2006 results: a strong platform for growth 1 2006 results: a strong platform for growth eskom...

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2006 RESULTS: A STRONG PLATFORM FOR 2006 RESULTS: A STRONG PLATFORM FOR

GROWTHGROWTH

2006 RESULTS:2006 RESULTS:

A STRONG PLATFORM FOR A STRONG PLATFORM FOR

GROWTHGROWTH

ESKOMHOLDINGS LTD

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GROWTHGROWTH

•Platform for growth

•Overview of the 2005/6 business performance

•Eskom’s commitment to Powering South Africa

•Making it happen

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GROWTHGROWTH

KEY CHALLENGES

•Disruption of power supplies in the Cape region

•Managing the tight reserve margin

•Planned major refurbishment of existing infrastructure

•Capacity expansion programme

•Safety

•Availability of certain skill categories

•Slow progress on EDI restructuring

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GROWTHGROWTH

Electricity distribution industry

Key Future Milestones:

• Decision on industry model, including governance and management– Economic Cluster Ministers – Cabinet

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GROWTHGROWTH

OPPORTUNITIES

•Developing a platform for economic

growth

•Developing skills base in South Africa

•Supply chain value improvement

•Begin to diversify our energy mix

•Keep price of electricity competitive

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GROWTHGROWTH

ELECTRICITY PRICES

0

2

4

6

8

10

12

14

16 •Introduced a multi-year price agreement, enabling better long-term planning by stakeholders

•Eskom intends to keep the price of electricity competitive

•Eskom supports a pricing policy that ensures gradual, stable and predictable price increases

Price of electricity – Industrial customers

Source: Extract from © 2004-2005 NUS Consulting Group International Electricity Survey and Cost Comparison, April 2006

AFFORDABLE AND SUSTAINABLE AFFORDABLE AND SUSTAINABLE TARIFFSTARIFFS

USc/kWh

30% GAP

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GROWTHGROWTH


•Overview of the 2005/6 business performance


•Making it happen

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GROWTHGROWTH

SUSTAINABILITY REPORTING

SOCIO-ECONOMICFINANCIAL

OCCUPATIONAL HYGIENE, SAFETY & ENVIRONMENT

TECHNICAL

• Corporate Social Investment

• HIV and Aids • Electrification• Black economic

empowerment• People measures • Skills development

• Plant availability

• Plant reliability

• System minutes

• Supply loss indices

• Safety• Environmental performance• Research & development• Resources

• Profit before tax

• Return on assets

• Financial Strength

• Credit rating

CUSTOMERCUSTOMERCUSTOMERCUSTOMER• World industrial

electricity prices

• Capacity Expansion Programme

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GROWTHGROWTH

FINANCIAL OVERVIEW2005/6

(12months) 2004/5

(15months)

Profit for the period (R' million) 4,635 5,411

Cash generated from operations (R' million) 12 096 15,302

Capital expenditure (R' million) 10,867 8,999

Total Assets (R' million) 128,152 109,806

Electricity sales (GWh) 208,316 256,959

Average selling price of electricity (c/kWh) 17.05 16.04

Average total cost (c/kWh) 13.99 14.25

Funds from operations/capex, % 141,31 286,29

Return on assets (%) 9.19 12.71

Debt:Equity 0.18 0.17

Interest cover 3.86 5.74

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GROWTHGROWTH

FUNDING

CREDIT RATING Moody’s S&P FitchForeign Currency A2 BBB+ - Local Currency A1 A- AOutlook Stable Stable Stable

•Eskom registered a R65 billion multi-term note programme

•Launched the first bond in the programme (ES33), the longest term bond in South Africa of R2.5 billion

•A seven-year maturity bond issue of €500 million

•R1.6 billion was securitised in May 2006

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GROWTHGROWTH

TECHNICAL PERFORMANCE

83.0

84.0

85.0

86.0

87.0

88.0

89.0

90.0

91.0

92.0

93.0

'2001 '2002 '2003 '2004/5 Target '2005/6

Unit Capability Factor (UCF)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

'2001 '2002 '2003 '2004/5 Target '2005/6

Unplanned Automatic Grid Separations (UAGS)

Availa

bili

ty (

%)

Relia

bili

ty (N

um

ber)

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

'2001 '2002 '2003 '2004/5 Target '2005/6

System Minutes Lost

<1SML

Syst

em

Min

ute

s

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GROWTHGROWTH

0.16

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

'2003 '2004/5 Target '2005/6

Distribution Supply Loss Index (DSLI)

1.7

0.0

0.5

1.0

1.5

2.0

'2004 '2004/5 Target '2005/6

Reticulation Supply Loss Index (RSLI)

TECHNICAL PERFORMANCE

Hou

rs

Hou

rs

5

0.00

1.00

2.00

3.00

4.00

5.00

6.00

'2003 '2004/5 Target '2005/6

Major Incidents

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GROWTHGROWTH

ENVIRONMENTAL PERFORMANCE

0.00

0.10

0.20

0.30

0.40

'2001 '2002 '2003 '2004/5 '2005/6

0.00

0.01

0.01

0.02

0.02

0.03

'2001 '2002 '2003 '2004/5 '2005/61.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

'2001 '2002 '2003 '2004/5 '2005/6

Radiation Exposure

Specific Water Consumption

l/MWhSO mSv

Relative Particulate Emissions

Kg/MWhSO

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GROWTHGROWTH

ENERGY CONSERVATION

•Demand-side management programme aims to save 4 255MW of generation capacity over 20-years

•Joint initiative between the DME, NERSA and Eskom

•Incentives to use electricity more efficiently outside Eskom’s peak demand periods

•In 2006, 171MW demand-side management savings was realised

•Highly successful campaign in the Cape limited anticipated load shedding

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GROWTHGROWTH

ESKOM’S CONTRIBUTION TO ASGISA

- Supplying affordable and quality electricity, including delivering on infrastructure and leveraging economic benefits from all associated activities

- Contributing towards bridging the gap between the 1st and 2nd economy by leveraging Eskom’s capital infrastructure investment programme to increase local content, skills development, SME, BWO and BEE participation

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GROWTHGROWTH

•Eskom’s project management capability to be increased to support the electrification drive – Eskom working with DME and Treasury to source funding

•Contributing towards human resource development – Eskom has committed to train 4000 learners in varying fields of skills including learner ships, scholarships, apprenticeship training, vocational, in service, management etc

•Aligning Eskom’s Corporate Social Investment programmes towards achievement of ASGI SA objectives

ESKOM’S CONTRIBUTION TO ASGISA

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GROWTHGROWTH

ELECTRIFICATION

•Electrified more than 3. 3 million households since inception

•Free Basic Electricity–98% of municipalities participating

–Improved the lives of more than one million people

1,500

2,000

2,500

3,000

'2001 '2002 '2003 '2004/5 '2005/6

CUMULATIVE NUMBER OF HOMES ELECTRIFIED

106 968 connections in 2006

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GROWTHGROWTH

2006 ACTUAL (12 MONTHS)

2005 ACTUAL (15 MONTHS)

Total connections 106,968 222,314 Direct connections excluding farm workers 101,621 219,885 Farm worker connections 1,105 2,429 Special projects, number 4,242 n/a

Capital expenditure (Rm) 496 891 Capital costs per connection (Rands) 4,207 3,942

Farmworker incentives paid (Rm) 2 5 Special Projects (Rm) 44 n/a

Funds applied to the electrification of grid schools and clinics by DME (Rm) 36.50 79.84 Number of connections 473 1,286

ELECTRIFICATION

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GROWTHGROWTH

ELECTRIFICATION PER PROVINCE

0

10,000

20,000

30,000

40,000

50,000

60,000

Eastern

Cape

Free Sta

te

Gaut

eng

KwaZu

lu/N

ata

l

Lim

popo

Mpum

ala

nga

North W

est

Northe

rn C

ape

Western

Cape

2004/52005/6

TOTAL NUMBER OF CONNECTIONS (including farm workers TOTAL NUMBER OF CONNECTIONS (including farm workers homes)homes)

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GROWTHGROWTH

ELECTRIFICATION PER PROVINCE

0

50

100

150

200

250

300

350

400EA

STER

N C

APE

FREE

STA

TE

GAUTE

NG

KW

AZU

LU/N

ATA

L

MPU

MALA

NGA

NORT

H W

EST

LIM

POPO

NORT

HER

N C

APE

WES

TERN

CAPE

2004/52005/6

SCHOOLS AND CLINICS CONNECTIONSSCHOOLS AND CLINICS CONNECTIONS

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GROWTHGROWTH

BEE PROCUREMENT

During the year Eskom spent – R11.1 billion with

BEE entities of which,

– R1.3 billion with black women- owned enterprises

* Prior to 2006 the BEE spent included VAT

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

*2001 *2002 *2003 *2005 '2006

R’m

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GROWTHGROWTH

BLACK ECONOMIC EMPOWERMENT

•MAJOR CATEGORIES OF SPEND

•Coal

•Coal Transportation

•Transformers

•Mini-Substations

•Control and Instrumentation Systems

•Plant Maintenance

•Scaffolding and insulation

•Petrol and Diesel

•Electricity Dispensers

•Motor vehicles

•Computers

•Electrification Projects

•SPEND

•Spent R11.1 billion (2005: R10.3 billion) on black-empowered enterprises as follows:

•BEE 67%

•SMME 24%

•BWO 17%

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GROWTHGROWTH

EMPLOYMENT EQUITY

60.1

50

51

52

53

54

55

56

57

58

59

60

61

2001 2002 2003 2004/5 '2005/6

31.8

10

15

20

25

30

35

2001 2002 2003 2004/5 '2005/6

Gender EquityRacial Equity

%%

2.5

0

0.5

1

1.5

2

2.5

2002 2003 2004/5 '2005/6

Employees with Disabilities

%

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GROWTHGROWTH

EMPLOYMENT EQUITY

ESKOM 2005/6 2004/5

RACEBlack staff at managerial level 60.1% 57.9%Black staff at all levels 70.0% 69.1%

GENDERWomen at managerial level 31.8% 28.9%Women at all levels 24.7% 23.3%

PEOPLE WITH DISABILITIES 2.5% 2.0%

INTERNAL PROMOTIONSBlack staff at all levels 78.1% 75.3%Women at all levels 39.7% 44.4%

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GROWTHGROWTH

MANAGING HIV AND AIDS

•Manage the impact of HIV and Aids through integrated response strategies

•Special focus on voluntary confidential counselling and testing

•Employee assistance programmes in place including support groups for Eskom employees living with HIV/Aids

•Launched the 3 Zeros Campaign

– No new infections

– No mother to child transmission

– No ill-health retirements

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GROWTHGROWTH

SAFETY

•10 (19 in 2004/5) work-related employee fatalities

•34 (40 in 2004/5) Public fatalities

•DIIR of 0.4 (0.45 in 2004/5)

•Intensified focus on safety improvement initiatives

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GROWTHGROWTH

EDUCATION AND TRAINING

•Invested R543m in development and training

•2 163 bursars supported–89% black–55% women

•Qualitative and quantitative focus–Leadership–Technical and engineering–Artisan

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GROWTHGROWTH


•Overview of the 2006 financial year’s performance


•Making it happen

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CAPACITY

EXPANSION

PROGRAMME

POWERING SOUTH AFRICA

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GROWTHGROWTH

CAPACITY PROGRAMME•5 years capacity expansion at a projected

cost of R97 billion including refurbishments

•Return to service of three mothballed power stations – Camden, Grootvlei and Komati

•Major Capacity Expansion– New coal fired base load station

– New pumped storage – Transmission Line – Open Cycle Gas Turbines - Mosselbay and Atlantis (R3.5 billion)

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GROWTHGROWTH

FIVE YEAR SPENDING PLAN

Corporate2%Distribution

16%

Transmission15%

Generation67%

New Business4%

• Regional projects

• Previous mothballed stations• Open Cycle Gas Turbine• Coal technology• Hydro and gas options

• Lines and cables• Substations• Reticulation networks

• Network Strengthening

• Renewable Energy • Underground coal

gasification

PLANNED SPENDING OVER NEXT 5 YEARS: R97 BILLION

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GROWTHGROWTH

Capacity Project Funnel

Build1000

800

1775

165

Feasibility, Business

Case, Contract

Concluding

Pre - feasibility

ResearchOpportunity

Identification

1128

1520

300

600

6000

1000

3600

10001600

1050

1600

1300

961

15575 MW 7800 MW 23100 MW

1050

800

90

112

4000

100

Version CPF 1.3.17 Date: 14/09/2006

- Coal

W - Hydro

- Nuclear

- Gas

- Coal- Coal

- Hydro

- Nuclear

- Gas

- Coal

Solar-

Transmission-

500

* Possible 2400MW Mid Merit

0

0

0

0

90

9

90

1800

1200

2000

1775

3500

* Brown outer circle indicates – out of Borders project

2100

872

1000

4200

500

800

2100

1332

4200

4200

500

1050

200

600

0

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GROWTHGROWTH

CAPACITY EXPANSION

East LondonEast London

Port ElizabethPort Elizabeth

BloemfonteinBloemfonteinUpingtonUpington

JohannesburgJohannesburg

PretoriaPretoria

PolokwanePolokwane

Cape TownCape Town

• Elements of new 765kV to be constructed by 2009

• Various HVDC options under investigation

• Elements of new 765kV to be constructed by 2009

• Various HVDC options under investigation

765kV line765kV line

400kV line400kV line

Concentrating Solar Plant

OCGT

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GROWTHGROWTH

OPEN CYCLE GAS TURBINES UNDER CONSTRUCTION

•Peaking – uses liquid fuel

•4 Units in Atlantis, 3 Units in Mossel Bay–7 x 146MW = 1022MW

•Investment R3.5bn

•All units commercial by Winter 2007

•Both sites on industrial zones

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GROWTHGROWTH

HOW MANY MW ARE ADDED TO THE SYSTEM?

The second OCGT represents GAS 1 project andThe third OCGT plant will be provided by the IPP (DME process)

CAMDEN GROOTVLEI KOMATINEW

BASELOAD CCGT ARNOTPUMP

STORAGE OCGT TOTAL

2005 190 20 210

2006 380 376 40 796

2007 380 376 40 1,068 1,864

2008 570 376 202 80 1,022 2,250

2009 202 384 60 904 1,550

2010 1,152 1,152 1,520 1,128 404 - 1,536 240 - 2,994 7,822

BASE LOAD PEAKING

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GROWTHGROWTH

MILESTONES• Camden

– Units 6, 7 and 8 operational– Unit 5 sychronised and in final commissioning– Unit 4 operational by year-end

• Open Cycle Gas Turbine– Good progress; some delay due to rains

– Completion by winter 2007 on a very tight programmeOpen Cycle Gas Turbine

• PFMA approval received for Gas 1 and Majuba Rail

• RoD issued for Project Alpha and the 765 kV line

• Good progress at Grootvlei

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GROWTHGROWTH

NEW MEGA POWER PROJECTS

PROJECT MW ADDED COST

Base load power station – Supercritical, near Lephalale

2100MW R26 billion

Pump storage power station - Drakensberg

1332MW R9 billion

Transmission 765kV line, substations – Standerdton to Cape Town, +- 1500km

N/A R6 billion

Total 3432 MW R41 billion

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GROWTHGROWTH


•Overview of the 2006 financial year’s performance


•Making it happen

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GROWTHGROWTH

MAKING IT HAPPEN OPPORTUNITIES

•National alignment with a common vision

•ASGI SA

•Dedicated and focused asset creation division

•Funding strategy in place with two successful bond issues

•Eskom Ethos – building together

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GROWTHGROWTH

MAKING IT HAPPEN CHALLENGES

•Sourcing human capital / Talent

•Contractor and supplier development

•Enhancing procurement processes

•Environmental Impact Assessments

•Land and servitude acquisition

•Mid-life maintenance programme in parallel with capacity expansion programme

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GROWTHGROWTH

Thank you for your attentionThank you for your attention

BUILDING TOGETHER

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GROWTHGROWTH

Additional information requested

•PBMR Status

•Nuclear Waste

•Energy Losses

•Tariff Structures

•Conductor theft

•Succession strategy

•Eskom climate change strategy

•Key sustainability initiatives

•Corruption in SOE’s – Eskom’s strategy

•Disruption of Power Supply – Cape Region

•Key risks to the Cape supply

•CSI

•National Electrification Fund Allocation Principles

•Eskom’s Africa Strategy

•Research & Development

•Renewable Energy in Eskom

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GROWTHGROWTH

PBMR status

•Licensing in progress, due date of submission to Nuclear Regulator - June 2007

• EIA record of decision in progress, due date – Sept 2007. Long lead times for DEAT influence decision

• Contract placement with PBMR company for construction of demonstration unit – June 2007

•Staffing is going according to plan to prepare for the construction and operating of demonstration unit

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GROWTHGROWTH

Nuclear Waste

•National Policy on Radioactive Waste Management has been issued– Allows for Governance structures to be created and appointed in five year’s time.

– Allows for a central fund to be created for research relating to and construction of final storage facility

•Eskom and NECSA has formed a working group to ensure alignment with the National Policy issued

•Eskom is providing for all nuclear reactive waste disposal and decommissioning costs

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GROWTHGROWTH

Energy Losses

•Meter audits are carried out continually

•Increasing feeder balancing throughout the business to pinpoint losses more effectively

•Selected customer areas are audited and reported on a regular basis

•Any illegal connections are immediately removed and a fine and reconnections charges are raised against offenders

•Split metering pilot project currently under way in Soweto. This technology is intended to prevent meter tampering by making the equipment inaccessible.

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GROWTHGROWTH

Tariff Structures

•Eskom tariffs are being restructured to be more cost reflective and inherent cross-subsidies are maintained as per the NERSA subsidy guidelines

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GROWTHGROWTH

Conductor theft: Current Risk Landscape

•Criminal related fatalities have decreased

•There is an overall decrease in the total number of fatalities but an increase in total number of injuries

•Key risk areas

– Motor vehicle accidents

– Objects into lines

– Low hanging conductors

– Physical electrical contact

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GROWTHGROWTH

Conductor Theft: Current Strategy (Criminal)

• Izinyoka adverts on Radio and Television

• Branded 1000 Taxis with Izinyoka adverts

• Billboards with Conductor theft and Illegal connection adverts

• Media Tours with National Journalists to highlight Illegal connections and Vandalism (E. Cape, KZN, Bloemfontein)

• Grape Vine cards (educate youth with criminal messages)

• Production of Calendars (Educate Legal Fraternity)

• Articles in De Rebus (magazine for Legal Fraternity)

• Criminal Poster Campaign at all Magistrates courts

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GROWTHGROWTH

Conductor theft: Current Strategy (Education)

• Inserted safety messages in School report cards (piloted)

• Proactive visits to 6210 schools nationally to educate on the safe use of electricity

• Partnered with external companies to educate their staff on safety

• Poster Campaign at all Vending stations

• Ran a school safety campaign in the Mail and Guardian

• Negotiating with DOE to Include Electrical Safety into the curriculum

• Competition between the Community Media to write and publish articles on safety

• Safety inserts into community and national newspapers

• Some schools were fitted with Play Pumps. We branded them with our safety messages

• Community Road Shows to educate on the safe use of electricity (Bloemfontein, KZN, Gauteng and Eastern Cape)

• Internal Campaigns at Key Customers to educate their staff

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GROWTHGROWTH

Conductor Theft: Campaign Successes (Criminal)

• Because of the direct and hard hitting Izinyoka Campaign, fatals and injuries as a result of Criminal activity significantly reduced

• The rate of cable and conductor theft incidents reduced by 27%

• Although the rate of incidents have reduced, the rate of cases being solved have increased

• Reporting to the crime line has also increased

• The Izinyoka advert won the best liked and noted category for 2 years in a row and came second in its third year

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GROWTHGROWTH

Conductor Theft: Planned Activities•Commuter Classrooms

•Shoppa Shows

•2 More media tours

•Busy with Resource Guide. Still in discussion

•Would like to shoot a new advert to make Wiseman come alive (has to be done but dependant on budget)

•Do a few more media releases but get DoL to endorse

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GROWTHGROWTH

Succession strategy

•Strategy in place

•Appointment of new CE six months before current CE leaving for effective hand-over period.

•Revised strategy to be approved by Board end of October 2006.

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GROWTHGROWTH

Eskom climate change strategy

• Aligned with and in support of the National climate change response strategy and related DME policy

• Long-term view

• Balanced and holistic– Addresses both adaptation and identifying opportunities for mitigation

– Demand and supply side actions

• Research a key component – primary innovation– Recognises that we will continue to use coal – focus on clean coal and carbon

sequestration

– Diversification of primary energy, including nuclear, gas and renewables

– Efficiency

• Reporting

• Integrated into investment and decision making – trade-offs e.g. dry cooling

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GROWTHGROWTH

Eskom and climate change• Research fund to promote renewable energy projects

• CDM projects – PIN stage

• Continuation of the DSM programme with climate change and other environmental benefits

• Diversification on the supply side

- Gas – OCGT and CCGT

- Nuclear

- Large hydro imports

- Bulk renewables

• Economic implications – national and company level

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GROWTHGROWTH

Key Sustainability Initiatives• Implementation of the Eskom sustainability

strategy, Climate Change strategy and Renewable Energy Strategy

• Reporting against sustainability performance index

• Benchmarking against JSE SRI

• Strategic partnerships and alliances at the international and national level.

• Key research projects in support of sustainable development

• Demand side management and internal energy efficiency programmes.

• Internal training programmes.

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GROWTHGROWTH

Corruption in SOE’s – Eskom strategy•War on complacency and dishonesty

•Whistleblowing Policy

•Forensic Investigation Function

•Fraud Prevention Programme

•Ethics Management Programmes

•Integration of Governance Functions

•Established crime prevention and Response plan

•Periodic reporting to Governance committees on crime trends, risks, tendencies and countermeasures

•Fraud Detection Initiatives

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GROWTHGROWTH

Corruption in SOE’s – Eskom strategy

•Due diligence Exercises

•Pre-employment screening/vetting

•Regular Audits in identified risk areas

•Compliance to legislation

•Corrective measures(arising from investigations)

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GROWTHGROWTH

DISRUPTION OF POWER SUPPLY – CAPE REGION

•DSM – Electricity saving initiatives

–CFL’s

5.3 million CFLs were distributed

–GAS

Voluntarily exchange electric stoves and heaters for new gas units

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GROWTHGROWTH

Key risks to Cape supply

•The long term failure of a major 600 MW coal fired thermal unit or a 900 MW nuclear thermal unit will increase the vulnerability of the power system to load shedding based on the location of the failure.

•The failure of more than one transmission lines in some key transmission corridors.

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GROWTHGROWTH

CORPORATE SOCIAL INVESTMENTActual 2006 Actual 2005

R'millions (12 months) (15 months)

Social, economic development and national programmes 25.3 30.9

Eskom mathematics and science education programme 3.9 4.3

Rural development 13.6 19.8 Legacy projects 6.0 6.8

SAAVI - 15.0

Health care professionals training 2.0 2.0 Eskom public scholarship programme 46.3 59.9

- Maths and science students 7.4 16.1

- Learnerships 5.0 2.8

- Other scholarships 33.9 41.0

Donations (Esdef, Chairman & Chief Exec fund) 8.1 11.7 Cause-related initiatives 5.3 9.4 -Expo for young scientists 4.8 5.9 -Proudly South African campaign 0.5 3.5

110.5 159.8

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GROWTHGROWTH

•The Integrated National Electrification Business Planning Unit (INEP BPU) makes recommendations for the approval of the Integrated National Electrification Plan [INEP] to the National Electrification Advisory Committee (NEAC) comprising of DME, National Treasury, SALGA, AMEU, DWAF, IDT, DPLG and Eskom based on the following criteria:

– Focus on backlog

– Apply a rural bias

– Prioritise on Integrated Sustainable Rural Development Strategy (ISRDS) Nodal Zones

– Maximise on available infrastructure

– Past Performance

– Government priorities and initiatives such as Integrated Infrastructure Development

– Regional capacity e.g. resources

NATIONAL ELECTRIFICATION FUND ALLOCATION PRINCIPLES

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GROWTHGROWTH

NATIONAL ELECTRIFICATION FUND PROCESS FOR THE ALLOCATION OF FUNDING TO THE PROVINCES

• Use same criteria as in National Electrification Advisory Committee

• Adjust programme as per DME requirements and in line with the Change Control Process.

• Provincial/Local municipal consultation done through:– Provincial IDP/MIG Forums chaired by Provincial Local Govt officials

– Provincial Energy Forums [where applicable] and these are chaired by Provincial Local Govt MEC’s

– Project sign-off per municipality based on municipal resolution

• Final funding allocations to Municipalities are based on the approved budget by DME and are consistent with IDP agreements signed between Eskom and Municipalities

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GROWTHGROWTH

Eskom’s Africa StrategyPriority African countries:

1. SADC– Botswana - additional

generation opportunities (coal, gas)

– DRC - Inga project (hydro)– Mozambique - additional

generation opportunities (hydro, coal, gas)

– Namibia - additional generation opportunities (gas)

– Uganda - existing footprint– Zambia - potential surplus

capacity

2. Rest of Africa– Nigeria - monitor market

potential

In line with Eskom’s core business, activities

will be focused on:

• Generation opportunities (>100MW)– SAPP projects to be prioritised

• Transmission inter-connectors– SAPP projects to be prioritised

• Distribution opportunities– In support of generation and transmission projects

– Electrification project management opportunities will be pursued

– Retail Eskom will service key customers, focusing on supply to

major customers such as mines, smelters, industry, etc. Domestic market will be avoided, unless it is linked to

another investment

– Existing concession (Uganda): act in accordance with outcome of due diligence

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GROWTHGROWTH

RESEARCH AND DEVELOPMENT

3%

26%

7%

35%

5% 3%

8%

10%

3%Primary Energy Diversification 3%

Electricity Supply and DeliveryExpansion 26%

New Markets and Future Demand 7%

Plant Optimisation andManagement 35%

Sustainable Development 10%

Renewables 3%

Integrated Systems and Solutions 5%

Strategic Research and Innovation3%

Research Management 8%

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GROWTHGROWTH

Renewable Energy In Eskom

• Policy and strategy in place

• Extensive research programme for more than 10 years

• Focus of research on overcoming barriers and building local capacity

• In excess of R60 million spent over the last 3 years

• Some of the RE pilot projects by Eskom:

– Klipheuwel wind farm – Western Cape (completed)

– Dish Stirling operational assessment – Johannesburg (completed)

– Biomass gasifier – East London (ongoing)

• Huge solar thermal electric potential, but cost and technical challenges

Wind

Solar

2006 results: a strong platform for growth 1 2006 results: a strong platform for growth eskom...

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strong platform

economic growth

growth overview

growth eskom holdings

gap slide

financial overview slide

south africa of r2

programme es33