JABULANE Mabuza, Eskom chairman since the beginning of 2018, will add the daily grind of running the South African power utility to his worries after it was announced tonight he would become CEO on an interim basis.
Eskom said it would seek to appoint a permanent CEO within three months. This follows the resignation of Phakamani Hadebe who is leaving Eskom after about 18 months as CEO citing ill health.
“I have made myself available to serve as the interim executive chairman and acting group CEO of Eskom with a good appreciation of the importance of leadership stability in the company right now as we look at the implementation of a sustainable operational and financial turnaround plan,” said Mabuza in a statement.
The appointment is effective from August 1.
“The board supports and welcomes Mr Mabuza’s appointment and urges all stakeholders to work together to ensure that Eskom emerges from the challenges it currently faces with positive outcomes,” said Eskom in an announcement.
Mabuza takes on enormous responsibility given Eskom’s precarious financial position which the unveiling of annual financial results tomorrow (July 30) will do little to ameliorate.
Eskom is expected to post its worst financial results yet, according to Bloomberg News which cited Anton Eberhard, a member of the government team advising Eskom, forecasting a minimum R25bn deficit.
The utility’s problems have extended into South Africa’s economy. Economists and analysts have voiced concerns that it will become a sovereign debt problem whilst the likelihood that the country will lose its last investment grade rating when Moody’s Investment Service revisits how it sees the country.
According to Bloomberg News, foreign investors are ditching South African assets at the fastest pace on record. They have sold a net $4.8bn of South African equities and bonds in 2019, the most on a year-to-date basis since at least 1998, according to data compiled by Bloomberg.
Analysts have suggested the time is ripe to short the rand.
“We now believe levels are stretched enough to enter outright rand shorts,” JPMorgan analysts including London-based Anezka Christovova and Robert Habib in New York said in a note seen by Bloomberg News. “South Africa’s fundamental picture remains very challenging with a ballooning fiscal deficit and structurally low growth.”
