Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom

Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
4.7 Benefits of price increases
Page 94 of 144
The money South Africa spends on electricity generates significant socioeconomic returns.
Eskom is not just about megawatts; it plays a key role in developing local industry,
broadening and deepening the country‟s skills pool, creating local jobs and transforming the
economy through black economic empowerment. Its capacity expansion programme is a
catalyst for economic growth and will leave a legacy for the country in terms of skills, local
supplier industries and development, particularly in the communities where the projects are
located.
As a state-owned company, Eskom has a responsibility to promote social and economic
development. Eskom‟s goal is to provide a reliable source of electricity in a way that helps
uplift all South Africans, especially those who are the most economically vulnerable. Its
ability to do so effectively hinges on its own financial health, which in turn is greatly
influenced by the revenue it recovers from electricity sales.
In addition to providing the electricity that allows South African companies and people to go
about their business, Eskom contributes to South Africa‟s economy and development in a
number of ways:
Contribution to GDP – Through its sales of electricity, Eskom‟s economic value
added at group level reached R54.9 billion in the financial year 2011/12. On a
local level, expenditure on its capacity expansion programme contributed 95% to
the gross regional domestic product of Lephalale (the town closest to where
Medupi is being built), 27% to that of Delmas (near the new Kusile power plant)
and 7% to that of Ladysmith (near Ingula hydro power plant).
Local supplier development – Eskom has awarded R75.2 billion in contracts on
its new build programme (63% of the total) to domestic suppliers, stimulating the
expansion of local supplier industries.
Employment – Eskom directly employs approximately 43 000 people, but there
are over 130 000 people employed in the Eskom „cloud‟, through contractors,
sub-contractors, suppliers and service providers, and over 500 000 people who
are supported, directly or indirectly, by Eskom.
Skills development – Eskom recruits and trains thousands of learners to
increase South Africa‟s pool of skilled workers. Almost 12 000 engineers,