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Eskom Briefing To Portfolio Committee On Public Enterprises 12 November 2003

Eskom Briefing To Portfolio Committee On Public Enterprises 12 November 2003. Thulani S Gcabashe Chief Executive. 1. Eskom Group Strategy. Eskom Holdings Limited. Finance Division. Human Resources Division. Resources & Strategy Division. Corporate Division.

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Eskom Briefing To Portfolio Committee On Public Enterprises 12 November 2003

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  1. Eskom Briefing To Portfolio Committee On Public Enterprises 12 November 2003 Thulani S Gcabashe Chief Executive

  2. 1. Eskom Group Strategy Eskom Holdings Limited Finance Division Human Resources Division Resources & Strategy Division Corporate Division Key Sales & Customer Service Division Generation Division Transmission Division Distribution Division Eskom Enterprises (Pty) Ltd Existing Organisational Structure

  3. 1. Eskom Group Strategy cont. Strategic Intent • African Power Sector based company operating primarily in Africa • Committed to African development through its products and services • Pre-eminent – top performer, market presence • Energy – based on core business of electricity • Related services – derived directly from the core business • Global stature – global company performing on at least equal footing to international peers To be the pre-eminent African energy and related services business of global stature

  4. 1. Eskom Group Strategy cont. Mission Eskom will grow shareholder value by exceeding its local and international customers’ needs for energy and related services

  5. 1. Eskom Group Strategy cont. Competitive Advantage of Eskom Key Competency The ability to develop and manage the entire extended electricity value chain so as to deliver high quality, low cost electricity using low grade and scarce resources (eg coal, water) in a challenging business, social, natural and political environment

  6. 1. Eskom Group Strategy cont. Eskom’s Core Strategy • Retaining & building existing markets whilst mitigating impact of industry structure on business growth • Retention of vertical integration through globalisation as local industry restructuring reduces local market share • Diversification based on core business • Enhancing Eskom’s long term competitive edge through innovative development of new business opportunities aligned with our core competencies • High level of corporate social responsibility

  7. Eskom Group Strategy cont.Lines Of Business A - Production of power B - Transportation of power C - Trading of power among producers & wholesalers / bulk users D - Retailing to end users of power E - Related Services • Bulk telecommunications • Engineering services • Consulting F - Backward linkage in primary energy to enhance A or C • Competency • If competitive advantage exists • Managed for cost reduction or value enhancement 4

  8. Other Africa SADC South Africa Active Investment Portfolio Management Markets Markets Synergy Maximisation - Bundled Products & Services New Business Development, Market Building & Globalisation Engineering Bulk Telecomms Retail Bulk Telecomms Surplus Sales Support Trading External Market Support Gas Transport Focussed Financial Services Coal Generation Nuclear IT Core Business: Electricity Support Competencies + Assets Derived Competencies + Assets Core Competencies + Strategic Assets

  9. 2. Industry Restructuring Generation • Creation of Generation clusters & subsidiarisation • 30% external participation in Generation • 10% BEE • 20% Private Sector Participant Transmission • Creation of power exchange as ring-fenced entity (SAPEX) • Retain system planning & system operations • Prepare for separation - Govt owned SA Tx Company

  10. 2. Industry Restructuring cont. Distribution • EDI Holdings created • REDs boundaries approved by EDI Holdings • Eskom moving from 7 to 6 regions • Alignment with Govt’s objectives • Draft Restructuring Bill

  11. 3. Shareholder Compact & Business Plan Economic Objective Improving management of resources Social Objective Demonstrating exemplary corporate citizenship & harmony with society Corporate Objectives Revised Business Model Objective Demonstrating progress towards achieving Eskom’s intended business model Environmental Objective Demonstrating exemplary corporate commitment to a sustainable environment

  12. 3. Shareholder Compact & Business Plan cont. • Improve the management of resources through: • Long term financial viability • Economical, efficient and effective usage of resources • Focus on customer satisfaction • Excellent technical performance • Improvement of safety performance ECONOMIC

  13. 3. Shareholder Compact & Business Plan cont. SOCIAL • Demonstrate exemplary corporate citizenship and harmony with society through: • Continued focus on affirmative action and actively promoting women and disability equity • Electrification as implementation agen for government • Supply of free basic electricity, taking into account the sustainability of the business • Support for socio-economic development • Support for NEPAD

  14. 3. Shareholder Compact & Business Plan cont. ENVIRONMENTAL Manage ESKOM’s impact on the environment REVISED BUSINESS MODEL Demonstrate progress towards achieving ESKOM’s intended business model through: • Diversification of markets, products and services • Restructuring ESKOM to support the strategic intent and align with Government policy

  15. 3. Shareholder Compact & Business Plan cont.

  16. 3. Shareholder Compact & Business Plan cont.

  17. 3. Shareholder Compact & Business Plan cont.

  18. 4. Key Challenges 4.1 DEMAND GROWTH • Accelerate Simunye RTS • Contingency plan for high growth Implementation • Build Braamhoek pumped storage • Decide to build next (Steelpoort) 3X333MW Pumped Storage • Fuel sourcing, siting selection & optimisation, including EIA: • New 6x700 MW PF station • Repowering Komati half station with FBC • Greenfield FBC 500MW options • 2 new CCGT options (1600MW Coega, 800MW W-Cape)

  19. 4.2 CAPITAL PROJECTS (RM) 4. Key Challenges cont. 2004 2005 2006 2007 2008 Total Generation 3921 5678 5482 6183 6313 27577 Transmission 2061 3118 1029 861 640 7709 Distribution 3062 3210 3134 3196 3199 15801 Total 9044 12006 9645 10240 10152 51087 • Investment in new generation capacity included • Braamhoek pumped storage R1585m • New coal power station R 846m

  20. 4. Key Challenges cont. 4.3 SADC POWER PROJECTS • Northern Mozambique Power Pool • Cohora Bassa • Mepanda Uncua • Kudu • Western Power Corridor (Inga 1, 2 & 3) • Tanzania-Zambia • Mozambique – Malawi

  21. 4.4 FREE BASIC ELECTRICICTY 4. Key Challenges cont. Funding Terms Between Eskom & Municipalities: • Municipalities identify households: • < 20Amp supply (Pre-paid) • < 150kWh per month (Conventional) • Subsidy based on 50 kWh • Retail Price of 34,5c per kWh nationally • Municipalities invoiced monthly • Annual renewal of contracts • On default can approach National Treasury • Govt FBE Task Team to facilitate distribution & signing of agreement

  22. 4. Key Challenges cont. 4.4 FREE BASIC ELECTRICICTY CONT. Impact (Rm)

  23. Questions?

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