Eskom to name acting CEO when Phakamani Hadebe steps down month end

By Mike Cohen and Paul Burkhardt

(Bloomberg) – South Africa’s struggling state-owned power utility will name an acting chief executive officer when incumbent Phakamani Hadebe steps down at the end of the month, according to a person familiar with the decision.

The appointment will be made as the government readies a rescue plan for Eskom Holdings SOC Ltd., which is saddled with more than $30bn in debt and isn’t selling enough power to cover its costs.The post will have to be filled temporarily because the board didn’t have enough time to advertise and go through the required processes for a permanent appointment, said the person, who asked not to be identified because they aren’t authorised to comment. Some recent Eskom chief executives began as interims.

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President Cyril Ramaphosa’s government intends to split Eskom into three units under a state-owned holding company and accelerate the disbursement of a 10-year, R230bn ($16.2bn) bailout. The appointment of an interim leader may prove problematic because the person would lack the necessary authority to introduce difficult and unpopular reforms, such as possible staff cuts, and might not be around to see them through.

Eskom didn’t immediately respond to a request seeking comment.

Hadebe quit in May after just 16 months in the post, saying that the role came with “unimaginable demands” that had taken a toll on his health and he was leaving in the interest of his family and the company. He will become the 10th person to vacate the post in as many years.

Ramaphosa said in his June 20 state-of-the-nation address that Hadebe’s replacement would be announced after his departure that a chief restructuring officer would be appointed soon to reposition the company financially .

Three teams have been assisting and advising on the Eskom turnaround, according to the person and interviews with other officials involved in the restructuring process:

  • A task team led by Anton Eberhard, a professor at the University of Cape Town, that reports to the presidency and made the initial recommendation to break up the utility. The presidency is evaluating its other suggestions.
  • A team from the National Treasury is considering how to strengthen Eskom’s balance sheet and address its financing issues, and is working on a law to accelerate the bailout. Finance Minister Tito Mboweni will also decide on a chief restructuring officer, and is expected to make an announcement this month.
  • A technical task team appointed by Public Enterprises Minister Pravin Gordhan in March has considered how to address operational issues and has submitted a final report. The ministry is guiding the process of breaking up Eskom, with the presidency playing a lesser role.

Ian Stuart, acting deputy director-general for the National Treasury’s budget office, said a number of proposals were on the table for fixing Eskom, including a debt swap and setting up a special-purpose vehicle to take over some of its debt.

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“The likelihood is that more support will be required” beyond the aid that has already been announced, he said in a text message.

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