Eskom is currently operating under a significant amount of pressure, which is nothing new for South Africa’s state-owned energy sector operator. Load-shedding, inefficiency and a notoriously temperamental power grid are all synonymous with the power-producing firm. To add its operational and infrastructure woes, its abilities and its many challenges are being further encumbered by a hole in its leadership. After announcing his departure in December, 48 year old Brian Dames left the electricity provider three months ago. Yet it still has an “acting” CEO. So where was his succession plan? And with the advantage of distance, what does he believe is the best road ahead? Â – LF
ALEC HOGG: Brian Dames left Eskom towards the end of last year for personal reasons, seeking to spend more time with his family. Joining us now in the studio to tell us what life is like after Eskom, is the former Chief Executive. Brian, we spoke to you in December, an hour after you made the public announcement and at the time, you said you were finished, you were exhausted, and you needed time with your family. It’s been six months.
BRIAN DAMES: It’s been three months. I left at the end of March.
ALEC HOGG: So you hung in there. Did you go to your office every day?
BRIAN DAMES: Yes, we completed the financial year, right up to the last day – I think it was on a Monday – so we completed the year. That was my commitment to Eskom – and that we completed. The last three months I had time to spend with my family. I had to struggle to find a tie this morning, because I’m not used to wearing a tie anymore.
ALEC HOGG: Paul O’Flaherty, your long-time colleague/former Financial Director took a year since leaving Eskom before he’s now over as CEO at ArcelorMittal. Are you going to do the same kind of thing?
BRIAN DAMES: I actually saw Paul this morning. I wish him well with the Mittal assignment. I’m sure it will be good for Paul and for the company. Most probably not… I have been very busy all my life, so I have taken off for a few months. I currently work as an advisor for one of the large global consulting companies, but pretty soon we’ll settle exactly what I’ll be doing, going forward.
ALEC HOGG: So you’re not taking time off completely.
BRIAN DAMES: It will not be completely, no. There’s a lot of work to be done in South Africa, a lot of work in the continent, a lot of opportunities in the energy space, and those are the ones we’d like to explore.
ALEC HOGG: We have a new Public Enterprises Minister, so had you stayed at Eskom, you would have had a new boss. Has she called you?
BRIAN DAMES: No, nobody called me.
ALEC HOGG: Nobody called you and said ‘come back. We might make it worth your while’.
BRIAN DAMES: No, I think there’s a good team at Eskom. I’m sure they’re dealing with the issues they’re having, competently. Nobody called me. I think people still believe that I’m on holiday somewhere. I have many calls from people in the Middle East. I have many engagements on the continent where people would like to have advice/assistance. Some governments are even very adamant as to what I should be doing, so there are quite a lot of options on the table.
ALEC HOGG: And our government?
BRIAN DAMES: No.
ALEC HOGG: They’re not calling you.
BRIAN DAMES: No, nobody called me.
ALEC HOGG: So we have other governments, we have multinationals wanting Brian Dames to work there, but our own government says… That must tell me something about your departure.
BRIAN DAMES: No, I had a great relationship with our shareholder and with the government. We’ve done this in a proper manner. It’s very important to do this correctly; because you see in many entities, you have this massive, big animosity when these changes happen. In the Eskom case – in my case – that was not the case and we’ve managed it that way, in a very mature manner and I think credit goes to both our shareholder (in this case, the government), the Board of Eskom, in how we’ve been able to deal with this. I’m sure they have many things that they…
ALEC HOGG: If you’re in the private sector, the CEO leaves after three-and-half years, and there’s no succession plan, you say ‘that CEO didn’t do his job’. Your succession is a huge part of it and you left. The government hasn’t phoned you to say ‘please reconsider. Please come back’ and there’s no successor in place. What do we think about this?
BRIAN DAMES: There was a succession plan. Eskom made a succession plan. I’ve done my job.
ALEC HOGG: So who’s the CEO?
BRIAN DAMES: I’ve done my job. I don’t appoint the CEO. I can give you the assurance: for all the critical jobs of Eskom, including the Chief Executive of Eskom, including levels in the EXCO and lower in the EXCO, there has been a succession plan in place. By the time I left, there was version 2 of the succession plan in place. It has been there. It has been very clear as to what should be done for many of the positions. The Finance Director position – I can show you the succession plan. I can show you the development plan, I can show you exactly, and that Eskom had an opportunity to then make an appointment.
ALEC HOGG: So what happened?
BRIAN DAMES: That is a process, certainly, that I’ve not been part of either whilst I was there, or post that. It’s a process owned by the Board of Eskom. As a Chief Exec, I dealt with most of the other roles. My role is to put a succession plan in place, to make sure the development process are in place, (which has been done), and then obviously, the Board takes it.
ALEC HOGG: Your side of the street is clean then, in this regard.
BRIAN DAMES: As far as the succession is concerned…
ALEC HOGG: We as South Africans say ‘who’s the boss at Eskom?’ Brian Dame was our boss. He was the man keeping the lights on.
BRIAN DAMES: Yes, I’ve had good support from many South Africans and I must thank them. Wherever I go, whether it’s to a shopping centre or whether it’s throughout the country, people have walked up to me to say ‘thank you’ and asking the same question, but I’m sure that will be resolved speedily.
ALEC HOGG: So what’s next? You must be what…49 now, because last time we spoke, you were 48…
BRIAN DAMES: Yes, I’m turning 49 on the 4th of July. What’s next? Currently, as I said I’m engaged in some advisory work. I’m off to the Middle East this week. I’m off to Nigeria this week, next week and the week thereafter. Then I’m off to Brazil for the BRICS Business Summit. I still lead the BRICS working group on Energy. On my return, I would soon work in the energy space – that’s clear – and we’ll have an African focus. That’s also very clear.
ALEC HOGG: Let’s just take a scenario here: you work with Mackenzie for example, and Mackenzie is appointed by Eskom to put a strategic plan together for them. What would your first suggestion be?
BRIAN DAMES: I think the announcement that were made around the radical change as far as the industry is concerned, is necessary for South Africa. South Africa has to deal, first and foremost its energy issues. It’s been going on for decades and it needs to finally deal with those issues. It needs to deal with the need for new capacity. It needs to deal with the role of Eskom within in the industry, and I know many say ‘break Eskom up. Create private sector’ and it needs to deal with that. I don’t think the answer is necessarily ‘break Eskom up’. If I were in the private sector, which I will soon be, I would love to have Eskom do what it’s currently doing – allowing the private sector to enter and allowing those private sector deals to be funded. Whether locally or globally, it is very attractive and it’s great to have such a player in the market. Eskom will continue to play a dominant role, but it needs to deal with its efficiency, it needs to deal with its skills/competency, and it needs to deal with how the private sector then comes in.
ALEC HOGG: Yes, but the problem with that is that all over the world and right through history, State enterprises by their very nature, are not the most efficient because they don’t have the profit driver. I’ve had this discussion with Marcel Golding back in 1993, where he said ‘look at Eskom, what a greatly run company that is. It shows that public enterprises can be well run’.
BRIAN DAMES: It can be well run. It should be run as a business.
ALEC HOGG: But where does it work?
BRIAN DAMES: You take the classical…what has happened between what happened in China and what has happened in the U.S. and tell me, which one of the two has won. The Chinese have driven a great sense of competitiveness through their State-owned companies with a very clear mandate as to the fact that they should be commercially run, that they should be competitive, that they should have good management, and that their developmental mandate should be transparent.
ALEC HOGG: China is under ten percent of global GDP. America is 26. China has one-point-six billion people. America has four-hundred-million. How can you say which one has won?
BRIAN DAMES: Yes, I know, but certainly, if you look at the post-financial recession where we’re at now.
ALEC HOGG: That’s a tiny period in history.
BRIAN DAMES: Yes, but we also look at that growth of China over a very tiny period of history. Now, it is a combination of both. I would not suggest that Eskom is the future or a State-owned company is the future for energy in South Africa, on its own. You need a combination of that in the private sector. You need it to be benchmarked and you need it to be well run. All I’m saying is that the argument that it cannot be, is not necessarily totally correct. I think a combination of those is absolutely possible. Have the private sector play a role in the industry and make sure that you have a State-owned company that’s well run, that its developmental mandate is clear, that it’s not interfered with, and it’s transparently funded. It’s crucially important.
ALEC HOGG: But Brian, I’m amazed that you’re saying this. While you were at Eskom, I’d understand it, but we have Medupi. We have Medupi with this long overrun, which has cost the economy – by your admission – lots of money. There are the promises on the screen. Medupi delay won’t cause load shedding. Necessary penalties will be at hand. Should any delays be experienced heads will roll etcetera
BRIAN DAMES: And all of that… These are massively complex projects. Medupi will end up exactly the same as all of Eskom’s currently operating power stations, which provides a very low energy base to this country. There’s nothing new about it. There’s nothing new about such a complex project. This is a private sector project and this is true. You can look at some of the big mining projects in this country and outside of the country – all experience similar issues. You’re talking about large, complex infrastructure projects. Yes, there were issues and yes, they will be dealt with but it will be completed. When Medupi is completed and it’s taken ten years, it will have been exactly as the same as all of Eskom’s current power stations.
ALEC HOGG: I don’t know. Mid-America wouldn’t have something of this nature.
BRIAN DAMES: Oh yes, it’s happening there as well.
ALEC HOGG: Where they’re having delayed…
BRIAN DAMES: Exactly, in the U.S., so let’s not say that we’re unique. Yes, there are issues with our suppliers and I can give you a copycat of Medupi, of only two units in Germany – exactly the same.
ALEC HOGG: So you’re still in with the Development State idea. You still think that the State should drive the…
BRIAN DAMES: I think there’s a combination of both. I think that we need to deal with the underlying issues in any sector. If you want the private sector to invest – and we should get the private sector to invest in energy –, you need to fix the pricing of energy. For the private sector to invest, you need to make sure there’s clear policy and certainty, and you need to have a counterparty for the private sector in order for them to raise the funding in order to do that. South Africa’s energy sector needs a combination of both: a large private sector investment and an entity, which at least, brings all of that into the market together otherwise, energy cannot be stored. You have a fundamental problem between the two. Eskom is there. It’s going to play a role, so we can’t wish it away. It needs to become efficient. It needs to continue improving its operation and it needs to create space for the private sector to come in.
ALEC HOGG: It’s complex, but it is a win. Done well together in partnership, these things are brilliant – public and private sector, together. However, we seem to be missing each other somehow.
BRIAN DAMES: We need a public/private partnership. I’m very clear on that and I think we’re going to see a lot of that on the continent. I think many African countries are very focused on what they need to do, but you do need a combination of both. What I found through all of these, is human capacity. The issue isn’t the money. The policy is a big issue, but human capacity…
ALEC HOGG: Brian Dames, it’s been a privilege, as always. It’s good to have you in the studio. You’re looking nice and relaxed, I’m sure you’ll agree – a lot more relaxed than when we last saw Mr Dames here at CNBC Africa. We wish him well with all his knowledge, his insight, and his wisdom so it can be applied not just outside of South Africa, but hopefully, within the borders of this country as well.
