eskom presentation to the portfolio committee dme presentation to the portfolio committee dme 9 may...

ESKOMESKOM

PRESENTATION TO THE PORTFOLIO PRESENTATION TO THE PORTFOLIO COMMITTEE DMECOMMITTEE DME

9 May 20019 May 2001

ESKOMESKOM 2001 OBJECTIVES

REGULATED BUSINESSREGULATED BUSINESS

GenerationGeneration

TransmissionTransmission

DistributionDistribution

CONTENTSCONTENTS

BACKGROUNDBACKGROUND

BUSINESS OBJECTIVES 2001BUSINESS OBJECTIVES 2001

BACKGROUNDBACKGROUND

STRATEGIC INTENTSTRATEGIC INTENT

Eskom will be the pre-eminent African energy and related services business, of global stature

KEY ISSUESKEY ISSUES

Clarity on Governance and Regulatory Clarity on Governance and Regulatory

Framework Framework

Provide strength and stability through Provide strength and stability through

the process of restructuringthe process of restructuring

Maintaining excellence in customer and Maintaining excellence in customer and

business performancebusiness performance

KEY ISSUESKEY ISSUESResearch and DevelopmentResearch and Development

Major projectsMajor projects Pebble Bed Modular ReactorPebble Bed Modular Reactor

– Cabinet ApprovalCabinet Approval

– EIAEIA

– Detailed feasibility studyDetailed feasibility study

Other projects e.g. wind, solar power,fuel cellsOther projects e.g. wind, solar power,fuel cells

PilotsPilots planned - planned - PBMR, wind, solar thermal and PBMR, wind, solar thermal and discard coal repoweringdiscard coal repowering


GovernanceGovernance

Incorporation of Eskom (Eskom Incorporation of Eskom (Eskom

Conversion Bill)Conversion Bill)

Shareholder CompactShareholder Compact– Clear mandate from Government as Clear mandate from Government as

ShareholderShareholder

– Mutual understanding and Mutual understanding and

commitment to initiatives to commitment to initiatives to

achieve strategic intentachieve strategic intent


Regulatory FrameworkRegulatory Framework

Need to address the following:Need to address the following:– Methodology (Legislation - Regulatory Bill)Methodology (Legislation - Regulatory Bill)

– Price increase approval process Price increase approval process

– Definition of Regulatory model (market Definition of Regulatory model (market

model)model)

Imperatives for current business needsImperatives for current business needs

Pre-condition for introduction of Pre-condition for introduction of

competition in the ESIcompetition in the ESI


Restructuring PrinciplesRestructuring Principles Should be informed by:Should be informed by:– Government’s objectives and policy Government’s objectives and policy

(Energy White Paper)(Energy White Paper)

– International experience and expertiseInternational experience and expertise

– Unique SA situationUnique SA situation

– Need to preserve existing strengths within Need to preserve existing strengths within

the industrythe industry

– Stakeholders inputStakeholders input

– Eskom’s strategic intent, in respect of Eskom’s strategic intent, in respect of

EskomEskom

BUSINESS OBJECTIVES 2001BUSINESS OBJECTIVES 2001

OVERVIEW OF FINANCIAL RESULTSOVERVIEW OF FINANCIAL RESULTS

Eskom Financial Performance:Eskom Financial Performance:

2000 %

1999%

Change

Net Income R'm (before tax) 3,213 2,062 55.8%

Net Income R'm (before tax and depreciation life adjust.) 2,572 2,062 24.7%

Return on Asset (Historical) 9.95 8.26 20.5%

Debt-Equity 0.68 0.89 23.6%

Electricity Sales Growth 2.8% 1.1%

Productivity R'm (Regulated Business) 428 (351)

ESKOM 2001 OBJECTIVES ESKOM 2001 OBJECTIVES

ObjectivesObjectives

FinancialFinancial

Financial performanceFinancial performance

Economic, efficient and effective use of operating and capital resources

Maintain financial independence

KPIs and targetsKPIs and targets

Productivity improvement not less than 2,5%

Total electricity cost not to exceed R120,08/MWh

Resources accessed without recourse to Government

-50

250

550

850

1150

1450

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

R’m R’m (2000 Rands(2000 Rands))

CUMULATIVE PRODUCTIVITYCUMULATIVE PRODUCTIVITYIMPROVEMENT FOR ALL RESOURCESIMPROVEMENT FOR ALL RESOURCES

ESKOM 2001 OBJECTIVESESKOM 2001 OBJECTIVES


FinancialFinancial

Financial performanceFinancial performance

Long-term financial viability


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

DEBT : EQUITYDEBT : EQUITY

0.5

0.9

1.3

1.7

2.1

2.5

2.9

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

100

110

120

130

140

150

160

170

180

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

TWh TWh

TWh SOLDTWh SOLD



FinancialFinancial

Maintain good governanceMaintain good governance

Improve discipline, governance and accountability to support strategic intent and new business


Shareholder compact approved and implemented

Effective governance structures and processes implemented

Effective internal controls in place

PFMA training



FinancialFinancial

Information SystemsInformation Systems

Information Systems strategy aligned with changing environment


Enabling agreement and service level agreements between Eskom and arivia.kom

Review and align information system strategy to support transformation



TechnicalTechnical

Technical performanceTechnical performance

Maintain excellent technical performance


Sustainability index - 80%

Generation plant performance- Energy Availability Factor - 90%- Unplanned Automatic Grid

Separations - 1,7



TechnicalTechnical

Technical performanceTechnical performance

Maintain excellent Transmission system performance


Transmission system performance

Supply Interruptions:- No incidents with a

severity greater than or equal to one

- System Minutes lost not to exceed 6,2

TECHNICAL PERFORMANCETECHNICAL PERFORMANCE

82.083.084.085.086.087.088.089.090.091.092.093.0

Actual1999

Actual2000

Target2001

Unipede Median = 85.8

Energy Availability Energy Availability Factor (EAF)Factor (EAF)

%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Actual1999

Actual2000

Target2001

Total System Total System Minutes LostMinutes Lost

Minutes

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Actual1999

Actual2000

Target2001

Unipede Median = 3.4

Unplanned Unplanned Automatic Grid Automatic Grid Separations per Separations per

7000 hours7000 hours

Number



Customer Customer SatisfactionSatisfaction

Customer managementCustomer managementPerception of customers

RegulationRegulation

Clear regulatory framework


Customer satisfaction levels, PreCare and MaxiCare, at least 8 on a scale of 1 to 10

Input into design of an appropriate regulatory framework

60

70

80

90

100

110

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Deflated by consumer price index Deflated by consumer price index Base = 100 in 1990Base = 100 in 1990

ELECTRICITY TARIFF INCREASEELECTRICITY TARIFF INCREASE



Human resource Human resource alignmentalignment

Implement employment equity


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

STAFF PROFILESTAFF PROFILE

0

5

10

15

20

25

30

35

40

45

50

55

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

%



Human resource Human resource

alignmentalignmentAlign human resource management to support the strategic intent


Intellectual capital managed and retained

Transformational leadership development program

Reward systems updated

Human resources policies reviewed

Human resources sustainability index implemented



Human resourceHuman resource

alignmentalignment

Maintain consultative processes and structures

Managing the impact of HIV/AIDS

Ensure people are ready for change


Processes and structures in place

Response strategies to HIV/Aids surveillance and financial impact study findings implemented

Leadership empowered to

manage change



Human resourceHuman resource

alignmentalignment

SafetySafety

Improve safety


Disabling injury incidence rate - less than 0,4

Work-related and public fatalities to be lower than previous year



Socio economicSocio economic

Black economic Black economic empowermentempowerment

Encourage black enterprise development

ElectrificationElectrification

To electrify additional homes during 2001


Procurement expenditure - R 2 647,5 million

including VAT

186 370 homes to be

electrified

ELECTRIFICATIONELECTRIFICATIONCumulative number of homes connectedCumulative number of homes connected

0

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2,400,000

2,700,000

3,000,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001



EnvironmentalEnvironmental

Protecting environmentProtecting environment

Environmental management systems compliant with SABS ISO14001 by end 2002


Action plans in place



EnvironmentalEnvironmental

Protecting environmentProtecting environment

Impact on environment


Environmental legislation contraventions - 0

Relative water consumption - 1,26/kWh

Particulate emissions - 0,33 kg/MWh

Radiation exposure - 0,25mSv

Lit

res

Lit

res

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

ENVIRONMENTAL PERFORMANCEENVIRONMENTAL PERFORMANCEWater Consumed per kWh Sent outWater Consumed per kWh Sent out

ENVIRONMENTAL PERFORMANCEENVIRONMENTAL PERFORMANCEParticulate Emissions Relative to Particulate Emissions Relative to

Energy Sent OutEnergy Sent Out

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

kgkg

CONCLUSIONCONCLUSION

eskom presentation to the portfolio committee dme presentation to the portfolio committee dme 9 may...

Documents

twh eskom

eskom presentation

governments objectives

financial independence

current business

related services business

changenet income rm

information system strategy