PUBLIC ENTERPRISES PROGRAMME 2: Energy and Broadband Enterprises 2008/9 BUSINESS PLAN FEBRUARY 2008

Strictly confidential2 PROGRAMME 2 ENERGY & BROADBAND ENTERPRISES Purpose  To align the corporate strategies of Eskom, PBMR and Broadband Infraco with government’s strategic intent and monitor their performance in respect of financial and operational performance Priorities for 2008/09  Portfolio Management  Implementation of the National Electricity Emergency Response Plan  Fastrack Geyser Replacement Programme  Capacity Expansion Programme implementation (Generation & Transmission)  Generation Adequacy monitoring  Implementation of Single Buyer Model – monitor Co-gen and IPP implementation  Generation, Transmission & Distribution Infrastructure Maintenance & Refurbishment  Monitoring of Eskom Nuclear Build Programme  Monitoring of progress of International Submarine Cable rollout

Strictly confidential3 PROGRAMME 2 BUDGET: ENERGY & BROADBAND ENTERPRISES Over the MTEF period, a total of R727 million has been allocated for Broadband Infraco and R3.5 billion for the PBMR. The Transfers are broken down as follows: ITEMS BUDGET 07/08 (R Thousands) BUDGET 08/09 (R Thousands) BUDGET 09/10 (R Thousands) BUDGET 10/11 (R Thousands) COMPENSATION OF EMPLOYEES GOODS AND SERVICES TRANSFERS (PBMR and Broadband Infraco) OTHER---- CAPITAL---- TOTAL

Strictly confidential4 PROGRAMME 2 Budget: ENERGY & BROADBAND ENTERPRISES continued ITEMSBUDGET 07/08 (Rands) BUDGET 08/09 (Rands) COMPENSATION OF EMPLOYEES GOODS AND SERVICES TRANSFERS OTHER-- CAPITAL-- TOTAL The Goods and Services for 2008/9 includes R for Consulting Fees.

Strictly confidential5 PROGRAMME 2: Energy and Broadband Structure VACANCIES: 1. DDG 2. DD – Financial Analyst 3. DD - Energy + 3 Interns (2008/9)

Strictly confidential6 PROGRAMME 2 : ENERGY AND BROADBAND ENTERPRISES Sub-Programme/ Project : ESKOM Sub- Programme Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INVESTMENT MANAGEMENT Corporate PlanSubmission by Eskom of its 5 year business plan by 7 April weeks30/06/2008Briefing Memorandum: A critical assessment of the business plan Eskom Shareholder CompactSOE team to drive the process of putting an annual updated compact into place:  Review the strategic intent statement  Review and benchmarking of SKPI’s  Approval of SKPI’s for the Shareholder Compact  Ensure signoff from Governance  Signed Shareholder Compact 2 weeks15/07/2008Decision Memorandum: Agreed Shareholder Compact SOE Dashboard: Monitoring of Eskom Performance Quarterly update of Eskom Dashboard Database8 daysWithin 1 day of receipt of Quarterly Report Updated Eskom Dashboard (latest information) Quarterly Report (Q1)Submission by Eskom of its 2008Q1 Report by 15/08/ week15/09/2008Briefing Memorandum: Critical assessment of performance including major risks Quarterly Report (Q2)Submission by Eskom of its 2008Q2 Report by 15/11/ week15/12/2008Briefing Memorandum: Critical assessment of performance including major risks Quarterly Report (Q3)Submission by Eskom of its 2008Q3 Report by 15/02/ week15/03/2009Briefing Memorandum: Critical assessment of performance including major risks Annual Report  Notify Eskom in writing (Mohamed Adam) that a draft of the annual report is expected by end-June in anticipation it being lodged with parliament  Receipt of Draft Annual Report from Eskom by 30/06/2008  Submission by Eskom of its 2007/8 Annual Report by 31/07/ weeksThe last Friday a week before Eskom Annual Report is lodged with Parliament Briefing Memorandum: Analysis of Eskom Performance, Major Issues, Risk, Financial, Regulatory and Governance

Strictly confidential7 Sub-ProgrammeActivity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INVESTMENT MANAGEMENT Five year performance review  Perform Eskom 5 year performance review (based on previous publication)  Analysis of Eskom’s five year performance 1 month20/12/2008Briefing Memorandum: The 5 year performance of Eskom DPE Board Presentations  Monthly Presentations on SOE Performance 12 daysn/aPowerPoint Presentation to the Monthly DPE Board Meeting Review of Board Strength  SOE team to annually assess composition of the SOE Board 1 weekTo co-inside with Annual Report Assessment Briefing Memorandum to the Minister Investor Brief  Energy team to compile a one page analyst report for the Eskom Board, specifically to include areas of focus. To be prepared quarterly. 4 weeks15/05/2008Briefing Memorandum to the Minister and a covering letter to the Eskom Board with the one pager attached. 15/09/ /12/ /03/2009 PROGRAMME 2 (ESKOM)

Strictly confidential8 PROGRAMME 2 (ESKOM) Sub- Programme Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INDUSTRY IMPACT Capacity Expansion Programme (Implementation)  Development of a Monthly Reporting Template using SOE Dashboard (by 01/04/2008)  Submission of Progress Reports Monthly by Eskom (first working day) 24 daysMonthly Start 01/05/2008 with April 2008 report Monthly Briefing Memorandum: Progress with the Capacity Expansion Programme Generation AdequacyMonitor continued implementation of the Adequacy Report by Eskom Monitor Generation Adequacy within Eskom, Reserve Margin, Available Capacity vs. Demand, etc. 8 weeks15/04/2008Briefing Memorandum: Quarterly assessment of Eskom Generation Adequacy 15/07/ /10/ /01/2009 Tariff Review (MYPD)  Engage with NERSA on Asset Valuation and Rate of Return Methodology  Define level and nature of required government contribution  Final Multi-year pricing determination by NERSA 9 weeks01/04/2008 Status Report Briefing Memorandum: Update on progress with NERSA engagement Briefing Memorandum: Outcome of NERSA Multi-year Price Draft Determination and implications for Eskom funding Briefing Memorandum: Final outcome of NERSA Multi-year Price Determination and implications for Eskom funding 30/06/2008 Assessment of Draft Determination 31/01/2009 (Final Assessment) Geyser Replacement Programme  Develop project framework  Obtain funding from NT and Eskom  Implement ( geysers in 2 years) 32 weeksMonthly (last working day) Briefing Memorandum: Monthly Progress reports to ensure speedy rollout

Strictly confidential9 Sub-ProgrammeActivity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output Capitalisation of Eskom  Develop a Proposal for the Capitalisation of Eskom to fund the Build Programme  Develop a Terms of Reference  Appoint a consultant to perform the analysis 3 months30/06/2008Decision Memorandum: Proposals for the Capitalisation of Eskom, assessment of the implications of the various options and a recommendation of the preferred methodology Implementation of the Single Buyer Model  Engage with DME to include a coal-fired base load IPP in the country plan  Engage with Eskom to issue Request for Proposals for base load IPP  Monitor progress with tendering and contract award 12 weeks30/06/2008Briefing Memorandum: Progress with the implementation of the Single Buyer and base load IPP by Eskom Assessment of the Audit of Eskom Maintenance Practices (Generation) Compile a letter from the Minister requesting the Eskom Board to conduct an audit using an independent internationally recognised resource. Eskom board to contract an Expert to conduct an audit of Eskom Generation’s practices and the high rate of unplanned outages 8 weeks31/07/2008Briefing Memorandum: An assessment of the audit report on Eskom’s maintenance practices and recommendation of possible interventions Assessment of the Audit of Eskom Maintenance Practices (Transmission) Compile a letter from the Minister requesting the Eskom Board to conduct an audit using an independent internationally recognised resource. Eskom board to contract an Expert to conduct an audit of Eskom Transmission’s practices 8 weeks31/07/2008Briefing Memorandum: An assessment of the audit report on Eskom’s maintenance practices and recommendation of possible interventions PROGRAMME 2 (ESKOM)

Strictly confidential10 Sub- Programme Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output Implementation of the National Response Plan  Lead the Implementation of the National Response plan to the Electricity Shortage  Monitor the Implementation of the National Response plan to the Electricity Shortage  Drive and contribute financially to the National Energy Efficiency Awareness Campaign 6 weeks31/05/2008Briefing Memorandum: An outline of the progress made with the implementation of the plan Distribution Infrastructure Maintenance and Refurbishment  Develop a proposal for Eskom and the Large Metros to perform distribution infrastructure maintenance, refurbishment and expansion  Develop a Terms of Reference  Appoint an international expert to assist with the drafting of the proposal  Obtain Cabinet approval for implementation framework 8 weeks30/06/2008Decision Memorandum: Approved framework for Eskom and Metros to take over the Electricity Distribution infrastructure of neighbouring small municipalities PROGRAMME 2 (ESKOM)

Strictly confidential11 Sub- Program me Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output Eskom Nuclear Build Programme  Monitor Progress with Eskom Nuclear Build, Quarterly Reporting.  Liaison between DPE, DME and NNR on Eskom Nuclear Build Programme 4 weeksWithin 1 month of end of Quarter Quarterly Briefing Memoranda Forum of Executives in Energy  Secretariat function for the Technical Task Team that supports the FEE  Support to the FEE Secretariat Ongoingn/aVarious Ad hoc  Referrals from the DG  Referrals from the Minister  General Comment on Cabinet Memoranda  PFMA Applications  Parliamentary Questions  Publication of 1 article per annum  Technical responses to Media Queries OngoingAgreed DatesTimeous response to agreed dates and Decision or Briefing Memoranda as required PROGRAMME 2 (ESKOM)

Strictly confidential12 Sub- Programme/Pr oject BROADBAND INFRACO Sub- Programme Activity / ProjectCritical Path Activities Time Required to complete Activity Due Date for submission to DG Output INVESTMENT MANAGEMENT Corporate Plan  Receipt of Corporate Plan from Infraco by 29/02/2008 (est. 01/04/2008)  Analysis of Corporate Plan 4 weeks30/04/2008Briefing Memorandum: Critical assessment of the Corporate Plan SOE Dashboard: Monitoring of Infraco Performance Monthly update of Infraco Dashboard Database3 weeksMonthly (Start 01/05/2008) Updated Infraco Dashboard (latest information) Shareholder CompactSOE team to drive the process of putting an annual updated compact into place:  Review the strategic intent statement  Review and benchmarking of SKPI’s  Approval of SKPI’s for the Shareholder Compact  Ensure signoff from Governance  Signed Shareholder Compact 2 weeks15/07/2008Decision Memorandum: Agreed Shareholder Compact Monthly Report  Develop a framework for monthly reporting  Analyse financials, operations  Risks and Corporate Governance  Timely submission of Monthly report 1 weekMonthly (01/06/2008) Monthly Briefing PROGRAMME 2

Strictly confidential13 Sub- Programme Activity / ProjectCritical Path Activities Time Required to complete Activity Due Date for submission to DG Output Quarterly Report (Q1)Submission by Infraco of its 2008Q1 Report by 15/08/ week15/09/2008Briefing Memorandum: Critical assessment of performance including major risks Quarterly Report (Q2)Submission by Infraco of its 2008Q2 Report by 15/11/ week15/12/2008Briefing Memorandum: Critical assessment of performance including major risks Quarterly Report (Q3)Submission by Infraco of its 2008Q3 Report by 15/02/ week15/03/2009Briefing Memorandum: Critical assessment of performance including major risks PROGRAMME 2 (INFRACO)

Strictly confidential14 Sub- Prog ram me Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INVESTMENT MANAGEMENT Annual Report  Notify Infraco in writing that a draft of the annual report is expected by end-June in anticipation it being lodged with parliament  Receipt of Draft Annual Report from Infraco by 30/06/2008  Submission by Infraco of its 2007/8 Annual Report by 31/07/ weeksThe last Friday a week before Infraco Annual Report is lodged with Parliament  Briefing Memorandum: Analysis of Infraco Performance, Major Issues, Risk, Financial, Regulatory and Governance DPE Board Presentations  Monthly Presentations on SOE Performance 12 daysn/a  Powerpoint Presentation to the Monthly DPE Board Meeting Review of Board Strength  SOE team to annually assess composition of the SOE Board 1 weekTo Co-incide with Annual Report Assessment  Briefing Memorandum to the Minister Investor Brief  Infraco team to compile a one- page analyst report for the Infraco Board, specifically to include areas of focus. To be prepared quarterly. 4 weeks15/05/2008  Briefing Memorandum to the Minister and a covering letter to the Infraco Board with the one pager attached. PROGRAMME 2 (INFRACO)

Strictly confidential15 Sub- Programme Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INDUSTRY IMPACT Review of Infraco’s Impact  Compile Benchmark: Price, Service level, Capacity, etc  Assessment of Broadband Pricing in SA, out of SA, key destinations (BMI)  Analyze Results on South African Broadband pricing quarterly  Development of a Terms of Reference  Appointment of a consultant 4 weeks30/04/2008  Briefing Memorandum: InfraCo’s Impact on Prices and Broadband Penetration 31/07/ /10/ /01/2009 International Submarine Cable and rolling out of the rest of the terrestrial network  Monitoring and Facilitating the Implementation of the International Submarine Cable 12 weeks15/04/2008  Briefing Memorandum: Progress with the rolling out of the International Submarine Cable 15/07/ /10/ /01/2009 Capitalisation  Preparation of the Infraco MTEF Submission 4 weeks01/08/2008  Briefing Memorandum: Guarantee Issue, Loan or Cash Injection and supporting documents Ad hoc  Referrals from the DG  Referrals from the Minister  General Comment on Cabinet Memoranda  PFMA Applications  Parliamentary Questions  Publication of 1 article per annum  Technical responses to Media Queries OngoingAgreed Dates  Timeous response to agreed dates and Decision or Briefing Memoranda as required PROGRAMME 2 (INFRACO)

Strictly confidential16 PROGRAMME 2 : ENERGY AND BROADBAND ENTERPRISES Sub- Programme/ Project : PBMR Sub-ProgrammeActivity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INVESTMENT MANAGEMENT Corporate PlanSubmission by PBMR of its business plan by 28/02/ weeks30/06/2009  Briefing Memorandum: A critical assessment of the business plan PBMR Shareholder Compact SOE team to drive the process of putting an annual updated compact into place:  Review the strategic intent statement  Review and benchmarking of SKPI’s  Approval of SKPI’s for the Shareholder Compact  Ensure signoff from Governance  Signed Shareholder Compact 2 weeks15/07/2008  Decision Memorandum: Agreed Shareholder Compact Monthly Reports  Development of an approved monthly reporting framework  EMC meetings and NT approval 2 daysMonthly (month-end)  Monthly Briefing Memoranda SOE Dashboard: Monitoring of PBMR Performance Quarterly update of PBMR Dashboard Database 8 daysWithin 1 day of receipt of Quarterly Report  Updated PBMR Dashboard (latest information) Quarterly Report (Q1)Submission by PBMR of its 2008Q1 Report by 15/08/ week15/09/2008  Briefing Memorandum: Critical assessment of performance including major risks

Strictly confidential17 Sub- Programme Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output Quarterly Report (Q2)Submission by PBMR of its 2008Q2 Report by 15/11/ week15/12/2008  Briefing Memorandum: Critical assessment of performance including major risks Quarterly Report (Q3)Submission by PBMR of its 2008Q3 Report by 15/02/ week15/03/2009  Briefing Memorandum: Critical assessment of performance including major risks Annual Report  Notify PBMR in writing that a draft of the annual report is expected by end-June in anticipation it being lodged with parliament  Receipt of Draft Annual Report from PBMR by 30/06/2008  Submission by PBMR of its 2007/8 Annual Report by 31/07/ weeksThe last Friday a week before PBMR Annual Report is lodged with Parliament  Briefing Memorandum: Analysis of PBMR Performance, Major Issues, Risk, Financial, Regulatory and Governance PROGRAMME 2 (PBMR)

Strictly confidential18 Sub- Programme Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INVESTMENT MANAGEMENT Expenditure Monitoring Committee  Inter-governmental committee meetings  Monthly Meetings  NT approval  Monthly transfers to PBMR 24 daysMonthly (last working day of the month)  Briefing Memorandum: Outlining Progress, any outstanding issues and request for transfer payment South Africa Power Project  Participation/Representation 52 daysn/a  Successful Implementation of the SA Power Project DPE Board Presentations  Monthly Presentations on SOE Performance 12 daysn/a  PowerPoint Presentation to the Monthly DPE Board Meeting Review of Board Strength  SOE team to annually assess composition of the SOE Board 1 weekTo Co-incide with Annual Report Assessment  Briefing Memorandum to the Minister Investor Brief  PBMR team to compile a one-page analyst report for the PBMR Board, specifically to include areas of focus. To be prepared quarterly. 4 weeks15/05/2008  Briefing Memorandum to the Minister and a covering letter to the PBMR Board with the one pager attached. 15/09/ /12/ /03/2009 PROGRAMME 2 (PBMR)

Strictly confidential19 Sub-ProgrammeActivity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output INDUSTRY IMPACT Government’s role in developing a nuclear power sector  Incl. Premature Decommissioning Fund Proposal  Incl. Nuclear Indemnity Insurance  Incl. Waste Disposal Plan  Develop a Terms of Reference  Commission a consultant 6 months30/09/2008  Decision Memorandum: Proposals and recommendations on how to deal with these matters Comparison of Levellised Unit Electricity Costs for different generation technologies  Develop a Terms of Reference  Commission a consultant 6 months30/09/2008  Briefing Memorandum: Proposals and recommendations National Treasury Investigation  Monitor Progress 12 days30/04/2008  Briefing Memorandum: Final Report Assessment NERSA approved purchase price for PBMR units  Engagement with NERSA and Eskom and PBMR to reach an agreed price for PBMR units  Negotiation with NERSA to allow work in progress costs to Eskom for prepayment  Agreement between PBMR and Eskom on prepayment schedule  Valid construction contract/order for PBMR to start construction 36 days30/11/2008  Briefing Memorandum: Progress Report to the Minister PROGRAMME 2 (PBMR)

Strictly confidential20 Sub- Programme Activity / ProjectCritical Path ActivitiesTime Required to complete Activity Due Date for submission to DG Output New/Updated PIM  Submission of updated document by PBMR 12 days31/10/2008  Briefing Memorandum: Assessment of PIM Capitalisation  Preparation of the PBMR MTEF Submission 4 weeks01/08/2008  Briefing Memorandum: Guarantee Issue, Loan or Cash Injection and supporting documents Ad hoc  Referrals from the DG  Referrals from the Minister  General Comment on Cabinet Memoranda  PFMA Applications  Parliamentary Questions  Publication of 1 article per annum  Technical responses to Media Queries OngoingAgreed Dates  Timeous response to agreed dates and Decision or Briefing Memoranda as required PROGRAMME 2 (PBMR)

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