We need to investigate ‘what is the methane they are running from’. From Moneyweb.
There’s been a stampede of executives from state-owned companies in recent months, leaving Eskom, Transnet, Denel, SAA and Alexkor under acting CEOs, with SA Express now liquidated.
In the past month, Transnet lost its CEO and CFO, while Transnet Freight Rail’s CEO Sizakele Mzimela announced she will leave at the end of October. Michelle Phillips, CEO of Transnet Pipelines, moves in as acting group CEO to replace the outgoing Portia Derby.
Eskom has no permanent replacement for André de Ruyter, who left as CEO 10 months ago after what appeared to be an attempt on his life by poisoning.
This week, it was announced that Eskom chair Mpho Makwana would resign after just a year in the job. He was formerly CEO of Altron and MTN South Africa.
The exodus wasn’t lost on Minister of Mineral Resources and Energy Gwede Mantashe, who commented at the Africa Oil Week in Cape Town: “If you are underground and you see mice running, you don’t go and look at what it is they see, you just follow them. Because when they run they are smelling methane. In order to save yourself you just follow them.
“It’s concerning to have a number of executives [in state-owned companies] just running like mice, running from methane. What is the methane that they are running away from? That is what we should investigate.”
Many read this as a not-so-subtle dig at his cabinet colleague Pravin Gordhan, Minister of Public Enterprises, who is ultimately responsible for state-owned enterprises (SOEs).
Shadow public enterprises minister Ghaleb Cachalia says Gordhan has presided over unprecedented governance chaos at executive and board levels in SOEs, most of which are operating under acting CEOs or interim boards.
A summary of the scorecard provided by Cachalia:
| SOE | Status of executive and board |
| Transnet | Has no CEO following the resignation of Portia Derby; of the 12 independent non-executive directors, six have resigned or retired without being replaced. |
| Eskom | Has had no CEO for eight months following the resignation of André de Ruyer in February; its chair resigned on Monday (9 October). |
| Denel | Has operated under three acting CEOs since 2020 to date; is operating under an interim board. |
| South African Airways | Has operated under four acting CEOs from 2019 to date; has been operating under an interim board since 2020. |
| South African Express | Final liquidation order granted in September 2022. |
| Alexkor | Has been operating under an acting CEO since 2022. |
“Whenever he speaks, Pravin talks of ‘green shoots’ appearing in the SOEs. All I see is weeds. How can he talk of ‘green shoots’ when all we see are companies losing money hand over fist,” Cachalia told Moneyweb.
The depth of the governance crisis triggered by Gordhan’s failure has become endemic to such an extent that SOEs are essentially in operational drift with no strategic direction, he adds.
“I sit in committees where all they measure is transformation. Transformation of what? Dying entities?” says Cachalia.
“Gordhan is good at pointing fingers and has never once taken responsibility for the chaos currently occurring in SOEs. Even at the height of state capture, Transnet was still able to keep our export sector ticking along, but under Gordhan, the entity’s ability to transport goods to ports has significantly collapsed,” said Cachalia in a statement issued this week.
Chokehold
The two critical chokeholds on national growth are Eskom and Transnet, which together robbed the GDP of 10% growth in 2022, according to Stellenbosch University logistics professor Jan Havenga.
The post-Covid resurgence in global demand essentially passed South Africa by.
PwC’s SA Economic Outlook puts the damage at around 7% in 2002, largely due to load shedding and Transnet’s inability to ship sufficient product to port in the midst of a commodity boom.
Read:
Here’s what needs to happen after the night of long knives at Transnet
Economy would’ve hit 10% growth in 2022 but for Eskom and Transnet
Cachalia says Gordhan has become a liability, not only to the well-being of SOEs but to the entire national economy and should be fired as a matter of urgency.
“Then we can get down to the real business of restoring governance, privatising as appropriate and dispensing with barking mad policies and procedures around preferential procurement, cadre deployment and BBBEE. Only then business, industry and citizens will be able to breathe again as we rebuild the spine, heart and arteries of our economy.”
While the Department of Public Enterprises wrestles with its SOE leadership problem, eventually, the responsible ministries are going to have to raise that dreaded word: privatisation.
Transnet has made some diffident moves in this direction, with a 25-year concession to run the Durban Container Terminal recently awarded to Philippines-based International Container Terminal Services (ICTS). It is also soliciting enquiries for a 20-year operating lease to run the 670km Container Corridor between Gauteng and Durban, but with conditions that are certain to drive many concessionaires away – such as a likely R5 billion tab for upgrading facilities and assumption of thousands of Transnet Freight Rail staff.
This belated nod to market realities is proceeding far too slowly for some.
Andrew Pike, head of ports, transport and logistics at Bowmans Law, says unless the business units within Transnet are cut loose and given autonomy, whether privatised or not, we are likely to see the same problems perpetuate.
Adds Cachalia: “What they are putting on the table for prospective concessionaires is not attractive enough. The time span has to be more attractive, and the state has to step up to the plate and say it will look after security (of infrastructure) arrangements.”
Read all our Transnet coverage here.
