Eskom’s Annual Report briefing

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Public Enterprises

27 October 2004
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Meeting report

PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
27 October 2004
ESKOM’S ANNUAL REPORT BRIEFING

Chairperson:
Mr Y Carrim (ANC)

Documents handed out

Eskom’s Annual Report 2003
Eskom PowerPoint presentation on their Annual Report 2003 and Corporate Objectives 2004

SUMMARY
Eskom presented its Annual Report to the Committee. Members raised the issue of poor electricity supply in rural areas. A more detailed report was requested by Members around the issues of job creation, HIV/AIDS, employment equity and electrification programmes, specifically the breakdown of beneficiaries.

MINUTES
Eskom’s Chief Executive, Mr Tulani Gcabashe, gave an introduction to the company and Managing Director of Finance, Mr Bongani Nqwababa, proceeded with the presentation. The latter reported that the main part of Eskom’s business was regulated, and dealt with the generation, transmission and distribution of power. Eskom’s corporate values included sustained performance excellence, integrity, innovation and customer satisfaction.

There had been an increase in employment and the electrification of houses in the last ten years. The Black Women Owned Enterprises and Black Economic Empowerment initiatives had also shown significant improvement. Profit was slightly lower than the previous year, but there had been growth in electricity sales. They felt Eskom’s sustenance of financial performance had been mainly due to sound corporate governance.

Their focus on health and safety would increased as staff risked exposure during the construction phase. More HIV/AIDS awareness programmes would also an additional area of focus. This year’s target for net income after tax and before the fair value adjustment, was R4.2 billion, with the net income after taxation being R2.8 billion. Their employment equity target was 57.9% black, with 29% of management female.

Discussion
Ms N Mnandi (ANC) asked if the Director-General’s salary had been in line with the international standards. She also questioned Eskom’s strategy regarding illegal connections and related losses. She asked for the number of HIV-infected employees and the measures taken to deal with the disease.

Mr Gcabashe responded that Director’s salary had been approved by the Board of Directors, and was considered in line with the market. Unless the company paid the market rate, it would not be able to attract or retain executives. HIV prevalence was 11% within the 18-35 age group. There was a testing and counselling programme to help staffmembers know their status.

Eskom’s Managing Director of Distribution, Mr Mongezi Ntsokolo, added that there were major losses from illegal connections in ‘unproclaimed areas’. Eskom was doing it’s best to remove cables and municipalities were trying to relocate people as soon as possible. The financial impact of these operations was very low, but people’s safety was an important concern.

Ms N Kondlo (ANC) asked if any of the ‘BEE money’ went to broad-based programmes across provinces. She also asked how many of the electrified homes were in rural areas, adding that the quality of electricity in rural areas should considered in Eskom’s eight-year plan. She enquired about the number of African women involved in Black Women Owned Enterprises. How many schools and clinics had been electrified this year?

Mr Gcabashe replied that some information needed to be compiled and would be availed to Members. Eskom was ensuring that companies that provide services, represented the broader community. Mr Ntsokolo said Eskom’s electricity allocation went towards schools and clinics. For the next eight years, the programme would be centrally driven with more than 70% of it directed to rural areas. The ‘quality of supply issue’ had been noted and would be further looked into. More robust, strengthened networks were being built and the existing ones were being upgraded to ensure contingency supplies.

Mr Z. Madasa (ACDP) asked how many meetings Board Members were required to attend per year. He further asked if it was legal to have electric wires running over house rooftops, and if connecting electricity in all rural areas would help prevent urbanisation. A more comprehensive report was needed.

Mr Gcabashe responded that there were several scheduled Board meetings at the beginning of the year, but members attended many more unscheduled ‘extraordinary’ meetings. Overhead lights were cheaper and could reach more customers, were easier to fix, and were safe.

Ms D Ngcengwane (ANC) asked if Eskom employed disabled women, and what South Africa was doing in terms of Eskom’s tariff structure. She enquired about the risks of extending Eskom services beyond South Africa.

Mr Gcabashe responded that they intended to reform domestic tariffs so these would be more cost-effective. There had been an increase in disabled employees and internal programmes provided specialised training.

The Chairperson agreed that the Committee needed a further, more detailed report so Parliament could know more about Eskom’s delivery.

The meeting was adjourned.

 

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