22. Service concession arrangements
  The Eskom group operates two service concessions for the generation and/or transmission of electricity, through its operations in Mali and Uganda.


EEM entered into an operation and maintenance agreement with SOGEM in 2001 to operate and maintain a 200 MW hydro-electricity facility in Mali and supply power to the national electrical companies in Mali, Senegal and Mauritania. The dam, hydro-electric generating plant and eastern and western transmission networks together constitute the energy assets in terms of the agreement. The concession period was originally 15 years (ending December 2017).

EEM is responsible for the day-to-day maintenance, repairs and replacement of the energy assets.

During the prior year an interim operating and maintenance contract between EEM and SOGEM was approved until 30 June 2013 and the process to finalise an additional 10-year contract was in progress.

The authorities of the countries involved decided in January 2014 that there would be one more attempt by EEM and SOGEM to reach agreement on the 10-year operating and maintenance contract through mediation, and if this process was not successful by 30 April 2014 EEM will exit from the arrangement. Although significant progress was made, agreement on this contract could not be reached by the cut off date.

Based on the above, it is management’s determination that the assets of EEM constitute non-current assets held-for-sale in terms of IFRS 5. The operations have been classified as discontinued operations, and the comparatives in the income statement and statement of cash flows have been restated in terms of IFRS 5. Refer to note 21.


Eskom Uganda Limited (Eskom Uganda) entered into an operation and maintenance agreement with Uganda Electricity Generation Company Limited (UEGCL) in 2002, which is linked to a power purchase agreement concluded with Uganda Electricity Transmission Company Limited (UETCL). In terms of the agreements, Eskom Uganda operates and maintains two hydro-electric power stations in Uganda, from which it supplies electricity to UETCL. The dams, powerhouses, related switchyard facilities, high voltage substation, land and movable property together constitute the ‘energy assets’ in terms of the agreement. The concession period is 20 years (ends in December 2023).

Eskom Uganda is entitled to receive revenue from UETCL, based on electricity supplied at tariffs regulated by the Electricity Regulatory Authority of Uganda. It also receives a fee to cover it for investment in additional energy assets where required. This has been recognised as an intangible asset.

The plant remains the property of UEGCL and will revert to UEGCL at the end of the concession period. At that point Eskom Uganda will have no further obligations in respect of the plant.

  Eskom Uganda   EEM  
Income statements                
Revenue 124   100   117   93  
Profit before tax 29   12   64   52  
Income tax (10)   (4)   (1)   (5)  
Profit for the year 19   8   63   47  
Statements of financial position                
Property, plant and equipment     29   30  
Intangible assets 114   76      
Inventories 25   18   7   7  
Payments made in advance 16        
Trade and other receivables 28   27   9   4  
Cash and cash equivalents 19   19   101   125  
  202   140   146   166  
Debt securities and borrowings 35   18      
Provisions 9   8   10   10  
Trade and other payables 15   15   101   119  
Other liabilities 5   9   2    
  64   50   113   129  

The underlying assets are included in the respective asset categories in the statement of financial position. Balances relating to EEM are included in non-current assets and liabilities held-for-sale for the 2014 financial year.