Nampak CEO to rescue Eskom; foreign ownership blow for SAA; Hain’s explosive testimony

By Jackie Cameron

  • South Africa appointed Andre de Ruyter as chief executive officer of Eskom, the debt-strapped utility that provides about 95% of the nation’s electricity and poses the biggest threat to its economy. De Ruyter, currently CEO of packaging firm Nampak, will take up the post on Jan. 15, the Department of Public Enterprises said in a statement. The state-owned power company has been looking for a new CEO since Phakamani Hadebe in July became the 10th person to vacate the post in as many years. De Ruyter takes the helm at Eskom in what is the most critical period since its establishment in 1923. The loss-making utility has R450bn ($30bn) of debt and is struggling to fix ageing power stations and correct defects in new ones. Saving the business is a key goal of the government, which is sustaining it with R138bn of bailouts over the next three years alone.
  • South African Airways officials will be summoned to a meeting with regulators next month to disclose details about talks with potential equity partners and give assurances that any deal won’t violate foreign-ownership laws, says Bloomberg. Under the Air Services Licensing Act of 1990, airlines must be at least three-quarters owned by South Africans to operate a domestic service. That would prevent international operators from buying more than a 25% stake from the government, unless the rules are changed. “We are going to be calling SAA to next month’s meeting to share with us what their plans are,” said Mike Mabasa, chairman of the Air Services Licensing Council, which regulates domestic aviation within South Africa. “If they are already in conversations with strategic equity partners we need to know what that entails.”
  • British lawmaker Lord Peter Hain has delivered explosive testimony to an inquiry into state capture. He accuses some of the world’s largest banks of aiding and abetting former President Jacob Zuma and his friends in raiding the national treasury. HSBC, Standard Chartered and India’s Bank of Baroda as well as their senior directors were “directly culpable” in the looting of South Africa’s treasury under Zuma, Hain said in his submission to the Judicial Commission of Inquiry into Allegations of State Capture. Hain was invited to give evidence because he had already named several corporates he was investigating under parliamentary privilege in 2017 as complicit in state capture. HSBC said it fully supported the commission’s inquiry, while Standard Chartered said there was no evidence linking it to the Guptas directly. Bank of Baroda did not respond to a request for comment. You can read Lord Hain’s full submission, on
  • The worst may be over for South African stocks, says Bloomberg. While the country’s equity benchmark has trailed the broader emerging-market gauge this year, rising less than half in dollar terms, analysts and traders have begun betting on a quicker rally in the coming months. While South African stocks have underperformed the emerging-market equity benchmark this year, analysts are betting the opposite may happen in the next 12 months. Even as they have lowered the average earnings estimate for the MSCI emerging-market gauge by 6.1% in dollar terms, they have raised it for the FTSE/JSE Africa All Share Index by 5.6%, data compiled by Bloomberg show. For an alternative view, see Magnus Heystek’s article on
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