Eskom Board at Odds With South African Minister Gordhan Over CEO Search

Loni Prinsloo and Paul Burkhardt
·3 min read
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(Bloomberg) -- The protracted search for Eskom Holdings SOC Ltd.’s new chief executive officer has raised tensions between the South African government minister that oversees the state utility and its board, according to people familiar with the matter.

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Andre de Ruyter announced his resignation as CEO nine months ago, yet a permanent replacement hasn’t been named despite an ongoing energy crisis that is taking an ever-increasing toll on the economy. A candidate put forward by the board was rejected by Public Enterprises Minister Pravin Gordhan, online publication News24 reported on Wednesday.

The board and its chairman, Mpho Makwana, have become frustrated that the selection process has been delayed because of demands from the minister, said one of the people who asked not to be identified because the matter isn’t public. Some board members threatened to quit in the coming weeks if Gordhan rejects their recommendation, another person said.

Eskom said it had reviewed 147 “high-caliber” candidates in its global search for a CEO, but the process had failed to “yield a clear-cut set of candidates” as required by the company’s memorandum of incorporation. The board then “emerged with a single appointable candidate.”

“When the board submitted the initial submission, upon conclusion of the selection process, it was fully cognizant of the provisions” of the MOI “which requires that the submission clearly profile three appointable candidates,” Eskom said in an emailed response to questions. “The recommendation was subsequently turned back by the shareholder, who did not concur with the recommendation as it was deemed to not fully meet the requirements.”

The board’s governance and strategy committee “is applying its mind and working toward a speedy resolution,” it added.

Gordhan denied that he is “stalling” the process and said he was exercising his oversight responsibility as required by law. He had asked the board to provide a list of three candidates from which he will choose the “best qualified” one.

“The process to appoint the Eskom CEO is a matter that cannot be taken lightly,” Gordhan said in a statement. “As the government’s shareholder representative I am bound to exercise my authority to demand conformity with the MOI.”

South Africa has been subjected to record power cuts that are implemented to prevent a complete collapse of the grid as Eskom struggles to meet demand from its old and poorly maintained coal-fired plants. The government has vowed to end the outages, with President Cyril Ramaphosa appointing an electricity minister to drive its response to the crisis.

De Ruyter abruptly left Eskom in February after the airing of a television interview in which he linked ruling African National Congress officials to widespread corruption at the company. His position has been temporarily filled by Chief Financial Officer Calib Cassim.

Plans to split Eskom into three operating units are also running behind schedule. While the regulator has granted trading and import-export licenses to the transmission unit, a number of steps remain before it can become operational. They include the appointment of its board and consent from lenders for its separation into a stand-alone entity.

(Updates with Gordhan comment form seventh paragraph.)

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