1. Finance (Foreign Exchange) Clarification Date 10 February 2016

2. 10 February 20162 Forex Eskom, in the normal running of its business, has exposure to foreign currency exchange rate movements and in being one of the larger corporates, has direct access to the foreign currency trading markets. In order to eliminate any exposure to the volatility of the currency exchange rate markets, Eskom has taken a decision to manage any of these risks

3. Payment methods - CPA(IG) The management of the risk entailed Eskom developing payment options involving foreign currency exchange rate risk. Namely : 1. Payment Method 1A - payment in foreign currency directly overseas to a nominated foreign beneficiary. N.B Proof of importation is required for payment to be effected. (Tenderer must be direct importer) 10 February 2016 3

4. Payment methods - CPA(IG) 2. Payment Method 1 B - Payment in foreign currency into a duly authorized CFC ( Customer Foreign Currency) Account. However The responsibility rests with the tenderer to provide evidence that they have a duly authorized CFC account and that they have the South African Reserve Bank’s approval to invoice Eskom (another locally registered entity) in foreign currency and to receive these foreign currency proceeds into their CFC a/c Eskom. Will require proof of these approvals (Copy of bankers application to SARB and copy of the official response) NB: Proof of importation will be required. Tenderer must be direct importer) 10 February 2016 4

5. Payment methods - CPA(IG) 3. Payment Method 2 – Payment in Rand, where the Rand payment is linked to Rate of Exchange. Eskom has special dispensation from SARB to hedge these exposures, and payment will be made at the spot rate of exchange obtained in cancelling the hedge (forward cover). Tenderers will have to provide a letter of indemnity advising that they(or their sub-contractors) will not be availing of forward cover. N.B Proof of importation is required N.B Tenderer must be the direct importer N.B Only payment of goods can make use of this payment method once Risk and Governance and the Eskom Treasury Department approve this method of payment. 10 February 20165

6. Fixed Rand Should a tenderer propose a fixed Rand price for the imported content (i.e. assume the exchange rate risk), Eskom will consider this proposal) However : Eskom reserves the right to check the market-relatedness of the cost to be passed on to Eskom. This price comparison must be done simultaneously The tenderer will be required to match or better the Eskom quote or Eskom will hedge the risk and payment will be in accordance with Payment Method 1A. If the Tenderer assumes the risk, Eskom will not be liable for any exchange rate movement for the duration of the contract. 10 February 20166

7. Customs documents for payments Import Related Payments 1A (Directly Overseas). When payment method 1A is to be used, the following documents will be required in order for the funds to be paid out to the beneficiary. Original invoice from the overseas supplier The invoice must include the full bank account details and address of the supplier to whom the payment is due. SARS Release Notification SAD500 and related Customs worksheet A bill of entry with a customs stamp is required or a bill of entry with the customs release notification Bill of lading (This may not be necessary if a Bill if Entry is provided) If the import is sent by courier, proof of delivery is required 10 February 20167

8. Customs documents for payments Import Related Payments 1B (CFC Account) - Kindly ensure that a copy of the Reserve Bank Approval and the suppliers bankers application request to SARB are sent to Treasury Operations. When payment method 1B is to be used, the following documents will be required in order for the funds to be paid out to the beneficiary Original Tax Invoice from the local supplier. Original Commercial invoice from the overseas supplier The invoice must include the full bank account details and address of the supplier to whom the payment is due. SARS Release Notification SAD500 and related Customs worksheet A bill of entry with a customs stamp is required or a bill of entry with the customs release notification 10 February 20168

9. Customs documents for payments A bill of entry with a customs stamp is required or a bill of entry with the customs release notification Bill of lading (This may not be necessary if a Bill if Entry is provided) If the import is sent by courier, proof of delivery is required Service Related payments. No service related payments are allowed into CFC account unless there is Reserve Bank approval obtained for such. Service related payments need the following documents: Tax invoice signed by project manager Commercial invoice if funds being paid into local CFC Assessment certificates signed by project manager EXCON and Checklist for payment 10 February 20169 Import Related Payments 1B (CFC Account) continued..

10. Conversion rates For conversion of the foreign portions to Rand, must the South African Reserve Bank's (SARB) exchange rate for seven (7 ) calendar days before tender close, be used. www.resbank.co.za - Select Research - Then select Rates - Click on "Select historical exchange rates and other interest rates" - Clicking on the exchange rate in the following page opens the daily rates per currency and SA Rand 10 February 201610

11. Forex Kindly take note of the following: During contract execution, and Eskom has hedged the exchange rate risk, should a supplier indicate a change in currency of payment or payment method, any associated costs will be borne by the supplier. During contract execution, and Eskom has hedged the exchange rate risk, should there be any delays by the supplier which result in the forward cover in place having to be modified to accommodate these changes, the additional forward covers costs incurred by Eskom will be recovered from the supplier. 10 February 2016 11

12. Any questions ? 10 February 201612