1. AFRICAN MINERALS & ENERGY FORUM BEE Opportunities in the Electricity Industry Parliamentary Portfolio Committee: Minerals & Energy Prepared by: Cingembo Mqaqa & Mandla Tshabalala

2. Objective of presentation To share areas of opportunities for BEE companies in Electricity To appraise Portfolio Committee of Minerals and Energy on some current developments in the ESI Introduce AMEF as an entity that will promote and ensure operational empowerment of Black owned businesses in the ESI

3. Background on Govt’s BEE intent Restructure SOEs to create shareholder value Promoting main stream BEE involvement and securing significant BEE operational equity Relevant Govt documents RDP GEAR Strategy White Paper on Energy Policy Status of the nation address: 2001 BEE Commission

4. Scope of presentation Customer operations Customer operations Customer operations Customer operations Customer operations Customer operations Customer operations Customers Trans-Elec IPP “Contestable” Customers “ Contestable” Customers Pool System Ops 6 RED Dx KWh R Retailer Eskom Gx Eskom Gx Tx Dx

5. Scope of presentation Electricity Generation Electricity Transmission Electricity Distribution Related non-core business

6. Electricity Generation Government Intent  Restructuring of Eskom  Grouping of generation plants into clusters  Promoting new privately-owned IPP investments Areas of interest & expertise:  Power plant management  Power plant operations and refurbishment  Research and Development (renewables) BEE Opportunities:  Equity in main stream Eskom generation  Simunye cluster not viable pending details studies  Equity in new IPPs (e.g. Cape Power Project, PBMR)  Equity in renewable generators (e.g Wind & Solar thermal)  Participation in energy Market Place  Management contracts for: – Power plant management – Power plant operations and refurbishment – Research and Development (renewables)

7. Electricity Transmission Government Intent  Open Access in electricity transmission to uncommitted capacity  Maintain as natural monopoly Areas of interest & expertise:  Electrity trading  Systems operation  Pool operation BEE Opportunities:  Equity in Systems operation  Equity in Pool operation  Equity in Transmission Company

8. Electricity Distribution Government Intent  Restructure Eskom into separate entities  Amalgamate Municipality with Eskom Dx  Form 6 REDs Areas of interest & expertise:  Metering & Billing  Client service / call centre  Vendor  Maintainance and operation BEE Opportunities:  Transfer of ownership of Eskom brands Agrelek, Elektroserve, Elektrowise, Industrelek, Utilimark  Participation in REDs  Equity in future REDs

9. Related non-core business Objective  Adding value to ESI Areas of interest:  Maintanance and refurbishment  Electrification  Non-utility generation BEE Opportunities:  Demand Side Management  Energy efficiency in government buildings  Equity in renewable energy companies  Equity in Eskom Enterprise  Change management and communication

10. BEE Current Status Update Opportunities Generation Transmission Distribution Non-core No >5% BEE PARTICIPATION OperationalEquity >1% No minimum Some current market perceptions  BEE only around for 2 more years  There are no BEE energy companies/ skills  BEE cannot deliver any way

11. BEE Position Opportunities Generation Transmission Distribution Non-core 40% 50% 70% BEE PARTICIPATION OperationalEquity 30% 50% Suggested financial and institutional support  Creation Energy Empowerment Fund  NER enforcing BEE participation at all levels  Business linkages between BEEs and FDI

12. ESI Trends

13. African Minerals & Energy Forum Background Established in 1998, AMEF is the private sector organisation for new black companies in the African minerals and energy business. AMEF’s aim is to promote and protect the interest of members in areas ranging from equity participation to strategic and policy intervention as well as technical requirements and capacity building support

14. African Minerals & Energy Forum Objective To promote active participation of Black Business in the Minerals and Energy sector To build capacity of AMEF members To create forums for networking To liaise with Government and Industry on behalf of members Position Promote and protect BEE interests ranging from equity participation to strategic position intervention Support governmetn’s transformational needs of the SA economy Act as vehicle through which government can achieve its short to long term empowerment goals Promote best environmental practises and good governance in ESI/EDI

15. References 1.Presidency: 2001. State of the Nation Address: Cape Town. Government Communication and Information Service 2.Ministry of Public Enterprises: 2000. An accelerated agenda towards the restructuring of State Owned Enterprises: Policy Framework: Pretoria: Government Printers. 3.EDIRC/PriceWaterCooper: 2000. Emerging views: Restructuring of the Electricity Distribution Industry: Johannesburg. EDIRC Secretariat 4.Department of Minerals and Energy: 1999 Annual Report: Pretoria: Chief Directorate, Communications. 5.Republic of South Africa: 1998. White Paper on Energy Policy for Republic of South Africa, Pretoria: Department of Minerals and Energy 6.Department of Finance: 1996. Growth, Employment and Redistribution: A Macroeconomic Strategy: Government Printers 7.Cheales, P: 1995. Look Out – A survival guide to the international business onslaught: William Waterman Publications 8.Ministry of Public Enterprises. 1995. Discussion document by Government of National Unity on the consultative and implemation framework for the restructuring of state assets. Pretoria: Government Printers