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

2. CAPACITY EXPANSION PROGRAMME
ESKOM
CAPACITY EXPANSION PROGRAMME
(UPDATE) 2

3. 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

4. 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

5. 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

7. 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

8. 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

9. 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

10. 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, km
N/A
R6 billion
Total
3432 MW
R41 billion 10

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

12. 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

13. Corporate Plan: CAPEX 5 year plan13 13

14. 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

15. 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

16. 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

17. 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

18. Transnet core businesses: Capital expenditure 2006/0718 18

19. 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

20. … 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

21. … 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

22. … 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

23. … 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

24. 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

25. 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

26. 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

27. 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

28. THANK YOU!