Question 1 (Marks: 100)

Read the two articles below and answer the question as indicated.

Article 1: The four biggest challenges confronting Eskom’s new boss

Dan Marokane, the new boss of Eskom, will take over a loss-making company that’s under intense pressure to do more to bring an end to years of power cuts that have throttled the economy.

A chemical engineer who previously served as Eskom’s head of group capital, Marokane was named as its chief executive officer on Friday after an almost year-long search for a candidate and will take up the post by the end of March next year. His appointment makes him the company’s 15th leader since 2007.

These are some of the biggest challenges he will face:

Instigating a financial turnaround

Eskom reported a R23.9 billion net loss in the current financial year as the outages curtailed its revenue, and it expects to post a similar result in the 12 months through March 2024.

While Marokane isn’t expected to restore the company to profit any time soon, he’ll have to demonstrate that progress is being made toward turning it around. The government has agreed to give Eskom a 254-billion-rand bailout over three years, contingent on it instituting cost-saving measures, improving the performance of its plants and other reforms. That leaves little room to maneuver.

Stemming power cuts

The performance of Eskom’s mainly coal-fired plants has deteriorated over recent years, with their reliability undermined by poor maintenance, and blackouts have reached a record.

Marokane may be forced to run some generation units beyond their scheduled retirement dates to avert an even bigger electricity supply gap. He will also have to decide whether to continue running auxiliary diesel-fired turbines, which are being used around the clock at huge expense to cushion customers against outages.

Another challenge will be to ensure that the Koeberg nuclear facility, once regarded as Eskom’s most reliable plant, meets deadlines to complete a refurbishment and license extension. The government’s plans to buy additional electricity from independent producers to stabilize the grid have faced multiple delays — but that’s largely outside of Eskom’s control.

Tackling crime and corruption

A judicial panel found that Eskom’s coffers were systematically looted during former President Jacob Zuma’s scandal-marred rule.

The bleed has continued since he left office in 2018, with former CEO Andre de Ruyter estimating that the company loses at least R1 billion a month to corruption and theft.

The army was deployed to power stations to help secure their assets, yet criminals still stripped more than R6 billion from the company in its last financial year.

Responsibility for addressing the crime scourge and bringing those responsible to book primarily rests with the overstretched law enforcement agencies. That leaves the new CEO with limited scope to act, although he will be expected to step up controls.

Reorganising a 100-year-old monopoly

The government announced plans in 2019 to break up Eskom into generation, transmission and distribution units, a move it says will make the various components easier to manage. Marokane will have to push the process through.

The transmission unit will be the first to be spun off, but consent from lenders is still needed and a separate board has to be appointed. The establishment of the business is seen as key to opening up the electricity market more widely to private producers and trading. Eskom has held a near monopoly over electricity provision since its establishment a century ago.

Source (extracted from): Bloomberg. 2023. The four biggest challenges confronting Eskom’s new boss. [Online]. Available at: https://www.news24.com/fin24/economy/the-four-biggest-challenges-confronting-eskoms-new-boss-20231209 [Accessed 22 January 2024].

Article 2: ‘Ethically grounded’: Eskom’s new CEO confirmed

Daniel Leseja Marokane has been appointed as chief executive officer of Eskom.

On Friday afternoon, Minister of Public Enterprises Pravin Gordhan said Marokane would join Eskom no later than 31 March 2024.

The final date will be announced once he has concluded the handover process with Tongaat-Hulett, where his currently acting CEO.

“Mr Marokane thrives on challenges, has the drive to energetically tackle the challenges confronting Eskom and is also ethically grounded,” said Gordhan.

Marokane was previously head of group capital at Eskom. He was forced out of the utility in 2015 in what the State Capture Inquiry found to be a plot conceived by the Guptas and former president Jacob Zuma. The Zondo report found that Marokane’s suspension was a “crucial step to pave the way for the capture of Eskom by the Guptas”.

Gordhan said on Friday that the board has also been requested to established “a professional, skilled and committed executive team that will collectively lead Eskom through a complex but exciting journey including achieving energy security for our people and the economy, implementing the Eskom Just Energy and concluding the restructuring of Eskom”.

“Dan has experience in managing complex strategic, operational and commercial turnaround across the private and public sectors. He also has in-depth knowledge of the Eskom environment. He leads from the front. He will hit the ground running. That is what Eskom and South Africa need right now,” said Eskom chair Mteto Nyati in a statement.

“It is an honour to be chosen to lead Eskom at this critical juncture in its history. I look forward to working with the leadership team, Eskom board, the shareholder [government] and other key stakeholders to accelerate implementation of the Generation Recovery Plan, the creation of transmission capacity as well as other critical Eskom priorities and chart a path to a sustainable future for Eskom. If it is to be, it is up to us,” said Marokane.

The Eskom top job has been vacant since February this year, after former chief executive André de Ruyter abruptly exited his post following an explosive television interview. He gave notice of his resignation in December 2022.

Marokane was one of more than 400 people who applied for the job. The appointment process has been marred by delays and controversy.

In May, the Eskom board recommended Marokane to Gordhan, who rejected the nomination after several months. He countered that the board was supposed to submit a shortlist of three candidates.

A new set of names was submitted in September, and amid growing tensions with Gordhan, board chair Mpho Makwana resigned.

Marokane holds a BSc in chemical engineering from the University of Cape Town and a Masters degree in petroleum engineering from the University of London. He also has an MBA from UCT.

“He has experience working in distressed organisations with visible and pressurised turnaround mandates,” Gordhan said on Friday.

“His recent assignment is at Tongaat-Hulett where he stepped up to lead this financially distressed business when its Group Chief Executive resigned.”

Marokane was appointed as an executive director at Tongaat in 2019 following an accounting scandal, with former executives including former CEO Peter Staude accused of manipulating accounts for years.

Tongaat, which is now buckling under a debt burden of more than R6 billion and struggling to turn its operations around, was placed in business rescue last year and is still in a battle for survival.

Before being appointed as acting CEO, after former Tongaat CEO Gavin Hudson resigned in February, Marokane was chair of the company’s listed Zimbabwean subsidiary, Hippo Valley Estates Limited.

The company said Marokane “played an important role in internal cash flow optimisation programmes and the management of the company’s asset disposals”.

On Friday evening, Marokane said that he will work with the business rescue practitioners over the next few months to ensure a smooth handover.

Marokane is a member of the University of Johannesburg Engineering Advisory Board and previously served as member of the UK High Commission Management Board in South Africa.

Trade union Solidarity previously said that Marokane was its preferred candidate.

“The best chief executive for Eskom is the one who will be prepared to steer the energy utility without tolerating political interference or bowing the knee to the ANC government’s misdemeanour.

“It is for this very reason that Solidarity supports Marokane’s appointment. In addition to his qualification and experience, he has already proven that he will not hesitate to act in Eskom’s best interests, even if it means losing favour with politicians,” Solidarity said.

Source (extracted from): Wasserman, H. 2023. ‘Ethically grounded’: Eskom’s new CEO confirmed.

[Online]. Available at: https://www.news24.com/fin24/economy/ethically-grounded-eskoms-new-ceo-confirmed-20231208 [Accessed 22 January 2024].

Assignment Instructions:

Critically discuss the following statement: ‘Even though Daniel Marokane is the right man for the job, he might already be too late to save Eskom!’

In your discussion ensure that you address the following aspects:

• Analyse Marokane within the context of leadership as person;

• Advise Marokane on the ideal set of influencing tactics to adopt in bringing about positive change in Eskom;

• Analyse Marokane’s role as strategic leader; and

• Assess Marokane’s anticipated managerial roles within Eskom.

Please ensure that you conduct additional research on Eskom and that your response displays a thorough integration of theory and application.

Note:

• The length of your essay should be 2 500 – 3 000 words (excluding in-text references and reference list).
• In order to compile this assignment successfully, you are required to read widely. You need to consult various national and international publications (not older than five years, unless they are seminal sources).

• Support your discussion with relevant theoretical and practical examples that relate to the cases provided. In addition, consider the industry or context being analysed and use examples from industry. Ensure that these examples are relevant to the discussion and used within the right context.

• You will be assessed according to the Referencing Rubric at the beginning of the assignment together with the content rubric provided on the last page of this assignment.

• You must use a minimum of eight credible academic sources such as textbooks, academic journal articles, and/ or subject magazines that will support the answering of this questions. Your prescribed textbook does not count towards the minimum academic sources required. Limit the use of websites as these are in most instances non-academic sources of which Wikipedia is the most commonly used website.

• Visit EBSCOhost which can be found on the library portal/website for relevant academic sources for this assignment.

Answers to Above Questions on Leadership and Management

Answer 1: In order to analyse Daniel Marokane’s leadership style, there are many important factors that are required to be considered. This includes the leadership qualities and experience, the ethical factors that are considered in the decision making process, the past record and achievements, the perception held by the public etc. The background of Marokane indicates that he is a chemical engineer which indicates that he has a good amount of technical knowledge in handling complex situations in Eskom.