State of the Power System

Mr Paul O’FlahertyFinance Director16 February 2012

In support of

2

Disclaimer

This presentation does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or

invitation of any offer to buy or subscribe for or underwrite or otherwise acquire, securities of Eskom Holdings Limited

(“Eskom”), any holding company or any of its subsidiaries in any jurisdiction or any other person, nor an inducement to enter

into any investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied

on in connection with, any contract or commitment or investment decision whatsoever. This presentation does not constitute

a recommendation regarding any securities of Eskom or any other person.

Certain statements in this presentation regarding Eskom’s business operations may constitute “forward looking statements.”

All statements other than statements of historical fact included in this presentation, including, without limitation, those

regarding the financial position, business strategy, management plans and objectives for future operations of Eskom are

forward looking statements.

Forward-looking statements are not intended to be a guarantee of future results, but instead constitute Eskom’s current

expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions.

These assumptions include, but are not limited to continued normal levels of operating performance and electricity demand

in the Distribution and Transmission divisions and operational performance in the Generation and Primary Energy divisions

consistent with historical levels, and incremental capacity additions through our Enterprises division at investment levels and

rates of return consistent with prior experience, as well as achievements of planned productivity improvements throughout

our business activities.

Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and

other factors. Eskom neither intends to nor assumes any obligation to update or revise any forward-looking statements,

whether as a result of new information, future events or otherwise.

In preparation of this document we used certain publicly available data. While the sources we used are generally regarded

as reliable we did not verify their content. Eskom does not accept any responsibility for using any such information.

In support of

3

7. Integrated resource plan (IRP)

2. Summary of the system

8. Funding plan

1. Background

4. State of the system

6. Capacity expansion programme

5. Partnership approach

Contents

3. The maintenance challenge

9. Conclusions and highlights of the state of the nation address

In support of

44

Background

The objectives of today’s engagement session is to

address the following areas of business on a Q&A basis:

• Security of the supply system;

• Capital expenditure; and

• Funding

In support of

55

Summary of the state of the system

South Africa’s power system will be tight for the next few years: the next two years are critical

We have kept the lights on since 2008 but balancing supply and demand has been a challenge

Most power stations are in their mid-life and require increased maintenance; however, maintenance has constantly been shifted in order to ensure we can meet demand

Strategy of shifting maintenance outages can no longer be sustained.

Summer is maintenance season in Eskom. System is being run at higher levels of risk to tackle backlog and keep up with maintenance while at the same time meeting demand

Energy demand year to date has been lower than originally forecast, but summer peaks are higher than expected

Supply also constrained by unreliability of some stations and power imports

This summer has seen significantly increased use of open cycle gas turbines and other reserves to balance supply and demand

In support of

Forecast of annual electricity gap

6

00

1

2

3

9

6

1 51 4 1 6 2 0 1 71 31 1 1 2

9 T W h is e q u iv a le n t

to ~ 1 0 0 0 M W

b a s e lo a d c a p a c ity

00

1

2

3

9

6

1 51 4 1 6 2 0 1 71 31 1 1 2

9 T W h is e q u iv a le n t

to ~ 1 0 0 0 M W

b a s e lo a d c a p a c ity

00

1

2

3

9

6

1 51 4 1 6 2 0 1 71 31 1 1 2

9 T W h is e q u iv a le n t

to ~ 1 0 0 0 M W

b a s e lo a d c a p a c ity

00

1

2

3

9

6

1 51 4 1 6 2 0 1 71 31 1 1 2

9 T W h is e q u iv a le n t

to ~ 1 0 0 0 M W

b a s e lo a d c a p a c ity

Source: Medium Term Risk Mitigation Plan (2009)

This forecast assumed that all planned supply and demand levers were put in

place

In support of

We took action to address the challenges we identified at the beginning of 2011

7

What we said What we did

We would improve coal handling and coal

quality to reduce load losses

Coal-related load losses have shown an improving trend over the past

few months but still a concern at three stations

We targeted to improve generation output

by 1%-2% over three years

Comparing December 2011 YTD with the same period in 2010, the EAF

performance deteriorated slightly by 0.9%. The Duvha unit 4 incident

was a major setback in improving performance. The Generation division

also undertook a lot more planned maintenance during the December

period as compared to previous years.

We would sign up about 400MW of co-

generation and own generation by April

2011

• 373MW MTPPP signed up (320MW operational)

• 515MW of municipal generation contracted (270MW operational).

• Additional 100MW signed up on short term contracts of which

90MW is available

• 20MW additional MTPPP which is operational.

We needed to undertake significant

maintenance during summer

Critical maintenance has been prioritised. PCLF of 15.5% achieved

during the lowest demand period in December.

Demand-side management programme

in place to reduce demand and energy

savings

Realised energy savings of 198.6GWh during the third quarter. Also

signed up pilot demand response aggregator to achieve 500MW by mid

2012.

We would communicate with our

stakeholders on the state of the systemExtensive programme of engagement with stakeholders

In support of

Review of system status in the last quarter

8

Week Start

MW MW

Week Forecast Operational Surplus/ Deficit

Planned Status

Actual Status

21-Nov-11 47 32526 30

28-Nov-11 48 32513 -972

05-Dec-11 49 32252 -908

12-Dec-11 50 31768 -1427

19-Dec-11 51 30296 -1114

26-Dec-11 52 28434 -510

02-Jan-12 1 30055 -506

09-Jan-12 2 31003 111

16-Jan-12 3 31958 -730

A green week indicates that demand and all

reserve requirements can be met with all

installed capacity (including the Open Cycle

Gas Turbines).

A yellow week indicates that there is up to

1,000 MW shortage of meeting the demand

and reserves. There is an increased

probability of requiring some emergency

reserves to meet the peak demand

A orange week indicates that there is

between 1000 and 2000 MW shortage of

meeting the demand and reserves. There is a

high probability of requiring substantial

emergency reserves to meet the peak

demand

• We have been making increased use of open cycle gas turbines• There is still a significant maintenance backlog• The actual system status has been worse than planned due to worse than expected

performance from the generation fleet and from Cahora Bassa.• A significant amount of maintenance has also been done

In support of

• Eskom provides a 3 600MW allowance for unplanned outages and production losses in its generation fleet, to cushion the system

• Unplanned outages have been running at higher levels this month: main factors are boiler tube leaks, poor coal quality at some stations; excessive heat impairing performance at dry cooled stations

• Outage delays after long duration outages also contribute to increased unavailability

Full and Partial Load Losses: May 2011 – 15 January 2012

Generation performance needs to improve

In support of

What is different from 2008?

• There are better emergency preparedness and communication processes and structures in place.

• The system status is shared regularly with customers through various platforms. Large customers get twice daily updates.

• Coal stockpiles have been replenished and are at healthy levels.

• There is much tighter co-ordination between the System Operator and Generation to ensure trade-offs between system stability and maintenance requirements. However this is not sustainable.

• There is better visibility of the power system status by Eskom management and Government to ensure better situational awareness and quicker response.

• The system is at risk but if the incidents materialise the aim is to contain the impact to short periods of time.

10

In support of

What has happened since 2008?

Supply side• 2 537MW of new capacity has been added.

• 1 025MW of capacity signed up from IPPs and municipal generators

Primary Energy• Coal stockpiles moved from 12 days to just over 40 days

• 15 million litre diesel storage facility hired in Cape Town

Demand side• 1 634MW of verified savings since 2008

• 177 projects to upgrade pumps, motors, fans and lighting at industrial installations,

mines and commercial buildings

Emergency preparedness• Approval of load shedding and critical load management protocol (NRSO48)

• Deployment of structures and protocols during the 2010 FIFA World Cup and COP 17

Communication• Power Alert campaign on SABC and e-TV.

• 49Million campaign

11

The maintenance challenge

In support of

Summer is maintenance season

• We do planned maintenance in summer, when demand is lower, so that maximum capacity available in winter. Maintenance season is usually from September to around mid-May, but this year some maintenance was done during winter

• A colder-than-expected winter puts added pressure on the system: for every 1 degree Centigrade decrease in winter temperature, electricity demand increases by 600 - 700 MW during the evening peak; a warmer than expected summer increases air-conditioning load and demand can increase by up to 400 MW

13

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

36,000

38,000

23:0

0

02:0

0

05:0

0

08:0

0

11:0

0

14:0

0

17:0

0

20:0

0

23:0

0

02:0

0

Typical Winter Day Typical Summer Day

Typical winter and summer load profiles

Peak demand at

37 000MW, compared

to last year’s summer

peak of 33 064MW

(and last year’s winter

peak of 37 064MW)

Summer load profile is much flatter,

peak of 32 000 – 33 000 MW, so if

there is a constraint, system is

constrained for entire day

Pe

ak

de

ma

nd

(M

W)

In support of

The preventative maintenance challenge

14

Activity Cycle time (years) Duration (days)

General overhaul (GO) 6 - 12 40 - 60

Interim repairs (IR) 2 - 3 14 - 35

Mini – general overhaul (MGO) 6 28

Boiler inspection (BI) 1 – 1.5 7 - 14

Statutory inspection and test (ST) 6 35

Main steam pipe work 120

GO

BI

IR

MGO

BI + ST

IR

MGO

A typical coal-fired generating unit requires certain necessary routine maintenance to ensure that it meets its technical performance requirements, is safe to operate and does not violate any environmental laws

18 months

18 months

18 months

18 months

18 months

6 months

In support of 0 10 20 30 40 50

Kendal

Matimba

Lethabo

Tutuka

Duvha

Matla

Kriel

Hendrina

Arnot

Age

History of system status in order to accommodate planned maintenance

In 2010 and 2011 the system was run much

closer to the “red line” compared to 2009 in

order to address the plant maintenance

requirements. However, the total amount of

maintenance work done was insufficient and

hence a maintenance backlog has developed

15

Mid - Life

YearMaintenance

% MW

2008 8.8 3370

2009 9.5 3733

2010 8.6 3458

2011 8.14 3315

Backlog

2011 36 units

* The surplus categorisation is revised in accordance with system changes

In support of

Current maintenance backlog

16

In support of

2012 maintenance challenge

• Planned outage requirements exceed the capacity available for maintenance

• So liquid-fuel open cycle gas turbine usage and demand-side management become critical

• The goal is a maintenance ratio of 10% of capacity, including 3% to address the backlog: Actual

achieved at the end of December 2011 is 15.62% and 8.14% for the financial YTD at 16/01/12.

• Planned outages are ranked on scope and risk, to enable prioritisation of outages within the

available capacity

• Lower risk outages (inspections and interim repairs) have had to make way for high-risk, high-

pressure pipe-work replacements, low-pressure turbine blade inspections and major

refurbishment outages

• All “deferred” outages are monitored for risk until they can be accommodated

MW0

2000

4000

6000

8000

10000

1200013-J

an

13-F

eb

13-M

ar

13-A

pr

13-M

ay

13-J

un

13-J

ul

13-A

ug

13-S

ep

13-O

ct

13-N

ov

13-D

ec

Maintenance Cap available for maint Excl Gas Cap available for maint Incl GasRequired

Capacity available

for maintenance

including Liquid-fuel

Open Cycle Gas

Turbines (OCGTs)

Capacity available for

maintenance

excluding Liquid-fuel

Open Cycle Gas

Turbines (OCGTs)

17

The state of the system

In support of

Demand has been below expectations

19

• The peak demand and total energy sent out for 2010 was almost back to levels seen in 2007, before the recession

• The summer demand in 2011 was generally higher than that previously experienced. However there was a drop in the winter load compared to that expected.

• The peak demand for 2011 was 37 064MW at the end of May, including non-Eskom generation. This is marginally higher than the 36 970MW peak in 2010 but lower than our forecast of 37 500MW for last winter. The forecast 2012 winter peak is also about 37 500MW

Weekly peak demand

26000

28000

30000

32000

34000

36000

38000

1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940414243444546474849505152

Pe

ak

De

ma

nd

(M

W)

Week number

2011 (Incl non-Eskom sales to Eskom) 2011 (Eskom Sent Out) 2010 2007

In support of

Constrained generation trends – OCGT usage

• In 2011 we used our OCGTs more to ensure that as much as possible maintenance is

done while keeping the lights on.

• However there is still a maintenance backlog.

20

In support of

Expected system status

21

• With all gas we

should be operating

in the green.

• Our normal planning

assumption is

3 600MW unplanned

with 4 500MW being

a risk assessment.

• It is clear that without

deferring

maintenance, the

system status is

more risky.

Date Maintenance

Excess Capacity available assuming use of

2238MW of OCGT capacity, required

3600MW unplanned allowance, required

Operating Reserves and Forecast

Excess Capacity available

assuming use of 2238MW of OCGT

capacity, required 4500MW

unplanned allowance, required

Operating Reserves and Forecast

13-Jan-12. Fri 6783 51 -849

20-Jan-12. Fri 6286 -222 -1122

26-Jan-12. Thu 5445 -7 -907

31-Jan-12. Tue 5357 169 -731

07-Feb-12. Tue 5480 -144 -1044

13-Feb-12. Mon 5628 -394 -1294

20-Feb-12. Mon 5189 -133 -1033

01-Mar-12. Thu 6047 -1241 -2141

05-Mar-12. Mon 5847 -1506 -2406

14-Mar-12. Wed 5962 -1724 -2624

22-Mar-12. Thu 5367 -1256 -2156

26-Mar-12. Mon 5737 -1409 -2309

03-Apr-12. Tue 7845 -3292 -4192

10-Apr-12. Tue 7834 -3480 -4380

17-Apr-12. Tue 6671 -3187 -4087

25-Apr-12. Wed 6481 -3088 -3988

02-May-12. Wed 6509 -3425 -4325

07-May-12. Mon 6726 -3942 -4842

14-May-12. Mon 6446 -4048 -4948

24-May-12. Thu 5619 -4878 -5778

28-May-12. Mon 3716 -2801 -3701

07-Jun-12. Thu 2638 -2307 -3207

14-Jun-12. Thu 2045 -1408 -2308

21-Jun-12. Thu 1603 -1290 -2190

27-Jun-12. Wed 1603 -1520 -2420

02-Jul-12. Mon 1518 -1450 -2350

09-Jul-12. Mon 925 -1713 -2613

18-Jul-12. Wed 765 -1033 -1933

23-Jul-12. Mon 765 -185 -1085

30-Jul-12. Mon 1714 -942 -1842

In support of

Required capacity to ensure stable system operation

22

• Ideally, 3 000MW of committed capacity from supply and demand initiatives is

needed immediately to keep the lights on and enable maintenance to continue.

• Reducing this target will require an adjustment to the maintenance programme.

• Between now and end-December 2013, the minimum targets set out in the

table below need to be achieved to prevent an emergency.

Immediate (within 1

month) (MW)

By July 2012 (MW) and

sustained to end

December 2013

High load factor

initiatives to bring

certainty to

maintenance planning

1000 2000

Pre-Emergency/

Contingency/Peaking

initiatives

2000 1000

In support of

Way forward

Eskom has set up a recovery team to:

• Execute the plan to secure identified and approved demand and supply levers.

• Step up communications to encourage greater energy efficiency.

• Be clear about our maintenance philosophy and the governance processes to manage risk and specify operating envelopes for power generation plants.

• Implement an effective outage strategy, using maintenance windows to reduce the backlog, deal with emerging risks and conduct scheduled, design-based maintenance.

• Implement a more sustainable maintenance philosophy throughout the generation fleet.

The Department of Public Enterprises will establish a task team with Eskom to develop the detailed delivery schedule and review progress, coordinate activities that require Government intervention, prepare updates for Cabinet and align communication and stakeholder plans.

23

In support of

24

What have we done?

• Signed power purchase agreements (PPAs) with the two municipalities to secure baseload generation.

• Secured available non-Eskom generation from customer base on a short-term basis.

• Signed power buyback agreements, where we were able to remove base demand off the system, while some were deferred to the winter period.

• Obtained voluntary co-operation over peak periods from large customers (at least 400MW)

• Identified possible cross-border generation - engagements are currently taking place.

In support of

25

Supply and demand side initiatives

Short Term InitiativesNovember 2011 – 29 February

2012

Target Capacity

(MW)

Secured Capacity

(MW)

ActualAvailable

(MW)Status

Municipal Baseload Power 515 515 270 Contracts ends 29 Feb 2012

MTPPP’s (Additional) 20 20 20 Contracts ends 29 Feb 2012

IPPs and short -term base load (additional)

100 90 90 Contracts ends 29 Feb 2012Additional 17 MW available 01 Feb 2011

Non – Eskom Peaking Generation 160 0 0 Original target 160 MW, some capacity falls outside mandate. 40 MW awaiting finalization. Expected 01 February 2011.

Cross Border 100 0 0 100 MW on track for target date 01 July 2012

Power Buy Back 1000(accumulative)

220(accumulative

)

220 120 MW available till 28 February 2012100 MW available until 12 February

Additional DMP 200 60 30 A further 127 MW Supplemental and 42 MW Instantaneous awaiting finalization

EDMP 200 0 0 Nothing secured to-date

DRAPP 500 0 0 On track to secure 500 MW by 31 July 2012

Mandatory ECS - - - DoE pronouncement on implementation of ECS

Alternative initiatives:

Stand-by customer generation, Mandatory DMP, Mandatory ECS, Mobile diesel generation, Coal quality improvement, State agencies building efficiency, Regional gas options.

In support of

Energy Conservation Scheme (ECS) Performance as at 31 October 2011

• Since July 2008, Eskom introduced the voluntary Energy Conservation Scheme to its top 250 customers

• 133 of the customers signed off their baselines (reference consumption)

• 95 of the customers with signed-off baselines are key industrial customers

26

ECS performance for rolling 12-month period (Nov ’10 to Oct ‘11) Eskom total Key industrial customers

Historical Consumption of Top 250 Eskom Customers (GWh) 126 383 90 012

Adjusted Historical Consumption of Top 250 Eskom Customers (GWh) 138 008 101 431

10% Savings Requirement based on Adjusted Historical Consumption 13 801 101 431

Allocation of all targeted customers (GWh) 124 208 91 288

Actual consumption of all targeted customers (GWh) 123 000 87 417

Savings from allocation - all targeted customers (GWh) 1.208 3.872

Savings from allocation - all targeted customers (%) 1.0% 4.2%

Savings from Allocation- customers with signed off baselines (%) 6.4% 6.9%

Munic Annual Consumption (GWh) 92 400

Partnership approach

In support of

Partner with us

• 49M is an Eskom initiative, supported by government, spurring an urgent need for all 49 million South Africans to embrace energy saving as a national culture, joining the global journey towards a sustainable future

• 49M campaign launched by Eskom and Government to create energy efficiency culture and calls for a 10% reduction in electricity usage

• Energy efficiency is not only a national concern, it is a global concern.

28

Capacity expansion programme

In support of

Mpumalanga

refurbishment

Mpumalanga

refurbishment

Capacity expansion programme

30

Distribution &

customer serviceTransmission ConstructionGenerationPrimary Energy

Medupi is the first coal-generating plant in Africa to use supercritical power generation technology

Return-to-service (RTS)Return-to-service (RTS)

� Komati (1 000 MW)

� Camden (1 520 MW)

� Grootvlei (1 180 MW)

New coalNew coal

� Medupi (4 764 MW)

� Kusile (4 800 MW)

Peaking & renewablesPeaking & renewables

� Ankerlig (1 338.3MW)

� Gourikwa (746 MW)

� Ingula (1 332 MW)

� Sere (100 MW)

� Arnot capacity increase

(300 MW)

� Matla refurbishment

� Kriel refurbishment

� Duvha refurbishment

TransmissionTransmission

� 765kV projects

� Central projects

� Northern projects

� Cape projects

3 700 MW 9 564 MW 3 516.3 MW 300 MW ~ 4 700 km

Commissions of new stationsCommissions of new stations

First UnitFirst Unit Last UnitLast Unit

Medupi

Kusile

Ingula

2013

2014

2014

2018

2018

2014

• ~ 17 080 MW of new capacity (5 501 MW installed and commissioned)

• ~ 4 700 km of required transmission network (3 747.6 km installed)

• 20 600 MVA planned (17 945 MVA installed)

In support of

Build progress to date (as at 31.12.2011)

To date, a large amount of construction work has been completed, adding ~5,501MW, 3,747.6 km of

transmission network, and ~17,945 sub-stations . . .

Km line

MVAs

Megawatts

Substations

Transmission

1,630

1,000

FY2004/5

FY2005/6

1,090

TotalFY2009/10

FY2008/9

1,375

FY2007/8

1,355

FY2006/7

MW of capacity

FY2010/11

1,351

1,043

1,770

5,501

315

2900

237430

480418.30

600.30

3,747.6

443.40

659

5,940

5,280 17,945

452

FY2011/12

275

479.6

280

Note: 280MWs reported include Gvl U6 (160MW – SHC) , Komati U4 (100MW) & Camden U6 (20MW) which are included in the GC Incentive SchemeSource: Eskom Group Capital Division (Construction Management)

In support of

Current planned capacity expansion plan

32

In addition, Eskom has commenced the development of a 100MW CSP plant

ProjectProjections

11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY Total

Grootvlei (return to service) 160 30 190

Komati (return to service) 225 200 425

Arnot capacity upgrade (coal fired) 30 30

Medupi (coal fired) 794 794 1588 794 794 4 764

Kusile (coal fired) 800 800 800 800 1600 4 800

Ingula (pumped storage) 1 332 1 332

Sere wind farm (renewable) 100 100

TOTAL (MWs) 385 260 894 3 387 2 388 1 594 1 594 1 600 11 641

In support of

Medupi update

• As announced on 11 October 2011, Eskom initiated a detailed assessment of

the timelines for the first unit of Medupi (Unit 6), which was due to deliver first

power to the national grid in late 2012; We said the schedule was at risk

• Main concern is the unit’s boiler, which is being built by a consortium comprising

Hitachi Power Africa and Hitachi Power Europe. We are working closely with the

parent company in Japan and Hitachi has put remedial measures in place to

mitigate the risks

• Hitachi has made commitments to enable Unit 6 to deliver first power to the grid

by May 2013 – in line with the Integrated Resource Plan

• Other contractual arrangements arising out of the delay are being addressed

33

Integrated Resource Plan (IRP 2010)

In support of

SA national planning process- driven by Regulations on New Generation

35

IPP Procurement PPA

Fund BuildIRP Feasi-bility

The IRP determines which technologies will be built

DoE

Regulations state new generation capacity must be represented in the IRP to receive generation and distribution licenses or receive a Section 34 exemption from the minister

A feasibility study is conducted and IRP capacity is allocated to the most suitable; IPPs or Eskom

DoE - According to New Generation Regulations

This process has not yet been executed and is required for subsequent planning actions

Suitable IPPs are procured through the IPP procurement process

DoE / Single Buyer Office

The IPP procurement process must be finalised to ensure participation of these producers

Buyer of electricity signs Power Purchase Agreements (PPAs) with power producer

Minister must assign a buyer of each PPA

Currently, the Single Buyer Office is ring-fenced within Eskom to sign PPAs based upon the DoE procurement decision

IPPs often require PPAs prior to obtaining external funding. Such PPAs will require government backing

Eskom, IPPs

Eskom may receive funding with government backing. Costs are recovered via the MYPD submissions electricity tariff

Building for Eskom or IPPs can only commence once investment decision has been taken

Eskom, IPPs

Construction of IRP projects may be delayed due to required upstream decisions

Ba

ckgro

un

dR

esp

on

sib

le

Sta

tus

In support of

Total additional new capacity

(without committed) until 2030 in GW

5

20

15

10

Wind

CSP

Solar PV

1,0

Peak -

OCGT

Coal

3,9

8,4

9,6

6,3

8,4

17,8

Renew-

ables

Nuclear Gas -

CCGT

2,42,6

Hydro

25

Policy-Adjusted IRP

10,1 0,0 0,05 0,0 1,0 1,0

35,5 1,8 2,1 0,0 2,4 0,0

65% 20% 5% 1% < 0,1% 9%

90% 5% 5% 0% < 0,1% 0%Energy

share

in 2010

in 2030

15% 23% 6% 6% 9% 42%

Share

of total

new GW

ΣΣΣΣ = 260TWh

ΣΣΣΣ = 454TWh

IRP outcomes

36

In support of

Capacity in 2030

37

Existing

35515

Committed

10133

Decomm.

(10902)

New

6250

Existing

1800

New

Committed

1125

New

17800

Funding Update

In support of

Funding plan – R300 billion to 2017 as at 31 December 2011

39

Source of fundsFunding sourced

RbnCurrently secured

Rbn

Draw-downs to date

Rbn

Amount supported by Government

Rbn

Bonds 90.0 31.8 31.8 19.3

Commercial paper 70.0 70.0 17.5 0.0

Export Credit Agency backed

32.9 32.9 13.9 0.0

World Bank loan 29.7 27.8 4.1 27.8

AFDB loan 20.9 20.9 5.9 20.9

DBSA loan 15.0 15.0 3.0 0.0

Shareholder loan 20.0 20.0 20.0 20.0

Other sources 23.4 6.8 0.9 4.9

Totals 300.0 223.7 97.1 92.9

Percentages 75.1%(1) 43.1%(2) 41.2%(2)

(1) As a percentage of the R300bn funding sourced(2) As a percentage of the currently secured total

Conclusion and highlights of state of the nation address relevant to Eskom

In support of

Conclusions

41

• South Africa’s power system will be tight for the next few years: the next two

years are critical.

• Summer is maintenance season in Eskom. System is being run at higher

levels of risk to tackle backlog and keep up with maintenance while at the

same time meeting demand.

• Strategy of shifting maintenance outages can no longer be sustained.

• Government, Eskom and business have been working together in the last 2

years to develop solutions. Some have been implemented while others need

to be accelerated.

• We need a partnership approach and need the support of all our citizens and

customers.

• We need all the IPPs to generate either for themselves or through a PPA.

Eskom is supporting and will continue to support this process.

• We need to save 10% of our current energy demand and remove 3000MW

from our demand to ensure that the power system can be operated in a

stable mode and that adequate maintenance is done on the generation fleet

to provide safe and sustainable performance.

In support of

Highlights of State of the nation address by President Zuma

42

• There is an on-going concern from business and communities about high electricity

costs. The President says he has asked Eskom to seek options on how the price

increase requirement may be reduced over the next few years, in support of economic

growth and job creation.

• The President said we need an electricity price path which will ensure that Eskom and

the industry remain financially viable and sustainable, but which remains affordable

especially for the poor.

• However to achieve sustainability, a pact will be required with all South Africans –

including business, labour, municipalities, communities and all customers and suppliers

to save electricity.

• The President added that for the next two years, until the Medupi and Kusile power

stations come into operation, the electricity system would be very tight. All South

Africans should play our part in order to avoid load shedding.

• To increase energy capacity the government would continue to search for renewable

energy sources, especially solar electricity and biofuels.

Thank you