EDI Holdings

EDI Holdings
Welcomes All
Stakeholders
Within the
RED ONE AREA
INAUGURAL RED ONE
REGIONAL ENGAGEMENT FORUM
CALVINIA
20 JULY 2007
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 3
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 4
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 5
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 6
Purpose of the Regional Engagement
Forum
To enhance a common and shared vision among stakeholders on RED
establishment
To inform and educate internal and external stakeholders about the
establishment of six wall-to-wall REDs
To proactively engage and mobilise stakeholders for the acceleration of RED
establishment processes
To provide technical support and advice in preparation for the establishment of
six wall-to-wall REDs through working in liaison with the existing RED
establishment structures as well as other relevant provincial and local
government structures
To monitor and evaluate stakeholder readiness for RED ONE
20 July 2007
Slide 7
Membership of the Regional Engagement
Forum
The Regional Engagement Forum shall comprise of the following members:
EDI Holdings
Eskom Regional representatives
SALGA Provincial Representatives
Municipalities within RED ONE Region
Municipal Manager
Councilor / MMC responsible for Infrastructure and Services
Director responsible for Infrastructure and Services
Head of Electricity Department
20 July 2007
Slide 8
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 9
Presentation Outline
Electricity Distribution Industry (EDI) Historical Context
25 October 2006 Cabinet Decision
Key Implementation Enablers and Their Status
What are REDs?
How will we get there?
Stakeholder Engagement
Conclusion
20 July 2007
Slide 10
EDI HISTORICAL CONTEXT
20 July 2007
Slide 11
Current Electricity Supply Industry
Structure
Currently, South Africa operates in the traditional mode of vertical integration with financial and physical flows
following the same path
ESKOM
Scheduling
Industry
180
Financial Flow
20 July 2007
Municipalities
Physical Energy Flow
Metering
& Billing
Residential
Business
Slide 12
Key Challenges Facing the EDI
Current industry structure is highly inefficient owing to fragmentation
Absence of economies of scale in respect of investing in assets, sharing of
facilities, services, people development.
Inadequate maintenance of networks
Estimated maintenance backlog: R5 bn accumulated over the past 10 years
Supply interruptions cost to the Economy: R2.9 bn to R 8.6 bn p.a.**
Inequitable treatment of consumers across the country
Significant variance in average tariffs by Distributors:
Inconsistent Electrification Performance
Access to electricity:
~73 % (National)
Slow and Inconsistent Roll-Out of FBE
Current rollout is less than 40% of targeted community
** Source: 2003/4 National Integrated Resource Plan (NIRP) ; # Source: NUS Consulting Study - 2005
20 July 2007
Slide 13
EDI Restructuring Objectives
Energy White Paper Objectives (1998)
EDI Restructuring Blueprint Objectives (2001)
·
Ensure electrification targets are met
·
·
Achievement of government’s electrification programme
Universal access to electricity for all South Africans
·
Provide low-cost electricity
·
·
Facilitate better price equality
Sustainable electricity supply to low-income consumers,
regardless of location, at affordable prices
·
Improve the financial health of the industry
·
Future REDs to operate on a sustained, financially viable
basis as independent businesses
·
Improve quality of service and supply
·
·
Foster proper co-ordination of operations and
investment capital
Acceptable and sustainable levels of supply security and
quality
·
Attract and retain competent employees
·
Future REDs to provide secure employment to their
employees, provide skills development and training
consistent with a high technology, modern distribution
business
Transition to be done within the context of a comprehensive
human resources strategy and an agreed social plan
·
·
20 July 2007
Planned and managed transition
Slide 14
History of Restructuring
Considerable
Debate over
EDI
Early 1990s
Blueprint
approved by
Cabinet
May 2001
20 July 2007
RED s
Approach
Endorsed
ERIC Report
Cabinet
Approved
Start of
Restructuring
Process
EDIRC
Established
Appointment
of PWC
Blueprint
Approved by
EDIRC
End 1999
April 2000
Aug 2000
1997
1999
EDI Holdings
established
RED 1
established
Cabinet
decision
Cabinet
decision
July 2003
July 2005
Sept 2005
Oct 2006
Slide 15
CABINET DECISION:
25 OCTOBER 2006
20 July 2007
Slide 16
Cabinet Decision: 25 October 2006
Having considered technical submissions on:
The financial viability of the different RED models;
The institutional and governance arrangements for the REDs; and
How the various models respond to the restructuring policy objectives.
The Cabinet approved the following:
That 6 wall to wall REDs be implemented;
That the REDs be established as public entities and be regulated according to the PFMA and the
Electricity Regulation Act;
That Eskom becomes a shareholder in the respective REDs for a transitional period and that they
reduce their shareholding over time;
That DME, through EDI Holdings, will oversee and control the establishment of REDs;
That a roadmap will be put in place to move from the current scenario into the future industry
structure
That a strategy needs to be developed to deal with capital investment requirements for the REDs
That EDI Restructuring legislation will be introduced; and
That a National electricity pricing system will be developed.
20 July 2007
Slide 17
KEY IMPLEMENTATION ENABLERS
AND THEIR STATUS
20 July 2007
Slide 18
Key Considerations and Implementation
Enablers
Key Implementation Enabler
Responsible
Status
Governance of the REDs
DME
This issue will be addressed in the EDI
Restructuring Bill
Electricity Restructuring Legislation
DME
The process is driven by DME and indication
from them is that the Electricity Restructuring Act
is targeted for mid 2007
Promulgation of Asset Transfer Framework to
enable effective and orderly transfer of assets from
local government and Eskom to the REDs
National Treasury
NT exempted municipalities and municipal
entities from sections 14 & 90 of the LG: MFMA
with regard to electricity transfers.
National Electricity Pricing System
NERSA
The process is driven by NERSA
National Tariff Harmonisation Framework to ensure
rationalisation of tariffs nationally
NERSA
EDI Holdings will submit a position paper by 31
March 2007 for input into the NERSA process
Salary Harmonisation Framework
EDI Holdings
A proposal served at the TLRS during January
2007 as part of the process of addressing the
COS and salary harmonisation
Capital Investment Strategy for Infrastructure
DME /
EDI Holdings
Will be attended to through
Establishment Business Case
Surcharge Principles Framework
National Treasury
The principles are being covered in the Municipal
Fiscal Powers and Functions Bill to be
promulgated during 2007
Local Government Amendment Bill
dplg
Considering relaxing of MSA S78 process
20 July 2007
the
RED
Slide 19
FUTURE REGIONAL ELECTRICITY
DISTRIBUTORS (REDs)
20 July 2007
Slide 20
6 Wall-to-Wall RED Boundary Map
RED 6
Johannesburg
Metro
Provincial Boundaries
Tshwane Metro
(Pretoria)
Ekhuruleni Metro
RED 4
RED 2
RED 5
RED 1
Cape
Town
eThekwini Metro
(Durban)
RED 3
Nelson Mandela
Bay Metro
(Port Elizabeth)
20 July 2007
Slide 21
REDs Statistical Information
RED
ONE
DESCRIPTION
RED
TWO
RED
THREE
RED
FOUR
RED
FIVE
RED
SIX
2004 FIGURES
No of customers: Eskom
No
279122
363832
496490
636527
506564
1234667
No of customers: Municipality
No
977742
936180
536661
651320
889157
819781
Energy Sales: Eskom
TWh
3.860
4.112
1.312
6.597
3.186
7.644
Energy Sales: Municipality
TWh
11.269
11.671
4.818
12.945
14,745
13.737
Assets: Eskom
Rbn
2.196
2.694
2.297
3.414
3.652
6.375
Assets: Municipalities
Rbn
3.581
4.154
2.693
5.537
5.731
2.634
Personnel
No
5069
5059
2649
5707
5302
7899
Revenue
Rbn
5.169
4.775
1.959
5.268
5.119
5.957
Current Surplus Transfer (Unaudited)
Rm
345
454
207
388
377
101
5 YEAR PROJECTED
Refurbishment Capital Requirement
Rbn
1.437
1.923
1.307
2.197
2.833
2.444
Maintenance Backlog
Rbn
0.581
0.704
0.245
0.837
0.405
1.017
New Work
Rbn
0.753
1.422
1.759
1.336
2.948
2.370
20 July 2007
Slide 22
Future REDs (…1)
New companies into which both municipalities and Eskom will transfer their electricity
distribution businesses
Shareholding to be split between Eskom, National and Local Government
Service providers of choice to the service authorities:
Municipality remains service authority and RED becomes Service provider
REDs will collect surcharges in accordance with the Municipal Fiscal Powers &
Functions Bill on behalf of the municipalities and pay it over to them
REDs will pay dividends to shareholders subject to financial performance
Relationship between RED and municipalities to be governed through the Service
Delivery Agreement as contemplated in Section 81 of Municipal Systems Act
Streamlined relationship reducing duplication and creating clear accountability
Better regulation with role clarity between service authorities, service providers and
the National Energy Regulator of South Africa
20 July 2007
Slide 23
Future REDs (…2)
Decentralised geographical service delivery
Enable Government’s social policy, e.g. electrification and free basic electricity
Single institution
Focus on service
Consistency in operating policies and application across RED geographical area
Development and application of best practices
Support Government’s objective of universal access to electricity by 2012
Become more efficient and able to service customers equally well, at realistic tariff levels
through:
Lower Interest charges due to improved access to capital markets
Efficiencies in “non-payroll” related areas, i.e., general costs
Accounts Receivable. Using best practices in a reasonable, good faith effort
approach to reduce bad debt accounts
20 July 2007
Slide 24
Municipal Revenue Stream
Municipalities will continue to derive income from electricity sales within their area of
jurisdiction
The income will be based on the current audited revenue generated from electricity
sales and transferred to the municipality to support other services
The method through which municipalities will receive a continued revenue stream from
electricity sales would be through:
A surcharge to customers on electricity sales
Dividends from the relevant RED, subject to financial performance and within the
approved policy of the relevant RED
Surcharges collected by the RED will be paid over to the relevant municipality on a
basis agreed to between the relevant municipality and the RED
20 July 2007
Slide 25
RED Future Business Model
Bundled but clearly demarcated wires and retail businesses
Wires business key characteristics:
Asset intensive
Capital intensive
Geared for serving an one to many relationship
Monopoly business with strong regulation
Retail business key characteristics:
Customer driven
Trading in energy
Products and services aligned according to market segmentation
Business geared towards competition and less regulation
Shared corporate and support services to wires and retail
Focus on buy in of services to avoid stranded costs and duplication
Business model to be customised to complement the geographical composition of the
RED area of jurisdiction
20 July 2007
Slide 26
Indicative RED Topography
DEPOT
AREA OFFICE
DEPOT
DEPOT
DEPOT
AREA OFFICE
AREA OFFICE
DEPOT
DEPOT
DEPOT
DEPOT
DEPOT
HEAD
OFFICE
20 July 2007
Slide 27
Roles and Responsibilities
ROLE
Shareholder
RESPONSIBILTY
Establish and contract shareholders compact with RED Board
Monitors the performance of the RED
Define socio and economic requirements
Define business performance expectations
Appoint the Board and CEO
RED Board
Ensure compliance with the shareholders compact
Establish RED Policy, Direction and Compliance requirements
Develop and implement strategies to create shareholder value and to
ensure effective service delivery
Ensure governance, legal, regulatory and policy compliance
Appoint Executive Management
RED Management
Develop and implement strategies to create shareholder value
Ensure effective business operations and compliance
Ensure effective service delivery
Appoint resources and ensure effective resource management
20 July 2007
Slide 28
Relationship Governance
Relationship Owner
Relationship Partner
Governance Instrument
National Government
RED Board
Shareholders Agreement
Shareholder Compact
Business Plan
Local Government (Service
Authority)
RED Board (Service Provider)
Shareholders Agreement
Service Delivery Agreement
(SDA)
Eskom Holdings
RED Board
Shareholders Agreement
Asset Transfer Agreement
RED Board
RED Management
Business Plan
Performance Contract
National Energy Regulator of
South Africa (NERSA)
RED Board
NERSA Licence
20 July 2007
Slide 29
HOW WILL WE GET THERE?
20 July 2007
Slide 30
Generic RED Establishment Roadmap
20 July 2007
Slide 31
Regional Project Governance Structures
20 July 2007
Slide 32
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 33
QUESTIONS/DISCUSSIONS
20 July 2007
Slide 34
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 35
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 36
MUNICIPAL PREPARATIONS
TOWARDS RED FOUR
ESTABLISHMENT
20 July 2007
Slide 37
RED ONE
Calvinia
20 July 2007
Slide 38
About RED ONE
6 wall-to-wall REDs as approved by Cabinet in May 2001 & October 2006
Mainly 2 Provinces: Western Cape & Northern Cape and a small part of Eastern
Cape
Metro: City of Cape Town
Eskom Region: Western
36 Local Municipalities
8 District Municipalities
Key Statistics
No of customers
Sales (GWh)
Revenue (R’m)
Assets (R’m)
Employees
- 1,256,864
- 15,129
- 5,169
- 5,777
- 5,170
Strategic Approach
Eskom Western Region as “footprint”
“Critical mass”
Leverage on the work done in establishing the RED1 (2005)
Phased Approach
20 July 2007
Slide 39
Municipal Preparations for
RED Readiness
Council Resolution that the Municipality participate in RED ONE establishment
Accession to Co-operative Agreement
Legal Compliance
MSA Section 78 process
Ringfencing of Electricity Distribution Business
Participation in the RED ONE Regional Project Governance Structures
20 July 2007
Slide 40
State of Readiness: Municipalities within
RED ONE (…1)
Municipality
MSA S78
Ringfencing
Accession
Agreement
Matzikama Local Municipality (WC011)
No
No
No
Cederberg Local Municipality (WC012)
No
No
No
Bergrivier Local Municipality (WC013)
No
No
No
Saldanha Local Municipality (WC014)
No
No
No
Swartland Local Municipality (WC015)
No
No
No
West Coast District Municipality (WC01)
No
No
No
Witzenberg Local Municipality (WC022)
No
No
No
Drakenstein Local Municipality (WC023)
Yes
Yes
Yes
Stellenbosch Local Municipality (WC024)
Busy
Busy
No
Breede Valley Local Municipality (WC025)
Yes
Yes
No
Breede River/Winelands Local Municipality (WC026)
Busy
Busy
No
Cape Winelands District Municipality (DC02)
No
No
No
Theewaterskloof Local Municipality (WC031)
No
No
No
Overstrand Local Municipality (WC032)
No
No
No
Cape Agulhas Local Municipality (WC033)
No
No
No
Swellendam Local Municipality (WC034)
No
No
No
Overberg District Municipality (DC03)
No
No
No
20 July 2007
Slide 41
State of Readiness: Municipalities within
RED ONE (…2)
Municipality
MSA S78
Ringfencing
Accession
Agreement
Kannaland Local Municipality (WC041)
Yes
Yes
No
Hessequa Local Municipality (WC042)
Yes
Yes
No
Mossel Bay Local Municipality (WC043)
Yes
Yes
No
George Local Municipality (WC044)
Yes
Yes
No
Oudtshoorn Local Municipality (WC045)
Yes
Yes
No
Bitou Local Municipality (WC047)
Yes
Yes
No
Knysna Local Municipality (WC048)
Yes
Yes
No
Eden District Municipality (WC04)
No
No
No
Laingsburg Local Municipality (WC051)
Yes
Yes
No
Prince Albert Local Municipality (WC052)
Yes
Yes
No
Beaufort West Local Municipality (WC053)
Yes
Yes
No
Central Karoo District Municipality (DC05)
No
No
No
Richtersveld Local Municipality (NC061)
No
No
No
Nama Khoi Local Municipality (NC062)
No
No
No
Kamiesberg Local Municipality (NC064)
No
No
No
Hantam Local Municipality (NC065)
No
No
No
Karoo Hoogland Local Municipality (NC066)
No
No
No
20 July 2007
Slide 42
State of Readiness: Municipalities within
RED ONE (…3)
Municipality
MSA S78
Ringfencing
Accession
Agreement
Khai-Ma Local Municipality (NC067)
No
No
No
Namakwa District Municipality (DC06)
No
No
No
Kareeberg Local Municipality (NC074)
No
No
No
SiyathembaLocal Municipality (NC077)
No
No
No
Pixley Ka Seme District Municipality (DC07)
No
No
No
Mier Local Municipality (NC081)
No
No
No
!Kai! Garib Local Municipality (NC082)
No
No
Yes
Khara Hais Local Municipality (NC083)
No
No
No
!Kheis Local Municipality (NC084)
No
No
No
Siyanda District Municipality (DC08)
No
No
No
Eskom
n/a
Yes
Yes
City of Cape Town Metropolitan Municipality
Yes
Yes
Yes
20 July 2007
Slide 43
Accession Agreement
EDI Co-operative Agreement entered into between National Government (DME),
SALGA, Eskom Holdings Limited, EDI Holdings and NERSA during 2002
All Municipalities and Municipal Entities become party to this agreement by way of the
Accession Agreement
On signing the Accession Agreement, Municipalities undertake to:
Provide the necessary assistance to EDI Holdings to enable it to meet its
objective of restructuring the EDI in accordance with the overall intent of the
reform process
Ringfence its Electricity Business (where applicable) in a manner agreed with
EDI Holdings in preparations for the establishment of the REDs
Use their best endeavour to initiate the required process in terms of the
Municipal Systems Act
Keep EDI Holdings promptly and fully informed of any activities that would
materially affect the business and/or the objectives of EDI Restructuring
20 July 2007
Slide 44
MSA Section 78
What is a Section 78 Assessment:
A Section 78 Assessment is a process required by the MSA to assess potential
service delivery mechanisms for the provision of a municipal service
Purpose of a Section 78 Assessment:
To select the most appropriate and optimal service delivery mechanism that will
ensure access to services for all.
Methodology for a Section 78 Assessment:
Assessment of Internal Mechanism [S78(1)]
Decision by Council [S78(2)]
Exploration and Assessment of External Mechanism [S78(3)]
Decision by Council [S78(4)]
20 July 2007
Slide 45
MSA Section 78 Process
STEP 1
STATUS QUO ASSESSMENT
STEP 2
ASSESS INTERNAL SERVICE DELIVERY MECHANISMS
INTERNAL
STEP 4
•
IMPLEMENT APPROPRIATE INTERNAL
SERVICE DELIVERY MECHANISMS
Allocate sufficient human, financial and other
resources necessary for proper provisioning
of the service
STEP 3
DECIDE
EXTERNAL
STEP 4
GIVE NOTICE TO THE LOCAL COMMUNITY
STEP 5
• Assess external service delivery mechanisms
• Conduct a feasibility study
On Internal
Mechanism
20 July 2007
STEP 6
DECIDE
On External
Mechanism
Slide 46
Ringfencing in Context
Ringfencing is the initial step to the process of RED creation, during which the Electricity
Distribution Business is separated from the parent municipality for incorporation into the
RED
Electricity Distribution Business
Wires Activities
Retail Activities
Functional Support Activities
Ringfencing Phases
Financial Ringfencing
Operational Ringfencing
Human Resources Ringfencing
Consider establishing an internal EDI Restructuring Steering Committee
20 July 2007
Slide 47
EDI Holdings Support
Toolkits available for:
Ringfencing
MSA S78
Modeling Information
Financial
Statistical
Funding
NERSA approved, through Eskom Multi Year Price Determination, the allocation
of R1,2bn over a 3 year period
Projects initiated after 1 April 2006 will be considered for pro-rata funding
Establishment of a Central Panel of Service Providers for Ringfencing and MSA
S78
20 July 2007
Slide 48
MFMA Act, 2003 (Act No.56 of 2003):
Exemption
To facilitate the EDI restructuring National Treasury provided exemption from
certain specific provisions of the MFMA (Government Gazette No. 29781, 05 April
2007)
Municipalities and Municipal Entities are exempted from or in respect of the
provisions of sections 14 and 90 of the MFMA subject to the following conditions:
Exemption relates to the transfer of ownership or otherwise disposal of capital
assets (moveable and immoveable), owned by municipalities and used for the
provision of electricity reticulation and other electricity services, to REDs or public
entities
The exemption requires that:
Municipalities must enter into a Service Delivery Agreement (SDA) and any other
agreement with the relevant RED
Municipalities must undertake a due diligence and ringfence their electricity business
All capital assets, current assets, loans and liabilities associated with the assets to
be transferred to the relevant RED must be identified
All the assets to be transferred to the relevant RED must be recorded in an asset
register
Assets to be transferred must be valued through a transparent and auditable
methodology
20 July 2007
Slide 49
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 50
ESKOM PREPARATIONS TOWARDS
RED ONE ESTABLISHMENT
20 July 2007
Slide 51
Eskom Preparations towards
RED ONE Establishment
PROGRAMME 726
The Financial, People & Communication streams are all complete.
Retail Stream
± 2000 customers to be transferred between regions, This will occur during
June 2007
Wires Stream
Some metering points still outstanding. To be completed by end of October
Regional Internal Boundary Optimisation (RIBO) project completed to be
signed of between regions.
One Technical service area (TSA) to be established as normal business
The BP&S stream is reliant on the changes to the others streams and will
complete all changes during June with system shut down
20 July 2007
Slide 52
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 53
QUESTIONS / DISCUSSIONS
20 July 2007
Slide 54
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 55
WAY FORWARD
20 July 2007
Slide 56
Conclusion
EDI Holdings welcomes the certainty created by the Cabinet Decision to create 6 wall to
wall REDs as Public Entities, regulated under the PFMA
EDI Holdings would like to urge RED ONE Municipalities to support the implementation
of the Cabinet Decision by:
Signing Accession Agreement; and
Commencing the preparatory work:
MSA Section 78
Ringfencing
Due Diligence
Join the Engagement Forum
EDI Holdings will continue to work with all industry players to ensure fast-tracking of the
restructuring process in order to ensure the realization of the restructuring objectives
20 July 2007
Slide 57
EDI Holdings RGM Contact Information
Name
Telephone
Number
Cell phone
Email Address
Deon Louw
(RED ONE)
021 446 2070
083 631 2240
[email protected]
Thandi Mazibuko
(RED TWO)
012 316 7733
082 653 2191
[email protected]
Nigel Waters
(RED THREE)
043 705 9634
082 449 0142
[email protected]
Nhlanhla Zondo
(RED FOUR)
012 316 8001
082 449 0142
[email protected]
Nigel Waters
(RED FIVE)
043 705 9634
082 449 0142
[email protected]
082 829 5078
[email protected]
Diamond Mushwana
(RED SIX)
20 July 2007
Slide 58
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 59
Agenda
#
POINTS FOR DISCUSSION
TIME
REGISTRATION
9h00-10h30
RESPONSIBLE
1.
Opening
5 min
Deon Louw: RED ONE RGM
2.
Welcoming Address
15 min
Executive Mayor Johnson: SALGA
3.
Purpose of the Regional Engagement Forum
10 min
Deon Louw: RED ONE RGM
4.
EDI Restructuring
30 min
Dr. W de Beer: COO EDI Holdings
30 min
15 min
ALL
5.
Discussions
TEA BREAK@12H00
6.
Municipal Preparations towards RED ONE Establishment
15 min
Deon Louw: RED ONE RGM
7.
Eskom Preparations towards RED ONE Establishment
10 min
ESKOM
8.
Discussions
8.1 RED ONE Restructuring Matters
8.2 Debate and Acceptance of REF Terms of Reference
8.3 Setting Date for First RED ONE Sponsors Committee
30 min
ALL
9.
Way Forward
10 min
Deon Louw: RED ONE RGM
10.
Closing Remarks
10 min
SALGA Northern Cape
LUNCH @ 13h30
20 July 2007
60 min
Slide 60
THANK YOU
20 July 2007
Slide 61