ESKOM

1

• ESKOM
• PRESENTATION TO THE PORTFOLIO COMMITTEE
  DME
• 9 May 2001

2
ESKOM 2001 OBJECTIVES

• REGULATED BUSINESS
• Generation
• Transmission
• Distribution

3
CONTENTS

• BACKGROUND
• BUSINESS OBJECTIVES 2001

4

• BACKGROUND

5
STRATEGIC INTENT
Eskom will be the pre-eminent African energy and
related services business, of global stature
6
KEY ISSUES

• Clarity on Governance and Regulatory Framework
• Provide strength and stability through the
  process of restructuring
• Maintaining excellence in customer and business
  performance

7
KEY ISSUES

• Research and Development
• Major projects
• Pebble Bed Modular Reactor
• Cabinet Approval
• EIA
• Detailed feasibility study
• Other projects e.g. wind, solar power,fuel
  cells
• Pilots planned - PBMR, wind, solar thermal and
  discard coal repowering

8
KEY ISSUES

• Governance
• Incorporation of Eskom (Eskom Conversion Bill)
• Shareholder Compact
• Clear mandate from Government as Shareholder
• Mutual understanding and commitment to
  initiatives to achieve strategic intent

9
KEY ISSUES

• Regulatory Framework
• Need to address the following
• Methodology (Legislation - Regulatory Bill)
• Price increase approval process
• Definition of Regulatory model (market model)
• Imperatives for current business needs
• Pre-condition for introduction of
• competition in the ESI

10
KEY ISSUES

• Restructuring Principles
• Should be informed by
• Governments objectives and policy (Energy White
  Paper)
• International experience and expertise
• Unique SA situation
• Need to preserve existing strengths within the
  industry
• Stakeholders input
• Eskoms strategic intent, in respect of Eskom

11

• BUSINESS OBJECTIVES 2001

12
OVERVIEW OF FINANCIAL RESULTS

• Eskom Financial Performance

13
ESKOM 2001 OBJECTIVES

• Objectives
• Financial
• Financial performance
• Economic, efficient and effective use of
  operating and capital resources
• Maintain financial independence

• KPIs and targets
• Productivity improvement not less than 2,5
• Total electricity cost not to exceed R120,08/MWh
• Resources accessed without recourse to Government

14
CUMULATIVE PRODUCTIVITYIMPROVEMENT FOR ALL
RESOURCES
Rm (2000 Rands)
15
ESKOM 2001 OBJECTIVES

• Objectives
• Financial
• Financial performance
• Long-term financial viability

• KPIs and targets
• Net profit - R3 342 million
• After tax - R2 122 million
• Debt-equity ratio less than 0,6
• Sales growth - 2,4 in GWh
  6,1 in Rm

16
DEBT EQUITY
17
TWh SOLD
TWh
18
ESKOM 2001 OBJECTIVES

• Objectives
• Financial
• Maintain good governance
• Improve discipline, governance and accountability
  to support strategic intent and new business

• KPIs and targets
• Shareholder compact approved and implemented
• Effective governance structures and processes
  implemented
• Effective internal controls in place
• PFMA training

19
ESKOM 2001 OBJECTIVES

• Objectives
• Financial
• Information Systems
• Information Systems strategy aligned with
  changing environment

• KPIs and targets
• Enabling agreement and service level agreements
  between Eskom and arivia.kom
• Review and align information system strategy to
  support transformation

20
ESKOM 2001 OBJECTIVES

• Objectives
• Technical
• Technical performance
• Maintain excellent technical performance

• KPIs and targets
• Sustainability index - 80
• Generation plant performance
• Energy Availability Factor - 90
• Unplanned Automatic Grid Separations - 1,7

21
ESKOM 2001 OBJECTIVES

• Objectives
• Technical
• Technical performance
• Maintain excellent Transmission system
  performance

• KPIs and targets
• Transmission system performance
• Supply Interruptions
• No incidents with a severity greater than or
  equal to one
• System Minutes lost not to exceed 6,2

22
TECHNICAL PERFORMANCE
Energy Availability Factor (EAF)
Unplanned Automatic Grid Separations per 7000
hours Number
Total System Minutes Lost Minutes
23
ESKOM 2001 OBJECTIVES

• Objectives
• Customer Satisfaction
• Customer management
• Perception of customers
• Regulation
• Clear regulatory framework

• KPIs and targets
• Customer satisfaction levels, PreCare and
  MaxiCare, at least 8 on a scale of 1 to 10
• Input into design of an appropriate regulatory
  framework

24
ELECTRICITY TARIFF INCREASE
Deflated by consumer price index Base 100 in
1990
25
ESKOM 2001 OBJECTIVES

• Objectives
• Human resource alignment
• Implement employment equity

• KPIs and targets
• Percentage of black management, professional and
  supervisory staff to exceed 50,7
• Percentage of women management, professional and
  supervisory staff to exceed 18,4
• Develop and implement friendly disabled person
  policy

26
STAFF PROFILE
27
ESKOM 2001 OBJECTIVES

• Objectives
• Human resource
• alignment
• Align human resource management to support the
  strategic intent

• KPIs and targets
• Intellectual capital managed and retained
• Transformational leadership development program
• Reward systems updated
• Human resources policies reviewed
• Human resources sustainability index implemented

28
ESKOM 2001 OBJECTIVES

• Objectives
• Human resource
• alignment
• Maintain consultative processes and structures
• Managing the impact of HIV/AIDS
• Ensure people are ready for change

• KPIs and targets
• Processes and structures in place
• Response strategies to HIV/Aids surveillance and
  financial impact study findings implemented
• Leadership empowered to manage change

29
ESKOM 2001 OBJECTIVES

• Objectives
• Human resource
• alignment
• Safety
• Improve safety

• KPIs and targets
• Disabling injury incidence rate - less than 0,4
• Work-related and public fatalities to be lower
  than previous year

30
ESKOM 2001 OBJECTIVES

• Objectives
• Socio economic
• Black economic empowerment
• Encourage black enterprise development
• Electrification
• To electrify additional homes during 2001

• KPIs and targets
• Procurement expenditure - R 2 647,5 million
• including VAT
• 186 370 homes to be
• electrified

31
ELECTRIFICATIONCumulative number of homes
connected
32
ESKOM 2001 OBJECTIVES

• Objectives
• Environmental
• Protecting environment
• Environmental management systems compliant with
  SABS ISO14001 by end 2002

• KPIs and targets
• Action plans in place

33
ESKOM 2001 OBJECTIVES

• Objectives
• Environmental
• Protecting environment
• Impact on environment

• KPIs and targets
• Environmental legislation contraventions - 0
• Relative water consumption - 1,26?/kWh
• Particulate emissions - 0,33 kg/MWh
• Radiation exposure - 0,25mSv

34
ENVIRONMENTAL PERFORMANCEWater Consumed per kWh
Sent out
Litres
35
ENVIRONMENTAL PERFORMANCEParticulate Emissions
Relative to Energy Sent Out
kg
36

• CONCLUSION