Future focus for Eskom

The current environment that Eskom operates in poses a number of short-term challenges:

The power system will remain constrained until units from the capacity expansion programme come online, but the level of power that can be generated can be influenced by changes in atmospheric emission licence conditions
The MYPD 3 determination has resulted in a revenue shortfall of R225 billion, which is exacerbated by lower local sales volumes, increasing pressure on Eskom’s credit rating
High open-cycle gas turbine usage (as a result of power system constraints) is increasing operational expenditure and has a negative impact on Eskom’s financial sustainability
The utility business model is changing around the world. Eskom needs to refine its business model to ensure its agility and long-term sustainability

The Eskom environment is dynamic, posing challenges, threats and opportunities. To guide Eskom in achieving the strategic objectives and deliver on its mandate, Eskom has developed a response plan to ensure sustainability along seven distinct dimensions. In pursuing these dimensions, safety will continue to be the foundation for all Eskom’s operations and is key to Eskom’s performance. The principles of the response plan are as follows:

Capital investment will prioritise capacity expansion projects, generation sustainability, environmental compliance, transmission strengthening and compliance, customer connections, asset maintenance, asset replacement and refurbishment and the connection of independent power producers, based on the available capital budget over the five-year MYPD 3 period
Eskom will pursue the Generation sustainability strategy which focuses on plant, people and processes
Alternative funding options, including government support will be pursued
The regulatory clearing account adjustment (RCA) will be pursued
Focus on skills building, transformation and environmental sustainability will continue
Eskom’s business model must be adapted and re-engineered

Seven areas of sustainability

Seven areas of sustainability

Eskom’s overall strategic direction is aligned to the DPE vision statement “To drive investment, productivity and transformation in its portfolio of state-owned companies, their customers and suppliers so as to unlock growth, drive industrialisation, create jobs and develop skills.”

Focus for 2014/15

During 2014/15, Eskom will focus on three core areas in support of its strategic objectives:

Sustainable asset creation through the capacity expansion programme, with particular focus on synchronisation of Medupi Unit 6
Ensuring financial sustainability by implementing the business productivity programme which also includes applying to NERSA in terms of the RCA
Operational sustainability by continuing the Generation sustainability strategy and enhancing performance levels in the Transmission, Distribution and Group Customer Services divisions