Asset Management, Smart Metering, Water and renewable Energy

Industrial Hub

Presented by Jerry Mafereka and Lindelani Errol Sibisi

16 August 2012ICUE Conference 2012

Sources of energy are becoming scarce and COP17 Targets for mitigating against negative Climate Change are massive.

Thus ESKOM as a major supplier of energy is embarking on a drive to boost supply of energy from alternative sources while simultaneously reducing demand for electricity.

The Energy Industry in South Africa is not as developed as in most countries thus ESKOM needs more capacity to meet growing demand.

However, there are very few local and well equipped suppliers hence the on-going importation for both the New Build Programme of Power Stations and Integrated Demand Management (IDM) Technologies.

Eskom seeks to build an industry by building a group of home-grown companies that can assist ESKOM (and later other clients) and compete globally especially in Africa.

The reality is that energy problems of South Africa are too complex and profound that no one company can solve them.

This process will create thousands of jobs and empower hundreds of companies to help solve South Africa’s energy problems.

Industry background

Eskom Transformation Imperatives

Create a society which allows all of its participants to generate economic growth within a framework that provides

consistency and stability

This is an investment in the future of South Africa

Correcting the inequalities of the Apartheid era

80% of population receiving 25% of total remuneration

90% owning less than 5% percent of the JSE

40% black South Africans unemployed compared to 10% of white South Africans (Skills-based problem)Demographics Ownership of JSE

All data at November 2005 Source for all charts: DTI

• Increase the level of participation by black owned businesses mainstream economy (ESKOM AND OTHERS)

• Increase income through resultant economic growth

• Increase the real market in the SA economy Second Economy

BE

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Second Economy

Mainstream EconomyMainstream Economy

More economic participants

Higher Economic Growth

A Bigger Market for All

What Eskom Supplier Development & Localization Strategy wants to Achieve

ESKOM will spend over R1trillon over the next 20 - 30 years on New Build and IDM Programmes because the current fleet of power stations will be due for decommissioning during this period.

About 40% of this amount is to be spend on developing the local energy industry focusing on small black owned companies

This will be done through: Skills development Localisation Industrialisation Job creation for decent work Enterprise development

Eskom’s Capital Investment Plans

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DefinitionKey performance area

• Increasing the skill base (number and skill level) of South African workers in areas relevant to the energy sector and where there is a national scarcity of skills

Skills development

• Utilisation of Eskom and suppliers’ spend to develop South African based suppliers relevant to the energy sector (focusing primarily on B-BBEE and Black Owned suppliers)

Localisation- Country- Province/Region- Site/Operation

• Utilisation of Eskom and suppliers’ spend to foster the establishment of new competitive industries in the energy sector

Industrialisation

• Creation of new jobs by suppliers as a direct result of Eskom business

Employment and job creation

• Providing a platform for SA-based suppliers to develop into national and international suppliers, through Capability & Capacity & Competitiveness development

Supplier development (SD)

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Industrial HubAsset Management, Smart Metering, Water and

renewable Energy Industrial Hub

“Utilisation of Eskom and suppliers’ spend to foster the establishment of new competitive industries in the energy sector” Create new black owned companies in the energy

sector Boost small black owned companies in the energy

sector to be competitive globally Create jobs Increase the skill base in the energy sector Boost the reliability of suppliers in the local industry

through fostering best practice

Strategic Objectives & Modus Operandi

Hub Management Office Consist:

ESKOM SD&L and Foundation, SABEF, ZIMELE and a Consortium of SMME’s

Duties: manage the running of the industrial hub and stakeholder relationships

Scope of Work to cover: Asset management

Large Scale Manufacturing of Capital Goods Construction and renovation of building Provision of related services

Smart Metering ESCOs Smart ICT Grids Local Water and Renewable

Energy Water and Renewable Energy

Generation of water from water Renewable energy

The Key Pillars of Industrial Hubs

Drivers of the programme will provide assistance such as: Business opportunities Funding Training Incubation

Drivers are to be identified by ESKOM and financed by its Global ICT Suppliers, National & Provincial DFIs.

Local Beneficiary Companies / Enterprises / Co-Ops / NGOs / CBOs be vetted by accredited empowerment verification agencies for eligibility.

The Drivers of Industrialization & Localization Framework and Programme

Management Office

Products & Services for Eskom Business

Asset Management

Manufacturing Retail Support Services

Cables and ConductorsMotorsGeneral ConductorsAir Heaters & FansProperties (Facilities) Vehicles  

ClampsVoltage Regulators Capacitive Voltage TransformersCoupling CapacitorsGrinding Elements  

Coal supply Buying and Hiring services for:•Fleet •Cranes•Aerial Platforms•Drill Equipment•Lubricants •Chemicals

Maintenance Services HR Specialist Recruitment Professional Services Print MaterialMetering strategyMonitoring systems CateringSmart Meter Systems Courier ServicesExternal AuditorsTravel Management

• Companies are to be grouped according to areas of specialisation • Each areas will have a champion who is part of the management

team

Asset Management

Smart Metering Water and Renewable

Energy

• IBM• T-Systems

• SEDA TTP• IDC• ESKOM

Construction Manufacturing Retail

Support Services

Khayelitsha Saldana AtlantisSir Lowry’s

Pass

Management Office (Consortium , Drivers,

SABEF and ESKOM)

B BBEE SMME’s

Industrial Hub Framework

Induction of companies Identify existing ESKOM suppliers who would be registered under the hub Use SABEF to induct new companies into the hub Identify other structure to induct new companies

Qualify companies to be added to the hub database Companies must meet set criteria Add to a database that will be available to the market

Train and educate new companies on energy related aspects and leadership FET’s, Technical Universities and Academic Universities will provide training Training programmes will also be put in place for ad hoc training programmes

Identify opportunities within and outside of ESKOM for companies in the industrial hub A competitive process according ESKOM requirements will be followed

Sell companies in the hub to other energy suppliers Use a portal to advertise opportunities to members of the hub Sell members to funders

Manage hub activity Report on statics

Number of companies added Success rate of the hub

Perform above mentioned activities

Typical Activities of the hub

Eskom Supplier Evaluation Process

Continuous Improvement cycle

Buyers

Identify focus areas

Capture buyer requirements

Contracting

Comply with buyer

contract requirements

Invite Suppliers to participate

Verification of evaluation data

Assisted self assessments

Develop improvement

plan

Implement improvement

plan

Suppliers

Facilitate access to supplier development resources

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Example of Targets & Outputs from the Smart Metering Pilot Study

• Through the Smart Energy School train over 15000 individuals within and out of ESKOM

Skills development

• Build and empower 300 new local companies

• Focus on Youth owned – 50%; and Women owned – 25%

• Empower 200 existing local companies

Localisation

• Boost the Smart Metering companies

• Build a Smart Metering School

Industrialisation

• Create over 15 000 jobs

• Focus on black, young, women and disabled individuals

Employment and job creation

• The 500 companies will be able to offer services to other clients such as local municipalities and across Africa

• Zimele will be able to grow to compete internationally

Supplier development

Why do we think we will Succeed?

We are ready to partner with ESKOM in SMME

Development…