Chairman of Eskom, Mr Zola Tsotsi
CEO of Eskom, Mr Brian Dames
Executives of Eskom
Members of the media
Ladies and gentlemen,
Thank you for permitting me to say a few words at today’s event on behalf of the Shareholder, the Minister of Public Enterprises, Malusi Gigaba, as Eskom releases its half-year results.
It seems like a very short while ago, some five months back, in fact, when we were all gathered here for Eskom’s annual results for the 2011 financial year. At that gathering we were able to reflect on a challenging year, in fact challenging past few years, where Eskom and government as its Shareholder were tested to the limit with regard to security of electricity supply and securing the funding for the massive capacity expansion programme that Eskom is engaged in.
We reflected on the fact that Eskom had been able to successfully keep the lights on and avoid load shedding, while managing a power system that has become tighter on the back of the South African economy’s continually growing appetite for more electricity.
We were also able to reflect on the continued financial turnaround that Eskom had begun in the previous financial year and the finalisation of the Eskom funding plan to enable the completion of the new build programme up to 2017.
As we reflect on the financial year to date, which has been no less challenging than the previous one, it is appropriate that this be located in the vision of the Department of Public Enterprises which is to drive investment, efficiencies and transformation in our portfolio of state owned companies, in their customers and in their suppliers to unlock growth, create jobs and develop skills.
Our vision is informed by the priority that government has placed on addressing the backlog in public infrastructure investment which has constrained growth and development. The Department of Public Enterprises (DPE) is putting considerable effort into formulating a new development-focused planning paradigm for state owned companies which will help to ensure the investment we need in infrastructure over the long term.
Eskom is a very sizeable part of the South African economy in its own right, and its impact on the economy is significant. We know an adequate and reliable supply of electricity is essential for economic growth and investment, and in this sense Eskom must be a conscious catalyst for economic growth, investment and job creation, and not a constraint, as some perceive it to be.
Eskom’s new build programme is the largest infrastructure programme South Africa has ever undertaken and as government, we want to leverage it to stimulate local industries and the development of critical and scarce skills in the economy, particularly engineers, technicians and artisans. Delivering on this goal requires partnerships among many stakeholders; between Eskom and its customers and suppliers; partnerships with business and labour, with learning institution and with other stakeholders, and including at the international level. We are challenged to work in ways we have never tried before.
We are encouraged by Eskom’s half-year results and the positive financials it has achieved and we commend Eskom in this regard. We must however be cognisant that Eskom’s sales are seasonal and this half-year profit is generally reflective of what will be achieved in the full year.
We believe this strong half-yearly performance of Eskom testifies to it being a well-managed and well-led company; and testifies to the state of company’s relationship with its shareholder, both of which we and Eskom are committed to continually work on improving.
Eskom has managed to maintain system’s security over the half-year and its quarterly state of the system briefings have attested to the company’s resolve to keep the lights on and the need to create space for maintenance to reduce the backlog. The summer season in which we are is of particular concern as it is Eskom’s maintenance season, and all South Africans are enjoined to heed Eskom’s call for the more efficient use of electricity, especially during this period so that the risk of unplanned power interruptions remain manageable. The Department of Public Enterprises (DPE) also continues to work closely with Eskom to find ways to create space for maintenance whilst minimising the costs of such interventions.
The new build programme has not been without its challenges either, with potential delays to Medupi power station resulting in the projected commissioning dates for first power moving from 2012 to 2013. We are working with Eskom to ensure that contingency measures are put into place should they be needed to fill any supply gaps that might arise from the delay. Shareholder oversight of the new build programme and its delivery is being stepped up to ensure early intervention should the need arise.
All in all, Eskom must be commended for maintaining a truly delicate and challenging balancing act of being a complex but viable and increasingly responsive company, and yet with its eyes fixed on the future and seeking to manage that transition as seamlessly as possible.
It deserves mentioning some key milestones in Eskom’s ongoing progressive journey: the finalisation of the funding from the World Bank and African Development Bank and other international funders for Eskom wind and concentrated solar projects. Implementation of these projects can now proceed without delay. Eskom has also just this week launched the first of its solar photovoltaic demonstration projects at Lethabo power station as part of its commitment to diversifying its energy mix toward renewables. The commencement of the construction of the boiler at Kusile power station is another significant milestone which we marked this past weekend.
The question of what will Eskom’s role be in Government’s IRP2010 remains, and the DPE is working closely with the Department of Energy and other government departments on finalising this, as well as Eskom’s future role in the nuclear fleet programme. This will be a key input into Eskom’s application to the National Energy Regulator of South Africa (NERSA) for its revenue allocations for the 3 years commencing 1 April 2013, the so-called MYPD3 period which is due for submission during 2012.
The need to bring the private sector into the power generation business on a sustainable basis cannot be over emphasised. We are very clear that Eskom will not be able to provide for our country’s long term electricity needs on its own. In this regard we support Eskom’s purchases of power from the private sector through its Medium Term Power Purchase Programme and the power it has purchased from Municipalities which assisted us through this past winter. We will continue to support such purchases where it makes sense and where it does not place undue upward pressure on already steeply increasing electricity prices.
In closing! Congratulations to Eskom on its good results, not only financially, but also in keeping the lights on and in driving through with its complex and largest build programme. There are still significant challenges ahead and government will support Eskom in ensuring that the company remains sustainable and has the wherewithall to make the necessary contribution to government’s objectives of growing the economy, creating jobs and developing skills. Finally, it bears stressing again and again the need for all South Africans to be aware of the current delicate supply and demand balance, and to heed the call for more prudent use of electricity during the coming months. Government and Eskom are doing all in our power to ensure security of electricity supply, but this cannot be achieved if electricity users do not also play your part.
Thank you.
Remarks by Director-General Mr Tshediso Matona: Eskom 2011 Interim Results
