Question NW1967 to the Minister of Public Enterprises
19 July 2023 - NW1967
Maotwe, Ms OMC to ask the Minister of Public Enterprises
(1) Whether, considering his latest remarks about Mr André de Ruyter (details furnished), he concedes that his steadfast defence and support of Mr De Ruyter over the years was misplaced; if not, what is the position in this regard; if so, what are the relevant details; (2) whether, taking into account his role in the recruitment and defence of Mr De Ruyter, he takes any responsibility for the seemingly abysmal performance of Mr De Ruyter as the Chief Executive Officer of Eskom; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
1. The role and responsibilities of a Shareholder Representative on behalf of the Government requires that the negotiated Shareholder’s Compact, is agreed to between me and the Board, annually. My role is, therefore, to assist the Board to meet these targets within the context of the State-Owned Companies (SOC’s) operating environment. As a Shareholder Representative such support is extended to the CEOs and considered critical to ensure success. My support to the Chief Executives of the SOCs is therefore underpinned by good governance principles as espoused in the PFMA, 1999, and the Companies Act, 2008. As a Shareholder Representative, I continue to support the leadership of Eskom, working with stakeholders, to ensure sustainable improvement in performance.
2. In terms of Eskom’s governance framework, the Chief Executive’s employment and performance contract is with the Board of Directors and not with the Shareholder Representative. The Chief Executive is responsible and accountable to the Board for his performance, strategy implementation and the management of the affairs of the company. According to Eskom, the performance indicators for the Group Chief Executive are agreed to at the beginning of each financial year. These indicators are based on the Shareholder’s Compact. Performance at year-end is based on the achievement of the shareholders compact. During the tenure of the former Chief Executive, it is extremely disappointing to note that Eskom’s power stations Energy Availability Factor (EAF) was 78% in 2018. The EAF declined to 69.9% in 2019 and has continued to current levels (May 2023) of 52%. At the time of announcement of the resignation of the former GCE, in December 2022, EAF was 57.2% with different levels of loadshedding daily.
As the Executive Authority, I intervened to assist in improving EAF. I have met with Power Station Managers on numerous occasions as well as Power Station Cluster Managers in order to assist in improving the EAF performance.
I reiterate that the entire recruitment process was managed by the then Board in 2019. The Board formulated a shortlist of candidates. The Board conducted the interviews. The Board submitted two candidates for the shareholder to consider. Both candidates were engaged with by four Ministers, whereafter the concurrence of Cabinet was obtained.
Ultimately the Board is responsible for the performance of the CEO and management team. Despite the many efforts, as set out above, to assist the team, it would appear that, the CEO’s focus was misdirected. This is now receiving the attention of the new Board.
Remarks: Reply: Approved / Not approved
Jacky Molisane PJ Gordhan, MP
Acting Director-General Minister
Date: Date: