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BOOKS
Eskom breaks new ground in corporate governance
Published: 20-JAN-05
Eskom is one of the world’s largest electricity utilities
and the national power company in South Africa.
Since 1991 it has electrifi ed approximately three
million homes, and has demonstrated superior
performance both technically and financially. It has also become
something of a beacon for state enterprises across the world in
the fi eld of corporate governance.
This book, by Eskom chairman Reuel Khoza and legal adviser
Mohamed Adam, emerges from the experience of transforming
Eskom from a statutory entity into a state-owned enterprise incorporated
in terms of South African company law. Its two-tier
governance model was replaced with a single board in terms of
current practices of good corporate governance.
Worldwide, there is a wealth of material available on corporate
governance, including codes and guidelines for best practice in
this regard. By comparison, there is little or no information that
addresses the issue of corporate
governance in the context of
state-owned enterprises – which are often characterised by poor
performance, inadequate service delivery, unnecessary bureaucracy
and a lack of good governance.
What this meant was that Khoza and Adam faced unprecedented
governance issues and challenges and were not adequately
covered in the numerous codes and models that do exist.
Instead, they and the members of the Eskom Board of Directors
relied on their own resources to craft appropriate solutions to
challenges such as role clarity, leadership, the independence of
the board, setting performance objectives, duties of directors
and transparency.
They must have got something right. In 2001, Eskom won the
Financial Times Global Energy Award for Power Company of
the Year at the awards ceremony in New York. It is the only stateowned
enterprise from a developing country that is ranked as
one of the seven largest power companies in the world.
“As participants in Eskom’s
transformation, were inspired to
share the lessons learnt and the knowledge gained. This is the
motivation and rationale for this book,” says Khoza.
Adam says it is becoming widely recognised that good corporate
governance is one of the cornerstones of business excellence.
“It is our hope that this book will provide valuable insights
into implementing appropriate governance practices in stateowned
enterprises. By sharing practical ideas and experiences,
we aim to help fill a gap that presently exists in the literature.
Similar ideas may already have been tried, or it may be useful
for readers just to know that others have had similar experiences.”
Africa’s experience in the 21st century has a great deal to
contribute to the growth of knowledge about good corporate
governance, particularly with regard to sustainability and triple
bottom line performance. This book marks the beginning of a
drive to export these and other triumphs to the rest of
the
world.
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