NI Water: How Murphy’s sackings left MacKenzie accountable directly to DRD

Fed up with drinking copious amounts of Northern Ireland Water stories on Slugger? Not as fed up as I am writing them. We kicked off back in July after that PAC when no one but the Belfast Telegraph (who have taken a ‘MacKenzie loyalist’ line throughout), whilst an industrious Jamie Delargy was working on it  sub rosa at UTV was giving it anything more than a cursory glance.

Six months later, a Chief Executive has gone and Regional Development, has the lost their Permanent Secretary (for the first time in Northern Irish history), after taking the kudos of sacking a largely industry competent Non Executive Directors. “Act in haste, repent in leisure”, as an old lady of close aquantence of mine used to say. If there was a cunning plan, it’s not looking so clever now.

Now, despite the fact that we have a good idea what the problems are (DRD have spent stupid money looking at this and other problems in the past), the Minister, knowing his own department cannot be trusted on the matter, is giving the job of the review to a Utilities Regulator’s Office that proposed driving down some of the investment costs in NI Water:

NI Water ’s Business Plan asked for £1,190m to run its business over the next three years. Our draft determination shows that through efficiency and other savings its revenue requirement could be reduced by 11% which would provide a saving of £136m. While we have assumed that domestic charges will not be levied during this period of price control, it is useful to look at the impact these savings would have on the average notional household charge. This would fall by £22 from £391 in 2009/10 to £369 in 2012/13. All non-domestic customers would also see reduced tariffs over the PC10 period.

That was from the PC10 plan, published in September 2009. It was the first of several rifts with senior executive staff (some of whom argued with MacKenzie that NI Water could not make those cuts and remain fit for purpose), and more crucially now for Mr MacKenzie, his Board who also argued the company could not take cuts backs at those rates.

Now Mr Murphy is proposing to pull in that same office (although the regulator himself is new) to conduct another round of expensive navel gazing. You can see why Antoinette McKeown said this morning on Good Morning Ulster that there was a significant conflict of interest in this course of action. Note, it still has to gain approval from the Executive.

But it gets worse. MacKenzie has effectively appointed, through the acquiescence of the Murphy appointed Board, a respectable senior manager (notwithstanding) who has zero Board level experience as Chief Executive from Saturday.

Whatever happens on Monday with the proposed no confidence motion, this is not a competent showing from a Minister whose prime motivation in this appears to have been to avoid bad headlines. And in persistently avoiding them he’s only made himself look incompetent, whatever the truth of the matter.

Muddling through till the May election seems to be Mr Murphy’s plan. That may do well enough for him, but someone needs to take some tough decisions and create the opportunity for NI Water to have a new start and get back on track. It will take at least a year to undo this tangled mess.

The Belfast Telegraph this morning has this to say about the matter:

He is the third chief executive to take the hot seat there in as many years, indicating an organisation with deep-seated problems.

You’d certainly think so. But the truth is that Mr MacKenzie, the sacked Board and even the GoCo’s first Chief Executive Kathryne Bryant have all struggled with the political stasis of a Minster who wanted to dispose of that GoCo, but did not have to direct means to do so.

By any objective means Northern Ireland Water is far from perfect. But its biggest problem has been the political antipathy of the Minister. His poor decision in sacking a competent board and putting in its place a group of people whilst well disposed to his anti-privatisation stance nevertheless have proved useless to an inexperienced CEO in a crisis.

And further, in sacking the four non executives back in March, Conor Murphy left MacKenzie sufficiently unfettered so that he was able to cut the communications budget by some 64% with no opposition either from what was left of the Board (ie one non executive director, and the rest employees) or his own shareholder unit at DRD.

After all of this corporate vandalism and strategic drift, Murphy will struggle to convince anyone worth their salt to take on the job – that’s surely reflected in the situation where the CEO designate has no Board experience – until, one way or the other, Mr Murphy leaves the job.

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