Eskom boss’s explosive interview exposes the ANC’s rotten core

South Africans lucky enough to be able to watch TV during a record blackout this week witnessed a brutal denunciation of the African National Congress as a kleptocracy robbing the country of darkness.

After André de Ruyter, the outgoing chief executive of electricity utility Eskom, told eNCA news that the coal plants at the heart of the energy crisis had been turned into ANC “feeding troughs”, he accused the ruling party of “regressive” behaviour. political and ideological agenda’.

De Ruyter, who also referred to an unnamed “high-level politician” involved in corruption and who was protected by a minister, was sacked by Eskom’s board on Wednesday.

No chief executive of a South African state-owned company has ever criticized the party that controls these vital assets in such harsh terms – but it reflects growing discontent in the country, which could mean the ANC is angrily targeting de Ruyter.

South Africa has a noisy civil society, inquisitive investigative journalists and an active opposition. The Democratic Alliance, the official opposition, already demanded on the basis of a freedom of information request that “Eskom’s management . . . to release the name of the senior ANC politician concerned”.

Business groups also called for an urgent investigation, “particularly in light of allegations that ministers and advisers to the presidency knew about the continuing high level of corruption and apparently did nothing about it”.

Cyril Ramaphosa took over the leadership of the ANC in 2017 with a promise to stamp out the corruption that was rampant under his predecessor, Jacob Zuma.

See also  What Dolly Parton can educate Vladimir Putin

But de Ruyter’s claims, coupled with the proliferation of other parastatals, analysts say have exposed the failure of the president’s mission and revealed a ruling party rife with corruption.

De Ruyter, whose hiring from the private sector to rescue Eskom three years ago was approved by the ANC, announced his resignation in December after being accused of treason by the energy minister.

“It is clear that I am under suspicion of treasonous activity, but the real criminals can go with impunity,” said de Ruyter.

His claims struck at the heart of the biggest problem facing the South African economy: how to separate the ANC from the state-owned enterprises that dominate activity but are driving the country to the point of collapse. According to the South African Reserve Bank, continuous power outages cost the economy $51 million a day.

André de Ruyter
André de Ruyter said “real criminals can act with impunity” © Sumaya Hisham / Reuters

For the ANC, the chance to extend the power of the liberation movement in South Africa’s democracy for a fourth decade in next year’s elections is winking in the darkness of 12-hour-a-day power outages.

“The energy crisis is a big risk to their electoral prospects. . . when de Ruyter says [Eskom] The ANC is draining it from within at the highest level, this will remove their likely deniability,” said political analyst Khaya Sithole. According to the latest surveys, the party’s support was 40 percent, after winning more than 57 percent in 2019.

See also  Fed fearful of doing ‘too little’ to stamp out soaring US inflation

It is well documented that Eskom has been wrecked by corruption, sabotage and political meddling. But until now, Sithole added, “there was no one with as much intimate knowledge as the CEO, who was a heartbeat away from naming names.”

As a result, de Ruyter’s defense showed “a kind of panic” on the part of the ANC: “a very knee-jerk reaction that prevented him from speaking at all costs”.

On the day the chief executive was fired this week, the National Treasury said it would pay and partially assume about $14 billion, or two-thirds, of Eskom’s debts. The three-year operation aims to free up cash to repair power plants and prevent defaults.

“It’s not ideal, but it’s the best decision given Eskom’s difficult financial situation,” said independent economist Thabi Leoka. But the rescue package will push up state borrowing, which had to decrease as a proportion of the gross domestic product.

“It takes three years,” Leoka said. “This is happening even when there are tight monetary conditions globally as interest rates are high and the cost of capital is rising.”

The debt relief also exposed the tension between state control of Eskom and hopes for a dose of private efficiency. The Treasury ordered that in return for the money, Eskom must open underperforming power stations to private concessionaires and “enable extensive private sector participation” in transmission.

The Treasury has been trying to convince the markets and credit rating agencies that it can prevent the relief from disappearing into a black hole, Sithole said. But he has no leverage over those claims because he cannot risk Eskom going bankrupt, he said. “We all know that’s completely pointless. Eskom is completely free to ignore these terms.”

See also  China’s largest property group warns of 70% plunge in revenue

Ramaphosa’s government has long balked at similar promises, such as a three-way split of Eskom into generation, transmission and distribution units. Under De Ruyter, Eskom has created a separate transmission company, but the state has not yet launched it.

Investors want to build private power plants to help curb blackouts, but they need certainty about transmission investments to know they can connect to the grid, Leoka said.

“What was missing from the whole puzzle of the energy crisis was urgency,” he said. “The lack of urgency has caused Eskom to completely collapse.”

Sithole added: “They just don’t know how to handle it [state] entities. This sense of frustration is not unique to Eskom. Others may not have been blunt enough [as de Ruyter] say it out loud.”

Ahead of his explosive TV interview, de Ruyter told the Financial Times: “In our dealings with private investors, we are still too beholden to South African exceptionalism, Madiba. [Nelson Mandela] magic.

“You know, it lost its luster a long time ago.” The world owes South Africa nothing.”

Additional reporting by David Pilling in Johannesburg