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DEPT OF PUBLIC ENTERPRISES CAPEX UPDATE

DEPT OF PUBLIC ENTERPRISES CAPEX UPDATE PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES 16 AUGUST 2006. CONTENTS. Progress Eskom’s Build Programme Overall spent to date Supplier Development (SD) Jobs created

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DEPT OF PUBLIC ENTERPRISES CAPEX UPDATE

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  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 4 000 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 11 11

  12. Progress on INEP • Annual funding is R1.39 billion and 230 000 hhlds are connected • In order to achieve the target annual funding should be R3.6 billion and 500 000 hhlds should be connected • Should the above happen the programme could create 10 000 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 2009/10 2010/11 2007/08 2008/09 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 2006/07 17 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

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