BLACKOUTS CONDITIONS HAVE BEEN EXECUTIVE FOR MONTHS AND YEARS,
NOW TO THE POINT WHERE THE SOUTH AFRICAN RESERVE BANK IS
CONSIDERING THIS YEAR TO BE 0.3% GROWTH AS OPPOSED TO 1.1%.
WHY SHOULD FOREIGN INVESTORS INVEST IN A COUNTRY LIKE SOUTH
AFRICA CONSIDERING HOW PROLONGED THESE ITS USE --
THESE ISSUES HAVE BEEN GOING ON? ANDRE:
THE GOOD THING ABOUT A CRISIS IS THAT IT CATALYZES ACTION.
WE HAVE SEEN A LOT OF ACTION IN TERMS OF ADDING ADDITIONAL
CAPACITY TO THE GRID. WE HAVE SEEN A LOT OF MONEY AND
EFFORT BEING THROWN AT IMPROVING THE STATE OF OUR
EXISTING GENERATION FEED.
42023, WE ANTICIPATE A TOUGH YEAR, BUT AFTER THAT, WE SHOULD
SEE THE FIRST OF THE 9000 OR SO MEGAWATTS OF NEW PRIVATE
GENERATION MYSTICALLY BEING ADDED TO THE GRID.
APPROXIMATELY 4500 MEGAWATTS OF CAPACITY BEING ADDED THROUGH
VARIOUS EFFORTS GOING ON AT ESKOM.
BY THEN, I BELIEVE WE SHOULD SEE A SIGNIFICANT IMPROVEMENT
IN ENERGY SECURITY AND A SUBSTANTIAL REDUCTION IN THE
OUTAGES.
>> WE ARE HEARING FROM THE FINANCE MINISTERS SAYING THAT
LOAD SHEDDING IS STILL GOING TO BE A THING OF THE FUTURE.
CONSIDERING THERE HAS BEEN MONEY POURED INTO THIS COMPANY,
THERE HAVE BEEN ATTEMPTS TO FIX SOME OF THESE PLANS.
WHY HASN'T THE SITUATION BEEN ABLE TO TURN AROUND IN YOUR
OPINION AT THE TIME YOU HAVE BEEN SERVING AS CEO? ANDRE:
YOU CAN LOOK AT THREE THINGS THAT YOU NEED TO ADDRESS THE
CAPACITY SHORTFALL. YOU NEED TIME, MONEY, AND
SKILLS. IN YOUR INTRODUCTION, YOU
REFERENCED THE FACT THAT WE HAVE SIGNIFICANTLY OUTSTANDING
DATA AND THIS WILL HOPEFULLY BE RESOLVED BY AN ANNOUNCEMENT BY
THE MINISTER OF FINANCE IN THE BUDGET SPEECH THAT THERE WILL
BE A SUBSTANTIAL IT A RELEASE THAT WILL BE IMPORTANT TO THE
NATIONAL GRID ITSELF. IF YOU DO NOT HAVE MONEY, YOU
CANNOT FIX YOUR PLANT. YOU NEED SKILL.
IT IS WIDELY ACKNOWLEDGED THAT ESKOM HAS HAD SUBSTANTIAL
SKILLS CHALLENGES. WE HAVE OPENED THE DOORS TO
RECRUITING BACK THE SKILLS WE HAVE LOST THE LAST FEW YEARS,
SO THAT WILL START PLAYING A SIGNIFICANT ROLE.
WE ARE ALSO LOOKING AT OUTSOURCING SOME OF THE
OPERATIONS SO WE CAN BRING IN SKILLS THAT WE SIMPLY DON'T
HAVE ANYMORE. AND THE LAST THING YOU NEED IS
YOU NEED -- TO OUTPERFORM THE OUTAGES THAT ARE NECESSARY TO
KEEP THE PLANT STABLE AND RELIABLE.
DUE TO A LACK OF CAPACITY, WHICH ESKOM HAS BEEN GOING
THROUGH, BEAR IN MIND THAT ESKOM IS NOT ABLE BY LAW TO
BEAR NEW CAPACITY WITHOUT THE CONSENT OF THE GOVERNMENT,
WHICH HAS NOT BEEN FORTHCOMING. WE NEED ADDITIONAL CAPACITY AND
WE HAVE CALLING FOR 46 GIGAWATTS OF NEW CAPACITY TO BE
ADDED CONSISTENTLY FOR THE PAST THREE YEARS, AND ONLY BELATEDLY
NOW HAVE THE FLOODGATES BEEN OPEN IN THIS REGARD.
THEREFORE, THAT'LL MAKE A MASSIVE CONTRIBUTION TO RESOLVE
THE ISSUE.
>> I ALSO HAVE TO ASK YOU, AS YOU MENTIONED, YOU ARE THE
OUTGOING CEO. IT WILL BE THE 15TH CEO FOR
ESKOM COMING IN. DO YOU THINK IT IS ONE PERSON
THAT CAN TURN THIS COMPANY AROUND?
DOES IT NEED TO BE A COMPLETE RESTRUCTURING AT THE TOP?
WHAT IS YOUR TAKE? HOW DIFFICULT DO YOU ANTICIPATE
IT TO FIND AN EXECUTIVE, CONSIDERING THE CHALLENGES YOU
HAVE HAD TO ENDURE PROFESSIONALLY AND PERSONALLY?
ANDRE: IT CERTAINLY IS A TOUGH JOB.
IT IS DEFINITELY NOT FOR THE FAINTHEARTED. WHAT WE NEED TO DO
INCREASINGLY, WE ARE NOW SEEING MOVES FROM THE GOVERNMENT,
ENABLING ESKOM TO OPERATE IN 24/7 INDUSTRIAL OPERATION
WITHOUT SOME OF THE BUREAUCRATIC ENCUMBRANCES WE
HAVE SUFFERED IN TERMS OF PROCURING REGULATIONS, IN TERMS
OF THE SKILLS WE ARE ABLE TO RECRUIT, IN TERMS OF HOW WE
HAVE TO COUNT IN VARIOUS OVERSIGHT BODIES, WHICH TAKES
AN ENORMOUS AMOUNT OF TIME FROM THE EXECUTIVE TEAM.
THAT IS TIME THAT WE DO NOT HAVE TO SPEND OPERATIONS AROUND
THE BUSINESS.
I THINK THERE IS A REALIZATION THAT MANAGEMENT SHOULD BE GIVEN
A FREER HAND SO THEY CAN THEN DO THEIR JOB WITHOUT HAVING
BOTH HANDS TIED BEHIND THEIR BACK BY BUREAUCRATIC RETURNS.
>> WHERE DOES CORRUPTION FIT INTO THIS?
YOU HAVE BEEN OUTSPOKEN ABOUT THIS AS WELL.
HOW DOES THE NEXT CEO COMES IN AND TURN AROUND SOME OF THE
ISSUES YOU HAVE COMPLAINED ABOUT? ANDRE:
IT IS IRONIC THAT SINCE THAT ANNOUNCEMENT, WE HAVE SEEN
SIGNIFICANT MOVES BY LAW ENFORCEMENT.
WE HAVE HAD 25 ARRESTS AT LOWER LEVELS WITH ORGANIZED CRIME,
CARTELS THAT WE KNOW ARE OPERATING IN ESKOM.
WE NEED TO DO A LOT MORE.
WE ARE EXPERIENCING SIGNIFICANT INTERVALS -- INTERNAL AND
EXTERNAL RESISTANCE IN ATTEMPTS TO HEAD OFF CORRUPTION BY
IMPROVING CONTROLS OVER INVENTORY, IMPROVING CONTROLS
OVER EXPENDITURE, IMPROVING CONTROLS OF QUALITY.
THESE ARE BASICS THAT NEED TO BE IN PLACE, BUT CERTAINLY
INTERNALLY IN ESKOM, THERE HAS BEEN RESISTANCE TO IMPLEMENTING
THESE CONTROLS FOR REASONS THAT YOU CAN WELL IMAGINE RELATE TO
CORRUPTION ITSELF.
WE REALLY HOPE, I REALLY HOPE THAT THERE WILL BE A
SIGNIFICANT STEP UP IN INTELLIGENCE GATHERING WITH
SOME OF OUR INTELLIGENCE AGENCIES THAT HAVE BEEN MISSING
IN ACTION.
WE ALSO NEED TO SEE ARRESTS AND SUCCESSFUL PROSECUTIONS, NOT
ONLY OF THE FOOT SOLDIERS BUT ALSO OF THOSE WHO HEAD UP THESE
CARTELS.
>> LET'S ALSO TALK -- YOU BROUGHT UP THE FACT THAT THE
GOVERNMENT IS STILL IN NEGOTIATIONS ABOUT TAKING OVER
SOME OF THE DEBT THAT ESKOM HAS ACCRUED AT THIS POINT IN TIME.
YOU TALKED ABOUT THE CHALLENGES INTERNALLY.
AT THE SAME TIME, WE ARE SEEING BONDS SURGE.
DO YOU THINK INVESTORS ARE GETTING TOO AHEAD OF THEMSELVES
CONSIDERING ALL OF THE HEADWINDS THAT STILL NEED TO BE
TACKLED UNTIL THERE IS ANY SORT OF RESOLUTION AT THIS POINT?
ANDRE: I THINK WHAT WE ARE SEEING IS
INVESTORS ARE GAINING INCREASING CONFIDENCE THAT
THERE IS IN FACT NOW A TURNAROUND PLAN.
THE PLAN IS BEING IMPLEMENTED, THAT WE ARE DEFINITELY
EXPECTING A FIRM COMMITMENT TO GET RELIEF FROM THE MINISTER OF
FINANCE. THAT WILL MAKE AN ENORMOUS
DIFFERENCE TO THE REST OF THE PROFILE OF THIS COST OF
BORROWING, AND ANTICIPATION OF AN ANNOUNCEMENT, THE BOTTOM OF
WHICH WILL ONLY BE ANNOUNCED BY THE MINISTER'S BUDGET SPEECH,
WE CAN EXPECT THAT THERE WILL BE A NEW LOOK AT RISK RATING
THAT IS ATTRIBUTED TO ESKOM AND POTENTIAL RISK OF A DEFAULT.
>> IT IS NOT DEFINITIVE YET. WHAT ARE THE STEPS ESKOM NEEDS
TO TAKE FOR THE GOVERNMENT TO STEP IN AND PROVIDE RELIEF?
ANDRE: WE NEED, FIRST OF ALL, COST
REFLECTIVE TARIFFS. THE TARIFFS THAT ARE REGULATED
BY THE ENERGY REGULATORS OF AFRICA STILL ARE BELOW COST
REFLECTIVE LEVELS. IN OTHER WORDS, WE LOSE MONEY
ON EVERY KILOWATT HOUR OF ELECTRICITY WE SELL.
THAT IS NOT SUSTAINABLE. IF DEBT RELIEF IS NOT
ACCOMPANIED BY REFORMS TO THE TARIFF, OF COURSE WE WILL BE
BACK AT THE AGENCY'S DOOR IN FIVE YEARS' TIME.
SO WE HAVE GOT TO REFORM THE TARIFFS.
HAVE ALSO GOT TO RESTRUCTURE THE COMPANY TO ALLOW FOR MORE
PRIVATE SECTOR GENERATION TO BE ADDED TO THE GRID MORE QUICKLY.
THE UNBUNDLING OF ESKOM IS A KEY EFFORT.
WE HAVE MADE GREAT STRIDES AND FROM AN ESKOM PERSPECTIVE, WE
HAVE DONE EVERYTHING WE POSSIBLY CAN.
WHAT WE NEED NOW IS THE SHAREHOLDERS, THE GOVERNMENT,
TO APPOINT A BOARD. WE NEED THE APPROPRIATE
LEGISLATION LICENSES AND SO FORTH TO BE AWARDED TO THE NEW
NATIONAL TRANSMISSION AGENCY OF SOUTH AFRICA.
ONCE THAT IS DONE, WE CAN LOOK AT THE ESSENCE AND SET UP
INDEPENDENT MARKET OPERATORS, AND SAT, WE BELIEVE, WILL BE
THE CATALYST IN UNLOCKING EVEN MORE PRIVATE INVESTMENT.
>> JUST TO WRAP IT UP, WE ARE SPEAKING TO YOU AND YOU ARE THE
OUTGOING CEO AT A TIME WHEN THE GOVERNMENT IS CONSIDERING
DECLARING A NATURAL STATE OF -- NATIONAL STATE OF DISASTER
BECAUSE OF THE POWER CUTS. IT HAS BEEN 13 CONSECUTIVE
MONTHS OF POWER OUTAGES. WHEN YOU REFLECT ON YOUR TIME
AS CEO, WHAT IS IT YOU ARE PROUD OF ACCOMPLISHING?
WHAT ARE YOU WALKING AWAY FROM PROUD THAT YOU HAVE BEEN ABLE
TO ACCOMPLISH DURING YOUR TIME AS CEO? ANDRE:
I THINK IF YOU LOOK AT OUR HEADCOUNT, HEADCOUNTS ARE DOWN
FROM 46 TO 46,000 WITHOUT ENFORCED ENTRENCHMENT.
FROM A STRATEGIC PERSPECTIVE, PUTTING SOUTH AFRICA RELATIVELY
ON THE ROAD TO GREEN ENERGY IS PROBABLY THE ONE THAT WILL BE
THE LONGEST LASTING OF MY CONTRIBUTIONS TO ESKOM.
LASTLY, JUST THE DIFFERENCE I HAVE MADE IN ORDER TO HIGHLIGHT
SOME OF THE CONSTRAINTS IS NOW CATALYZED AND THE PRESIDENT IS
AT A POINT WHERE HE IS CONSIDERING A STATE OF
DISASTER, CLEARY -- CLEARLY INDICATING THAT THE JOB I WAS
ASKED TO DO IS NOT POSSIBLE. THERE WERE NOT SIGNIFICANT
NUMBERS BEING ADDED TO ALLOW ESKOM TO START ON ITS ROAD TO
RECOVERY.