Truth to Power: A harsh wake up call – Katzenellenbogen on de Ruyter - Biznews

Unveiling the harsh realities of corruption, incompetence, and political interference, former Eskom CEO André de Ruyter’s tell-all memoir, ‘Truth to Power: My Three Years Inside Eskom,’ sheds light on the tumultuous state power utility and reflects a larger decline in South Africa. Jonathan Katzenellenbogen reflects on de Ruyter’s gripping exposé of a toxic atmosphere riddled with red tape, destructive policies, and a lack of accountability. From shocking revelations of attempted bugging and assassination plots to the uphill battle of transforming Eskom, Katzenellenbogen declares de Ruyter’s book as a wake-up call for understanding the challenges faced in turning around a government and a country.

Jonathan Katzenellenbogen

Anyone seeking to understand why it is so difficult to turn around the government and country would be well advised to read Truth to Power, My Three Years Inside Eskom, by the ex-Eskom CEO André de Ruyter. It is a tell-all memoir about his ordeal in the state power utility.

It is a story of corruption, red tape, destructive policies, a don’t-care attitude, slack management, arrogance, inexperience, incompetence, political interference, and intrigue, elevated here and there with outbreaks of courage and excellence by staff members struggling to survive in Eskom’s toxic atmosphere.

De Ruyter’s accounts of the attempt to bug his car and later, to kill him with cyanide, are now well-known, but the meat of his book is the insight it offers into the Eskom crisis and our wider decline. South Africa is Eskom writ large.

The government is furious about De Ruyter’s allegedly racist fabrications about crime cartels with secret connections to powerful cabinet ministers. To be sure, his charges in this regard remain unproven, in the sense that they are not backed by evidence that would stand up in court.  But how does one obtain that sort of evidence when the government and the police and intelligence services seem to lack the will to investigate? This is the essential question De Ruyter poses, and Pretoria has yet to provide a coherent reply.

Welcomed

Soon after taking over Eskom, De Ruyter tours Lethabo power station, where he is welcomed with tea and snacks.  After seeing a neatly trimmed lawn outside, he is impressed. Then it is on to the turbine hall, where he is greeted by a thick dust blanket covering the floor, turbines, and an abandoned floor-washer machine. It was, he says, a power station with, “no pride, no discipline, and no housekeeping”.

On a tour of a Japanese power station, De Ruyter says he was given white gloves and says that he could have eaten off the floor.

“Negligence and carelessness had become cemented into the organisation,” he writes. He sees multiple failures by station managers to ensure sufficient coal supplies of the right quality, that stockpiles of coal are laid out in the correct way, that drainage ditches are dug and kept clear so the coal does not get drenched, that maintenance schedules are adhered to, that the plant is kept clear of ash.

After finding station after station in “a shameful state”, De Ruyter spends his energy fighting fires and trying to improve housekeeping to keep the lights on. This is not what a big boss is meant to be doing. 

 De Ruyter clearly needed to come in and kick ass after seeing the state of Eskom. What comes across is that De Ruyter did not have an executive team to do the work. He is close to Jan Oberholzer, the Head of Operations, and praises a number of specialists. While leadership counts for a lot, it is really the team that is critical to getting things done. 

After being blocked by staff on key projects such as controlling spending on spare parts, a major source of illicit income for connected insiders, he begins to realize he is almost alone. “The creativity of the blocking brigade knew no bounds.” He then takes the unusual and controversial step of convincing business to fund a secretive private inquiry into the rackets that were bleeding Eskom to death.

Small victories

Meanwhile, there were a few small victories, but they often led to the opening of new fronts in the ongoing war. For instance, a unit manager from the Komati power station enormously improves her plant’s Energy Availability Factor or EAF, the key metric which shows the percentage of rated capacity that the plant supplies to the grid.  But she soon receives death threats because her changes mean less spending on maintenance and parts, thereby enraging the criminals that feed off Eskom.

There are battles with the unions. He is told by a union at Lethabo power station after a strike-and-pay award: “We are not happy. And as long as we are not happy your plants will not run well.” De Ruyter replies: “Do you think 60 million South Africans are happy with Eskom’s performance?

There are battles with three of the four ministers overseeing Eskom. Gwede Mantashe, Minister of Minerals and Energy and Ebrahim Patel, Minister of Trade and Industry are ideologues, and are openly hostile. Pravin Gordhan, Minister of Public Enterprises, comes across in the book as understanding the issues, but reluctant to take action on a number of core matters, out of loyalty to the ANC. De Ruyter is able to work well with Barbara Creecy, whose ministerial portfolio includes the environment.

And the law makes everything difficult. Labour laws make it very difficult to hire and fire. There is the Public Finance Management Act, which ties red tape around almost every procedure. Just to issue a tender can take six months. Then there are procurement regulations to ensure buying from empowerment groups which add big margins on what would be paid to the original equipment manufacturers. And then there are racial quotas which reduce flexibility in hiring.

Industrial might

The energy regulator refuses to recognise Eskom’s plight. South African industrial might was built on cheap electricity, and the National Energy Regulator of South Africa (NERSA), which sets prices, wants to keep it that way, he charges. In part that is because NERSA comes under political pressure from politicians whose support base is accustomed to relatively low electricity prices or entirely free power. And effectively going after the municipalities that don’t pay Eskom seems a lost cause.

All this drives home the hopeless positions in which state-owned enterprises find themselves. They are tied and bound and made unfit for purpose.

Under the Treasury’s debt relief plan for Eskom, once an international engineering firm has made findings on the state of our ageing coal-powered fleet, power stations that are worth rescuing will be handed over to private firms to run. But with all the red tape and problems at Eskom, will the private sector not find themselves in an untenable position?

De Ruyter had a plan, which was longer-term and took account of the need to keep the coal fleet running at maximum capacity until mainly green sources are producing sufficient power. The plan is Eskom’s Strategy 2035, which would see the gradual decommissioning by 2035 of older coal plants, which account for about half of Eskom’s generation capacity. This would give time for South Africa to embark on a ‘Just Transition’ towards green energy, financed by loans from the West. Lifting the cap on the amount that independent power producers can feed onto the grid would contribute towards easing the power crisis.

Base load

But what about our base load? After all, the wind does not always blow and the sun does not always shine, batteries are expensive, and we do not have sufficient transmission line capacity to take the new sources of power to Gauteng. He rightly says coal plants can no longer be financed, and the Europeans would impose high taxes on our exports. But he dismisses nuclear as far too expensive. His plan needs far greater explanation.

De Ruyter claims achievements in his three years. The culture changed, operations began to show signs of recovery, at an operational level the utility was profitable, Lethabo power station turned around, he successfully lobbied the Presidency for the lifting of the cap on what independents can produce, and he helped raise billions for South Africa’s green energy transition.

Whatever the criticisms of his management style and strategy, the man has to be given immense credit. It is a job few want. At least he gave his all to the task, and has written this book, which is a wake-up call for change.

This is a book that should be read by anyone interested in our predicament, but also MBA students and consultants, because it would rid them of their idea that management problems are technical and easily solved on PowerPoint slides. The book leaves one with a deep frustration about any prospect of making South Africa a successful country.

The politics are certainly not right.

Jonathan Katzenellenbogen is a Johannesburg-based freelance financial journalist.

https://www.biznews.com/global-citizen/2023/05/24/truth-to-power-harsh-wake-up-call-katzenellenbogen-de-ruyter

This article was first published on the Daily Friend.