Eskom's approach to leveraging developmental benefits in the roll-out of its capacity expansion programme. 3rd Annual Eseta Conference November 2007

A GROWING ECONOMY THAT BENEFITS ALL… Government led Accelerated and Shared growth initiative (ASGI SA) is about ensuring that the country achieves 6% growth, whilst having poverty and unemployment by This initiative is made necessary by the need to ensure that growth in our economy is both accelerated and shared Special Focus on bridging the gap between the 1 st economy & the 2 nd economy

ASGISA seeks to create jobs, alleviate poverty, improve service delivery and promote good governance Objectives Alleviate poverty Develop skills Improve service delivery Promote good governance Targets 6% growth Half the number living in poverty by 2014 Half the number of unemployed by 2014 SOEs have been tasked to support ASGISA through job creation, poverty alleviation, skills development and infrastructure development. Create jobs

Eskom will contribute through its core business of supplying electricity and leveraging economic benefits from associated activities 6% growth Half the number living in poverty Half the number of unemployed Growing its assets to meet electricity demand growth Maximising local content Procuring from BEE, SME and BWO suppliers Training new learners Electrification Focussed CSI programmes R150bn over next five years learner pipeline Over 3.4 milion homes electrified since 1991 Over R400 million invested by the Eskom Development Foundation, since Source for stats: Eskom Holdings Annual Report 2007 The multi – billion rand build programme presents an opportunity to leverage developmental benefits on a significant scale

Return to service of Camden, Grootvlei & Komati power stations (total of 3 800MW) Camden (near Ermelo in Mpumalanga) – 8 units of 200MW –5 units under commercial operation. Another planned for commercial operation by end 2007, and last unit scheduled for commissioning in Grootvlei (near Balfour in Mpumalanga) – 1200 MW –1 st unit to be commissioned by end 2007 –Last unit scheduled for commercial operation by end 2009 Komati (between Middelburg & Bethal in Mpumalanga) – 1 000MW (5 x 100MW and 4 x 125MW) –1 st unit is planned to be commissioned in 2008 –Last unit scheduled to be in commercial operation in 2011 Camden Grootvlei The build programme presents opportunity for leveraging developmental benefits…

Open Cycle Gas Turbine Stations Ankerlig ( Atlantis, Cape Town) (9 units x MW) –4 units rated at MW under commercial operation –5 additional units of MW to be built Gourikwa (Mosselbay) – 1200 MW –3 units rated at 146,29MW under commercial operation –Additional 2 units of 146MW to be built Grootvlei Gourikwa Site Pumped Storage Ingula (near Van Reenen, beteen KZN & Free State) MW – Will comprise 2 dams, undergraound waterways, underground powerhouse complex, access tunnels & access roads –Station to be fully operational by 2012 Coal Fired Power Station Medupi (Lephalale, Limpopo) - 6 units totalling 4 788MW installed capacity – 1 st unit to be commissioned by –Boiler & Turbine contracts have been recently signed

Local Content¹ commitment BEE compliance 2 nd tier BWO participation 2 nd tier SME participation Skills development² commitment –According to pre-identified skills catagories Technical Financial ASGISA readiness Existing prerequisite Additional prerequisite 40% 20% Notes: 1.Value that is added in South Africa by South African Resources 2.Training and development in a specific trade to the point where the trainee passes a trade test and qualifies as an artisan. 3.BEE – Black Economic Empowerment 4.SME – Small & Medium Enterprises 5.BWO – Black Woman Owned Businesses ASGISA readiness criteria are being applied for awarding contracts, in order to ensure developmental benefits in the roll – out of the infrastructure programme

ASGI-SA compliance is to be awarded 20% of the total tender evaluation points, i.e. 80% is awarded for price and quality and 20% for ASGI-SA compliance. A scorecard approach is used with the following weightings for each of the ASGI-SA criteria: A Suppliers tender response must achieve a total ASGISA score greater than 60% for a tender to be evaluated and a contract to be approved. The model seeks to strike a balance between technical criteria and evaluated price on the one hand, and the achievement of ASGISA objectives on the other hand.

In executing the boiler and turbine contracts for the Medupi Power station, local content and the transfer of knowledge and skills will be supported. Boiler and turbine contracts recently signed for Medupi –Boiler contract to the value of R20,2 billion, has been awarded to an Hitachi Consortium, (consisting of Hitachi Power Europe GmbH and Hitachi Power Africa (Pty) Ltd) –The turbine contract, valued at R13,2 billion, has been awarded to Alstom S&E Africa (Pty) Ltd More than 50% of the two contracts combined will be procured locally. NEW BUILD: ASGISA CONTRIBUTIONS This includes a significant portion of skills development across various artisan and technical categories, BEE, SME and BWO contracting

The growth in our infrastructure is accompanied by increasing skills requirements We need skills to build the infrastructure, operate the new plant and still retain our existing skills to run our current assets, in an era characterised by global infrastructure expansion.

In order to meet our skills requirements, a multi- pronged resourcing strategy is required … BOOST Build Borrow Bridge Bind Succession Plans Promotion Career progression Buy Recruitment Head- hunting Agencies Birth School Programs University Partners Pipelining Training Development Coaching Mentorship Outsourcing Contracting Consulting Deployment Secondment Redeployment Retention Incentives Employment Brand Resourcing Strategy

ESKOMS SKILLS REQUIREMENTS YEARTotal Number Required TOTAL 6193 Source: Eskom Annual Report 2007, pg 62

Learner intake is increasing. The ASGISA commitment of a learner pipeline was exceeded by TargetActual 2007Actual 2006 Total Learner pipeline The development pipeline covers all catagories of learners, including university bursars, learnerships, engineers in training and graduates in training. Source: Annual Report 2007, pg 20, 63

ESKOMS APPROACH Recruited more learners than planned on the ASGISA drive to accelerate the process 800 more bursars were recruited in addition to the Eskom existing bursars Partnerships were sought to alleviate training capacity shortages i.e. Denel ( training 89 Artisans in collaboration with Denel in 2007 ) Agreements with supplier companies to provide workplace exposure to learners where we lacked capacity Eskom sponsors two teachers per school to teach Maths and Science and supporting material is provided to 18 schools Winter School programmes conducted centrally and at various business units to build capacity in maths and Science for matriculants

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