Eskom chief’s explosive interview reveals ANC’s rotten core

South Africans lucky enough to be able to watch television during record blackouts this week witnessed a brutal denunciation of the African National Congress as a kleptocracy that has sacked the country into obscurity.

After André de Ruyter, the outgoing chief executive of electricity utility Eskom, told news channel eNCA that coal-fired power plants had been turned into an ANC “feeding trough” at the heart of the energy crisis, the ruling party accused him of carrying a “regressive political and ideological agenda”. .

De Ruyter, who also referred to an unnamed “senior politician” implicated in the corruption and protected by a minister, was relieved of his post by Eskom’s board on Wednesday.

No CEO of a South African state-owned company has ever so outspokenly criticized the party that controls these crucial assets – but it reflects growing discontent in the country that the ANC’s angry targeting of de Ruyter could backfire.

South Africa has a rowdy civil society, inquisitive investigative journalists and an active opposition. The Democratic Alliance, the official opposition, has already requested information in a request for information that “Eskom’s management . . . publish the name of the senior ANC politician concerned”.

Business associations also called for an urgent investigation, “particularly because of allegations that ministers and advisors in the presidency knew about the persistently 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 deal with the corruption rampant under his predecessor, Jacob Zuma.

But de Ruyter’s allegations, coupled with rampant bribery of other parastatal organizations, have exposed the failure of the president’s search, analysts say, and revealed a ruling party tainted by corruption.

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

“Of course I am suspected of treason, but the real culprits can act with impunity,” said de Ruyter.

His accusations got to the heart of the biggest problem facing South Africa’s economy: how to separate the ANC from state-owned companies that dominate activities but are pushing the country to the brink of collapse. Power outages cost the economy $51 million a day, according to the South African Reserve Bank.

For the ANC, its chances of extending the liberation movement’s hold on South African democracy to a fourth decade in next year’s elections are blurred in the darkness of power cuts lasting up to 12 hours a day.

“The energy crisis is a big risk for their electoral chances. . . if de Ruyter says so [Eskom] being eroded from within by the ANC at the highest level, it removes their plausible denial,” said Khaya Sithole, a political analyst. Recent polls put the party’s support at 40 percent after winning more than 57 percent in 2019.

That Eskom has been rocked by corruption, sabotage and political interference is well documented. But until now “you haven’t had anyone as intimate as the chief executive who was a heartbeat away from naming names,” Sithole added.

As a result, de Ruyter’s defenestration demonstrated “an element of panic” from the ANC: “a very knee-jerk reaction to keep him from speaking at all costs”.

On the day the chief executive was removed this week, the National Treasury said it would pay off and partially absorb about $14 billion, or two-thirds of Eskom’s debt. The three-year operation is expected to free up cash for power plant repairs and prevent failure.

“It’s not ideal, but it’s the best decision given Eskom’s tax situation,” said Thabi Leoka, an independent economist. But the bailout will boost government debt, which should be falling as a percentage of gross domestic product.

“It takes us back three years,” Leoka said. “This also comes at a time when monetary conditions are tight around the world, as interest rates are high and the cost of capital is rising.”

The debt relief has also exposed the tension between maintaining state control of Eskom and hoping for a dose of private efficiency. The Treasury has ordered that in exchange for the cash, Eskom must open up underperforming power plants to private concessionaires and allow “extensive private sector participation” in the transmission.

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

The Ramaphosa government has long hesitated with similar promises, such as a tripartition of Eskom into generation, transmission and distribution entities. Under de Ruyter, Eskom has prepared a separate transmission company, but the state has yet to establish it.

Investors want to build private power projects to curb blackouts, but they need certainty about transmission investments to know they can be connected to the grid, Leoka said.

“What was missing from the whole mystery of the energy crisis was urgency,” she said. “Because of this lack of urgency, Eskom completely collapsed.”

Sithole added: “They just don’t know how to deal with it [state] entities. This sense of frustration is not unique to Eskom. Maybe other people weren’t open enough [as de Ruyter] to say it out loud.”

Ahead of his explosive TV interview, de Ruyter told the Financial Times: “We still rely far too heavily on South Africa’s exceptional Madiba for our engagements with private investors [Nelson Mandela] Magic.

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

Additional reporting by David Pilling in Johannesburg