DEPT OF PUBLIC ENTERPRISES CAPEX UPDATE PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES 16 AUGUST 2006

CONTENTS Progress Eskom’s Build Programme Overall spent to date Supplier Development (SD) Jobs created Progress on the Integrated National Electrification Programme (INEP) Progress Transnet Build Programme 2

Progress on Eskom Build Programme

Progress on Eskom Build Programme (Cont)

Progress on Eskom Build Programme (Cont)

Progress on Eskom Build Programme (Cont)

Build Programme & SD Maximise SD & industry wide initiatives SD with major focus on Small enterprise (SE)with turnover of up to R25m Medium enterprises (ME) with turnover between R25m & R100m Black Women Owned Business (BWOB) including both Small & Medium enterprises 7 7

Build Programme & SD Opportunities are explored to contract directly with the above group Suppliers Engagement Where direct contracting is not practical, large suppliers to subcontract a substantial amount of the contract to SE, ME & BWOBs Include skills transfer & programme, to be audited by Eskom (including classroom content) In service training & learnerships to students 8 8

BP & HR Capacity building Target 4 000 by March 2007 year-end through: Providing them with skills for either employability or to be self employed Identifying & developing critical skills for Eskom & the industry future requirements Engineers, artisans, technicians & graduates-in training will be targeted Expansion & central coordination of learnership programmes, with funding from the Energy Sector Training Authority (ESETA) grant; currently Eskom has 1127 students in the programme 9 9

Progress on INEP The DME is reponsible for planning, coordination, administration, monitoring & evaluation of the INEP The year 2012 is targeted for universal access 3.2 million households have been electrified since 1991 3.4 million households are un-electrified 10 10

HOUSEHOLD ELECTRIFICATION - HISTORY SOUTH AFRICA COST PER CONNECTION RURAL CONNECTIONS URBAN CONNECTIONS TOTAL CONNECTIONS 1991 - 1994 3,176 572,441 66,853 639,294 1995 3,370 226,065 87,114 313,179 1996 3,417 261,438 45,609 307,047 1997 3,159 241,880 43,662 285,542 1998 3,008 198,197 93,155 291,352 1999 2,899 173,625 125,622 299,247 2000 2,647 133,672 122,351 256,023 2001 2,532 105,587 103,948 209,535 2002 2,614 107,718 103,910 211,628 2003 3,384 117,108 58,288 175,396 2004 4,207  126,477 43,893 170,370 2005 (March)   38,920 12,974 51,894 2005/6 4,137 119,077 16,791 135,868 GRAND TOTAL 2,422,205 924,170 3,346,375 11 11

Progress on INEP Annual funding is R1.39 billion and 230 000 hhlds are connected In order to achieve the target annual funding should be R3.6 billion and 500 000 hhlds should be connected Should the above happen the programme could create 10 000 jobs per annum (according to the DME). 12 12

Transnet core businesses: 5 year investment plan 5 Year investment plan R64.5bn Rail R34.1bn Ports R24.8bn Pipeline R4.9bn 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 13 13

Corporate plan: Capex 2006/07 and 5 year plan Total 5 year Capital Investment Plan: R64.5bn 2006/07 2007/08 2008/09 2009/10 2010/11 R11.4bn R15.3bn R14.7bn R12.0bn R11.1bn 18% 24% 23% 18% 17% Roll out plan 5 year investment plan Rail Ports Pipeline Other R31.5bn R24.8bn R4.9bn R3.3bn 14 14

Transnet capital projects To ensure effective implementation of investment plan: Appointed new focused, centralised and experienced project team Centralised control over projects in excess of R 300 million Access to high quality skills for managing risk and delivery on 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 – July 2006 CORE BUSINESSES Most of projects have commenced Spending to date R2.0bn vs budget of R3.1bn Spoornet underspending R0.8bn NPA underspending R0.3bn Spending behind schedule mainly due to:- Delays in the approvals of EIA’s (mainly NPA) Delivery of imported supplies (eg. wheel centres for Spoornet which is the major cause of Spoornet being behind budget. This underspending will be progressively caught up) Plans in place to accelerate implementation over remaining months 16 16

Transnet core businesses: Capital expenditure 2006/07 17 17

Progress on major projects – July 2006 Saldanha Port/Rail line Total cost of project is R3bn and the budget for 2006/07 is R1.1bn Spending to date R134m against budget of R325m (mainly due to revision of engineering design) Cape Town Container terminal ETC of R2.4bn with R160m budgeted for 2006/07 EIA approval outstanding Project essential to create required capacity for container handling 18 18

Progress on major projects – July 2006 (cont.) Durban Pier 1: Resurfacing Total cost of R1.4bn Civil contracts already awarded Spending to date: R68m vs budget of R108m 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: R16m vs budget of R25m 19 19

Progress on major projects – July 2006 (cont.) Port of Ngqura Will conclude phase 1 of the project in 2006/07 (total cost of R3.5bn) Feasibilities undertaken to construct a container terminal at port Experiencing delays in land surveys Spending to date 2006/07 on Nqgura is R26m vs budget of R82m 20 20

Progress on major projects – July 2006 (cont.) OTHER PROJECTS Wagon fleet renewal and modernisation Budget 2006/07: R900m, actual spending to date R278m vs budget of R241m Coal line capacity expansion from 71mtpa to 78mtpa Budget 2006/07 of R119m, actual spending to date R90m vs budget of R24m Projects between R20m – R300m Specific focus and action plans to address projects behind schedule 21 21

Major risks in roll out of investment plan Delay in EIA approvals Claims and other legal challenges Delivery of imported equipment 22 22

Projections: Capex spending Transnet committed to roll out the 5 year plan Core businesses confident that approved budget for 2006/07 will be largely achieved Resources allocated to ensure successful implementation of planned projects 23 23