Eskom’s supplier localisation drive is complemented by its corporate social investment (CSI) programme, which aims to improve society at large through targeted direct investments into community education, health and developmental projects

Rolling out government’s universal electrification programme within Eskom’s areas of operation has been the company’s most direct, widespread contribution to social improvement. The capacity expansion programme, as one of the main drivers of industrialisation in the country, has contributed substantially to the shareholder’s vision of transforming society by creating jobs and developing skills. Eskom also has an internal transformation policy to ensure workplace equity.

Operating highlights

Eskom achieved 201 788 electrification connections during 2013/14 (including DoE funded connections), the highest since 2002. The increased connections are in response to increased DoE funding in terms of its universal access programme
Eskom awarded R3.1 billion in contracts to local suppliers on the capacity expansion programme
All targets for B-BBEE attributable expenditure measures were exceeded

Operating challenges

Construction delays resulted in the CSI target for the number of rural development projects completed not being met. The remaining project is due for completion in the first few months of 2014/15
The expiry of Eskom’s exemption from the Preferential Procurement Policy Framework Act (PPPFA) required that a number of commodity strategies and targets be reviewed and amended
Employee numbers have been capped, resulting in the reduction of opportunities to improve on employment equity

Future focus areas

Continuing with the CSI impact study which is currently underway to determine the impact of CSI programmes implemented over the past three years
Finding innovative funding solutions for CSI spend
Continuing the electrification connections on the accelerated DoE universal access programme
Finding innovative ways to further advance skills development, job creation, localisation and enterprise development in collaboration with other state-owned companies, and within the ambit of applicable procurement regulations
Finalisation of Eskom’s revised employment equity plan

Maximising Eskom’s socio-economic contribution

Eskom’s socio-economic contribution is measured in terms of the key performance areas shown in the table that follows.

Key performance indicators of Eskom’s socio-economic contribution for the group1

Indicator and unit
Corporate social investments committed, R million   133.0   132.9   194.3   87.9    
Job creation, number 2 000   24 965   25 181   35 759   28 616    
Total number of electrification connections, number2 300 013   184 975   201 788   139 881   154 250    
Procurement from B-BBEE compliant suppliers, % 75.0   75.0   91.8   82.1   73.2    
Local sourcing in procurement, %3 52.0   52.0   54.6   80.2   77.2    
Procurement from black-owned suppliers, % 20.0   10.0   35.3   22.1   14.6    
Procurement from black women-owned suppliers, % 9.0   5.0   7.5   5.1   3.3    
Procurement from black youth-owned suppliers, % 5.0   1.0   1.0   1.0      

1. Group numbers are shown, except where those numbers are not available, in which case company numbers are presented.
2. The reporting boundary for the number of connections was changed in March 2014 to exclude farm worker and municipality funded connections. The target has been revised to exclude 551 farmer connections. The comparatives have been restated (876 and 963 farmer, and 3 801 and zero municipality-funded connections deducted for March 2013 and March 2012 respectively). A total of 992 farm worker, and 2 879 municipality funded connections were installed for the current year.
3. Local sourcing of procurement for capacity expansion projects only.

Corporate social investment

The Eskom Development Foundation NPC (the Foundation) continues to implement Eskom’s corporate social investment mandate to promote transformation and social sustainability. The Foundation focuses on initiatives to develop small- and medium-sized enterprises, education, health, food security, community development, energy and the environment. Year-to-date, the Foundation has approved the commitment of R132.9 million for corporate social investment (CSI), impacting 357 443 beneficiaries. An amount of R115.4 million was spent during the year.

CSI highlights for the year include:

The graduation of 214 learners who successfully completed the contractor academy programme
Launch of the telematics programme with the St Johns School in the Eastern Cape. The telematics technology enables students to benefit directly from the subject presenter based in Cape Town through satellite connection. A total of 4 973 learners will benefit from this initiative and it encourages a culture of teaching and learning through technology
The successful completion of six further education and training (FET) college projects, and five rural development projects as listed as follows

Rural development projects
FET colleges
  Sthandimfundo High School   Cape Town
  Tiyane Magoro Pre-school   Boland
  Mqhokweni Primary School   Vhembe
  Nzimakwe cooperative   Sekhukhune
  Phumalanga Primary School   Umgungundlovu

More information on Eskom’s corporate social investment initiatives can be found at www.eskom.co.za/IR2014/04.html


The Government of South Africa, through the Department of Energy (DoE), continues to fund the electrification of previously disadvantaged and farm worker households in its licensed areas of supply. While the DoE funds the new connections and infrastructure development, Eskom carries the ongoing operating costs for these connections, and receives the revenue for electricity sold.

The National Census of 2011/12 identified 3.4 million South Africans who are without electricity. The majority of these people live in the Limpopo, Eastern Cape and KwaZulu-Natal provinces. In order to achieve the United Nation’s millennium development goal of universal access to electricity by 2030, the DoE has accelerated the universal access programme.

The DoE’s integrated national electrification programme that commenced in 2013/14, increased its funding by 17%. At the same time, Eskom is pursuing construction efficiency opportunities in order to unlock savings to fund 50 000 extra connections per annum. The electrification programme is now being implemented in more remote areas where the construction of network infrastructure is more expensive due to the distances involved and, in some cases, the difficult terrain encountered.

Eskom has in 2013/14, for the first time since year 2002, achieved electrification of more than 200 000 household connections in a year. Electrification performed on behalf of, and funded by, municipalities has been excluded from the numbers reported above. Eskom has connected 2 879 municipal households in 2013/14 (2012/13: 3 801). The electrification of farm dwellers is also excluded from these numbers.

Electrification of grid schools and clinics

School electrification is funded by the Department of Basic Education. A total of 112 schools received electricity for the first time for a total capital outlay of R51 million. No clinics were identified for electrification during the year.

Indicator and unit
Capital investment, R million 51   36   2  
Total connections, number 112   142   19  

Localisation, job creation and skills development through the capacity expansion programme

Contracts with key suppliers generally include targets for skills development and job creation. Some suppliers are failing to meet these targets on time and are being monitored more closely to ensure compliance.

Since the inception of the capacity expansion programme, a total of 8 930 individuals have been trained for skills development against a target of 9 377. A total of 2 476 learners are currently being trained in various institutions throughout the country.

As at 31 March 2014, there are a total of 25 181 jobs created through the mega projects in the capacity expansion programme. This is less than the previous year as the completion of work in certain areas has resulted in the demobilisation of workers.

A total of 547 contracts worth R5.6 billion were awarded through the capacity expansion programme during 2013/14. Of this,
R3.1 billion (54.6% of the total contract value) was committed to local content. To date, R98.7 billion (65.3% of the total contracted value of R151.2 billion) has been committed to local content, of which R68.7 billion (69.5% of local committed expenditure) has been paid out.

In addition to Eskom’s local expenditure, major suppliers on the capacity expansion programme committed to R1.4 billion to local development plans specific to their build contracts. These commitments are specific to the boiler, turbine and generator packages. These values are cumulative, from inception of the capacity expansion programme in 2005, up to 31 March 2014.

Eskom B-BBEE attributable expenditure performance

Initiatives to ensure B-BBEE compliance have brought about improvements in Eskom’s transformation performance. The Eskom group’s total measured procurement spend (including primary energy) amounted to R130 billion in 2013/14, of which R119.4 billion (91.8%) was attributable to B-BBEE compliant suppliers, exceeding the internal target of 75%.

Strategies are being developed to improve procurement from black-owned businesses, with a particular focus on businesses owned by black women and black youth. Total measured procurement spend from black women- and black youth-owned both met or exceeded the target for the year.

Improving internal transformation

Eskom extended its employment equity plan, which was signed in 2010 and expired in March 2013, by one year to allow time to analyse the company’s internal transformation progress and develop a long-term employment equity plan. This was done in consultation with the Department of Labour and organised labour.

Key performance indicators for internal transformation1

Employment equity – Group
People with disability, % 2.50   3.00   2.77   2.43   2.36    
Racial equity in senior management, % of black employees 74.0   61.0   59.3   58.4   53.9    
Racial equity in professionals and middle management, % of black employees 79.0   71.0   70.6   69.0   65.7    
Gender equity in senior management, % of female employees 38.0   30.0   28.8   28.5   24.3    
Gender equity in professionals and middle management, % of female employees 42.0   36.0   34.9   34.0   32.4    

1. Group numbers are shown, except where those numbers are not available, in which case company numbers are presented.

The Eskom group employs 46 919 people including fixed-term contractors. It has become apparent that Eskom cannot grow its headcount and strategies have been put in place to manage the current headcount. The freeze on recruitment to limit employee numbers has restricted the opportunities for transformation; however Eskom is committed to achieving the employment equity expectations and is reviewing various options. The primary focus will be on the occupational levels that are under-represented.

Employment equity at senior management, professional and middle management levels remains below target, with women under-represented across all occupational levels.

The proportion of people with disabilities is 2.77%, slightly below the 3% target but above the government’s target of 2% for the public services. Eskom has identified that not all its facilities can accommodate people with disabilities. To address this, Eskom has drafted a disability charter to ensure that facilities become more accessible.

Employee relations

Eskom’s employee engagement model builds employee participation and involves employees and executives in conversations around strategy, performance and people. Eskom has also built more productive and sustainable relationships with organised labour and continues to do so through a partnering model to guide these interactions. In addition, Eskom has embarked on a process to further strengthen the relationships with the trade unions, utilising the services of an external facilitator.

After a lengthy wage dispute, Eskom and its recognised trade unions referred the wage dispute to the CCMA for resolution. A final decision, for the most part in favour of Eskom, was delivered in January 2014. The decision was only effective for the financial year 2013/14, backdated to 1 July 2013.

Even though Eskom has been declared an essential service, which prohibits employees from engaging in industrial action, employees at some Eskom sites have embarked on various forms of unprotected industrial action.