Stefan Schwarzfischer is a fortnight away from marking his first year as the CEO of the Botswana Power Corporation (BPC). Brought in as the Mr Fix-It of a perennially troubled parastatal, Schwarzfischer opens up to Staff Writer, MBONGENI MGUNI
From the moment he was unveiled as the BPC CEO last November, Schwarzfischer was branded as a professional restructurer and re-engineer of troubled firms who would take the lead in the utility’s ambitious Masa 2020 strategy. For workers and unions however, the terms “restructurer and re-engineer” were seen as business-speak for a corporate panga-man, an consummate professional who would cut jobs with as little emotion as a movie hitman.
That Schwarzfischer is German – a nation not globally renowned for being warm and fuzzy – only lent momentum to the panic that was slowly building among the Corporation’s 2,100-strong workforce.
The BPC has suffered operational losses since the 2005/06 financial year, which have widened from an initial P27 million to P2 billion in 2016. The main issues have been widening costs of inputs, particularly power imports set against non-cost reflective tariffs, operational inefficiencies and a bulging debt book.
The Masa 2020 turnaround strategy aims to return BPC to profitability by the year 2020, an exercise that involves restructuring/job cuts, tariff adjustments and process re-engineering. The new CEO’s main task was and is to deliver that strategy on time.
Schwarzfischer’s chequered CV offered frightened workers little comfort. In his past roles, Schwarzfischer gained a reputation for strategic transformation, restructuring and delivering cost-savings as well as production increases. His only previous contact with Botswana prior to joining BPC was when under the employ of KPMG South Africa, he was involved in the restructuring of the Botswana Meat Commission.
The CEO’s profile on the BPC website notes that: “he has over the years managed restructuring processes in almost all the organisations that he worked for including development and implementation of turnaround strategies”.
Schwarzfischer in his own online profile highlights his “20 years of experience managing international market growth, corporate restructuring and process development”.
From the intimidating atmosphere that preceded Schwarzfischer’s arrival last November, employees today call him “Steffy” and an open door policy means they only have to knock to gain an audience. The CEO’s desk faces several glass panels lining the main corridor in the EXCO wing of the BPC’s Motlakase House headquarters, meaning any employee passing through can see exactly what he’s up to and who is in his office.
As we sit in the EXCO wing of Motlakase House, our discussions are punctuated by various EXCO and ordinary staff members acknowledging the CEO as they pass by the glass panes. I ask Schwarzfischer whether workers avoided him in the corridors last November or whether he was aware that his reputation had preceded him.
“I have not experienced that,” he says.
“What I saw is that people were sometimes curious. My office resembles a wildlife enclosure and people were curious to see what the CEO was doing. Today, they greet and move on.”
After his appointment last November, Schwarzfischer travelled across the BPC’s footprint around the country, introducing himself and listening to workers’ input on the state of the Corporation. He conducted door-to-door “surprise visits” and familiarised himself with the Corporation’s work environment, with physical visits to each office at Motlakase House, the BPC’s headquarters.
At Morupule B, whose sale is expected to be finalised by March 2018, workers are particularly unsettled.
“Staff is frightened and you must deal with those fears.
“It’s about how you approach people. Everyone here knows that we need to change and you cannot have change without changing anything.
“You must carefully explain what you are doing.
“You must do this in a constructive way, with no disrespect. When we talk to the unions, there are different political angles at play, which is normal but we need to solve issues.
“Five percent of staff, no matter what you do, it will always be wrong and that’s also normal. You cannot convince everyone that this is the right way of doing things.
“However, BPC has years of proven non-performance and that has to change.”
Steering an organisation the size of BPC through a restructuring means Schwarzfischer’s days are a breathless trail of meetings, decision-making and interventions.
“I get out of bed, start the coffee machine then check Whatsapp messages that arrived during the night.” Under the German, the BPC leverages heavily on Whatsapp as a secure method of quickly sharing information. The Corporation has Whatsapp groups at various levels for speedy communication, a system that boosted the response and recently when nine elephants were electrocuted in Dukwi.
“It’s breakfast, shower then leave and during the drive to the office, there’s one or two conversations which are usually with the Ministry or the Board because they are often only available early morning or night as they are also very busy.
“Once in the office, I run through the schedule for the day, go through documents that need studying, those that need signing and continue through with meetings for the rest of the day.
“I have an open door policy and any staff member can pitch up without an appointment or an agenda. We discuss issues quickly and make decisions. In between I run around the different offices most of the day,” he says.
The cordial employee relations, however, do not blunt the reality of job losses as part of the BPC’s restructuring. Since Schwarzfischer’s arrival, 350 employees have left the Corporation under both retrenchment and voluntary separation. The CEO says at least 500 workers had applied for voluntary separation, but some were rejected for various reasons, including the fact that their skills were still needed within the organisation.
“In general, that was overhanging staff, areas that had been outsourced and so forth.
“In Phase 2 of the process, we will be re-engineering processes and that may mean you need a certain capacity or skills set. We are trying to make sure that it is as smooth as possible and if we see that someone or some work is not needed in a certain area, we will try and find a way to switch that staff member to another workstation.
“This is not to say this method will work on all cases.”
The first phase of the Masa 2020 has also involved renegotiation of power import agreements with Eskom and the use of the Southern African Power Pool platform. Both initiatives have significantly lowered the weight of imported power, the BPC’s single largest cost-driver. For the financial year ended March 2016, the BPC spent P1.96 billion on power purchases, representing about 40% of its operating expenses. The initiatives mean the BPC is paying about 60 thebe per kilowatt hour (kWh) for imports, while Morupule B is producing at a cost of 49 thebe/kWh. Before, the BPC was buying power from Eskom under a firm contract at 140 thebe/kWh. By 2016, the Corporation was on average selling power at 82.1 thebe/kWh suggesting that the BPC for the first time is making a return on its sales of power.
“For us at the moment, whether we are importing power or producing it at Morupule B, the cost is nearly the same. That is quite a relief for us because it speaks to the level of subsidies we are receiving for imports,” the CEO says.
The early results of the re-engineering show that the Corporation actually turned a profit between April and August 2017, from a loss over the corresponding previous period. “This does not mean we stop restructuring but we are seeing the light at the end of the tunnel and we still need to improve a lot.”
The improved books and leaner, meaner structure have also complemented the optimised production coming out of Morupule B, where a high-maintenance programme has seen the troubled power station run at its highest, steadiest levels for more than a year.
The improved financials and better employee relations are part of the reason why a relationship that started with fear and mistrust, has now shifted to nicknames such as “Steffy”. Restructurer, re-engineer or corporate panga-man? The results of the transformation thus far point to a rosier future, but Schwarzfischer’s experience means he knows better than to count his chickens before they hatch.