Jacob Zuma. Picture: KOPANO TLAPE
President Jacob Zuma addresses the inaugural Black Industrialists Indaba in Midrand on Wednesday. It has emerged Mr Zuma was directly involved in advocating the inquiry into Eskom. Picture: PUXLEY MAKGATHO

PRESIDENT Jacob Zuma was directly involved in advocating the controversial inquiry into Eskom, initiated by chairman Zola Tsotsi two weeks ago and now the subject of contention among board members.

The proposed inquiry took the public and the market by surprise and resulted in a further credit downgrade by one ratings agency. It was also used as a basis to suspend four senior executives despite Mr Tsotsi acknowledging that they had done no wrong.

Individuals with direct knowledge of events at the Department of Public Enterprises and in the government’s energy war room said that in the days preceding the board meeting at which the decision was taken, Mr Zuma contacted acting director-general Matsietsi Mokholo suggesting that the department support the idea of an inquiry.

Asked about the claim, Ms Mokholo said she was unable to comment. Public Enterprises Minister Lynne Brown also declined to comment.

At the board meeting several days later Mr Tsotsi motivated the need for an inquiry on the grounds that Mr Zuma wanted it to take place. Mr Tsotsi also produced his favoured service provider — consultant Nick Linnell — whom he said came with the recommendation of Mr Zuma. Asked on Monday whether he was acting at Mr Zuma’s bidding, Mr Tsotsi said he would not comment on Eskom affairs in the media.

Mr Zuma’s spokesman Mac Maharaj did not respond to a request for comment.

At the board meeting a resolution was adopted to support both the inquiry and the suspensions but since then the board has grown uncomfortable about these decisions.

At an engagement with Ms Brown last Friday, the board indicated that it wanted to initiate a process to remove Mr Tsotsi. Ms Brown, who must give her permission for such a discussion to take place, assented. The board began formal proceedings on Wednesday afternoon and was expected to table a resolution requesting that Ms Brown suspend Mr Tsotsi.

In a briefing to Parliament’s portfolio committee on public enterprises on Wednesday, Ms Brown said she had requested legal advice on how to proceed should she receive such a resolution. She said Eskom’s memorandum of incorporation as well as the Companies Act did not allow her to interfere politically, operationally or managerially in the utility and she had to take this into account when considering the board’s recommendation. Her caution is understandable as there are expectations that Mr Tsotsi would likely resist his removal. It is also becoming increasingly clear that there are powerful political forces at play in the drama at Eskom.

As its leadership problems deepen, the company’s financial position has continued to deteriorate. On Wednesday afternoon Ms Brown met urgently with other Cabinet ministers to discuss a developing cash-flow crisis. It is anticipated that Eskom will run out of cash to pay suppliers and staff in the next four weeks, unless it receives emergency assistance.

While this is not the first time that Eskom has been expected to "run out of cash", Ms Brown confirmed that the utility did have "a cash-flow problem".

Eskom has been under enormous financial pressure since the National Energy Regulator of SA turned down its request for a 16% tariff increase, granting it 8% between 2013 and 2017. In February, Finance Minister Nhlanhla Nene said Eskom would receive a cash injection, raised from the sale of state assets, this year in two tranches, with the first R10bn by June. The Treasury said Wednesday that while this remained the plan it "did not preclude the funds being transferred earlier should this be deemed desirable".

The Treasury also suggested that Eskom could raise additional borrowings. From the R350bn guarantee facility provided by the Treasury, approximately R144bn had been raised, leaving R200bn remaining.

Eskom is currently without a permanent CEO or financial director, both of whom are suspended. CEO Tshediso Matona laid a complaint with the Commission for Conciliation, Mediation and Arbitration (CCMA) relating to an unfair suspension. The CCMA said that "the matter will be set down for conciliation" in accordance with procedure.

On Wednesday as Eskom again instituted load shedding, Deputy President Cyril Ramaphosa said in the National Council of Provinces that it had deployed senior managers to power stations to ensure scheduled maintenance was carried out.

Mr Ramaphosa said the war room was aware of a number of problems regarding municipalities and government departments owing Eskom money. The utility would improve debt collection, he said.

Also on Wednesday, the construction site at the Medupi power station was closed after workers staged protests.

The National Union of Metalworkers of SA warned that they would escalate their action to a strike if their demands, which included an end to retrenchments, were not met. Medupi is four years behind schedule.

With Paul Vecchiatto and Karl Gernetzky