Energy News — 23 March 2015

When Eskom chairperson Zola Tsotsi took to the podium 10 days ago to announce the suspension of the utility’s CEO, Tshediso Matona, and three other senior executives, he made it clear that he was just the messenger.

Now Tsotsi faces the axe, according to an African News Agency (ANA) article published in the Sunday Independent.

According to the article, the Eskom board allegedly turned on Tsotsi over the terms of reference and scope of the inquiry that was announced when he suspended the utility’s leadership.

Sources told ANA that the process to start the inquiry had now paused and might even be canned.

The main issue was allegedly over whether the inquiry should be chaired by a retired judge with powers to subpoena people, with fears that without this, it could result in a watered-down process with little accountability and real exposure to the truth.

“All of them want him out,” a unnamed source close to the board told City Press, according to Sapa.

“He has absolutely no understanding of corporate governance. None.”

The charges reportedly levelled against Tsotsi by his fellow board members included interfering with the executive and signing off certain documents on behalf of Eskom, thereby undermining the chief executive and other executive directors.

The board meeting on Thursday reportedly ran into the early hours of Friday morning and was marked by clashes between the chairperson and other board members.

According to City Press, after heated arguments Tsotsi was asked to leave the meeting because the other board members wanted to discuss the issue among themselves.

An insider told the paper that Tsotsi was initially reluctant to leave the meeting, but was eventually overruled and had to leave the room.

“In his absence, they tabled a vote of no confidence in him. All of them want him out,” the source was quoted as saying.

Board has urgent meeting with minister

The board then reportedly asked for a meeting with Public Enterprise Minister Lynne Brown in Cape Town on Friday.

Brown admitted to the paper that she met some of the board members on Friday, but said the recommendation to remove Tsotsi as chairperson had not been communicated to her.

Public Enterprises spokesperson Colin Cruywagen told ANA that the board had requested a meeting with Brown on Friday, but didn’t comment on the move against Tsotsi, who allegedly was not part of the meeting.

Tsotsi is a chemical engineer who was Eskom’s corporate strategy manager between 1997 and 2000 and a consultant from 2000 to 2004. He was head of the Business Planning Unit from 1995 until 2004. He replaced Bobby Godsell as chairperson of Eskom from 2011.

Godsell has now been brought on to Deputy President Cyril Ramaphosa’s energy advisory panel to help find solutions to the utility’s problems.

As chairperson, Tsotsi witnessed the departure of its chief executive Brian Dames, regarded by many as the best person to run Eskom, with decades of experience.

Tsotsi interfering with Eskom – insider

Business Day reported on Friday that Tsotsi was accused of interfering in operational matters and taking over executive responsibilities.

The Times Media Group’s publication has letters by the non-executive chairperson in which he makes binding commitments and orders to key Eskom suppliers.

An insider told Business Day that Tsotsi spends “about six hours in the office every day and he’s forever calling the executives into his office”.

“This he justifies to the minister by saying it’s business unusual and that he needs to be there,” the insider was quoted as saying.

Eskom denies Tsotsi to head up inquiry

Eskom last week told Fin24 the independence of the investigation into the affairs of Eskom need not be questioned as it is not true that Tsotsi will be heading the investigation.

The denial followed reports that Tsotsi was taking control of the probe and had put himself in charge of the investigation. The independence of the inquiry was, therefore, questioned.

“As the chair said last week at the media briefing, a lawyer has been appointed to head the inquiry,” said Eskom.

At the media briefing, Tsotsi indicated he would head a board subcommittee to oversee progress regarding the investigation. Two other board members would serve on the subcommittee with him.

Tsotsi reiterated then that the investigation was “nothing sinister”. It should rather be seen as a fact-finding mission, expecting to take about three months.

Eskom said in a statement it is seeking an independent view on the status of, among other things, the poor performance of generation plants, delays in bringing the new generation plant on-stream, the high costs of primary energy and cash flow challenges.

Ramaphosa to the rescue

Eskom’s leadership crisis has been eased with the presence of Ramaphosa, who announced an energy advisory panel to assist the War Room in turning Eskom around.

Members of Business Leadership SA among others met with Ramaphosa on Friday to make proposals regarding the energy crisis in South Africa. “We will benefit a great deal from the discussion with Business Leadership SA,” Ramaphosa said. “They have a number of ideas and proposals.”

Ramaphosa also told Parliament this week that retrenchment of skilled staff at Eskom had been stopped. “Retrenchments of a voluntary nature must now stop,” he said. “We need all our skilled people in Eskom.”

In-depth look at suspension of executives

The suspended executives allege that Tsotsi was behaving like an executive chair, interfering with the day-to-day operations of the company.

This was according to an in-depth analysis by Caiphus Kgosana and Andisiwe Makinana in City Press on March 15, which has been republished below:

In response to the above allegation, Tsotsi told City Press: “I have articulated the Eskom board’s reasons behind asking the four executives to step aside during the independent inquiry. There is nothing more to add on the matter. Please refer to the media statement I read out at the press conference on Thursday.”

An insider said that ever since Matona’s arrival, he and his officials have been pushing back against this interference.

Sources have said there was a push by some powerful people to direct the lucrative diesel supply contracts towards their favoured suppliers. The executives were also resisting pressure to favour a “Saxonwold family” when it came to sourcing coal supplies.

Executives weren’t supposed to be suspended

What shocked those present, City Press was told, was that the inquiry had been initiated by some board members and accepted by the entire board with the understanding that the executives would play an integral role in it. This had come after a realisation that information about the crisis was unreliable.

There were crossed lines between Eskom itself, the responsible ministries – public enterprises and energy – as well as with the interdepartmental “war room”.

The war room, which was set up in February, had not been successful in fulfilling its coordinating role between the various players because of turf wars and mistrust.

The inquiry was meant to get to the bottom of the crisis and provide definitive answers on the way forward. Eskom’s top executives were supposed to play an integral part in this process.

“Board members were, therefore, shocked when Tsotsi used the process as pretext to suspend the execs,” said the source.

Decision was cooked

At the reconvened meeting on March 11, Brown lent support to Tsotsi, and the rest of the board was cowed.

“By the time she got there, the whole thing was already cooked. They had cooked it elsewhere.”

Brown confirmed that she attended an Eskom board meeting, but denied that she had put pressure on the board to support the suspension of the executive members.

“I have no right to instruct them to suspend or fire anybody. I absolutely have no powers to fire the executive. The only thing I can do is bring to their attention what is in the public space,” she said.

Brown said she left while the meeting was still taking place and received a call at 21:00 on Wednesday from the Eskom board to say that they had reached a decision [to suspend the executive members] and “I said I support it”.

Executives hope for intervention

The suspended executives are hoping there will be political intervention against the decision as they believe some ANC leaders are also unhappy.

“It will not be in the interests of anyone if this fight gets ugly. An ugly fight will be damaging to everybody. It will affect Eskom badly. The government will be affected badly and the ANC will not remain untouched,” a source familiar with suspension said.

Another source said the reason for the suspensions trotted out by Tsotsi and Brown was far from the truth.

“The official version is rubbish … this thing is big and it is going to get bigger,” said the insider.

The suspension has led to deep unhappiness within the utility, with questions asked about why black executives are being made to be scapegoats.

Staff kept in the dark

Two senior employees of the utility also told of how staff were kept in the dark about the suspension until Tsotsi publicly announced the move at a media conference.

One of the employees described the mood within Eskom headquarters as gloomy. “People are asking why four black executives are being targeted when there are so many other people along the chain, many of them not black, who are also responsible for some of the problems we have experienced in terms of keeping the lights on and delays in bringing new generation capacity onto the grid.”

He said the suspension of Matona was even more baffling, considering that he has been in the job for only six months.

“How can they put the blame on him when he’s only settling into the job? The board members themselves, including the chair … all of these things they are blaming on him, but it happened on their watch. Why are they still there?

An own goal

“This is an own goal. We have been receiving such positive publicity after the first of the six units at Medupi was synchronised and produced its first power, and now this.”

The insider singled out group capital executive Morokane, who has extensive fuel industry experience and contacts, which he turned to when the utility was running short of diesel.

“When we were running short of diesel, Dan called his contacts at PetroSA and other petrochemical firms to ensure that we got a steady supply. Since then, we haven’t had a problem with diesel supply. We cannot afford to lose a guy like that,” he said.

Weekend of load shedding

Eskom said on Sunday that there was a medium to high possibility of load shedding, which was “dependent on the performance of the power plant”.

It implemented stage 1 load shedding from 09:00 to 21:00 on Saturday, the first time in weeks it has needed to switch off the country’s lights.

Source: Fin24

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