Eskom's new boss officially starts today...
06 January 2020
Here's what we know about Andre de Ruyter
- Andre de Ruyter has started possibly the toughest job in the country.
- The new Eskom CEO heads an operation with earnings that are far exceeded by its debt repayments.
- Eskom's 10 former CEOs and 6 boards could do little to stop the escalating crisis at the utility
- But he knows coal.
Andre de Ruyter started possibly the toughest job in South Africa on Monday. Apart from a renewed bout of load-shedding and power stations that are falling apart, the new Eskom CEO heads an operation with earnings that are far exceeded by its debt repayments. Eskom's debt burden has now topped R450 billion, and over the past decade, its 10 former CEOs and 6 boards could do little to stop the escalating crisis at the utility.
He studied law and received an MBA in the Netherlands
Pretoria-born De Ruyter holds a BA degree from the University of Pretoria, an LLB from Unisa and an MBA from Nijenrode University in the Netherlands.
He achieved some success at Sasol
De Ruyter started at Sasol straight out of university, and held various positions in Sasol Mining, Sasol Oil, Sasol Gas and Sasol Synfuels International, and lead the development of Sasol's synthetic fuel plant in China. He also headed Sasol's North American operations, and was in charge of the initial stages of the eventually ill-fated Lake Charles Chemicals Project.
One of his biggest achievements was restoring the loss-making Sasol Olefins and Surfactants in Germany to profitability. Sasol wanted to sell the unit in the early 2000s, but after De Ruyter was seconded to the business, he managed to turn it around.
"By the time he left, Olefins and Surfactants was the second-best performing business in the Sasol Group, second only to Synfuels," a Sasol colleague remembers. He was also credited with trying to persuade Sasol not to pursue a Chinese coal-to-liquid project due to environmental and cost reasons – which eventually was the course they took.
De Ruyter was "Mr Coal" at Sasol
Energy expert Chris Yelland believes De Ruyter is well-suited to the Eskom job given that Sasol is a large energy provider itself. Apart from importing gas, it generates a lot of its own power, and also owns its own coal mines, using the output as feedstock to generate power.
"What people are forgetting is that this man knows coal," a former Sasol executive told Business Insider SA. "By the time he left Sasol he was running probably 90% of the Sasol business. The only thing he didn't control was Synfuels (Secunda), SPI (the very small exploration arm of the business). Every other part of the business that he ran required coal."
He headed a struggling Nampak
In 2014, De Ruyter left Sasol to join Nampak, which was starting to show some serious cracks.
Nampak is Africa's largest diversified packaging manufacturer, and has been listed on the JSE for fifty years. It has 25 factories in South Africa, which contributes 60% of its income, as well as 18 sites in the rest of Africa, and 8 in the UK. Nampak has some 5,600 employees – compared to Eskom's 47,000 workers.
The company struggled with net debt of R5.7 billion due to aggressive expansion outside of South Africa, particularly in Nigeria and Angola. This started to backfire after the oil price collapse in 2014-2015, which contributed to foreign currency volatility and problems repatriating money from those markets, as well as from Zimbabwe, which continued to crater during this time.
In addition, its UK operation was hit by Brexit and the South African economy faltered, hitting demand for its products in local markets.
While De Ruyter succeeded in lowering Nampak's net debt to below R4bn by last year – by selling some of its assets and cutting costs - the company continued to suffer, with its revenue down from R20bn five years ago to R17bn, and trading profit remaining flat. Its share price has lost more than 80% of its value during this time.
Mboweni got to know De Ruyter at Nampak
Finance minister Tito Mboweni joined Nampak in 2010 as chairperson, four years before De Ruyter was appointed as CEO. They worked together until Mboweni resigned as chair last year on his return to public service. Dr Reuel Khoza, who recently joined the Public Investment Corporation as chair, also served on the Nampak board with them.
He was a strong proponent for lower power prices
In the past, De Ruyter vehemently opposed above-inflation Eskom tariff hikes and demanded that the utility should address its own inefficiencies before it recovers losses from its customers.
De Ruyter also wanted government to lower electricity rates to industry, and as a former chairperson of the Manufacturing Circle, he blamed high energy costs, in part, for the shrinking manufacturing sector, which currently contributes to around 10% of South Africa's GDP, from 24% three decades ago. Bolstering manufacturing to 28% could create more than 1 million jobs, he argued.
He's good with people
"Andre is a very good people person and he understands that you win on the ground," a former colleague at Sasol says. "He will be looking to the factory floor to rebuild trust and confidence. He used to walk the floor in Sasolburg all the time. He knew every major process on the plant, he knew about coal quality, he dealt with unions all the time and he spent many years managing Sasol's international coal sales."
De Ruyter earned more than R18m at Nampak
According to the Nampak annual report, De Ruyter earned almost R18.3m in 2018. His predecessor at Eskom, Phakamani Hadebe earned less than half of that amount last year, and De Ruyter has already agreed to take a pay cut, the department of public enterprises confirmed.
De Ruyter is married, has three children, and lives in the north of Johannesburg.
Compiled by Helena Wasserman from Business Insider.
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