Presentation to Standing Committee on Public Accounts

Presentation to Standing Committee on Public Accounts
2018/11/20 Produced by Procurement Recovery Team

Contents Purpose Introduction
Analysis of Deviations and Expansions in Q4 FY2017/18 Tegeta Deviations and Expansions Concluding Remarks

Purpose and Introduction
Purpose: To present a report of ESKOM’s deviations and expansions for Q4 FY2017/18. Introduction: This report provides a review of 74 cases of deviations and expansions during Q4 of FY2017/18 Internal to Eskom the deviations and expansions are managed through a governance process through various tender committees with defined delegations of authority Recent audits on Eskom’s financial results have revealed compliance weaknesses in the procurement process, as well as shortcomings in the planning and contract management. Eskom is at an advanced stage of finalising an audit recovery programme The Recovery Programme is monitored by the Board’s Audit and Risk Committee. The objectives of the programme are: to address the identified weaknesses with a view to achieve a clean audit to improve performance of the procurement process to improve capital project development and delivery.

Eskom has a governance process to sanction expansions and deviations requests prior to NT submission
Deviation or Expansion required Motivation reviewed by relevant Eskom Tender Committee Approved? Y Application to NT Eskom Procurement Governance framework N Approved? Y Appeal? Y N Implement as per NT decision

In Q4 2017/18, the 74 Expansions & Deviations are circa 1% of total volume of new transactions for the period Eskom concluded 9159 new procurement transactions during Q4 2017/18. There were a total of 59 Expansions and 15 Deviations The 74 Expansions and Deviations represent <1% of total procurement transactions (by volume) placed over this period Expansions 59 transactions 1% 73.91% Deviations 15 transactions 0% New Transactions 9159 transactions 99%

Deviations

Deviations show a declining trend since Q3 of the previous financial year
The number of deviations submitted is showing a declining trend Eskom is actively driving down deviations Eskom submits on average deviations per quarter.

Deviations: overview for period Q4 2017/2018 (1/3)
Eskom submitted 15 Deviations The total value of the Deviations requested during the 2017/18 Q4 is R364 million 9 transaction valued at R196M were not approved by NT 5 transactions valued at R152M were supported by NT 73.91%

Of the 15 deviations, 5 constitute 88% (R323M) of the total* value of the deviations requested Of the top 5 deviations, one transaction (supply of liquid sulphur) was approved. It constitutes 41% (R133M) of the top 5 deviations Three of the Top 5 valued at R174M (88%) were declined. These are # 49 - Limestone handling for Kusile (R75M) #51 - Kendal boiler's super heater (R53M) #46 - Line traps for Distribution and Transmission (R46M) A decision on the remaining single transaction in the Top 5 for the Upgrade of Water Treatment Plant Human Interface at Duvha Power Station (#52) valued at R15M is pending One of the 15 deviations was for the supply of coal to address shortfalls. While NT declined Eskom's initial request an alternative approach was recommended to source the requisite coal * The R364M of deviations does not include the coal purchase transaction Changed in Rev 1.1

Of the 5 deviations that were approved One was a single supply (liquid sulphur) Two were justifiable based on delays (design/inclement weather/land claims) Two were justified on the basis of finalising remaining works to close the projects Eskom has complied with NT decisions where deviations requested were not supported

Expansions

There is no clear trend on volume of Expansions, however we are henceforth focused on reducing the volumes and value of expansions Eskom submits on average expansions per quarter. Greater effort is required to drive down expansions This is less than 1% of total transactions per quarter (by volume)

Expansions: Overview for period Q4 2017/2018
Eskom submitted 59 expansions The total value of the expansions requested during the 2017/18 Q4 is R24.13 billion 26 expansions valued at R9.48BN (39% of total expansions) were supported by NT 26 expansions valued at R14,46BN (60% of total expansions by value) were not supported by NT 73.91%

Expansions: Analysis of Top 10 for Q4 2017/2018
Top 10 expansions have a total value of R23.2Bn. (Value of all 59 expansions is R24.1Bn) Six of Top 10 expansions valued at R9.3Bn (38% of R24.1Bn) were approved Three of Top 10 expansions valued at R13.8Bn (57% of R24Bn) were declined. These are (#40) Maintenance and outage repair services for Boiler Pressure parts and/or the maintenance and outage repair services for High Pressure Pipework (Valued at R13.6 BN) (#86) Security Services (Valued at R136.8 M) (#33) Upgrade of existing plant, plus construction of new Ash Handling plant at Camden Power Station (Valued at R116.5 M) One expansion valued at R114M is pending. This transaction (#79) relates to Provision of Engineering and Project Management to Kusile Power Station Of the 26 expansions that were approved 13 were for time only. The balance of expansions (13) were approved on the basis of compelling reasons for continuity of services Of the 26 expansions that were not supported by NT, Eskom has since discovered that there are 3 cases where the contracts were implemented without NT support

Expansions: 3 Contracts Implemented without NT support
NT Ref Supplier Name Project Description Orig Value Expansion Value Reason for expansion Root cause Consequence Management (PERSONNEL) 50 M-Tech Industrial (Pty) Provision of Engineering and Project Management Services R15.6 M R50.6M To extend the duration of the contract from the original 12 months, to 36 months, to a further 12 months, plus related additional increase in value Poor planning and unforeseen events. Investigation underway, and a condonation will be sought from NT, the relevant disciplinary action taken. (Group Executive-A Masango) 85 Lephalale Site Services Medupi Catering R243 M R189.8M To extend the duration of the contract from 2 years, by 1 year, and later by another 18 months, plus related additional increases in value Unforeseen events. Investigation underway, and a condonation will be sought from NT, the relevant disciplinary action taken.(*) 86 Various security companies Security Services R206.4M R244.6M Increase in scope (more sites), and increase in duration by 12 months and additional value increase Unforeseen events and poor planning (Acting Divisinal Executive- M Strauss) Eskom is investigating the rationale for time expansion given the un-specialised nature of the service.

Tegeta

Tegeta Expansions – National Treasury Submissions (1/2)
Date Project Description Original Value Expansion Value Why Status 11 Aug 2016 Modification of Optimum Short Term contract for the supply of coal to Arnot (Third Addendum) R235 R (excluding CPA, VAT, and Quality adjustments) To meet coal requirements at Arnot The contract was not extended as National treasury did not support the expansion requested and the contract expired on 19 Aug 2016 when the supply quantity ran out. National Treasury however supported a deviation to request proposals from 4 suppliers (Exxaro, Hlagisa, Umsimbithi and Tegeta Optimum) and requested that all proposals received and assessments done be submitted to National Treasury for verification purposes. This was done by Eskom. Notification for a variation in Brakfontein contract value for the supply of 10.8 million tons to Majuba (Second Addendum) R3 794 748 750.00 R (excluding CPA, VAT, Transport and Quality adjustments) To supply additional coal to Majubafrom Brakfontein Colliery Extension resource Original contract signed 10 Mar 2015, for 10 yrs 5 months, 2 months after contract commencement (on 25 June 2015) the supplier offered additional tonnages ( tons) from the Brakfontein Colliery. There was no extension of time. National Treasury did not support the modification of contract until the question of coal qualities had been cleared.

Tegeta Expansions – National Treasury Submissions (2/2)
Date Project Description Original Value Expansion Value Why Status 11 Aug 2016 Modification of Koornfontein contract for the supply of 16.8 million tons coal to Komati (Fourth Addendum) R R (excluding CPA, VAT, Transport and Quality adjustments) To meet coal requirements at Komati Supply of an additional tons of coal to Komati at a rate of tons per month for a period of 7 years On 17 Aug 2016 National Treasury supported the expansion on the contract and the contract was concluded by Eskom and the supplier Addendum was signed on 2 Sep 2016 On 12 Dec 2016, National Treasury withdrew the letter dated 17 Aug 2016 and supported the expansion on condition that a market research revealed that the option chosen is the optimum procurement approach 8 Feb 2018 Modification of the Optimum Coal Supply Agreement for supply of coal to Hendrina (Fifth Addendum) R (Based on a contractual supply of tons per annum from 1 Apr 2011 to 31 Dec 2018 at R115/ton) R0.00 Tegeta requested the medium term escalation basket a reduction of the tons raising of the AI rejection limit National Treasury requested and was notified of the modification to the CSA This Fifth Addendum (signed 20 Jan 2018) fixed the price to R201.46/t for the remaining duration of the contract, changed the escalation basket to be in line with the medium term basket of indices, and effected a reduction of the tons from per month to per month and raising of the AI rejection limit from 453mgFe/4kg to 650mgFe/4kg. The end date was revised to be 30 June 2019 in the event of undersupply of coal.

Tegeta Expansions – No National Treasury Submissions (1/2)
Date Project Description Original Value Expansion Value Why Status 12 May 2015 Modification of Brakfontein Coal Supply Agreement to Majuba R3 794 748 750.00 R0.0 (Quality specification changes only) Additional coal supply required at Majuba This First Addendum was concluded on 12 May 2015 to modify the coal quality specifications. No National Treasury support required at the time 7 Mar 2016 Modification to the Optimum Coal Mine Coal Supply Agreement to Hendrina R (Based on a contractual supply of tons per annum from 1 Apr 2011 to 31 Dec 2018 at R115/ton) R0.00 Optimum Coal Mine sold to Tegeta by Glencore Fourth Addendum – Sale of shares from Optimum Coal Holdings to Tegeta and Oakbay 15 Mar 2016 Modification of Optimum Short Term Coal Supply Agreement to Arnot R235 Tegeta requested 7 day payment terms This First addendum was concluded on 15 March 2016 to change the payment terms from 30 days to 7 days with a 0.75% discount on the total value of invoice being applicable. 14 Apr 2016 Modification of Optimum Short Term Coal Supply Agrement for supply of tons of coal to Arnot R (excluding VAT, CPA, Transport and Quality adjustments) To meet coal requirements at Arnot Board Tender Committee gave approval on 11 April 2016 to modify the contract for a further 5 months for the supply of tons of coal including a prepayment for the coal to be supplied. This was effected as the second addendum No National Treasury support required at the time

Tegeta Expansions – No National Treasury Submissions (2/2)
Date Project Description Original Value Expansion Value Why Status 28 Apr 2016 Modification of Koornfontein Coal Mine Coal Supply Agreement for an additional tons to Komati (Second Addendum) R R To meet coal requirements at Komati Second Addendum signed 28 April No National Treasury support required at the time. 31 May 2016 Modification of Koornfontein Coal Mine Coal Supply Agreement for an additional tons to Komati (Third Addendum) R Third Addendum signed 31 May No National Treasury support required at the time. 20 Dec 2016 Temporary relief agreement to the Optimum Coal Mine Coal Supply Agreement to Hendrina R (Based on a contractual supply of tons per annum from 1 Apr 2011 to 31 Dec 2018 at R115/ton) R0.00 Tegeta requested a relief This relief was applicable from 1 Sep 2016 to 31 July 2017 to provide temporary relief to the following To change the escalation from CCI to a different escalation mechanism To not deduct penalties To reduce monthly supply to tons per month 18 Aug 2017 Extension of the Temporary relief agreement to the Optimum Coal Mine Tegeta requested a continuation of the relief Effective 1 August 2017 until 31 October 2017

What is Eskom doing to drive deviations and expansions down?
Elevated approval of emergency and sole source procurement to Group Executives (Already lead to a reduction in deviations Detailed root cause analysis with a focus on the New Build Exco review completed – to be submitted to Board Purpose is to identify what went wrong in the past; identify potential future deviations/expansions; generally lesson for future – how can we avoid or minimise these?) Root cause analysis across rest of procurement in progress identify key drivers of modifications Review of full portfolio of contracts expiring over next 12 months Which contracts will be expiring? When? Put plan in place to avoid late process start The above efforts intended to improve demand and procurement planning as well as contract management Working with NT on improved methodologies to avoid deviations (eg. Coal contracts)

There is a strong leadership focus on ensuring compliance
Concluding Remarks There is a strong leadership focus on ensuring compliance Leadership commitment GCE and CFO will continue to drive leadership compliance with PFMA and PPPFA through initiatives that instill discipline, ethical behavior and professionalism Consequence management Eskom will continue to implement consequence management and remedial measures for contraventions in line with current policies Awareness training will be rolled out with the Procurement Tender Committees Treasury and Department of Public Enterprise alignment Reporting to Treasury and Department of Public Enterprises will be improved to ensure alignment on PPPFA Audit and Risk The Eskom Board Audit and Risk Committee will continue to provide oversight to the process to deliver an unqualified audit opinion.

THANK YOU

Deviations: detailed notes

Deviations Supported by National Treasury – 5 submissions in Q4 2017/18
NT Ref Project Description Supplier Deviation Value Reason for Deviation 40 Generator Services Workshop Aurecon SA R Delays in design phase 41 Construction of Dumasi Hombe 132KV Consolidated Power Projects R Delays due to weather and land claimant 44 Pre strengthening phase 3C- TYPE FILTER SHUNT CAPACITOR BANKS EOH Power Systems (Pty) Ltd R Contractor could not complete the remaining work as the resistors for three (3) sites were delivered in February 2017 45 Supply, delivery and off-loading of Liquid Sulphur to various Power Stations Chemical Initiatives & Sasol South Africa (Pty) Ltd R The supplier is the only manufacturers of liquid sulphur 47 Heritage Management Project at Medupi Power Station Project Mbhofu Consulting - To finalise the closure phase

ABB South Africa (Pty) Ltd
Deviation pending support by National Treasury submission at the end of Q4 2017/18 NT Ref Project Description Supplier Deviation Value Why Status 52 "Upgrade of Water Treatment Plant Human Interface at Duvha Power Station" ABB South Africa (Pty) Ltd R Continuity of service Still awaiting NT feedback

Scope of work has not been completed
Eskom Deviations not supported by National Treasury – 9 submissions in Q4 2017/18 : Slide 1/2 NT Ref Project Description Supplier Deviation Value Why Status 39 Approach current suppliers from closed RFP for Coal Shortfall for various Eskom Power Stations (Primary Energy) Various suppliers Not stated Shortfall in coal NT recommendation was implemented with Eskom issued another confined market request if the other two processes do not fulfill the coal shortfall – contract now in place 42 Storm water Controls for the Kendal Ash Dump (Generation) Steffen, Robertson and Kirsten (South Africa) Pty Ltd R Continuity of service Recommendation from NT implemented, work was not carried out 43 Small aperture terminal connectivity for substations fitted with closed circuit television (Distribution) Vodacom South Africa R Minimise new infrastructure costs The recommendation from NT to extend the contract for 12 months was implemented, while Eskom finalise a new process 46 Manufacture, testing, supply, delivery, off-loading and erection of estimated quantities of Line Traps (Transmission & Distribution) High Voltage Equipment (Pty) Ltd R To finalise the competitive bidding process Contract was not modified, as it was not supported by NT 48 Design, Site Monitoring/Supervision and Construction Services to the Steam Generator Replacement Container Laydown Area and storage facilities at Koeberg (Nuclear) Botes and Kennedy Manyalo (Pty) Ltd R Scope of work has not been completed As the single source approval request was rejected by NT, the end user is preparing documentation to issue a tender to the open market.

Eskom Deviations not supported by National Treasury – 9 submissions in Q4 2017/18 : Slide 2/2
NT Ref Project Description Supplier Deviation Value Why Status 49 Issue Request for Proposal (RFP) for Kusile Power Station limestone handling at Clewer Highveld Steel Complex, to the closed market (Primary Energy) Makoya Supply Chain Holdings, Coal Solution and Hydro Lime R Cheaper rail logistics solution NT recommendation adhered to, RFQ still to go out to the market 50 Supply and provisioning of data SIM card MV90 metering database (Distribution) MTN SA R APN with MTN SA which is in use by all Operating Units Recommendation from NT implemented, work was not carried out 51 Kendal Power Station's Boiler Super-Heater Remaining Useful Life Replacement Project at Kendal Power Station (Generation) Babcock International Group R Preferred Bidder 53 Radiological Analysis Services for Koeberg Nuclear Power Station (Nuclear) PSI Risk Consultants R Continuity of service The single source has been stopped as instructed by NT

Expansions: detailed notes

Expansions Supported by National Treasury - 26 submissions in Q4 2017/18: Slides 1/4
NT Ref Project Description Supplier Original value Expansion Value Reason for Extension 30 Provision of IT services T – Systems South Africa (Pty) Ltd R R Finalisation of the bidding process 32 Facilities management services to estate within North West Operation Unit and Grid Khumovusi Trading & Projects, Tiyisa Trading, SHB2Y Contracts and Motshiamos United R R Continuity of services 35 Medupi Ash Dump Rula Bulk Materials Handling (Pty) Ltd R R0 Time only -Finalisation of the project 36 Rehabilitation of civil items at First Falls, Second Falls and Collywobbles dams Surface Preparations Equipment and Coatings (Pty) Ltd R with contingency amount of R Time only - Delays caused by inclement weather 37 Area E - Pre-fabrication facility at Duvha Power Station Vuka Magagula Trading and Projects cc R Time Only - delays due to design capabilities by supplier

NT Ref Project Description Supplier Original value Expansion Value Reason for Extension 38 The supply, transportation, erection and dismantling of scaffolding and insulation material for 15 (FIFTEEN) Generation Power Stations Southey Contracting (Pty) Ltd, Kaefer Thermal Contracting Services, SGB-Cape and TMS Group Industrial Services (Pty) Ltd R R Continuity of service 41 Civil works at Gromis and Oranjemond substation Gebane Engineering Services R R0 42 The maintenance workshop services (MWS) roof and cladding replacement Randblast Sites (Pty) Ltd R 43 Cvil works at Upington Substation Rigama Construction (Pty) Ltd R 45 Design, manufacture, delivery, testing, installation and hot commissioning of the 2 x 275kvAr Filter capacitor installation at Lepeni Substation Afritek (Pty) Ltd R R 47 Provision of Facilities Management Services to Eskom Real Estate (ERE) Corporate Office Buildings in Gauteng Region on as and when required basis Eris Periscopic Masingati, Leroy Building Construction cc & Thumncu (Pty) Ltd R R

NT Ref Project Description Supplier Original value Expansion Value Reason for Extension 48 Upington Cabling & Stringing contract for the transmission power delivery projects in the Northern Cape High Voltage Technology (Pty) Ltd R R Continuity of service 49 World Bank Funded Infrastructure for Transmission Power Babcock Ntuthuko R R0 51 Dismantling, Commissioning, of existing Non-Lethal Fence, Reconstruction and Commissioning of Non-Lethal Fence at Delphi Substation SA Fence and Gate R 52 Construction of Niewehoop- Upington 400kV Line (SECTION B) Consolidated Power Projects (Pty) Ltd (Conco) R 53 Construction of Nieuwehoop- Upington 400kV Line (SECTION A) Opti Power Projects (Pty) Ltd R 56 Construction of the Ash Dump and Dams and Miscellaneous Infrastructure at Medupi Power Station Basil Read (Pty) Ltd R 57 Provision of construction supervision at Ingula Pumped Storage Scheme Braamhoek Consultants Joint Venture (BCJV) R R 60 Free Carrier Arrangement (FCA) Transporters for haulage Free Carrier Arrangement (FCA) Transporters R R 61 The Consolidated Building Management System at Kusile Power Station Project (P22A) Honeywell Automation and Control Solution Southern Africa (Pty) Ltd R R 65 Panel Contract for Provision of Legal Services 73 legal firms R R

NT Ref Project Description Supplier Original value Expansion Value Reason for Extension 67 The supply and delivery of lubricants to various Eskom Power Stations BP Southern Africa (Pty) Ltd, Engen (Pty Ltd) and Chevron (Pty) Ltd R R Continuity of service 68 Design, manufacture, testing and supply of estimated quantities of Medium Voltage (MV) Electric Motors to various power stations for the Generation Division ABB South Africa (Pty) Ltd and Actom (Pty) Ltd R R0 75 The Upgrade of Lift Platform and Chairlift at Eskom Academy of Learning and Leadership Development Centre Centre Buildings in Midrand Shorts Lifts (Pty) Ltd R R 76 Assessment, design, installation, testing, commissioning of Fire Systems at Duvha Network Management Centre (NMC) Thlokomelo Management (Pty) Ltd R 77 Transportation of coal by Rail from various rail sidings to Tutuka, Grootvlei, Camden and Majuba Power Stations Transnet Freight Rail (TFR) R R

Expansions pending support by National Treasury - 7 submissions in Q4 2017/18: Slides 1/2
NT Ref Project Description Supplier Original value Expansion Value Why Status 54 HV and MV Feeder Protection Schemes ` R R Continuity of service Contract was not extended and expired. Resubmission to NT be done as a deviation. 58 Installation and erection of 160 Newly manufactured low NOX burners at Camden John Thompson a division of ACTOM R - NT did not support the value expansion, but supported the time extension. 59 Sourcing and delivery of material and services for the Eskom Information center EBSCO International & Worldwide Information Systems (Pty) Ltd for subscription and Worldwide Information Systems (Pty) Ltd & Alicanie Trading cc for Books R R NT recommendations were implemented. 63 Manufacture, Testing, Supply and Delivery of Various Estimated Quantities of Low Voltage Fuses to Eskom on As and When Required Basis Imbani- Advanced Product (Pty) Ltd (APT) R R Contract was stopped. New tender process in progress.

Expansions pending support by National Treasury - 7 submissions in Q4 2017/18: Slides 2/2
NT Ref Project Description Supplier Original value Expansion Value Why Status 79 Provision of Engineering and Project Management to Kusile Power Station Black & Veatch R R Continuity of service Conditional approved - Alternative actions being evaluated 80 Provision of Engineering and Project Management to Medupi Power Station Parsons Brinckerhoff Africa (Pty) Ltd (P&B Africa R 81 Stringing and Cabling at Various Substations- Central Grid R.T Tshabalala Electrical, R R 0.00 NT not supported. No work was carried out

Expansions not supported by National Treasury – 26 submissions in Q4 2017/18: Slide 1/7
NT Ref Project Description Supplier Original value Expansion Value Why Status 31 Supply and delivery of 66kv and 132kv circuit breakers (Dx & Tx) ABB South Africa (Pty) Ltd R R Continuity of services The request to extend this contract further was not approved by National Treasury and expired on 31 March The RFQ for the establishment of new contracts is currently being evaluated. 33 Upgrade of existing plant, design and construction of new plant and materials for the Ash Handling at Camden Power Station (Gx) Rula Bulk Material Handling (Pty) Ltd R R National Treasury approved the contract extended until 31 August 2018 to carry out the existing works while Eskom is appealing the application. 34 400 MV Switchgear - to modify a contract for the MV indoor primary metal enclosed switchgear to Eskom for a three year period on an as and when required basis (Dx & Tx) Actom MV SwitchGear (Pty) Ltd R R Funds exhausted The request to expand this contract was not approved by NT. The contract expires 30 September Contract not in use.

NT Ref Project Description Supplier Original value Expansion Value Why Status 39 Manufacture and supply Power - request for approval to expand/ modify a contract for the manufacture and supply of power quality monitoring meters to Eskom on an "as and when" required basis Quality Meters (Dx) Actom Protection Control a Division of Actom (Pty) Ltd R R Continuity of service as competitive bid of new contract in process Contract value depleted and no purchase order releases can be done by the business. New tender process at strategy compilation stage. 40 Maintenance and outage repair services for Boiler Pressure parts and/or the maintenance and outage repair services for High Pressure Pipework (Gx) Actom, Babcock and Steinmuller R R NT approved a 12 months extension until 30 September Currently preparing a new submission extension for time in order to finalise evaluation process. 44 Qualified Inspection Service during outages 121, 221 AND 222 at Koeberg Operating Unit (Nuclear) Westinghouse Electric R R Continuity of service Alternative actions being evaluated

NT Ref Project Description Supplier Original value Expansion Value Why Status 46 NEC and FIDIC Training (Group Capital) BCA Training (Pty) Ltd R R Continuity of service Alternative actions being evaluated 50 Provision of Engineering and Project Management Services (Group Capital) M-Tech Industrial (Pty) Ltd R R National Treasury letter was received after task order expiry. The task order was extended and continued for 3 months after initial expiry date. The matter is currently under investigation and condonation from NT will be sought. 55 Medium and Low Pressure Valves and Valve Spares (Gx) Ainsworth Diagosys JV, Ithuba Valves and Industrial Suppliers CC, Mitech Mokoena JV & Zenzele Premier JV R - Finalisation of competitive bidding process The modification was not implemented, the contract was allowed to expire on 03/03/2018 62 Hyperwave Assurance and ad-hoc support (Group IT) Suritec (Pty) Ltd R R Recommendation from NT implemented, work was stopped. New contract placed.

NT Ref Project Description Supplier Original value Expansion Value Why Status 64 Procurement of Plant Design, Supply and Installation of Overhead Track Equipment (OHTE) (Group Capital) Ircon International Ltd R R Continuity of service Alternative actions being evaluated 66 Provision of project and program controls oversight and assurance (Group Capital) LTE Consulting (LTE) R R Task order duration was shortened to fit within the 15% expansion limit that was approved by Eskom within its delegation. New Request For Proposal was issued 69 Supply of Three PSA Nitrogen Generation Plants at Kusile Power Station (Group Capital) Nugen Technologies (Pty) Ltd R - NT supported the expansion of time only with no financial implication. 70 Provision of Management Services (Group Capital) Norconsultant Iyanda (Pty) Ltd R R Recommendation from NT implemented, Stopped New Request For Proposal (Task Order 952) was issued 71 Provision of Project Development Services For Transmission Projects Developed by Group Capital: Project Package 3 (Group Capital) Nyeleti R R Retain the necessary resources Recommendation from NT implemented, Stopped New Request For Proposal (Task Order 947) was issued

NT Ref Project Description Supplier Original value Expansion Value Why Status 72 Provision of Project Development Services For Transmission Projects Developed by Group Capital: Project Package 2 (Group Capital) Project Powerhouse R - Retain the necessary resources Recommendation from NT implemented, Stopped New Request For Proposal (Task Order 947) was issued 73 Provision of Project Development Services For Transmission Projects Developed by Group Capital: Project Package 1 (Group Capital) Vaughan Charles Associate R R Continuity of service 74 Refurbishment of four main insolation valves (Group Capital) WK Construction R R Transaction did not continue. In the process of determining the correct procurement mechanism 78 TUTUKA Ash Dump Increase Project: Concept Development For Vertical extension of the existing Tutuka Ash Dump Facility and additional Thermal Monitoring (Group Capital) Zitholele JV R R Alternative actions being evaluated

NT Ref Project Description Supplier Original value Expansion Value Why Status 82 LV Switchgear replacement project at Matla Power Station (Group Capital) Siemens (Pty) Ltd R - Continuity of service NT recommendations implemented 83 MV Switchgear replacement project at Matla Power Station (Group Capital) R R 84 Printing Services (Group IT) Motswako Office Solution (Pty) Ltd R R Finalisation of the bidding process NT recommendations implemented - duration and value were reduced to fit within the 15% expansion limit that was approved by Eskom within its delegation. 85 Medupi Catering (Group Capital) Lephalale Site Service R R Continuity of services NT recommendation of an open tender was implemented, after several appeals to NT to reconsider the decision. However, due to site stability reasons for providing meals to the construction workers, the contract was extended from 31 Jan‘18 until the new one started on 1 Aug’18.The matter is currently under investigation and condonation from NT will be sought.

NT Ref Project Description Supplier Original value Expansion Value Why Status 86 Security Services (Dx) Various service providers R R Continuity of services National Treasury letter was received after contracts expiry. The contracts expired. Due to the nature of the services the work continued under once-off PO with the same suppliers. The process has been internally condoned. A new contract based on an open tender process will be placed in September The matter is currently under investigation and condonation from NT will be sought. 87 Supply and deliver of 400kv circuit breakers (Dx & Tx) Actom (Pty) Ltd R R The contract was not extended. The RFQ for the establishment of new contracts is underway – current tenders being evaluated. 88 Common plant pressure vessels testing and repairs (Gx) DB Thermal (Pty) Ltd R R NT rejection was accepted and recommendations carried out

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