2009 Review
In my first blog entry at the beginning of the year I was optimistic and expected a marked increase in demand for interims within the energy and utilities sector. I was confident that programmes of change, the push for renewable energy and the prospects of new build nuclear would all generate a wealth of opportunities for interim managers. Well 2009 is nearly over and the finish line is in sight. Although there has been a steady flow of opportunities, the number of assignments has been disappointing and the decision making process frustratingly protracted. There have been some notable successes in 2009 for Interim Partners’ Energy and Utilities Practice however I expected a great deal more. Was my optimism for interim opportunities in the sector misplaced? No. I genuinely believe there is latent demand for interim managers to address the critical issues the sector faces. Interestingly, there has been a marked increase in interim assignments coming through in the final quarter and I am confident this is an indication of more to come in 2010.
So what happened with 2009? For the regulated businesses there is still a great deal of procrastination regarding the need for change. Ultimately, without pressure from Government and regulators there is little impetus for change. The regulated businesses are also facing unique challenges posed by the RPI – X model. For the first time since deregulation they are faced with a deflationary environment. This translates into reduced spending on programmes of change and, with many in the process of restructuring their businesses, existing programmes are being resourced with those internally displaced. The consultation period for smart metering comes to an end during November. This has taken longer than expected and has also frustrated demand.
With falling oil prices, more proactive National Oil Companies (NOCs) and limited credit its been a tough year in oil and gas also. BP and Shell have reduced there dependence on non-permanent resource as part of a broad based and aggressive restructure. For the oil juniors funding has prevented development and production. However, major programmes of change are needed if these businesses are to succeed.
I would welcome an opportunity to share your thoughts, insights and experiences on interim management in 2009 and expectations for 2010.
Duncan Hoggett is Head of the Utilities Practice at Interim Partners.
