Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
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ESKOM PROFILE<br />
Overview of <strong>Multi</strong>-<strong>Year</strong> <strong>Price</strong> <strong>Determination</strong><br />
2013/14–2017/18 (MYPD 3)<br />
Page 9 of 144<br />
<strong>Eskom</strong> is the country‟s primary electricity supplier and is wholly owned by the South African<br />
government. As at 31 March 2012, it generated, transmitted and distributed electricity<br />
directly to 3 000 industrial customers, 1 000 mining customers, 49 000 commercial<br />
customers, 84 000 agricultural customers and more than 4 million mostly prepaid residential<br />
customers, many of them in rural areas. It also sold electricity to 187 municipalities, which in<br />
turn redistributed it to businesses and households. <strong>Eskom</strong> supplied about 40% of the<br />
residential market directly, with the rest supplied by municipalities.<br />
In 2005, <strong>Eskom</strong> embarked on a R337 billion capacity expansion programme to add about<br />
17 000 megawatts (MW) of new generating capacity and 4 700km of new transmission<br />
infrastructure, plus associated substations, to the national electricity grid. It is building three<br />
new power stations – Ingula on the KwaZulu-Natal/Free State border, Medupi in Limpopo<br />
and Kusile in Mpumalanga – that together will add more than a quarter to the country‟s total<br />
generation capacity by the time the last of these stations, Kusile, will be substantially<br />
commissioned in 2018/19.<br />
To finance the programme, <strong>Eskom</strong> has raised more than R180 billion in debt on local and<br />
international capital markets. It expects to increase this to over R360 billion by the end of the<br />
current capacity expansion programme. Key to the availability and cost of this debt are<br />
<strong>Eskom</strong>‟s ratings with international credit-rating agencies. Currently, the company relies on<br />
government support to anchor its investment-grade rating. <strong>Eskom</strong> is working to achieve a<br />
standalone investment-grade rating to minimise the need for this support in future. Most<br />
rating agencies see the company‟s current financial ratios as weak and expect this to be the<br />
case for the next three years.<br />
Strategic objectives<br />
<strong>Eskom</strong>‟s corporate plan, endorsed by its board and shareholder in September 2011, sets out<br />
strategic objectives that will enable the company to meet its long-term challenges. <strong>Eskom</strong><br />
aims to provide electricity in a sustainable manner, improving the quality of life of all in South<br />
Africa and the region. This requires that <strong>Eskom</strong> is efficient and sustainable, and that it<br />
achieves standalone investment-grade status. The key imperative is to shift performance