Financial markets concerned about development at Eskom: Economist

Chief Economist at Econometrix Dr Azar Jammine says former Eskom Chief Executive Officer Andre De Ruyter’s allegations about criminal activities at Eskom have not been well received by the financial markets.

De Ruyter made allegations that a senior African National Congress (ANC) minister is involved in criminal activities at the power utility with the knowledge of other senior party leaders.

“Well without a doubt it is not received very well in the financial markets. Not only have they been terrified in the last few weeks about the increased incidents of load shedding and its implications for overall economic growth and tax revenue collection. But now further that the power utility, which is at the heart of the South African economy, is rudderless,“ says Jammine.

Chief Economist at Econometrix Dr Azar Jammine analyses recent developments at Eskom: 

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ANC to challenge De Ruyter

In response to the allegations, ANC Secretary General Fikile Mbalula has vowed to haul De Ruyter before the courts to prove his claims. He says that De Ruyter was not tasked to express his personal ideologies on energy or the ANC but to manage Eskom and stop load shedding.

“We will challenge him for saying our party is corrupt and failing to prove how, I am not going to wait for some parliamentary committee to summon him for that. We will take action and I am going to write to him through our lawyers, he must prove within 10 or seven days what he said.., we will meet in court. I challenge him he must name those people who he said are corrupt, then he must deal with them himself.”

Fikile Mbalula hits out at Andre de Ruyter over his comments: 

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Solution to load shedding

Eskom has been struggling to keep the lights on. Currently, it is implementing stage 6 load shedding.

Delivering his speech on Wednesday, Minister of Finance Enoch Godongwana announced that government has allocated an amount of R254 billion in debt relief for the power utility. Eskom’s overall debt amounts to R422 billion.

Gondongwana said the funds will ease pressure on the company’s balance sheet and also enable it to invest in transmission and distribution infrastructure.

Jammine says there seems to be an ideological battle in the country in terms of how the power crisis should be resolved.

“What one sees especially given the comments De Ruyter made and the counter comments by the ANC through Fikile Mbalula that there is an ideological battle taking place in South Africa currently between those who favour market-oriented solutions to our economic problems and the problems of SOEs, in terms of the solutions being to try and get the private sector increasingly involved in resolving these issues on the one hand and those who feel hell-bent on government ruling the roast and dictating the conditions under which organisations have to continue operating, but with the knowledge that government has been singularly unsuccessful in managing these SOEs.”

De Ruyter’s legacy  

De Ruyter was appointed Eskom CEO in December 2019. Apart from dealing with the huge financial crisis at Eskom, the CEO had to deal with operational challenges and oversee the division of the power utility into three separate entities.

Watch a related video below recorded in 2019:

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Energy Analyst Chris Yelland says De Ruyter failed to achieve the goals he had for the power utility.

“I think he significantly underestimated the challenges before him, he was confronted with very significant procurement irregularities, maladministration, and corruption at many layers within Eskom and I think this has certainly hampered his vision and intentions of dealing with these problems quickly. In that respect, I don’t think he achieved what he set out to achieve and I think he would be the first to admit it.”

Yelland has warned that the leadership vacuum being left at the power utility is dangerous: 

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