So we start the week knowing a few things. First, finance minister Tito Mboweni has until budget day next February to come up with the first of three plausible R50bn spending-cut tranches over the next three years to fend off a near certain downgrade of our sovereign debt to junk by Moody’s, the only large ratings agency still to rate us (just) investable. Moody’s said as much when it cut its “outlook” on our debt from stable to negative on Friday. Notably, it didn’t put us on what is called in the ratings game a “negative watch” but it was scathing about the government’s ability to get its spending under control.
Second, we know that Eskom should have a new CEO by the end of this week, once the chosen name has meandered its way through the treacle of government and cabinet, where lots of people will wonder whether their cousin might not be a better candidate.
There are two names to consider. Andy (Andries) Calitz, a highly experienced executive with Shell, where he has taken charge of huge projects and investments since 1997 after leaving Eskom as general manager of transmission in 1996. He knows Eskom like the back of his hand.
The other would be Sipho Maseko, currently the successful CEO of Telkom. He knows nothing about Eskom but he is an extremely capable leader, not afraid of politicians, and close to Eskom chair Jabu Mabuza. Mabuza roped Maseko into Telkom when he was chair there and may be about to do the same thing to the poor man at Eskom.
Calitz and Maseko are very different propositions. If it were up to me I’d get Calitz into Eskom and if Maseko is up for more national service I’d ask him to fix SAA. Fixing it would involve finding it an equity partner. The people running SAA are truly, frighteningly, absurd.
Third, we know that Pravin Gordhan has to ensure that whoever becomes Eskom CEO, quickly, within months, meets the terms under which Mboweni will go ahead and take half of Eskom’s R450bn debt of its hands so that, under new leadership, it can begin trading legally and, hopefully, behaving like a vaguely recognisable business again.
The terms are not onerous, though I’m not sure you can say that about anything at Eskom. They are contained in the special paper Gordhan released last Tuesday. Here it is, long on vision, as one respectable analyst says, and short on deadlines and final shapes. Those had better come quickly though. Gordhan doesn’t have the time he thinks he has. You’ll find the Treasury’s conditions for relieving Eskom of half its debt on page 27.
Quite when Mboweni is supposed to be able to start measuring that is anyone’s guess. The unbundling of Eskom into its generation, transmission and distribution businesses is going to take forever, especially now that Gordhan (and, more importantly, Mboweni) appear to have found a complicated way to introduce competition into the coal-fired power market without including the private sector.
Eskom’s generators will instead be divided up into three clusters and the transmissions business will buy from them, in theory, on price. Should one cluster charge too much, transmission management will have the right to shut it out of its buying programme for a month. I thought Marianne Merten last week did a fine job on a complicated story. Basically, Gordhan believes he has the time to get it right. But almost all of his optimism will depend on getting the right CEO in place this week. Or next. Or next month.
Obviously some of this is extremely difficult. Where Gordhan operates he is often accused of needlessly and destructively interfering with management well beyond the remit he has as the shareholder representative. He takes offence at this and explains that wherever he looks in the state sector the guardians of state capture have more than ruined the very fabric of the companies they were once in charge of. What’s worse, though the big cheeses of state capture have been wrestled out of their chairs, many of their underlings are still in Transnet and Eskom and the other SOEs. For me, for the moment, he wins the argument for keeping the current SOEs under the public enterprises department where they are. Returning, say, SAA or even Transnet to the transport department would be a disaster. He may not be the best corporate strategist around but he has a nose for graft and there’s still way too much of it in our system to let go.
Once (if) the National Prosecuting Authority gets some prosecutions going the juniors will creep out from behind their cupboards and put their hands up to give evidence in the hope of saving themselves.
But as Merten makes clear in her report, union buy-in is critical to what Gordhan, in particular, is trying to do. In public, they scream blue murder and threaten the wildest retaliations to anything that might actually save some of the companies the state owns. In private there’s obviously more give and take. Former ArcelorMittal CEO Paul O’Flaherty will tell you that swivel-eyed, ferocious trade union revolutionary Irvin Jim helped him save the steelmaker six years ago when they talked privately. Gordhan is certain Mboweni will find the first R50bn he needs for February with relative ease and that a lot of it will come from the public wage bill.
And he is also confident he can get Eskom straight and find a place for its debt. This is a guy who has fought, since the day Jacob Zuma fired Nhlanhla Nene in December 2015, to save our investment grade rating. It is hard to believe he would be so foolish as to lose that battle now. Yet the things that need to be done require the utmost commitment and courage from the government and its union allies.
What the government is very bad at is telling its story. President Cyril Ramaphosa is already wasting his new weekly newsletter on things trivial. People want to know what’s going on.
Fourth, and finally, we know that the English rugby team is ordinary. That they can be knocked back by a determined defence, that Owen Farrell can easily be stepped and that, like anyone with a plan, it all goes out the window when someone hits them in the mouth.
Wasn’t that World Cup final just the best? I have watched the whole game four times already and I’ve replayed Makazole Mapimpi’s and Cheslin Kolbe’s tries over and over so many times I’ve lost count. Mapimpi is a relatively new discovery. But what idiot made Kolbe think he wasn’t needed in SA and sent him to play in France?
In the wake of the World Cup victory we probably need to prepare ourselves to say goodbye forever to some of these heroes. Coach Rassie Erasmus has coached his final game. Will Duane Vermeulen ever pull the jersey on again? Or even Willie le Roux, who despite everything played a near-perfect game on Saturday? And Faf de Klerk? Almost half the winning team play their rugby overseas.
There’ll be new delights, but I’ve enjoyed some of the rugby writing from the English. Their sports writers are always better when they lose and for them, the losing narrative is all about losing not so much to a better team (they all concede they did) but to an SA reborn as a human and democratic wonder in the making. Here is the peerless Andy Bull (he writes a brilliant rugby column every week) in The Guardian and I thought the UK’s Sunday Times’ coverage was also absolutely fantastic. Here’s their chief rugby writer Stephen Jones, a guy who hasn’t always been nice about the Boks.
And finally I can’t resist including this, from the Daily Mail. Will we ever see Tendai Mtawarira in the green and gold again? What a guy …
Have a good week.
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