The following article was published in ThisDayLive on Wednesday, October 29, 2013. To view the original article, click here.
Dickerman: Interstate Electrics Will Deliver Uninterrupted Power to the South-east
Fears have been expressed by stakeholders in the power sector over the competence or otherwise of Interstate Electrics’, the new owner of Enugu Electricity Distribution Company, to effectively manage the power utility that will be responsible for distributing and marketing electricity in the south-east.
Chineme Okafor spoke with the Managing Director of the company, Robert Dickerman, who unfolded the strategies put in place to deliver steady electricity to its customers in the region.
Interstate Electrics will soon take over operations at Enugu Electricity Distribution Company (EEDC) and there are fears that it lacks the capacity to effectively manage the power asset. Can you allay the fears?
I can tell you what our focus area is.
We are expecting to make a lot of improvements to the utility system but our focus area is primarily customer service to be honest with you and customer service has many dimensions. I bring quite a wealth of experience in the utility management business and the team that we are going to assemble has similar experience.
From other markets, what we bring to bear is an understanding of what customer experience should be. We know that the customers in the EEDC areas of operation have really lost faith in the utility as a service provider and I am speaking generally. We know that they are disappointed with the reliability in the electricity that they receive and it is not important to them that are involved.
But what they know is that they don’t have reliable delivery service, we believe that they are disappointed with the outage management process, they are disappointed with the customer service and interaction with the company in terms of dealings.
There is obviously a transition that needs to happen from estimated billing system to metered billing for all customers, that is clearly the way that the relationship should work; no one should have to pay on estimated billing, people should pay based upon what is metered and what their actual usage is and they should actually be transparent to them.
We are going to work very hard to make changes quite quickly to these customer dimensions, to improve the customer service from a technical, engineering and ICT standpoints. That is going to be the most noticeable change that people will see once we take control of the utility and change is going to take a little bit of time but we are going to move relatively quickly to make these changes.
We are planning to upgrade the utility in other ways as well, we are planning to make significant investments in the company; some of the things that we will invest in will simply make it a better managed company and with more capabilities.
We will be investing significantly in information technology for example to upgrade our financial reporting system so that we have a better handle of the company but the first step to us is earning the trust of the customers by having a reliable service that we provide to them and a better relationship.
So, the allegation of incompetence is unfounded. We are not going to take over EEDC, we are coming to join EEDC and partner with it to bring to bear tested principles and strategies on EEDC and its customers. We have come to improve the utility and do not have an alternate staff that we will use to replace the existing staff, we are going to work with them and explain the staff our strategies in moving EEDC forward.
Is there more to your decision to immediately focus on customer service?
We are doing that first of all because the customers are entitled to it and because we have an objective that is also part of our overall plans, which is that we want customers to trust us and come back to the grid because we know that there are a lot of customers whose estimates have been put at about 70 per cent that are by-passing the meters or simply not paying for the electricity that they are getting and that has bankrupted the company.
Now as a private owner, we have an opportunity to invest additional capital to improve the customer service and in return we are going to go to the customer base and ask them to trust the grid and come back to it. This is because the more customers that come into the system officially, and we have a commercial relationship, the better we can make the service for everyone in that as increased revenue go back into the infrastructure, the low we can get the rates.
We have the same objective that they do have and our objective is simply reliable electricity at the lowest rate possible, that is what we are shooting for and we know that is what our customers want as well. We know that they have not been well served in the past but we plan to change that perspective.
Our number one strategic objective and the philosophy by which we are going to operate this company is do right to the customers and the money will take care of itself. We don’t plan to be ignorant about financial performance but to be smart about it and we want to have a better financial performance than they had but the way to get there is by offering a better, quality service, getting the non-paying customers back as paying customers and then you can get the revenue take care of itself.
Have you taken due diligence on the disco regarding its business challenges and prospects?
We have done a bit of due diligence but as you know, this process is a bit unusual in terms of normal acquisition processes. Normally, in acquisition processes the acquiring company will have access to the company, its reports, executives and their daily operations but none of the buyers in this particular process for the PHCN companies have had that opportunity and so the amount of due diligence information we have been able to gather have been quite minimal unfortunately.
Most of the due diligence that we are going to be collecting will happen after we take over, we are still been told by the government that the date will be November 1, there are no guarantees that it will be November 1 but we are certainly planning and hoping that it will be that date depending on the government’s ability to meet up with the requirements.
With such limited knowledge, how do you plan to overcome initial challenges?
I have talked about our first and most important strategic focus, which is improving customer service but another strategy that we have is that we want to improve the technology.
We are making significant investments in meters in order to affect that customer relationship. We are studying the different technologies and capital plans that will enable us to get the best from every naira that we are going to be spending on the investments.
In addition to that, we are going to be sending a message to all our employees and we think they will be about a little over 2000 when we take control and it will be a leaner staff that I have ever operated with because they are about 3,400 today.
But we will send a very strong message to them about what our most important values in line with the pillars of the foundation of the house that we are trying to build. The first of the pillars is integrity. We are going to be talking to our employees about integrity not just as an abstract but in description of what it means to us and we expect them to adapt and live by it. It is not something that we are going to waver on, it means complete honesty and to us a lot more transparency about the operations of the company.
We fully expect that once we take control and have them involved, that they understand that honesty is absolute and we are going to run the company as a honest business; our customers and shareholders expect that from us and the broader stakeholder expect that from us; that in many ways will affect the way we do business in our vendor activities, procurement activities and cash collection, in every aspects of the business because there is nothing new that we are trying to do that does not exist in other markets, we are only going to insist on strict adherence to these principles.
Another pillar that is related with honesty is performance in terms of operating and financial performance. These will include improving the business, we don’t necessarily want to run lean but we want to improve the business, we want processes to run efficiently; there are processes that are currently run manually but should be automated, we are going to upgrade that quickly.
We want good information management processes in terms of what is usually known in the industry as revenue cycle services which is the process of metering, billing and customer services; those are closely linked but they may not be as closely linked today and we want to make sure that those linkages are better tied; that is going to improve the operating efficiency.
What about upgrade of ailing equipment?
Distributing the energy efficiently is the most critical part of this and we know that there are equipment that are operating as part of the network today that are substandard. We have to bring the condition of that equipment as well as the amount of equipment up to speed and also to a reasonable level and we have fully trained and competent engineers operating that equipment, that is core because when we have that, we can then take care of the business processes.
When I talk about financial performance, again, it is extremely important because in order to optimise a business that is privatively owned, you have to know how you are doing and to measure your financial performance. We think that some of those matrix may be missing and we have to fill in the gaps in those capabilities so that we have a very robust ability to measure our financial performance and we are also tracking it to optimise the financial performance of the company, but that however is not our number one strategic objective.
Metering is vital to efficiency and revenue generation, how do you plan to ensure customers are provided with functional meters?
We are going to be investing as much as we can in metering first of all where it does not exist and secondly, we know that there are some meters that have been tampered with and they need to be fixed while some need to be upgraded.
We have not done the audit, this is going to come from the energy audit that we are going to perform, we want to know our customer usage because that will enable us to serve them better and they want us to know them better.
As this market develops, we are going to be engaging the NERC in conversation about how better to serve customer. For example, I don’t believe that there is a peak and off-peak electricity pricing differential in Nigeria and it is widely understood that there are certain times in the day and week that usage is higher.
But as the NBET and others get more sophisticated, I think that it will be clear to Nigerians that at least at the wholesale level and eventually at the retail level that we need to have pricing differentiation to send the right price signal to the market so that energy is not wasted but used efficiently, that is the objective of this.
As the market develops, I am hoping that we get smart grid technologies, smart meters and opportunities for two-way communication which is the fundamental core of smart grid technologies to enable consumers and to give them more flexibility on how they use energy and to have transparent pricing and costing. It is all in the name of efficiency and technology and we are going to be focusing on that.
What about network expansions, how soon will this happen especially with regard to tidying up obvious loose knots in the distribution process?
You make a good point that the devil is in the details and that is what we are going to be addressing. We are going to be focusing on delivery capability. Whenever you are faced with spending money on priority projects, you are going to use some sort of analytical framework or methodology in making decisions.
We are clearly going to be prioritising that but it is not the same thing as saying that we are going to abandon people in the rural areas. We are not going to do that because all of our customers are valuable to us and we have to use rational prioritisation in determining what part of the system needs the investment more but ultimately our goal is to improve capacity and make sure that everyone has access to electricity and improved reliability while frequent outages are reduced, that their billing is accurate and customer service experience is professional and efficient.
There are many dimensions to this. Having transformers, maintenance training programmes, that is all part of the solution and all that is required because it is a big and complex business but the great thing is that EEDC has a lot of professionals with great deal of knowledge and experience in this business and hopefully, they are going to buy into the new focus and strategy and be critical part of the team.
In line with the “fit and proper” guideline of the NERC for managing power utilities in Nigeria, what cognate experience do you have that informed your appointment?
Well, the management team is yet to be announced but it is likely going to be a hybrid of people who are currently in senior positions at the EEDC and some new individuals who have joined the company like me.
I have 33 years in the energy business. I have done a lot of different things in the energy business and a lot of my electricity experience has been in the utility and others have been in the generation side of it. I have led businesses in the developing nations; I have led the utility in Jamaica and was responsible for the Jamaican public service as the chief operating officer of their parent company, Marubeni Corporations and I have operated the largest independent power producer in Trinidad and Tobago.
I was a senior vice president of two US utilities; Edison and Sempra Energy which is the parent company of San Diego Electric and Gas and if you go back far enough, I was a commodity trader starting with oil and gas. I have also got opportunities through efficiency programmes in merger and acquisition (M&A) activities and refinancing to get a view of best practices in terms of technology, financing and performance. That is the perspective that I bring to this job and I think that has something to do with why I was asked to come in.
Robert Dickerman is a renowned American energy executive, as well as a strategy, development and operations leader with outstanding relationships and contacts throughout the energy industry.
He has more than 30 years of executive-level experience in the energy industry and has headed KPMG’s Global Energy Strategy Practice. He has also managed energy companies in Asia, Europe, North America and the Caribbean. In addition, his industry experience includes executive positions in Edison Source, Sempra Energy Solutions, Marubeni Caribbean Power Holding, and recently Zenergy Capital, Inc.
He is currently appointed to lead the multinational and multi-disciplinary management team to be assembled by Interstate Electric Ltd to manage operations at the Enugu Electricity Distribution Company (EEDC). EEDC overseas the distribution electricity in the five south eastern states of Anambra, Enugu, Abia, Imo and Ebonyi.