Another failed executive added to the pile of corpses?

Another failed executive added to the pile of corpses?

By Jack Ward, MD of Powermode

The South African business arena – both private and public sector - is littered with the corpses of failed executives. John Oliphant, CEO of the Government Employees Pension Fund was suspended from his duties recently. He joined Vuyisile Kona, acting CEO of SAA, Sipho Thomo, CEO of Armscor, and Nocks Seabi, CEO of Limpopo Tourism and a long line of prominent individuals who have, for one reason or another, failed to live up to their promises.

Has the departure in early April this year of Brian Dames, former CEO of state-owned Eskom, added to the pile? Dames claims he ‘jumped’ and was not ‘pushed’ from his lofty perch. But his speedy exit, well before the end of his contracted period of employment, has raised eyebrows.

Did he simply fail to meet the challenges of his post, or does Dames’ move represent a hastened departure from a sinking ship?

Under his watch Eskom’s critical build programme has steadily fallen behind schedule – so much so that it is now three years late according to Eskom watchers.

Of course, Eskom will remain afloat, propped up on a wing and a prayer – and tax payers’ funding. But who will steer the ship? The helm is now in the tender hands of an inexperienced acting CEO who lacks the management skills needed to oversee projects of the size of the Medupi, the enterprise’s new dry-cooled, coal-fired power station being built near Lephalale in Limpopo province.

Scheduled for commissioning in 2013, the delayed project has been plagued with problems linked to control and instrumentation systems, the poor quality of welding on supplied boilers and - South Africa’s favourite - labour unrest.

Probably the most serious hurdle has been the delay associated with the installation of a flue gas desulphurisation plant to which Eskom is committed in terms of a World Bank loan which is linked to its meeting air quality and particulate emission regulations.

What about the Kusile project? This power station, under construction near Witbank, in Mpumalanga, is scheduled for completion in December 2014, but there are similar question marks surrounding work progress there.

Against this backdrop, the urgent need - underlined by Eskom’s own consultants - to establish 35 new coal mines to support the Medupi and Kusile plants has faded. But industry-insiders have highlighted just how well this dovetails with the dire warning issued by the coal mining industry of an impending ‘coal supply cliff’.

Also under Dames’ watch, emergency protocols have had to be invoked on a number of occasions to obviate national power crises. Consumers have again been exposed to load-shedding, despite assurances to the contrary.

One of the answers to Eskom’s woes would be to encourage the involvement of independent power producers, but the necessary legislation designed to establish legal and regulatory frameworks – the Independent System and Market Operator (ISMO) Bill – has been frozen in deadlock. Parliament recently confirmed that the bill lapsed at the end of last year. Reports suggest that Eskom has been a ‘reluctant participant’ in its proposed implementation which would end its power monopoly.

In addition to this debacle, Dames has overseen a significant backlog in investment in Eskom’s network maintenance, upgrading and refurbishment programme – which in itself carries a price tag of around R 50- to R60-billion. Is this failure the harbinger of more load-shedding?

With all these problems relentlessly staring him in the face, Dames was probably of the belief that his position was untenable and that abandoning ship was the only plausible solution. Will he now search for employment elsewhere, reputation relatively intact (by South African standards), and give another entity the opportunity to experience the pain of mismanagement?

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