By Alec Hogg
- As its board of directors weigh their short-list for a new CEO, Eskom received welcome support over the weekend from the head of the African Development Bank. Interviewed in New York by Bloomberg Television, AfDB’s president Akinwumi Adesina described Eskom as “too big to fail… the lifeline of the Southern African region.” The 59 year old Nigerian who was wearing his trademark bowtie commended the efforts of SA president Cyril Ramaphosa, arguing that Eskom’s problems stem from poor management rather than any lack of investment. Adesina said the Eskom’s revival requires cutting costs, a shift to renewable energy and selecting a skilled chief executive. On the last of these, Wits, Harvard and Insead trained Andy Calitz has emerged as a frontrunner for the CEO position, due to be announced before the end of October. Widely-travelled Calitz, who lives in Weybridge near London, is an electrical engineer who started his career at Eskom before joining Shell in 1996. In the past couple decades he has managed numerous operations around the world for the world’s leading energy group, most recently as CEO of LNG Canada, a joint venture between Shell and other majors. Calitz returned to Shell in July after successfully shepherding the $40bn Canadian business into production and has been named on the short-list alongside former Eskom CEO Jacob Maroga, who ran the utility between 2007 and 2009.
- Eskom was high on the agenda on the third day of the ANC’s National Executive Committee meeting in Benoni yesterday. According to Fin24, which cited a leaked copy of finance minister Tito Mboweni’s presentation, the ANC brains trust were told Eskom’s $30bn debt is around 9% of the country’s GDP – equivalent to the mining and agricultural sectors combined. Fin24 says the finance minister warned that failure to take urgent corrective action on SOEs will require even worse adjustments in three years time. Having previously argued for the sale of SAA and Eskom’s coal mines, Mboweni repeated his argument that Government had to stop subsidising inefficient State Owned Enterprises and sell those that have no clear public service mandate – and particularly those with unsustainable models that had been abusing their monopoly position.
- On the other side of the political house, Mmusi Maimane, leader of the Democratic Alliance, continues to draw fire. This time he has become infected with Steinhoff virus after accepting a car from the company’s disgraced former CEO Markus Jooste. Yesterday’s Rapport newspaper reported that Maimane drove the vehicle, a white Toyota Fortuner, ahead of and after the 2016 Municipal elections. Rapport quotes the DA’s Federal Executive chairperson James Selfe as saying the car was owned by car hire company Hertz, a Steinhoff subsidiary, and paid for by the group’s head office. Rapport says despite letters from colleagues suggesting he return the vehicle to avoid potential reputational risk, the DA leader continued to use it. Yesterday morning Maimane tweeted that the Sunday newspaper’s story was part of a smear campaign against him by what he described as “gutless individuals who spread lies about me and my family.” Steinhoff told Rapport it does not comment on the alleged activities of its former CEO.
- The attacks earlier this month which knocked out half of Saudi Arabia’s production facilities – and pushed the oil price higher – have been blamed for what will be an 18c a litre rise in South Africa’s petrol price. Diesel will rise by 25c a litre. The higher prices kick in from Wednesday. In an emailed statement to Bloomberg, SA Energy minister Gwede Mantashe blamed the Saudi attacks for the higher pump prices, saying that had it not been for a stronger Rand, the increase would have been even higher. Although the Rand, at R15.15 to the US Dollar, is ending near the levels where it began the month, for most of September the currency traded below R15, touching a low of R14.55. The Rand’s softening in late September is in line with other Emerging Market currencies, which are set to post their weakest quarter in more than a year. Share prices on the JSE were also impacted, with South African stocks about to record their worst three month period in eight years during the September quarter. Property stocks led the losers where Delta is down 75%; Rebosis 54% and Intu Properties off 41%. The setback for Emerging Market shares and currencies has been blamed on the US China trade war woes, with developing country exchange rates taking another knock late last week after Bloomberg reports that the Trump Administration is considering choking off portfolio flows to China. This would open a new front in a trade war that continues to damage global economic growth.
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