Eskom: We Anaylse Parastatals

Lee Molefi

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It’s like 2008 all over again. Rolling blackouts abound while lifeless traffic lights, dimmed homes and long queues at generator-lit fast food restaurants illustrate the same, depressing picture: load-shedding is back. Thanks, Eskom. On Saturday 1 November 2014, a coal silo collapsed at Majuba Power Plant in Mpumalanga, a powerplant that reportedly produces 10% of […]

It’s like 2008 all over again. Rolling blackouts abound while lifeless traffic lights, dimmed homes and long queues at generator-lit fast food restaurants illustrate the same, depressing picture: load-shedding is back. Thanks, Eskom.

On Saturday 1 November 2014, a coal silo collapsed at Majuba Power Plant in Mpumalanga, a powerplant that reportedly produces 10% of South Africa’s overall electricity output. According to Business Day, the silo collapsed after undergoing months of “severe strain”as a result of poor maintenance. By the first week of November, street-poles were adorned with headlines exclaiming that the blackouts are likely to continue for the foreseeable future. Hard times.

While a wide range of criticisms and cause & effect scenarios have been dealt by pundit upon pundit – some in lit conditions, others not – the more significant supposition in that range, however, may be that – in the company of bodies such as SARS, Telkom, TRANSNET, PRASA and the SABC – Eskom is the worst-run parastatal in the country. Is this a fair assessment? And which of the government’s companies are in fact “well-run?” Let’s start with the basics.

What is a parastatal? Cue Wikipedia –

“A parastatal is a legal entity that undertakes commercial activities on behalf of an owner government. Their legal status varies from being a part of government to stock companies with a state as a regular stockholder. There is no standard definition of a government-owned corporation (GOC) or state-owned enterprise (SOE), although the two terms can be used interchangeably. The defining characteristics are that they have a distinct legal form and they are established to operate in commercial affairs. While they may also have public policy objectives, GOCs should be differentiated from other forms of government agencies or state entities established to pursue purely non-financial objectives.

So South Africa’s got those, you know. Parastatals. So which are the best and worst of the bunch? Of the vast range of parastatals in South Africa, which include South African Airways, the SABC, Telkom, Denel, COEGA and Mintek, which have made South African lives better or worse in recent times? And importantly, how do we analyse this?

According to the Centre for Corporate Governance, parastatals should be listed according to their levels of transparency, accountability, how the boards function, their relationship with shareholders, and social and environmental performance, however, all this considered, we’re going to rate them according to how the services they provide have reached you.

It is, afterall, important that we gauge how effective, ineffective or outright diabolical some of these compaines have been in delivering services directly to you – using your tax money.

Let’s begin.

Everyone’s Favourite – SARS

The South African Revenue Service (SARS), or ‘affectionately’: the taxman, has been considered a riveting success in recent years because of its successful modernisation of the tax collection process, which began in earnest in 2007. According to an article in the Business Day dated August 2012, the introduction of SARS electronic tax filing system – which allows taxpayers to file online and to even obtain refunds within three days – means the company has collected hundreds of billions of rands more in revenue than in years preceding; thus gifting the Department of Finance more money to redirect toward worthy causes and to underwrite infrastructure development projects.

Speaking to Business Day, some of the reasons attributed to the revenue collector’s success by Ivan Pillay, acting commissioner at SARS, are “ the stability of the finance department [which Trevor Manuel headed for thirteen years] and management within SARS,” which was headed by former finance minister Pravin Gordhan for ten years.

More recently, SARS came out tops in a survey of 4000 South Africans who were asked about the service they received from government agencies, departments or organs. According to City Press, 75% of respondents in Mpumalanga voted that SARS was the best government organ they interacted with in a survey conducted by Ask Afrika Orange Index 2014 on government service trends – they performed similarly on the national level – underscoring SARS’s public perception as a reliable, efficient government agency.

Ivan Pillay, speaking to the Sowetan in 2012, said SARS has a strict recruitment policy where they look for people with the right values and want to serve, “not just bureaucrats.” “Our vision is to do the right thing for our people … Our vision is to uplift the country. We need to address the historical imbalances and we are driven by that vision, ” he concludes in the news report.

Pravin Gordhan, who replaced Trevor Manuel as Minister of Finance in 2009, was the commissioner of SARS between 1999 and 2009, and is widely credited with transforming the revenue collector to the innovative agency it is widely regarded as today.

The Bad Boy – Eskom

This was a tight call between the SABC and Eskom. While the SABC has come under fire for hiring under-qualified personnel in key positions – with COO Hlaudi Motsoeneng and even chairperson Ellen Tshabalala facing allegations of lying about their qualifications, -Eskom has arguably had a sharper impact on the life of the everyday South African with the 2008 energy crisis and the most recent spate of blackouts which come as a result of the collapse of the coal silo at the Majuba power plant in Mpumalanga.

In the Ask Afrika Orange Index 2014 on government service trends survey reported on in the City Press, Eskom surprisingly came in quite high on the scale, despite heavily-publicised revenue shortfalls and suffering a credit downgrade applied by the Moody’s Investor Service on November 6 2014.

On mining news website, miningmx, Eskom CEO Tshediso Motane is reported as expressing his disappointment at Eskom’s recent credit downgrade, saying that Eskom had made “great progress” in resolving its financial challenges.

Eskom has faced years of both financial and operations challenges, and on the financial side –  have reported a revenue shortfall of R225bn which they hope to allay with a government bailout of R50bn and by raising electricity tariffs. Public Enterprises Minister Lynne Brown has a target of reducing Eskom’s revenue shortfall to R119bn.

For more on the financial condition of Eskom, read Carol Paton’s in-depth analysis here

The One That No One Can Figure Out – SAA

What the hell is going on at SAA?

Despite being voted the best airline in Africa for 12 years running by Skytrax – a global aviation research organisation – SAA remains embattled within, contending with rumours of nepotism and irregularity and continually in need of government bailouts, ie. your tax money.

According to Fin24, Nawal Taneja – an aviation specialist – believes SAA may struggle to preserve or expand its market share on its regional routes in Africa if it doesn’t develop strategies to place it ahead of its competitors in Africa, such as Ethiopian Airlines and Kenyan Airways. Still, it’s difficult to imagine that SAA can stimulate the kind of growth that is required to keep the company competitive if it continues to face administrative instability such as that it has seen in recent years.

SAA Chairperson Dudu Myeni, who is rumoured to have a close relationship with President Jacob Zuma, has brought SAA a new spate of negative news coverage in recent weeks due to the straining relationship she reportedly shares with Public Enterprises Minister Lynne Brown; this is after defying the minister’s instruction to reverse the suspension of SAA chief executive Monwabisi Kalawe. Minister Brown is quoted by the Mail & Guardian as saying Myeni had defied her and that she was waiting to “hear from them [the board] why they are not listening to me”. Kalawe, who assumed the role of chief executive in April 2013, is suspended due to accusations of poor governance and irregularity levelled against him by Myeni.

Dudu Myeni announced on Saturday that Mango Airlines CEO Nico Bezuidenhout has been appointed to his second term as acting CEO at SAA.

That story continues to develop.


Like any organisation, parastatals encounter times of difficulty & growth; variantly make terrifying losses or generate jaw-dropping profits. Still, their operations must be closely scrutinised in order for us to ensure that the companies are run efficiently and continually held to account.

Which is your favourite government agency, organ or department to interact with? Tell us. #LiveVIPZA

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