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

ESKOM ESKOM 2001 OBJECTIVES REGULATED BUSINESS GenerationTransmissionDistribution

CONTENTS BACKGROUND BACKGROUND BUSINESS OBJECTIVES 2001 BUSINESS OBJECTIVES 2001

BACKGROUND

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

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

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

KEY ISSUES Governance 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

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

KEY ISSUES Restructuring Principles Restructuring Principles Should be informed by: –Government’s objectives and policy (Energy White Paper) –International experience and expertise –Unique SA situation –Need to preserve existing strengths within the industry –Stakeholders input –Eskom’s strategic intent, in respect of Eskom

BUSINESS OBJECTIVES 2001

OVERVIEW OF FINANCIAL RESULTS Eskom Financial Performance:

ESKOM 2001 OBJECTIVES ObjectivesFinancial Financial performance 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

R’m (2000 Rands ) CUMULATIVE PRODUCTIVITY IMPROVEMENT FOR ALL RESOURCES

ESKOM 2001 OBJECTIVES ObjectivesFinancial Financial performance 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

DEBT : EQUITY

TWh TWh SOLD

ESKOM 2001 OBJECTIVES ObjectivesFinancial Maintain good governance 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

ESKOM 2001 OBJECTIVES ObjectivesFinancial Information Systems 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

ESKOM 2001 OBJECTIVES ObjectivesTechnical Technical performance 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

ESKOM 2001 OBJECTIVES ObjectivesTechnical 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

TECHNICAL PERFORMANCE Energy Availability Factor (EAF) % Total System Minutes Lost Minutes Unplanned Automatic Grid Separations per 7000 hours Number

ESKOM 2001 OBJECTIVES Objectives Customer Satisfaction Customer management Customer management Perception of customers Regulation 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

Deflated by consumer price index Base = 100 in 1990 ELECTRICITY TARIFF INCREASE

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

STAFF PROFILE

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

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

ESKOM 2001 OBJECTIVES Objectives Human resource alignment Safety 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

ESKOM 2001 OBJECTIVES Objectives Socio economic Black economic empowerment Black economic empowerment Encourage black enterprise development Electrification Electrification To electrify additional homes during 2001 KPIs and targets Procurement expenditure - R 2 647,5 million including VAT homes to be electrified

ELECTRIFICATION Cumulative number of homes connected ELECTRIFICATION Cumulative number of homes connected

ESKOM 2001 OBJECTIVES ObjectivesEnvironmental Protecting environment Environmental management systems compliant with SABS ISO14001 by end 2002 KPIs and targets Action plans in place

ESKOM 2001 OBJECTIVES ObjectivesEnvironmental Protecting environment 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

Litres ENVIRONMENTAL PERFORMANCE Water Consumed per kWh Sent out

ENVIRONMENTAL PERFORMANCE Particulate Emissions Relative to Energy Sent Out kg

CONCLUSION