Eskom Seeks New Operating Model as It Fires Executives

(Bloomberg) -- South Africa’s Eskom Holdings SOC Ltd. is considering a new operating model to move responsibility down the chain of command as the financially strapped utility seeks to cut costs and improve efficiency.

The state-owned company is scheduled to announce a long-awaited turnaround plan at the end of November. Eskom, which is grappling with high debt levels and waning demand for its power, said earlier this month that executives were being consulted over job cuts as part of cost-reduction measures.

The company needs a new operating model to “empower divisions and line functions to deliver,” according to an internal strategy document dated October and seen by Bloomberg. The new structure would be expected to improve accountability and productivity, according to the presentation, which included an agenda for an Oct. 3 meeting between top Eskom executives and labor union representatives.

Eskom won’t “make any public pronouncements on this document until we have met with our shareholder and other key stakeholders,’’ spokesman Khulu Phasiwe said by phone. A briefing is planned for Friday at the company’s Johannesburg headquarters to discuss its operational performance.

Eskom Seeks New Operating Model as It Fires Executives

The utility’s payroll, which has grown by more than a third in a decade, has come under scrutiny as executives and government officials consider options to revive the struggling company. Eskom has been identified as a key risk to South Africa’s economy by ratings companies. However, the National Union of Mineworkers has vowed to fight any job cuts, arguing that its workers didn’t make the mistakes that resulted in the current financial situation.

The proposed operating model would compress management, result in faster decision making and improve morale, as well as “allow monitoring and the ability to hold people accountable,” according to the presentation.

While the initial focus of the project would be to move the power company toward long-term sustainability, it’s eventually aiming to become a "Pan African" utility, the document said.

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