Cape Town, 5 April 2001
My thanks, at the outset, to the Chairman, Reuel Khoza and the Chief Executive, Thulani Gcabashe, for presentations that, in a manner of speaking, have shed considerable light on Eskom's current activities and performance!
Electricity is a critical factor in the realisation of our country's and our continent's prospects for economic growth and in the general improvement of our peoples' quality of life. Agrarian reform, infrastructure development, and the continued democratisation of political systems can only really bear significant fruit from the bedrock of an efficient, effective, accessible and environmentally sensitive supply of energy. Africa's energy requirements span sprawling rural countrysides and urban centres that are growing by leaps and bounds, often without sufficient planning, landscaping or regard for sustainable natural resources. Industries, mining, households, different modes of transport and increasingly, agricultural sectors, all compete for energy [albeit in different proportions] from a rich variety of sources, not least of which is electricity.
Eskom's social and economic impact has been clearly stated in the presentations. It is a global performer of quality and efficiency, operating above average against many of the international benchmarks we can identify. The financials are healthy, with, inter alia, improving debt:equity ratios, returns on total assets, and cumulative productivity improvements for all resources. Its environmental record is improving, particularly in the critical areas of water consumption and particulate emissions. Even the woodpole replacement programme marks a contribution to the conservation of our rapidly depleting timber resources. It has also achieved major success in its RDP commitments, particularly in the areas of household connections, staff transformation within the company, its contributions to the Skills Development Levy, pricing policies, and improving services through for example a reduction in the number of incidents that cause powercuts. Flood relief and its participation in the disaster relief management system are noteworthy. Eskom's receipt of prestigious specialist awards that recognise its status as a technology powerhouse alongside its excellent contribution against HIV/AIDS expertise further underlines its positive and conscientious role as a sound corporate citizen.
Eskom's strategic impact is also clear, supplying some 95% of South Africa's domestic electricity requirements and nearly 60% of the electricity consumed throughout Africa. Here at home, the mining sector draws 87% of its energy use from electricity supplies, whilst the rail network draws less than 5% of the total national electricity consumption. Eskom Enterprises performs extremely well as a component of South Africa's phalanx of measures designed to give flesh and blood to the renaissance of our continent. In this arena it is worth noting that Eskom Enterprises now enjoys representation through joint ventures, partnerships, business agreements and operations in more that 25 African countries.
The achievements and strengths represented in the Annual Results provides some indication that Eskom must continue to contribute to the resolution of energy-related issues that are still obstacles in the road towards a better life for all our people. Government's view is that Eskom will fulfil its function through the continued identification as its own of Government's goals in the energy sector. And it will be an even sharper instrument than it is now as a restructured entity within an invigorated long-term policy environment.
Government's goals take into direct account the complexity of our economic environment and the challenges that face our people, our continent and our government as a whole. Continued inequalities in wealth and accessibility to improved living conditions between, and even within, cities and towns and the countryside have only partly been addressed by nearly seven years of RDP activity. Thus, achieving universal access to electricity remains a top priority for this government. Great strides have already been made, with the electrification of households increasing from 36% in 1994 to some 70% in 2000. We stand today with electricity supplied to about 46% of rural and 80% of urban households. This situation accounts for the fact that Eskom's RDP commitments are heavily biased towards rollout in rural areas, to the extent that over 70% of this activity is directed into rural areas. Rural electrification of households in particular is not only an immediate human concern: we must note that rural households account for an overwhelming portion of the 65% of net household energy that is still obtained from fuelwood. This is simply unsustainable for the environment, has significant negative health consequences, and is significantly more costly for users than electricity. Furthermore, the rapid and sustainable supply of electricity to schools, health-care facilities and the economic nodal points established through the CBPWP are also areas that require urgent attention. Appropriate energy resources, particularly grid- and non grid-sourced electricity must drive rural development.
Another goal is to secure not only the continued supply of energy, but to ensure that its cost to the household consumer as well as to industrial enterprises remains as low as it can be. Government activity to reduce the costs of doing business in South Africa, such as tariff and regulatory reform, IT and communications development, will be most effective if we are able to combine them with low-priced yet efficient energy supplies.
Widening the participation and ownership of PDIs in the economy through well-designed economic empowerment initiatives is also practicable in the energy sector in general. It can also attract foreign and local direct investment in a manner that expands benefits beyond the sector as well.
In order to achieve these goals, the South African government is committed to restructuring the energy sector so that it remains efficient both in its investment and operations so that it supports industrial and commercial growth, and promotes social and economic development in SA. We intend to meet and indeed go beyond international standards in terms of cost competitiveness, quality of service, and the protection of health, safety and the environment.
Today is not the occasion to reflect on the restructuring of Eskom. As you are aware parliament is currently processing the Eskom Conversion Bill which will further improve Eskom's performance. I will elaborate on all these matters when I address Parliament in my budget vote on June 01.
Chairman, CE, through you, I want to express Government's appreciation for the magnificent contribution that all Eskomites have made, collectively and individually, to make Eskom one of the business jewels in the South African and African crowns. Your reputation is international, and we are very proud of it. Well done.