DEPT OF PUBLIC ENTERPRISES CAPEX UPDATE 01 JULY – 30 SEPTEMBER 2006 PRESENTATION TO THE PORTFOLIO COMMITTEE 08 NOVEMBER 2006

CAPACITY EXPANSION PROGRAMME ESKOM CAPACITY EXPANSION PROGRAMME (UPDATE) 2

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 – Mossel Bay and Atlantis (R3.5 billion) 3

FIVE YEAR SPENDING PLAN PLANNED SPENDING OVER NEXT 5 YEARS: R97 BILLION Renewable Energy Underground coal gasification Lines and cables Substations Reticulation networks Regional projects Previous mothballed stations Open Cycle Gas Turbine Coal technology Hydro and gas options Network Strengthening 4

Capacity Project Funnel Research Opportunity Identification Pre - feasibility Feasibility, Business 1000 165 Case, Contract Build Concluding 3500 1332 800 1775 112 1775 600 1000 1000 600 1600 961 1200 1520 100 1800 1600 6000 4200 1000 800 4000 2000 300 500 4200 200 800 3600 500 1050 1128 90 4200 W - - Hydro Hydro 2100 9 2100 - - Nuclear 872 1300 Nuclear 500 90 1050 1050 - - Gas Gas - - Coal Coal - - Coal Coal * Possible 2400MW Mid Merit 90 - Solar - Transmission 15575 MW 7800 MW 23100 MW 5 * Brown outer circle indicates – out of Borders project

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 7

HOW MANY MW ARE ADDED TO THE SYSTEM? The second OCGT represents GAS 1 project and The third OCGT plant will be provided by the IPP (DME process) 8

MILESTONES Camden Units 6, 7 and 8 operational Unit 5 synchronised 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 programme Open 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 9

NEW MEGA POWER PROJECTS 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 10

CAPACITY EXPANSION PROGRAMME TRANSNET CAPACITY EXPANSION PROGRAMME (UPDATE) 11 11

Transnet core businesses: 5-year investment plan 5-Year investment plan R64.5bn as approved by the Board of Directors Major investments: To sustain and expand operations Export lines: Iron ore and Coal lines to increase capacity and major refurbishment costs Port infrastructure and terminals General freight business: Replacement of assets; major refurbishment costs Pipeline (Multi product) from Durban to Johannesburg to create capacity 12 12

Corporate Plan: CAPEX 5 year plan 13 13

Transnet capital projects To ensure effective implementation of investment plan: Established centralised project management team to improve project management in the Group Appointed skilled and experienced project team Centralised control over projects in excess of R 300 million Access to additional high quality skills for managing risk and delivery on time 14 14

Transnet capital projects continued Major projects Transnet Capital Projects responsible for entire project value chain – feasibility to execution Agreement with Hatch/Mott MacDondald/Goba (International project management consultants with local representation) 15 15

Progress to date: Core businesses – Sept 2006 Most of the planned projects have commenced Spending to date R3.6bn vs budget of R5.0bn Underspending is mainly at Spoornet and NPA Spending behind schedule mainly due to:- EIA approvals Prolonged lead times Feasibility studies not completed/finalised Re-evaluation of project scope, design work and resource issues Capitalisation of maintenance (Spoornet) behind schedule 16 16

Progress to date: Core businesses – continued Review exercise conducted on existing projects to identify reasons for delays/under spending Monitored on a monthly basis Specific actions to address identified bottlenecks/issues Revised cash flows 17 17

Transnet core businesses: Capital expenditure 2006/07 18 18

Progress on major projects – Sept 2006 Saldanha Port/Rail line Total cost of project is R3bn and the budget for 2006/07 is R1.1bn Spending to date R264m against budget of R471m (mainly due to revision of engineering design) 19 19

… major projects – Sept 2006 continued Cape Town Container terminal ETC of R2.4bn with R160m budgeted for 2006/07 Spending to date of R22m against a budget of R67m EIA approval outstanding Project essential to create required capacity for container handling 20 20

… major projects – Sept 2006 continued Durban Pier 1: New Container Terminal Total cost of R1.4bn Spending to date: R142m vs budget of R355m Civil contracts awarded which will speed up progress 21 21

… major projects – Sept 2006 continued Durban Harbour Entrance Widening Total cost of project is R1.7bn Feasibility study underway Detail engineering in progress which includes breakwater and deepening of channel Spending to date: R36.5m vs budget of R39.7m 22 22

… major projects – Sept 2006 continued Port of Ngqura Will conclude phase 1 (total cost of R3.5bn) of the project in 2006/07 Feasibilities currently undertaken to construct a container terminal at port Business case to be submitted to the Board in November 06 Experiencing delays in land surveys and approval of variation orders 23 23

Other projects – Sept 2006 continued Wagon fleet renewal and modernisation Budget 2006/07: R900m Actual spending to date R500m vs budget of R439m Project accelerated to meet operational requirements Coal line capacity expansion from 71mtpa to 78mtpa Budget 2006/07 of R412m Actual spending to date R174m vs budget of R72m Project accelerated to address client requirements 24 24

Major risks in roll out of investment plan Delay in EIA approvals Claims and other legal challenges Delivery of imported equipment Capacity to roll out projects on set timelines Competition for resources/commodities together with other major capital investors in SA 25 25

Projections: Capex spending Transnet committed to roll out the 5 year plan as reflected in the Corporate Plan Core businesses confident that approved budget for 2006/07 will be largely achieved 26 26

Projections: Capex spending continued Additional resources allocated to bottlenecks to ensure successful implementation of planned projects Monitoring process established in the Group to ensure continuous focus and implementation of action plans 27 27

THANK YOU!