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JIMMY MOYAHA: On Friday, Minister of Electricity and Energy Kgosientsho Ramokgopa announced that Eskom chairperson Ntate Mteto Nyati has been reappointed for another three-year term to lead the Eskom board.
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This new three-year term will commence on November 1, 2026, and finish in October 2029. Let’s explore this further with Eskom’s chair, Ntate Mteto Nyati, who joins us now.
Ntate Nyati, it’s a pleasure to have you on the show. Thank you for your time. Congratulations are in order, I believe. You stepped in during a tough time in 2022, amidst Stage 6 load shedding. Fast forward to four years later, and the business seems significantly transformed from where it was in September 2022. However, I anticipate there’s still a lot of work to do.
MTETO NYATI: Absolutely, the journey is far from complete. However, when reflecting on our starting point, we do feel a sense of accomplishment.
First and foremost, in terms of financial health, the company is strong. Our balance sheet shows a reduction in net-debt-to-Ebitda from 16x to about 4x.
Additionally, we have achieved profitability for two consecutive years.
Furthermore, our staff morale is at an all-time high.
These elements position us favorably for growth moving forward as a company.
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JIMMY MOYAHA: Ntate Nyati, let’s tackle the ongoing challenges this state-owned utility faces. We still contend with legacy municipal debt, a situation that continues to persist. From Eskom’s perspective, a vital part of the turnaround strategy has been the National Treasury’s take-over of R254 billion of Eskom’s debt over recent years.
From a business and operational standpoint, how does Eskom plan to continue or redefine its strategy as you enter what can be termed your second term as chair?
DR MTETO NYATI: Yes. The need for a bailout usually arises when a company struggles to maintain itself.
This organization endured losses for an extended period. While we’ve become profitable over the last two years, prior to that, we faced considerable losses for seven years, hampering Eskom’s viability.
Our primary focus must always be on sustaining profitability.
Moreover, any debts owed to us need to be collected. For example, we’ve seen the City of Johannesburg pay off R4.5 billion; that’s a positive start. We need many other municipalities to follow suit.
To accomplish this, we require support from several departments—National Treasury included, as well as Cogta [Department of Cooperative Governance and Traditional Affairs] and the Department of Electricity and Energy. Together, we’ll need to develop lasting solutions to the municipal debt crisis.
The encouraging news is that there’s now consensus on the urgency of addressing this issue, and we are already implementing some solutions.
JIMMY MOYAHA: Ntate Nyati, let’s delve into other alignment matters within Eskom as a business. Once, the parastatal was the most cost-effective producer of bulk electricity in the world. Now, retail electricity consumers pay over R3.70 per kilowatt-hour, making the market relatively expensive.
I’d like your thoughts on how Eskom can strike a balance between profitability and sustainability while ensuring affordable electricity. The minister has previously expressed an intention to increase the number of households receiving free electricity, which I assume poses a challenge for your operations—balancing profitability with societal needs.
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DR MTETO NYATI: Not necessarily. While it’s termed ‘free basic electricity,’ it doesn’t imply that it’s actually free.
There’s no such thing as a free lunch—someone has to cover the costs. The government was paying and continues to pay for it, but previously those funds went to municipalities rather than to Eskom.
The minister has mentioned that going forward, he intends for that money to go directly to Eskom. For consumers, it may seem free; however, the expense is shouldered by those who pay Eskom directly.
So how do we plan to reduce electricity prices in the future?
We have set ourselves an ambitious target of trimming Eskom’s operational costs to around R112 billion.
We’ve dedicated a year to this initiative, and management has not only met but surpassed the targets set for this time frame. It’s a five-year program aimed at significantly cutting Eskom’s costs.
We’ve promised the South African public that, moving forward, our price increases will be limited to single digits, unlike the double-digit hikes seen previously.
Our ultimate goal—although we won’t formally commit to it here—is to align any increases with CPI.
This, however, depends on ongoing efforts by management to reduce Eskom’s operational costs, and it’s the board’s responsibility to ensure management remains accountable for this.
That’s the commitment we extend to South Africa.
JIMMY MOYAHA: Ntate Nyati, before we wrap up, can we discuss the commitments made back in 2019 by the President during his State of the Nation Address regarding the unbundling of Eskom into three separate entities? This has led to considerable debate over its sustainability.
From your perspective as board chair, I’d like to understand the current status of this initiative. You’ve previously expressed your desire to ensure that if we pursue this path, it is executed in a way that maximizes benefits. What’s the present status of the unbundling process as we look to the future?
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DR MTETO NYATI: The government’s policy to unbundle Eskom was established in 2019, and progress has been steady.
However, since this board took over, we’ve managed to accelerate the process. Just over two years ago, we successfully unbundled the National Transmission Company of South Africa.
This agency now operates as a separate entity with its own board, functioning independently.
The ongoing discussions revolve around fully transitioning this company out of Eskom holdings. We, as a board, fully endorse this move, but we must be cautious, ensuring it doesn’t introduce risks that could jeopardize Eskom’s stability.
The positive aspect is that all key stakeholders agree on effectively managing these risks, and you may have heard that National Treasury and DBSA [Development Bank of SA] are looking for advisors to help us navigate the risks identified by Eskom.
As a board, we view this development favorably, as it will help align stakeholders and manage risks to prevent Eskom from declining further during the unbundling process.
We are in a strong position, with key parties cooperating. The emphasis now is on implementation.
JIMMY MOYAHA: Balancing risk management and finding common ground for the benefit of South Africans—this is the mandate of the Eskom board, and they are dedicated to executing it as instructed.
We will conclude our discussion on that note. Congratulations once more to Ntate Mteto Nyati on his reappointment as chair of the Eskom board, who has provided insights on his reappointment and the future direction of Eskom.
