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

2. 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

3. Progress on Eskom Build Programme

4. Progress on Eskom Build Programme (Cont)

5. Progress on Eskom Build Programme (Cont)

6. Progress on Eskom Build Programme (Cont)

7. 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

8. 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

9. BP & HR Capacity building
Target 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

10. 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

11. HOUSEHOLD ELECTRIFICATION - HISTORY
SOUTH AFRICA
COST PER CONNECTION
RURAL CONNECTIONS
URBAN CONNECTIONS
TOTAL CONNECTIONS
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

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

13. 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

14. 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

15. 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

16. 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

17. Transnet core businesses: Capital expenditure 2006/0717 17

18. 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

19. 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

20. 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

21. 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

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

23. 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