South African president Cyril Ramaphosa will move state electricity monopoly Eskom to the oversight of the energy ministry, as a power struggle rages in his government over the worst ever blackouts to strike Africa’s most industrialised nation.
Ramaphosa’s government would implement “a clear mandate” from the ruling African National Congress to move many state-owned companies, including Eskom, to ministries overseeing their economic sectors, he told South African media on Monday. The ministry for public enterprises, run by former finance minister Pravin Gordhan, currently oversees Eskom.
While Ramaphosa signalled that any move would take time to implement, the plan highlights a battle over how to solve South Africa’s energy crisis at a critical juncture for the heavily indebted utility, whose chief executive André de Ruyter resigned in December.
De Ruyter, who will stay on until March, survived an alleged attempt to kill him with cyanide-laced coffee shortly after submitting his resignation, reflecting his intense battle to reduce corruption as power cuts escalate. The matter is being investigated by police.
The utility is responsible for generating nearly all of the African nation’s power, but imposed more than 200 days of rolling blackouts in 2022 as its ageing coal plants constantly break down.
Ramaphosa said on Monday that the government was trying to avoid the “worst Armageddon” of a total collapse of the grid, while it attempts to change control of Eskom. “We need to weigh up what the consequential issues would be . . . we need to look at the efficacy, the timing and everything else,” he said. “The resolution will be implemented, it is just a matter of how.”
Putting Eskom under the control of the energy ministry could slow efforts to root out the corruption that has reduced the utility’s ability to deliver power and delay the country’s transition to renewable energies, analysts said.
The planned shift would also greatly increase the power of Gwede Mantashe, the energy minister who denies being a “coal fundamentalist”. One Eskom insider who asked not to be named said that it would be disastrous if the utility came under Mantashe’s control and would jeopardise plans by South Africa, one of the world’s top 20 carbon dioxide emitters, to accelerate a transition from coal to solar and wind.
Changing oversight of Eskom might also endanger plans to split the company into separate generation, transmission and distribution divisions, a move that many ANC stalwarts regard as a backdoor privatisation.
“Unbundling will come to a grinding halt if [Eskom] comes to energy,” the person said. “Gwede doesn’t want private investment; he thinks electricity generation is the role of the state.”
Criticism from Mantashe about de Ruyter was widely seen as the trigger for his resignation, raising further questions about the independence of Eskom bosses under the energy ministry’s oversight. Before the chief executive’s resignation in December, Mantashe dismissed de Ruyter as a “policeman” who was too focused on investigating crime at the utility and not on restoring power. Mantashe even accused him of treason.
“Eskom, by not attending to load-shedding [reducing demand by cutting electricity flows], is agitating for the overthrow of the state,” he said.
Analysts have said that reshuffling oversight of state companies could see a return to the widescale looting that became rife under Jacob Zuma, the country’s former president. Eskom and other prize assets were hollowed out through the manipulation of procurement contracts to fund patronage in the ANC.
“Reformers in the treasury and presidency do not agree that [state companies] should move to line departments and do not want the conflicts of interest that would become rampant,” said Peter Attard Montalto, head of capital markets at Intellidex, a South African research firm.
“While there is some attempt to dress this up as a policy debate, I think most investors can see through it as a very blatant move by vested interests in the party to open the taps again,” Attard Montalto added.
