This is an overview of business performance against the shareholder compact key performance indicators. Click here for more detailed information on the shareholder compact.

• Capital and financial efficiency
  The return and earnings ratios were impacted negatively by the following:

• there was a significant increase in the cost of coal in line with the trend in rising prices for export coal
• during significant energy shortages, the open-cycle gas turbines (using diesel) were run much more than expected due to the low reserve margin, and the diesel was purchased at a time of high world oil prices
• in terms of the MYPD rules, the price increase was restricted to less than the inflationary increases of coal and diesel

We made an application to the regulator regarding the recovery of all or some of these over-expenditures by way of an increased tariff in future.

• Capacity expansion (infrastructure and capex)
  

• in total, Eskom spent R1 455 million more in capital than targeted in the shareholder compact, indicating the effectiveness and fast tracking of the rollout of the capital expansion programme
• the generation technical plan expenditure was underspent by R242 million (6,5%). While there was an increase of major maintenance overhauls undertaken, this was offset by the deferral of scope of work on other maintenance projects in order to manage the capacity constraints
• Eskom built 24km less transmission lines than targeted for the year. Delays and difficulties in obtaining the necessary servitudes, which we need to enable us to proceed with construction over privately owned land, delayed the completion of a number of major projects

• Operating efficiency and effectiveness

• The increased growth in demand over recent years, combined with limited operational capacity, has resulted in a significant increase in the production requirement on existing power stations. In order to deliver on the continued demand, this increased production has, in many instances, led to plant components being stressed beyond their design operating parameters. This increased level of usage, combined with exceptionally wet conditions in January and February 2008, contributed significantly to a culmination of conditions that resulted in forced capacity losses. These performance issues are being addressed as part of the generation technical recovery plan
• equipment failure contributed significantly to the five “degree-one” incidents on the transmission network. Various preventative and corrective actions have been identified already in order to address the poor interruption performance. The one “degree-three” incident was the result of load shedding
• the distribution performance has not improved since the previous year and the business plan target was not achieved due to a higher number of planned interruptions for maintenance and refurbishment and an increase in unplanned interruptions, caused by an increase in conductor theft, energy theft in the winter months, and bad weather. Load shedding also had a negative impact on operational performance
  If load shedding is excluded, SAIDI and SAIfiwould have achieved 55,51 and 25,36 respectively, which still represents a deterioration in performance compared to the previous year.
• as indicated above, the increase in the cost of coal and diesel was the primary reason for increase in the rand/megawatt per hour performance indicator