Performance of the Integrated National Electrification Programme

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Performance of the Integrated National Electrification Programme

Presentation to the Select Committee on Finance8 August 2006

Presented by: Chris van Zyl

Senior Manager: Capital Programme

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CONTENTS

1. Quarterly Report Municipal Programme 2006/07

2. Allocations (Capital expenditure 2006/07)


4. Connections – 2006/07

5. Connections 2005/06

6. Quarterly Report Eskom 2006/07

7. Allocations 2006/07




11. The way forward

12. Conclusion and questions

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Quarterly Report of Electrification funding for the period 1 April

2006 to 30 June 2006 to Licensed Municipal Distributors.

The quarterly report for the period 1 April to 30 June 2006 is based

on the gazetted programme for 2006/7 financial year.

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11. The way forward


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CAPITAL EXPENDITURE

2006/07 CAPITAL EXPENDITURE Government Financial Year

Province 2006/7Original Allocation(R’000)

Year to DateScheduled Transfers1st Quarter(R’000)

Year to DateActual Transfers1st Quarter(R’000)

Year to Date Expenditure (Excluding Top-upFunding)1st Quarter(R’000)

Eastern Cape 61,188 2,950 0 15,401

Free State 26,910 700 0 0

Gauteng 95,160 2,474 0 0

Kwazulu Natal 68,640 3,514 0 0

Limpopo 18,700 0 0 0

Mpumalanga 41,802 8,945 0 480

Northern Cape 14,972 615 0 160

North West 29,500 1,000 0 0

Western Cape 34,258 1,300 0 0

Total 391,130 21,498 0 16,041

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An amount of R 21,498 million was scheduled to be transferred during the first quarter.

However no funds were transferred to municipalities due to the following reasons:

a. Implementation contracts are not yet returned by Municipalities. The municipalities indicated that

they are awaiting their Council Resolutions on contracts before signing, hence the delay.

b. The contracts were received late to effect the transfers in June 2006.

c. A number of Municipalities are currently busy with 2005/6 projects hence unable to start with

2006/7 projects.

CAPITAL EXPENDITURE

Continue….

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a. The transfers for July 2006 were effected.

b. Follow ups are being made with municipalities to ensure implementation

contracts are signed.

c. The site visits and technical audits are currently being conducted to

monitor and verify the 2005/6 projects .

CAPITAL EXPENDITURE

Continue….

Action plan

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11. The way forward


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Summary of Capital Expenditure2005/06

Province Revised Allocations (R’000)

Year to Date Actual Transfers(R’000)

Year to Date Expenditure (Excluding Top-up Funding)(R’000)

1st Quarter Expenditure(Excluding Top-up Funding)(R’000)

Year to Date Expenditure (Including Top –up Funding(R’000)

Year to Date Top –up Funding (R’000)

1st Quarter Top –up Funding(R’000)

Eastern Cape58,203 56,653 45,505

62745,505 0 0

Free State30,323 28,524 17,013

4,93117,693 680 680

Gauteng40,389 39,439 39,279

7,28539,362 83 0

Kwazulu Natal62,086 60,018 46,103

6,70559,021 12,918 1,353

Limpopo23,460 23,200 12,807

3,11212,934 127 0

Mpumalanga25,357 21,220 16,959

4,84719,021 2,062 1,484

Northern Cape9,934 9,637 6,178

4417,771 1,593 983

North West19,090 15,210 12,120

53012,730 610 0

Western Cape44,289 43,578 40,433

4,51047,794 7,361 4,749

Total313,131 297,479 236,395

32,988261,829 25,434 9,249

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Progress for the 1st quarter (1 April – 30 June 2006)

The 1st quarter actual expenditure excluding top up funding equalled to R 32,988

million. The year to date actual expenditure is standing at 79%of the total transfers.

For the 1st quarter municipalities utilised own funding (top-up) to the amount of R 9,249

million , which is 36% of year to date top-up funding.

Reason for the variance per Province:

Municipalities in some of the Provinces did not submit their monthly reports.

CAPITAL EXPENDITURE

Continue….

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11. The way forward


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• No connections has been reported as contracts with municipalities have not

been finalised

CONNECTIONS

2007/06

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11. The way forward


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CONNECTIONS

Summary of Household Connections 2005/06

Province Name Revised connections

Connections31 March 2006

ActualConnections1st Quarter

Year to date Actual

Eastern Cape 10,383 7,753 5,158 12,911

Kwazulu/Natal 16,761 12,801 2,272 15,073

Limpopo 5,885 2,051 681 2,732

Mpumalanga 6,129 2,191 1,863 4,054

North West 5,143 3,470 400 3,870

Northern Cape 2,877 1,010 767 1,777

Western Cape 10,687 5,505 1,427 6,932

Total 77,407 44,364 13,760 58,124

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For the quarter under review the Municipalities reported 13,760 actual connections.

While the year to date actual connections equalled 58 124 connections. To date 75% of

the revised household connections has been achieved.

7 school connections were reported during the 1st quarter of 2006. Year to date actual

connections equalled to 56 (these includes additional 10 schools electrified from

savings) against the year to date budget of 55 schools. To date 84% of planned schools

have been electrified.

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11. The way forward


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Eskom Programme

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Eskom programme Allocations 2006/07

PROGRAMME TYPE

2005/6 Roll-Over Funding including Special (Funding already received from DME) (Including VAT)

2006/7 PLANNED CAPEX (To be transferred by DME during 2006/7 (INCLUDING VAT)

PLANNED CONNECTIONS

Planned Year to Date Capex (Including VAT)

Actual Year to Date Capex (Including VAT)

2005/6 Households Roll Over 70,516,425.60 15,631 39,488,042.62 27,152,182.43

2006/7 Households 680,358,044.80 83,292 108,190,277.61 86,321,851.79

2005/6 Committed Projects Bridged Financed by Eskom

165,581,401.75 0 165,581,401.75 165,581,401.75

2006/7 Schools and Clinics

47,225,553.45 470 6,811,179.75 2,345,829.57

Total Eskom Programme 70,516,425.60 893,165,000.00 99,393.00 320,070,901.73 281,401,265.54

Quaterly

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11. The way forward


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Eskom Allocation per province 2006/07 according to Gazette

PROVINCETOTAL PLANNED CAPEX (Including VAT)

EASTERN CAPE 236,044,062

FREE STATE 31,881,802

GAUTENG 93,939,761

KWAZULU/NATAL 205,518,079

LIMPOPO 132,588,283

MPUMALANGA 35,014,060

NORTH WEST 109,889,053

NORTHERN CAPE 15,763,300

WESTERN CAPE 31,526,600

Grand Total 893,165,000

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11. The way forward


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Eskom Allocation and Expenditure2005/06

Capital Budget Expenditure Variance

DME Budget - Over Expenditure 2004-2005 Claimed as part of 2005/6 Budget 271,901,806.76 228,401,683.68 43,500,123.08

DME Budget - Household 461,869,764.21 400,981,605.23 60,888,158.98

DME Budget - Schools and Clinics 39,698,485.04 41,649,318.06 -1,950,833.03

DME Schools and Clinics Special- 2004/5 Additional Funding 0.00 1,938,020.90 -1,938,020.90

DME HH Specials - 2004/5 Additional Funding 0.00 29,983,002.55 -29,983,002.55

Cosmo City Funding for JHB Metro 10,000,000.00 10,000,000.00 0

Total DME Total 783,470,056.00 712,953,630.41 70,516,425.59

DME 2005/6 Specials bridged financed by Eskom 0.00 26,595,880.54 26,595,880.54

Negotiated Commitments bridged financed by Eskom 0.00 43,222,850.58 43,222,850.58

2005/6 Committed Projects bridged financed by Eskom (Harmonization) 0.00 95,762,670.63 95,762,670.63

2005/6 Commitments Bridged Financed by Eskom 0.00 165,581,401.75 165,581,401.75

Total for 2005/6 Financial Year 783,470,056.00 878,535,032.16 -95,064,976.15

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Eskom Expenditure Per Province 2005/06

PROVINCE Capital Expenditure

EASTERN CAPE 182,928,083.74

FREE STATE 14,113,058.88

GAUTENG 47,945,505.11

KWAZULU/NATAL 132,830,464.64

LIMPOPO 145,683,243.00

MPUMALANGA 40,882,559.16

NORTH WEST 70,407,339.79

NORTHERN CAPE 3,158,917.33

WESTERN CAPE 12,184,176.84

2004/5 Roll Over 228,401,683.68

Grand Total 878,535,032.16

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Eskom Allocation 2005/06Explanation for overspending and roll overs

R 95 million overspending due to :

1. Other Projects committed during 2005/06

2. Projects substituted from Annexure A (Eskom Contract) without following change process

3. Uncertainty of migration to the MIG – Projects of R300 million was committed of which R103 was

contracted with DME. Actual expenditure incurred on all commitments R95 million

4. Pressure from communities and Municipalities to accelerate electrification in preparation for the

elections

5. Infill Projects substituted by other projects

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Eskom Allocation 2005/06Explanation for overspending and roll overs, continue

R 70 million Roll overs were due to:

• Projects not done due to the other committed projects

• Projects not completed in the 2005/06

• Projects that could not be executed due to no houses being available

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11. The way forward


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Eskom Connections 2006/07Households

PROVINCETOTAL PLANNED CONNECTIONS

TOTAL YEAR TO DATE PLANNED CONNECTIONS

TOTAL YEAR TO DATE ACTUAL CONNECTIONS

EASTERN CAPE 17,449 2,503 1,719

FREE STATE 4,147 0 492

GAUTENG 6,982 0 0

KWAZULU/NATAL 19,972 10 2,897

LIMPOPO 10,955 1,730 481

MPUMALANGA 4,018 28 0

NORTH WEST 13,046 0 0

NORTHERN CAPE 2,562 10 18

WESTERN CAPE 4,160 0 35

Grand Total 83,292 4,281 5,642

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Eskom Connections 2006/07Schools and Clinics

PROVINCEPLANNED CONNECTIONS

PlannedConnections Year to Date

Actual Connections Year to Date

EASTERN CAPE 201.00 21.00 16.00

FREE STATE 12.00

GAUTENG 7.00

KWAZULU/NATAL 110.00 20.00 13.00

LIMPOPO 58.00 5.00 4.00

MPUMALANGA 35.00 6.00 5.00

NORTH WEST 40.00 5.00 3.00

NORTHERN CAPE 7.00

Total 470.00 57.00 41.00

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11. The way forward


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Eskom Connections 2005/06Households, Schools and Clinics

Connections Budget Actual Variance

DME Budget - Over Expenditure 2004-2005 Claimed as part of 2005/6 Budget - Connections already reported in 2004/5 Financial Year 0 0 0

DME Budget - Household 84,385 87,863 -3,478

DME Budget - Schools and Clinics 446 473 -27

DME Schools and Clinics Special- 2004/5 Additional Funding 15 0 15

DME HH Specials - 2004/5 Additional Funding 6,063 5,456 607

Total DME Total 90,909 93,792 -2,883

DME 2005/6 Specials bridged financed by Eskom 5,951 1,232 4,719

Negotiated Commitments bridged financed by Eskom 9,881 3,020 6,861

2005/6 Committed Projects bridged financed by Eskom (Harmonization) 0 9,362 -9,362

2005/6 Commitments Bridged Financed by Eskom 15,832 13,614 2,218

Total for 2005/6 Financial Year 106,741 107,406 -665

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Eskom Connections 2005/06 cont.

Performance according to connections achieved

• Households 104%

• Schools and Clinics 106%

• Special Projects 85%

• Total Programme 100,09%

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Explanation for differences

• During initial contracting more than 50% of the Eskom projects were still in the early

phase of planning with accuracy levels varying between 65% and 85%.

• Many of the estimates are provided by municipalities and can only be verified and

confirmed once Eskom has completed their pre-engineering process.

• Due to Eskom’s blanket connection policy were all households in an electrification

project is provided with a connection before the project is deemed completed which

has resulted in volume differences.

Eskom Connections 2005/06 cont.

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11. The way forward


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The way forward

• Eskom engage in pre-engineering work within 2006/07 financial year to prepare projects for contracting for 2007/08.

• Change Control process to be strictly followed for any changes.

• Eskom not overspend without DME pre- approval

• Monthly meeting between DME and Eskom to ensure compliance.

• Addition controls put in place at Eskom Regions to ensure compliance.

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11. The way forward


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Questions

Thank you

Documents

Performance of the Integrated National Electrification Programme