Chris Gibbons:
South Africa?s power giant Eskom has released its annual results. They come at the end of a year when Eskom took major strain as a result of a damaged generator at its nuclear facility Koeberg in the Western Cape and that was a process which also revealed a looming shortage of power in the country forecasts and plans laid ten years ago outstripped by the country?s economic growth. I spoke earlier on today to Eskom?s CEO, Thulani Gcabashe, and put it to him that the problems in the Western Cape had come through in the numbers.

Thulani Gcabashe:
Yes they have, largely in our technical performance numbers where we experienced a lot of capability of units generally because Koeberg was not available. But the financial results are reasonably good. We posted a profit of R4.6-billion which is less on last year, but is reasonable in the circumstances.

Chris Gibbons:
That is an operating profit, that?s an attributable profit, so Thulani am I looking ? sorry go on.

Thulani Gcabashe:
That would be the bottom line. That profit after adjustments and tax.

Chris Gibbons:
I see the pre-tax profit down to R6.8-billion from R7.6-billion and it is a 15 month period as well, why is that?

Thulani Gcabashe:
Last year, we changed our financial year, to go from a January to December to line up with the governments own financial year. So we had to have a 15 month year in order to get in line with 1 April ?06. So for the first time we are doing 12 months, 1 April to 31 March, which makes the comparison a little awkward.

Chris Gibbons:
This is a business where lead times are very long, where you can be caught on the wrong foot if the economy moves against you. How do you look going forward?

Thulani Gcabashe:
We have plans and we recently accelerated those plans. We are currently looking at a five-year plan in which we will spend R97-billion and largely in generation of about seven percent of that will be generation. But we are looking right across the valuation chain and implementing projects in the major transmission lines, a second major line to run from Mpumulanga down to Cape, as well as additional generation down in the Cape, but also base load generation up in the coalfields, up in the north of the country, so it is quite a comprehensive programme.

Just in terms of that, we announced four projects this morning, totalling R41-billion, which were recently approved by our board. So we have a five-year plan that is there and we have also had these first major projects approved.

Chris Gibbons:
Can you give me an idea of what those projects are?

Thulani Gcabashe:
Yes, one of them is a base load coal fired station, that is the one that is up in the north of the country for R26-billion and then a pump storage scheme will be built in the Drakensberg for R9-billion and another transmission line down to the Cape, R6-billion.

Chris Gibbons:
Now, by your own admission of the results presentation this morning, you said you have marginal spare capacity, you have those logistical challenges in the grid, but it is probably fair to say that in the past couple of months, your team seems to have been managing the problem very much better. Do you feel that your processes have improved?

Thulani Gcabashe:
Most certainly, we have learned from what we have experienced and there have been very good operational management of the system, which is very tight and still is tight. As you are aware, the second unit of Koeberg is not online yet, the refuelling will be completed in the next two weeks or so and we hope to have it online by the end of July. So we are still very tight, but it by managing that system I think our people have been excellent. Of course, the demand side management programme has had a tremendous effect and that really illustrates and we appreciate the co-operation that we have had from the customers in that area.

Chris Gibbons:
If you take the problems of Koeberg out of the numbers, what do you think the picture would look like?

Thulani Gcabashe:
It would not have been substantially different from a financial perspective. The other thing that impacted financially was the low growth in sales and that is as a result of a winter that was much warmer last year. You may recall that in fact on average, it was a few degrees higher than a normal winter. We also had gold mines shutting down because of the strong rand at the time so that had tended to affect the revenue by bringing it down substantially from the previous year; R35-billion as opposed to R41-billion the previous year.

Chris Gibbons:
The voice there of Thulani Gcabashe the CEO of Eskom talking with me a little bit earlier on today.