Stepping into the role of CEO at Chile’s largest energy supplier, ENAP (Empresa Nacional del Petróleo, or National Petroleum Company), Marcelo Tokman was faced with many challenges, mostly revolving around financial stability. The 100 per cent state-owned company is required by law to change CEOs with each new government, something that occurs every four years. Understandably, this can create a few problems.
“If you look at the financial performance of ENAP over the past decade, you are basically looking at a rollercoaster,” Marcelo explains. “We would have good years but it wasn’t sustainable, and the next year it would crash. We would recover well, only to crash again.”
President Michelle Bachelet’s Government has taken a draft bill to Congress, to change the laws surrounding corporate governance at ENAP to remove the necessity for government officials to sit on its board. At present, the Chairman of the Board of Directors is also Chile’s Energy Minister. “Basically the idea is to take the board members that are government officials off the board, so that we have a more clear distinction between the company and the government—more of a separation—to bring some additional stability and a long-term view to the company. We need to be a publically-owned company which, although involved in implementing the long-term energy strategies for the country, is isolated from more short-term political decisions. Hopefully the next CEO will be appointed under a new law and it will allow for longer-term tenures of CEOs.”
Regardless of this, Marcelo has had to find other ways to stabilise the business. “In 2014 we designed—and got all of the approvals from the government and the board—and began implementing an ambitious long-term strategic plan which considers, among other things, record investments back into our three lines of business,” he says. “That is: exploration and production; refining and marketing; and the new line that we created in 2014, which is gas and power. The plan is to maximise ENAP’s contribution to the energy sector but we want to do this efficiently and responsibly in order to safeguard the company’s finances and guarantee sustainability.”
The strategy is working, and ENAP has seen consecutive years of growth. “We went from investing less than US$300 million per year,” Marcelo explains. “In 2014, we were able to raise that figure to US$400 million, and in 2015 we will reach over US$600 million. This year we should be investing close to US$800 million and the same figure through the next years.”