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Eskom’s Approach to Supplier Development, Localisation & Transformation - Western Cape Alan Ranganthan W. Cape Supplier Development Manager 12 September 2013 “Accelerating Sustainable Growth and Development through partnerships” Supplier Development & Localisation

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Eskom’s Approach to Supplier Development, Localisation &

Transformation - Western Cape

Alan RanganthanW. Cape Supplier Development Manager

12 September 2013

“Accelerating Sustainable Growth and Development through partnerships”

Supplier Development & Localisation

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Content

Supplier Development and Localisation (SD&L) Targets

Strategy & Focus Area’s

Background

Supplier Development and Localisation (SD&L) Mandate

Supplier Development

How to do Business with Eskom

Eskom Contacts

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We have aligned our focus with the government’s objectives…

B-BBEE

NGP/NDP

Initiative ASGI-SA

NIPF

IPAP

CSDP

NIPP

Skills Developm

ent

Development Objectives Job creation

Localisation

Industrialisation

Supplier Developm

ent

We have aligned along local development objectives rather thanpolicy and other government initiatives, thus we can address therequirements of multiple programmes simultaneously and withouthaving to develop new organisations or functions

ASGISA Accelerated and Shared Growth Initiative for South Africa

NIPF National Industrial Policy Framework

IPAP Industrial Policy Action Plan

CSDP Competitive Supplier Development Programme

NIPP The National Industrial Participation Programme

B-BBEE Broad-Based Black Economic Empowerment

NGP/NDP New Growth Path/ National Development Plan 3

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SD & L’s mandate is to contribute positively to the country’s economic transformation

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Our mandate is to achieve maximum and sustainable local

development impact through leveraging Eskom’s procurement

spend in a manner that allows flexibility within the business in order

to accommodate government local development initiatives and

policies

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To ensure delivery of the mandate the board has incorporated these KPIs in the corporate plan 2011/12 – 2016/17.

Strategic

Key Performance Area(based on Immediate

Priorities)Key Performance

Indicator (KPI)

Eskom Target A&F Nov

apprai-sal

In SHC

EXCO CompactsMYPD 2

promised & IBR11/12 12/13 13/14 14/15 15/16 16/17 Floor Kick Norm Stretch Ceiling

Secure our future resource requirements. mandate and the required enabling environment

Maximise socio-economic contribution

Local content - New Build (%) 52 52 52 52 52 52 52 50 52 60 62 65

Job Creation 39,020 40,963 39,869 43,268 42,845 - 18,000 20,400 21,477 34,449 38,520

Electrification (‘000) 98 121 152 182 241 288 100 140 160 180 200

BBBEE Compliant (%) 60 70 75 80 85 90 50 55 60 65 70

Local sourcing (%) 52 55 57 59 60 61

Black Owned (%) 20 25 30 35 40 50

Black Woman Owned (%) 8 10 15 20 25 30

Black Youth Owned 2 5 10 15 20 25

Black People Living with Disability (%) 0.5 1.0 1.5 2.0 2.5 3.0

Ensuring our financial sustainability

Ensure financial sustainability

Cost of Electricity (ZAR / MWh) 429.1 485.3 528.6 499.9 549.2 593.9 387.02 397 387 377 366 350

Interest Cover 0.53 1.10 1.35 2.17 2.77 3.10 >=1 1.0 1.2 1.5 1.7 2.0

Cash savings (ZAR m) 3,022 2,430 2,780 10,000 10,000 10,000 1,500 1,500 1,500 1,500 1,500

Credit rating BBB- BBB- BBB- BBB- BBB- BBB-

Debt / Equity ratio 2.82 3.15 3.20 2.55 1.84 1.32 <=2.5

FFO2 as % of total debt 4.51 8.03 8.88 17.84 24.14 25.40

Corporate Plan Shareholder Compact

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6

Ope

ratio

nal

Priority focus areas▪ Boiler Maintenance▪ Primary Energy▪ Cables and Conductors▪ Metering▪ Valves▪ Protection Schemes▪ Grinding Elements ▪ Pumps▪ ICT▪ Vessel (Containers)▪ Generators▪ Switchgear▪ Generation Spares▪ Fabric Filter Bags

▪ Transformers▪ Turbines▪ Control systems▪ Ash & Stockpile Handling▪ Pipes▪ Rotors▪ Conveyor▪ Tubes▪ Air Heater Pack ▪ Economiser▪ Capacitor Bank▪ DC Equipment▪ MV Motors

▪ CSP▪ Solar PV▪ Wind

▪ Gas CCGT▪ Nuclear New Build

▪ Tx Line Construction▪ Biomass▪ Network Strengthening▪ Substation construction

and refurbishing▪ Koeberg Nuclear▪ Electrification of homes

▪ Civil Construction▪ Fabric Filter Plant

Retrofit▪ Steel▪ Building and Build

maintenance

Our SD&L plan prioritises 42 operational and project spend focus areas to drive industrialisation and localisation

Proj

ects

and

New

B

uild

IRP2

010

Other

TotalSpend

42 FocusAreas

Planned procurement spend(%)

Provide a platform for sustained demand through our operational and project spend

~89%

100%

~11%

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Four Pillar Approach to Supplier Development

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SUPPLIER DEVELOPMENT

Skills Development

Funding Information Work Opportunities

• Contractor Academy• Skills Development

Programmes• Mentors and Coaches• Profession Services

• MOA / MOU with Gov. & Non-Gov. Institutes e.g. NEF, IDC, SADB etc.

• Communicate Eskom requirements & Procurement Plan

• Supplier assessments

• Sub contracting• JV’s • Contracting with risk

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Enterprise/Supplier Development approach

1. Identify current and future projects as well as procurement plans (5 year plan).

2. Determine current supplier base in terms of availability, capacity and capability.

3. Based on analysis in line with required categories, select and prioritisecontractor/suppliers for development.

4. Development of the selected candidates (new and existing) using internal(contractor academy) and external (incubators) expertise.

5. Organise supplier training sessions on SHEQ

6. Skills transfer / competency improvement on emerging entities through JVsand subcontracting to LMEs

7. Emphasis on local to site and set asides.

8. Monitor the adherence to 14 day payment period for small entities

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Challenges

• SMME’s lack capability and capacityo In order for small firms to maintain narrow profit margins, they are not

able to introduce innovative improvements to products and processes which negatively impacts on their ability to take advantage of new market opportunities.

• Difficulty in achieving Quality and SHE tender evaluation thresholds• Barriers to Entry i.e. CIDB levels• Information on Opportunities in Business• Difficulties in raising finance• Adherence to the B-BBEE policy on early payments for SMEs (EMEs & QSEs) –

14 days

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• Eskom procurement processes and practices are based on good governance underpinned by ethical values of responsibility, accountability, fairness and transparencyGovernance

• Registration on the Eskom Vendor Database is not a prerequisite for tendering

• Companies who are not currently registered will not be prejudiced in any way during the Tendering evaluation process.

• If the successful tenderer not registered on Eskom supplier database, the potential supplier will be required to submit the list of mandatory registration documents prior to the contract being awarded.

• The vendor number may only be awarded once all mandatory and statutory requirements have been fully complied with.

Registration request as as a result of an open

tender process

• This type of registration is base on Eskom’s needs. Once a need has been identified Eskom will then invite suppliers in that space to come forward to register.

• The following two channels of communication will be used to attract potential suppliers to register; local newspaper and Eskom website under supplier registration link.

• Some of the potential suppliers will, depending on the type or nature of services/product they offer, be required to go through the pre-qualification process.

• Request for quotation (RFQ) can be sent to non-registered vendors and request for a budget quote via the email or fax and suppliers must be informed that if they are successful they will be required to submit the list of required mandatory documents for registration.

Registration request as as a result of

informal/closed tendering

How to do Business with Eskom

1010

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Tender/Procurement opportunities

• ESKOM advertise on the website:

• www.eskom.co.za

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Tenders

Click on Tenders

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Tender/Procurement opportunities

• What is out on tender

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Click

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Tender/Procurement opportunities

• Click on GENERAL SEARCH

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Tender/Procurement opportunities

• Click on GENERAL SEARCH

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Tender/Procurement opportunities

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Click on Search

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Tender/Procurement opportunities?

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Click on view

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Communication for unsuccessful bidders?

• Eskom Procurement and Supply Management Procedure 32-1034

• 3.11.2.3 Unsuccessful Tenderers

• Notification is sent to unsuccessful suppliers once the contract / order has been awarded and accepted.

• Eskom informs unsuccessful suppliers of decisions on contract / order awards on informal tenders /enquiries on specific requests.

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Group Commercial Support Construction, Material & Metals [email protected] (011) 800-3715Transformers & Switchgear [email protected] (011)800-4903Control and Instrumentation, Insulators and Metering Equipment [email protected] (011) 800-3558

Consulting, Advertising, HR & Legal Services [email protected] (011) 800-4780Hardware, Software/IT services & Telecoms [email protected] (011)800-4276Transport, Catering, Furniture, Security & Courier [email protected] (011) 800-4696Coal [email protected] (011) 800-3966Land, Properties & Fleet [email protected] (011) 800-4273Asset Disposal [email protected] (011) 800-4176Integrated Demand Management(IDM) www.eskomidm.co.za (011) 800 3388

Key Procurement Areas for New Build Projects

Emalahleni (013) 656-5937Wilge (013) 649-1525

Delmas (013) 665-4321Ellisrus (014) 763-6414

Supplier Development and Localisation [email protected] (011) 800-3478Eskom Vendor Registration Portal https://supplier.eskom.co.za/Highlight (011) 800-3478Username and Password [email protected] (011) 800-5060

Group Commercial Support - contacts

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W. Cape Support Team

Samantha Francis [email protected] +27 21 980 3339

Nikiwe Shongwe [email protected] +27 21 980 7521

Alan Ranganthan [email protected] +27 21 980 7592

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Thank You

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