Eskom bleeds cash to pay consultants

2014-12-14 15:00

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Former employees at the parastatal have realised that they can rake in the big bucks by making a strategic career move to consultancy

Eskom executives have taken note of the huge amount the ailing utility spends on consultants, and realised the big money lies in a strategic career move. And if they can get Eskom as a client, all the better.

Eskom spent close to a massive R3?billion on consultants in the financial year to March and has issued tenders for consultancy services worth billions over the next five years.

Former Eskom CEO Brian Dames, who left in March with a R15.4?million package, has resurfaced as a senior adviser at McKinsey & Company, a management consulting firm that counts the power utility as one of its biggest clients.

Dames was recently interviewed on television network CNBC Africa, where he talked on behalf of the firm about his take on energy issues.

McKinsey has handled a number of assignments for Eskom, including drawing up a procurement strategy for its massive build programme and information technology consulting services.

But Eskom spokesperson Andrew Etzinger denied Dames was back at Eskom in a different capacity.

“Brian Dames is not doing any business with Eskom, and is not registered as a consultant,” he said.

He did not comment after being sent an online link to the CNBC Africa interview, and Dames did not respond to emails sent to his McKinsey address.

But Dames is not the only senior employee to leave for a consulting career, which has proven very lucrative for companies vying for contracts from the skills-strapped parastatal. Others have left, mostly before the latest round of rotational power cuts hit.

Kannan Lakmeeharan, its former acting executive for technology and commercial, quit in April to join an unnamed global consulting firm as a senior external adviser. Izak du Plessis, who acted as finance chief after incumbent Bongani Nqwababa quit in 2008, also left for a consulting firm in September.

City Press has also found senior employees outside the executive committee who have left for consulting firms, including a senior network operations engineer who joined McKinsey in January, and a consultant engineer who left to work as a management consultant at boutique advisory firm Regiments Capital in November.

Regiments executive director Eric Wood said the firm does not provide services to Eskom, but hinted at the jostling that goes on for contracts behind the scenes.

“We have pitched for work, including balance sheet optimisation and cash release, but have not been awarded anything,” he said.

“The last appointment by Eskom was when Regiments was appointed joint lead for the issuance of a €500?million foreign bond – about five years ago.”

Eskom’s consultant bill has ballooned over the past 10 years. In 2005, its spending on “managerial, technical and other fees” – which Eskom confirmed was the line item it used to record payments to consultants – stood at R537?million.

By the year to March 2014, it had spent R2.9?billion, R683?million less than the previous year, when an explosion in 2011 at its Duvha Power Station forced management to bring in German consultancy VGB PowerTech to investigate.

The bill is set to grow larger as the utility issued an open tender in 2012 for a panel of consultants to provide engineering and project management services, with an estimated value of R7?billion over five years.

Another tender was issued in October for the provision of engineering consulting services, including the review of transformer designs and reactors.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.