By Peroshni Govender
JOHANNESBURG (Reuters) – South Africa appointed veteran public service expert Brian Molefe as acting CEO of its struggling power utility firm Eskom on Friday in an attempt to help keep the lights on in Africa’s most advanced economy.
Limited and unreliable electricity is a major drag on already slow South African economic growth and an irritant for households and businesses alike: on Friday for the sixth day running Eskom had to impose rolling blackouts in order to prevent its creaking grid from collapsing.
Molefe, who is stepping down as chief executive of state transport firm Transnet [TRAN.UL], replaces Tshediso Matona, who was suspended pending an inquiry into the problems at Eskom, which is state-owned.
As well as struggling to supply power, Eskom faces a serious liquidity crunch: It has said it needs 200 billion rand to plug a funding gap until 2018.
Public enterprises minister Lynne Brown said she wanted someone at Eskom who could “do the job from the get go.”
“I need the capability of somebody who had held a leadership role in a state-owned company that’s almost as large as Eskom and who has turned that company around,” she said.
Molefe said his priorities would be to tackle power generation problems, reduce the utility’s dependence on coal – which accounts for close to 90 percent of the power Eskom produces – and save money through being more efficient.
ESKOM FUNDING
Separately, a government official said South Africa had held talks with the World Bank about borrowing a further $1.6 billion remaining on a loan to Eskom.
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Matsietsi Mokholo, acting director general of the Department of Public Enterprises, said South Africa had also discussed the possibility of “future extended funding to Eskom” by the Bank.
The government, which is giving Eskom 23 billion rand this year to keep it functioning, has said its economic growth forecast for 2015 could halve to 1 percent because of power constraints.
Standard & Poor’s (S&P) cut its credit ratings for Eskom to junk on March 20, a move which will almost certainly raise borrowing costs for the firm.
Molefe’s replacement at Transnet, which runs South Africa’s rail and port network, will be decided on Monday, and there were three candidates being considered, Brown said.
A senior Transnet executive said it was likely that Siyabonga Gama, the respected head of Transnet’s rail freight operations, would replace Molefe as head of the overall group.
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