Eskom Is Said to Base Executive Revamp on Consultant Work

(Bloomberg) -- Eskom Holdings SOC Ltd. is proposing executive job cuts and a reorganization of management units in an effort to improve the South African utility’s financial position, according to a document seen by Bloomberg.

Eskom, which produces about 90 percent of the nation’s electricity, hired Boston Consulting Group earlier this year to help develop long-term strategic plans for the company, and Lazard Ltd. for financial advisory services. The internal memo seen by Bloomberg has been informed by their input.

The utility proposes a new leadership structure and plans to reduce the number of the most senior executives, a level known as F-Band employees, based on international benchmarks and comparisons to similar electricity companies reviewed by Boston Consulting and a Lazard, according to the document. Eskom’s own strategy work along with consultancy findings were considered “as a basis for recognizing that a restructure at executive level is warranted,” the memo says.

Eskom is struggling with high debt and declining demand for power as it takes steps to emerge from multiple scandals involving graft and mismanagement. The company expects to announce a previously delayed strategic plan at the end of November. In the meantime the threat of blackouts looms, with Eskom announcing a near 10-hour electricity shut off in some areas on Sunday before canceling the stoppage later on.

Job Dismissals

Eskom confirmed on Friday that a job dismissal process was proceeding for F-Band employees due to a new executive structure. Khulu Phasiwe, a spokesman for the utility, didn’t immediately respond to a message seeking comment.

The proposed changes will merge the roles of group executive distribution and group executive customer service to increase accountability, according to the plan. Group executives for generation, transmission, distribution and capital will report to the chief operating officer rather than the chief executive officer, as is currently the case.

The heads of IT and procurement will be demoted to E-Band general managers, the document said. This will also be the case for the heads of strategy, risk and sustainability, security, audit and forensics and corporate affairs, reflecting “the reality that these are support positions that do not necessarily reflect the complexity and seniority necessary to be F-Band positions.”

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