1 eskom : distribution division (electrification) select committee : 08 march 2005 presented by:...
TRANSCRIPT
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Eskom : Distribution Division
(Electrification)
Select Committee : 08 March 2005 Presented by: Mongezi Ntsokolo Managing Director (Distribution Division)
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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ESKOM HOLDINGS: DIVISIONAL MANDATES
Generation
Transmission
Eskom Enterprises
Corporate
Distribution
To design, build & refurbish Eskom’s assets, act as a catalyst for globalisation for the group and to be the custodian of Eskom’s non-regulated businesses. Eskom Enterprises will also offer strategic and commercial lifecycle services to the line divisions
To optimally operate and maintain the plant lifecycle of Eskom’s South African generation capacity assets.
To assure regulatory compliance, ensure effective group wide governance, develop policies for compliance assurance and to provide strategic services.
To optimally operate and maintain the lifecycle of the South African transmission network.
To manage the retail business and optimally operate and maintain, the SA Distribution network, while playing an active role in the restructuring of the EDI.
Key Customers
Key CustomersTo proactively manage contestable client relationships and to trade energy from Generation and international sources to contestable clients in SA (consumers of >100GWh) and customers abroad
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South African Electricity Industry
Eskom
Industry
Business
ResidentialPhysical Energy Flow
Financial Flow
Mu
nic
ipalities
Currently, South Africa operates in the traditional mode of vertical
integration with financial and physical flows following the same path
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DISTRIBUTION STRATEGIC INTENT
Within the Mandate and resulting Distribution Business Model, Distribution has defined its Strategic Intent:
Eskom Distribution will lead in: the provision of electricity services and customer satisfaction through empowered, sustainable regional businesses,
for the benefit of our country.
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DISTRIBUTION DIVISION – BUSINESS MODEL
Customer CategoriesWires Business (Engineering/Network)
Retail Business(Customer Service)
Overall management of network infrastructure in
delivery of electricity to end user
Functional Areas:
• Construction of network infrastructure;
• Installation of meters;
• Inspection, testing, upgrade & maintenance of equipment
• Technical customer connections & disconnections
Purchase electricity from the wholesale market and sell to
end user/ Redistributors
Residential
Traction
Agriculture
Commercial
Redistributors
Prepaid
Mining & Industrial
Functional Areas:
• Sales & Marketing
• Energy Trading
• Customer Service
• Pricing & Tariff Planning
• Call Centre
• Billing
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DISTRIBUTION REGIONS
Cape Town UniCityeKurhuleni MetroNelson Mandela MetroJohannesburg MetroeThekwini MetroTshwane Metro
RED 1
RED 4
RED 2
RED 3
RED 6
RED 5
RED 1 (New Western)RED 2 (New North Western)RED 3 (New Southern)RED 4 (New Central)RED 5 (New Eastern)RED 6 (New Northern)
RED 1 (New Western)RED 2 (New North Western)RED 3 (New Southern)RED 4 (New Central)RED 5 (New Eastern)RED 6 (New Northern)
Metro per RED Boundary Model
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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The Integrated National Electrification Programme (INEP) recommends to
the National Electrification Advisory Committee (NEAC) based on the
following criteria: Focus on backlog
Apply a rural bias
Prioritise on Integrated Sustainable Rural Development Strategy (ISRDS) Nodal Zones
Maximise on available infrastructure
Past Performance
Government priorities and initiatives such as Integrated Infrastructure Development
Regional capacity e.g. resource
NATIONAL ELECTRIFICATION FUND ALLOCATION PRINCIPLES
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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HOUSEHOLD ELECTRIFICATION - HISTORY
SOUTH AFRICACOST PER
CONNECTIONS (R)RURAL
CONNECTIONSURBAN
CONNECTIONSTOTAL
CONNECTIONS
1994 3,176 187,530 66,853 254,383
1995 3,370 226,065 87,114 313,179
1996 3,417 261,438 45,609 307,047
1997 3,159 241,880 43,662 285,542
1998 3,008 198,197 93,155 291,352
1999 2,899 173,625 125,622 299,247
2000 2,647 133,672 122,351 256,023
2001 2,532 105,587 103,948 209,535
2002 2,614 107,718 103,910 211,628
2003 3,384 117,108 58,288 175,396
2004 4,207 126,477 43,893 170,370
GRAND TOTAL 1,879,297 894,405 2,773,702
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ELECTRIFICATION SUCCESS : CUMULATIVE CONNECTIONS
0
500
1000
1500
2000
2500
3000
3500
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
638
952
1280
1545
1836
2136
2392
2601
2813
29883159
Th
ou
san
ds
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PROVINCEuntil1994
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL
E Cape 60,967 46,984 71,157 76,892 74,445 61,787 39,041 28,913 26,235 33,362 29,331 549,114
Free State 37,024 18,984 14,193 23,518 25,099 12,567 5,972 6,734 9,681 6,237 4,542 164,551
Gauteng 119,077 46,973 25,393 14,192 26,354 29,660 26,121 17,615 17,796 10,728 11,579 345,488
KZN 141,063 49,567 43,309 31,529 32,735 23,644 24,605 26,488 36,959 36,174 34,875 480,948
Limpopo 91,485 68,465 62,663 54,476 65,686 69,477 59,970 49,215 58,405 44,183 50,889 674,914
Mpumalanga 93,605 37,947 42,048 34,829 13,114 3,052 24,612 19,473 7,437 5,825 10,868 292,810
N West 65,631 24,665 37,267 41,832 45,210 81,768 59,208 40,357 34,150 24,777 16,879 471,744
N Cape 4,651 6,835 9,024 2,340 2,818 1,313 2,458 4,135 8,214 3,283 4,373 49,444
W Cape 25,791 12,759 1,993 5,934 5,891 15,979 14,036 16,605 12,751 10,827 7,034 129,600
TOTAL 639,294 313,179 307,047 285,542 291,352 299,247 256,023 209,535 211,628 175,396 170,370 3,158,613
PROVINCIAL HOUSEHOLD ELECTRIFICATION HISTORY
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PROVINCIAL SCHOOLS ELECTRIFICATION HISTORY
PROVINCE 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004GRAND TOTAL
E CAPE 105 41 180 95 214 149 75 7 220 390 326 1,802
FREE STATE 92 95 89 41 44 43 31 64 73 42 52 666
GAUTENG 48 75 84 29 146 12 25 6 15 2 3 445
KZN 141 82 172 99 193 86 64 45 215 256 196 1,549
LIMPOPO 192 340 89 140 80 104 111 58 246 195 364 1,919
MPUMALANGA 88 228 176 22 23 11 13 6 24 54 116 761
NORTH WEST 128 67 123 101 39 70 89 131 177 136 104 1,165
N CAPE 64 36 58 6 42 5 1 12 5 10 28 267
W CAPE 29 26 57 16 170 3 2 3 6 9 7 328
TOTAL 887 990 1,028 549 951 483 411 332 981 1,094 1,196 8,902
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PROVINCIAL CLINICS ELECTRIFICATION HISTORY
PROVINCE 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004GRAND TOTAL
E CAPE 4 1 2 28 0 0 1 1 4 3 5 49
FREE STATE 8 4 1 0 0 0 4 0 0 0 0 17
GAUTENG 1 1 0 0 0 0 0 0 0 0 0 2
KZN 5 0 0 0 0 13 0 0 41 0 2 61
LIMPOPO 5 23 5 0 0 0 0 1 0 13 3 50
MPUMALANGA 7 0 0 0 0 0 1 0 0 0 3 11
NORTH WEST 7 0 8 0 1 0 0 4 8 1 4 33
N CAPE 7 1 0 0 0 0 0 3 0 3 2 16
W CAPE 6 7 0 0 0 0 0 1 0 0 0 14
TOTAL 50 37 16 28 1 13 6 10 53 20 19 253
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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SUMMARY OF 2004/5 PLAN
46,094140,455186,639159,982573,241733,223 TOTAL
1,78811,05712,8456,39926,19032,589 Gauteng
9,47515,75925,23431,72968,741100,470 North West
18.89546,09965,08439,981157,466197,447 Limpopo
-388,5008,4627,37915,42422,803 Mpumalanga
6,58016,33022,91034,320121,106155,526 Kwa-Zulu Natal
573,8783,9351,6669,04010,706 Free State
8,05327,67835,73140,360136,032176,392 Eastern Cape
2,1804,7336,9131,41627,58529,001 Northern Cape
-8966,4215,525-3,36811,6578,289 Western Cape
VARIANCEYTD
ACTUAL(Jan 05)
BUDGETYear End
(March ’05)VARIANCE
YTDACTUAL(Jan 05)
BUDGETYear End
(March ’05)PROVINCE
CONNECTIONSCAPEX - R'000
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SUMMARY OF 2004/5 PLAN
Province
Capital R'000 Year to date Expenditure as % of rojection
Year End Projected
Capital R'000
Year to Date Expenditure as % of Year
End Projected
Capital
Connections YTD Connections as % of
YTD Connections
Projection
Year End Projected
Connections
YTD Actual Connections as % of Year
End Projected Connections
YTD Actual YTD Projection
YTD Actual YTD Projection
Western Cape 11,657 7,359 158.4% 8,289 140.6% 6,421 4,200 152.88% 5,525 116.22%
Northern Cape 27,585 28,748 96.0% 29,001 95.1% 4,733 6,081 77.83% 6,913 68.47%
Eastern Cape 136,032 138,095 98.5% 176,333 77.1% 27,678 30,007 92.24% 35,851 77.20%
Free State 9,040 9,579 94.4% 10,706 84.4% 3,878 3,285 118.05% 3,935 98.55%
Kwa-Zulu Natal 121,106 132,293 91.5% 155,526 77.9% 16,330 18,706 87.30% 22,910 71.28%
Mpumalanga 15,424 19,582 78.8% 23,343 66.1% 8,500 6,925 122.74% 8,462 100.45%
Limpopo 157,466 163,260 96.5% 197,447 79.8% 46,099 48,854 94.36% 65,084 70.83%
North West 68,741 84,346 81.5% 100,470 68.4% 15,759 14,961 105.33% 25,234 62.45%
Gauteng 26,190 28,545 91.7% 32,589 80.4% 11,057 10,375 106.57% 12,845 86.08%
Sub Total 573,240 611,806 93.7% 733,703 78.1% 140,455 143,394 97.95% 186,759 75.21%
14% VAT 80,254 85,653 93.7% 102,718 78.1%
Total National Government 653,493 697,459 93.7% 836,421 78.1% 140,455 143,394 97.95% 186,759 75.21%
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ALLOCATION OF ESKOM 2004/5 REGAZETTED FUNDING PER PROVINCE
PROVINCE %
Western Cape 1.13
Northern Cape 3.95
Eastern Cape 24.04
Free State 1.46
KZN 21.20
Mpumalanga 3.18
Limpopo 26.91
North West 13.69
Gauteng 4.44
TOTAL 100.00
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2004/5 PROJECTION
The target for end March 2005 includes all special and roll over projects form the previous financial year.
The year to date performance stands at 75.3% of year end target. This rate of delivery is satisfactory. The biggest backlog on the YTD performance is in the Limpopo
province. Plans are in place to address the shortcomings in the Limpopo
province especially. It is important to note that to complete all the projects in the 2004/5
financial year, it is expected that the programme will be overspent.
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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BACKLOG OVERVIEW OF ESKOM’s AREA OF SUPPLY
PROVINCE
HOUSEHOLD BACKLOG
Nodal Zones (Rural) R’000
TOTAL ELECTRIFICATION 8 YEAR ACCELARATED PLANNING ESTIMATES
March 2005 March 2012Households
R’000Infrastructure
R’000Grand Total
R’000
Western Cape 103,065 120,028 3,684 540,124 0 540,124
Northern Cape 32,131 38,273 21,287 172,228 12,514 184,742
Eastern Cape 561,556 721,462 2,166,794 3,562,220 527,253 4,089,472
FreeState 136,640 158,544 300,551 713,446 0 713,446
KwaZulu Natal 557,572 787,058 1,270,292 3,886,100 558,954 4,445,054
Mpumalanga 94,905 121,238 0 560,726 76,918 637,644
Limpopo 287,308 351,225 491,432 1,624,415 156,007 1,780,422
North West 124,799 148,417 0 667,878 85,929 753,807
Gauteng 432,651 742,133 0 3,664,284 83,426 3,747,710
Grand Total 2,330,627 3,188,378 4,254,040 15,391,421 1,501,001 16,892,421
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ELECTRIFICATION CHALLENGES
Current funding expectations exceeding available funds Universal Access to electricity by 20012/13 - funding Integrated planning involving all stakeholders (Provincial, DME,
Eskom & Municipalities) Aligned policies to facilitate implementation process (e.g. un-
proclaimed, land usages) Harmonization of government initiatives e.g. electrification and
housing programmes Implementation of the Expanded Public Works Programme (EPWP)
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GOING FORWARD
Align municipal requirements with available funding Energy forum to:
confirm prioritised 2005/6 plan confirm the 2006/7 plan based on current electrification levels
Develop universal access master plan (Draft by June 2005, Plan by October 2005) Stakeholder alignment Identify number of un-electrified households per municipality. Assess electrical network capacity requirements Quantify resource requirements (funding & capacity)
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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ASSUMPTIONS
Cash Flow through Municipality Eskom will not challenge the decision The distributor with the money gets the targets Cash flow will follow: National Treasury - Municipality -
Eskom. Who gets the money owns the networks and is
responsible for the O&M
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BENEFITS TO ESKOM
Closer relationships between Regions and Municipalities
Should bulk funding be separated from connection funding, Bulk Infrastructure could be accelerated.
Top-up funding from Municipalities by optimising the funds within the MIG’s.
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RISKS
More decision makers Due to increased number of municipalities acting independently, the following risks
might occur:- Quality Assurance; Public and contractor safety; Sustainability and network performance; Cost increase. Different design standards which will increase maintenance cost and spares keeping
More stakeholder management will be required to get agreement on how to implement the programme
Eskom might be requested to operate and maintain on behalf of the municipalities through service agreement contracts. This is not Eskom Distribution core business to be a service provider
Optimisation of bulk infrastructure will be problematic and a lot of wheeling will take place between network owners
Will in-fills on Eskom networks still be possible
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ESKOM’s PROPOSALS / VIEWS
Separate bulk infrastructure from Household connections Appoint Eskom to co-ordinate Bulk Infrastructure creation Whoever build the household infrastructure must use
National accepted Standards All work done by Eskom will be at cost and cash up-front Eskom will not be able to commit to any targets at
Programme level but will contract at project level only DME to ensure medium to long-term team planning
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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FBE Approach
FBE Approach National Task Team, comprising of DPLG, DME, National Treasury,
Eskom, NER, DPE and SALGA Negotiated One National Contract, and one National Tariff country wide
Criteria As per “indigenous criteria” of the specific Municipality/Metro or Prepaid < 20A circuit breaker or conventional < 150 KWhrs consumption
per month Funds flow directly to Municipality through equitable share fund Eskom enters into Funding Agreements with Municipalities/Metros Eskom claims monthly from Municipalities/Metros as per National Tariff.
Excess claimed from National Government annually
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FUNDING AGREEMENT STATUS
FBE Customers across 235 Municipalities
Funding agreements
Agreements Extensions
Signed 196 1
Not Signed 38 N/A
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MUNICS NOT SIGNED
SOUTHERN REGION Engcobo Makana Mbashe
NORTH WEST Dihlabeng Emthanjeni Ekurhuleni Dipaleseng Phumelela Beaufort West Gariep
CENTRAL Mafikeng Ditsobotlo Zeerust Naledi
WESTERN Stellenbosch Saldanha Bay Matsikama Langerberg Overstrand Laingsberg
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MUNICS NOT SIGNED cont…..
KZN Msinga Dannhauser Edumbe Abaqulusi Ulundi Umhlabuyalingana Jozini Big 5 Munic Umhlatuze KwaDukuza Ingwe
NORTHERN Umjindi Govan Mbeki Emalahleni
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Rolled out non-FBE Compliant Method
SOUTHERN Inxuba Yethemba
NORTH WEST Nala Lesidi Metsimaholo
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FBE STATUS
“Customers approved by municipality” are as per Funding Agreements and received from municipalities.
“Configured customers” are customers that can collect their tokens.
The difference between “Approved Customers” and “Configured Customers” is mainly due to data quality.
Municipalities Customers
FBE roll out
Number of Customers
Customers approved by municipality
Configured
Actual 141 1,885.998 866,445 498,802
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FBE STATUS
Action to increase token collection Install “Auto Vend” software. Software will be installed at all vendors by end of January 2005. This will issue FBE tokens to customer on first buying of token if FBE token was not yet issuedIncreased customer awareness through targeted communication campaignsCustomer education on “Key Change Tokens”Significant increase in vending facilities Research new distribution channels e.g. distribution via SMS messaging
FBE Tokens Collected 2004
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
66,341 93,533 197,228 204,843 204,754 214,882 242,075 261,110 220,759 238,340 226,481 232,034
11% 16% 17% 17% 15% 14% 15% 15% 12% 10% 9% 9%
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GENERIC ISSUES RAISED BY MUNICIPALITIES
No Indigent Register Political repercussions should they give FBE whilst many
are without electricity Awaiting Council Resolution No funds available Municipality not ready to sign, wants to use own method
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FBE – WAY FORWARD
Communication structure between stakeholders: Workshops per District Municipalities Energy forums Agreed accountable persons for both Eskom and Municipalities
All contracts to be signed Resolve all data quality issues for FBE Confirm current configured FBE customers as per Eskom database with
municipalities Propose use of Eskom data base in absence of indigent register Improve turnaround time for configuration on system Increase FBE token collection External Factors
Municipal Budget Limitations FBE to farm workers
Get agreement on invoicing process and details required
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CONTENT
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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BEE PROCUREMENT HISTORY
YEAR BEE SMME BWOTotal
EmpowermentOther Total
2002 R1767,3m Included in BEE R100,4m R1867,7m (53%) R1687,8m R3555,5m
2003 R973,8m R945,5m R266,5m R2185,8m (57%) R1662,0m R3847,8m
2004 R917,9m R903,0m R344,9m R2165,8m (59%) R1537,4m R3703,2m
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CONTENTS
Distribution Business Model Electrification
National Electrification fund allocation principles Electrification 1994 and onwards 2004/5 Plan Status Feedback Challenges Municipal Infrastructure Grant : Eskom Perspective
Free Basic Electricity Black Economic Empowerment General Service Delivery
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ISSUES IMPACTING SERVICE DELIVERY
Ageing networks Standards of networks in takeover areas Illegal connections
Revenue losses Safety of public and staff
Debt management
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GENERAL SERVICE DELIVERY IMPROVEMENTS
Increased Regional capacity to plan and execute services Implemented a new customer service system Investment of R1352m on network strengthening and refurbishment
during 2004 Intensified maintenance and vegetation management Regional Customer Executives appointed to improve service to
municipalities Increasing number of Vending stations Focused training on service delivery improvement Focused action to get all customers legally connected to network
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REVIEW OF VENDING
Deployment criteria: Vending station within 5 kilometers One station for every 3000 customers
Review service at vending point: Checking queuing times at vending stations Determining tolerance for queuing
Review vending process: Upfront vending Expansion of footprint Cell phone vending