South Africans lucky enough to have power to watch television this week during record blackouts witnessed a brutal denunciation of the African National Congress as a kleptocracy looting the country into darkness.
After André de Ruyter, the outgoing chief executive of electricity utility Eskom, told news channel eNCA that coal power plants at the heart of the energy crisis had been turned into an ANC “feeding trough”, the ruling party accused him of bearing a “regressive” political and ideological agenda”.
De Ruyterwho also referred to an unnamed “high-level politician” involved in the corruption who was being protected by a minister, was removed from his post by Eskom’s board on Wednesday.
No chief executive of a South African state enterprise has ever criticized the party that controls these crucial assets in such stark terms — but it reflects rising discontent in the country that could mean the ANC’s furious targeting of de Ruyter backfires.
South Africa has a rowdy civil society, prying investigative journalists and an active opposition. The Democratic Alliance, the official opposition, has already demanded, under a freedom of information request, that “Eskom administration . . . make public the name of the senior ANC politician concerned”.
Business groups also demanded an urgent probe, “particularly because of allegations that ministers and advisers in the presidency knew about the continued high levels of corruption and apparently did nothing about it.”
Cyril Ramaphosa assumed the ANC’s leadership in 2017 with a pledge to clear up the corruption that had run rampant under his predecessor Jacob Zuma.
But de Ruyter’s allegations, coupled with rampant graft at other parastatals, have, analysts said, exposed the failure of the president’s quest and revealed a ruling party rotten with corruption.
De Ruyter, whose recruitment from the private sector three years ago to rescue Eskom was approved by the ANC, announced in December that he would stand down after being accused by the energy minister of treason.
“Clearly, I am under suspicion of treasonous activity, but the real culprits can act with impunity,” de Ruyter said.
His allegations struck the heart of the biggest problem facing South Africa’s economy: how to disentangle the ANC from state enterprises that dominate activity but are driving the country to the point of collapse. According to the South African Reserve Bank, rolling blackouts are costing the economy $51mn a day.
For the ANC, its chances of extending the liberation movement’s grip on South Africa’s democracy into a fourth decade in next year’s elections are winking out into the darkness of power cuts that last up to 12 hours a day.
“The energy crisis is a big risk for their electoral prospects. . . when de Ruyter says that [Eskom] is being hollowed out from within by the ANC at the highest level, it removes their plausible deniability,” said Khaya Sithole, a political analyst. Recent polls put the party’s support at 40 per cent after winning more than 57 per cent in 2019.
That Eskom has been shattered by corruption, sabotage and meddling by politicians is well documented. But before now, “you didn’t have anyone with as intimate knowledge as the chief executive being a heartbeat away from naming names”, Sithole added.
As a result, the defenestration of de Ruyter showed “an element of panic” by the ANC: “a very knee-jerk reaction to stop him from speaking at all costs”.
On the day that the chief executive was ousted this week, the National Treasury said that it would pay off and partially take over about $14bn, or two-thirds, of Eskom’s debts. The three-year operation is designed to free up cash to repair power stations and prevent a default.
“It is not ideal, but it is the best decision given Eskom’s fiscal predicament,” Thabi Leoka, an independent economist, said. But the bailout will push up state borrowings that were meant to be falling as a share of gross domestic product.
“It takes us back three years,” Leoka said. “This is also happening at a time when there are tight monetary conditions globally, as interest rates are high, and the cost of capital is going up.”
The debt relief also laid bare the tension between keeping state control of Eskom and hoping for a dose of private efficiency. The treasure has ordered that in return for the money, Eskom will have to open underperforming power plants to private concessionaires and “allow for extensive private sector participation” in transmission.
The treasury was trying to convince markets and rating agencies that it could stop the relief 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 it is completely nonsensical. Eskom is completely free to ignore those conditions.”
Ramaphosa’s government has long dithered on similar promises, such as a three-way split of Eskom into generation, transmission and distribution entities. Under de Ruyter, Eskom prepared a separate transmission company but the state is yet to launch it.
Investors want to build private power projects to help stem blackouts but they need certainty on transmission investment to know they can link to the grid, Leoka said.
“What has been missing through the whole conundrum of the energy crisis has been urgency,” she said. “There has been a total collapse of Eskom as a result of this lack of urgency.”
Sithole added: “They quite simply do not know how to manage [state] entities. That sense of frustration is not isolated to just Eskom. Perhaps other people haven’t been blunt enough [as de Ruyter] to say it out loud.”
Before his explosive TV interview, de Ruyter told the Financial Times: “In our engagements with private investors, we are still far too reliant on South African exceptionalism, the Madiba [Nelson Mandela] magic.
“You know, that lost its luster a long time ago. The world doesn’t owe South Africa anything.”
Additional reporting by David Pilling in Johannesburg