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

2. ESKOM ESKOM 2001 OBJECTIVES REGULATED BUSINESS GenerationTransmissionDistribution

3. CONTENTS BACKGROUND BACKGROUND BUSINESS OBJECTIVES 2001 BUSINESS OBJECTIVES 2001

4. BACKGROUND

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

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

7. 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

8. 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

9. 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

10. 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

11. BUSINESS OBJECTIVES 2001

12. OVERVIEW OF FINANCIAL RESULTS Eskom Financial Performance:

13. 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

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

15. 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

16. DEBT : EQUITY

17. TWh TWh SOLD

18. 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

19. 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

20. 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

21. 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

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

23. 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

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

25. 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

26. STAFF PROFILE

27. 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

28. 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

29. 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

30. 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 186 370 homes to be electrified

31. ELECTRIFICATION Cumulative number of homes connected ELECTRIFICATION Cumulative number of homes connected

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

33. 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

34. Litres ENVIRONMENTAL PERFORMANCE Water Consumed per kWh Sent out

35. ENVIRONMENTAL PERFORMANCE Particulate Emissions Relative to Energy Sent Out kg

36. CONCLUSION