi's final unit has been synchronised to the grid and is supplying power, with commercial operation expected by midyear, and all six units of Kusile will be in commercial operation in 2023.
