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Service Delivery Framework. Update for Portfolio Committee of Public Enterprises By Jacob Maroga. Contents. Background stats on Distribution Customer profile Debt Statistics History of Takeover debt Bulk Debt Individual Debt SDF Background Objectives Principles Progress feedback. - PowerPoint PPT Presentation

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  • Service Delivery Framework Update for Portfolio Committeeof Public EnterprisesBy Jacob Maroga

  • ContentsBackground stats on DistributionCustomer profileDebt StatisticsHistory of Takeover debtBulk DebtIndividual DebtSDFBackgroundObjectivesPrinciplesProgress feedback

  • THE MAP OF ESKOM REGIONS

  • Total number of CustomersLPU- Large Power UsersSPU- Small Power Users

  • The History of Customer NumbersHistorically Eskom was mainly a bulk supplierResidential customers grew from 140k in 1991 to 3,3m in 2003Areas of growthTake-overs of former Black Local AuthoritiesTake-overs of former HomelandsElectrification programme

  • Sales and Revenue by category

    Sheet1

    Sales and Revenue for 2002

    Sales(GWh)Revenue(Rm)%

    Municipalities74,63610,51038%

    Industrial51,3806,63424%

    Mining32,5494,60417%

    Traction3,2585592%

    Residential(Con)4,8831,5276%

    Residential(PPD)3,0051,1084%

    Commercial6,4831,2655%

    Agricultural4,0091,0604%

    International Sales228330%

    Total180,43127,300

    Sheet2

    Sheet3

  • Total Debt (Rm)

  • LPU over 90 days (Rm)

  • LPU over 90 days per Region (Rm)

  • SPU Debtors over 90 days per Region (Rm)

  • SPU Debtors over 90 days (Rm)

  • Local Authority Debt (Rm) over 30 days and R10 000

  • History of Problems with BLAsFinancial collapse of former Black Local Authorities( BLAs) in late 80s Bulk debt problemsTwo processes unfolded to solve BLA debt problemsEskom take-overs of customers and assets Bulk debt agreements with newly formed TLCs

  • Bulk Debt Agreements with Municipalities

    In the early 90s Municipalities owed Eskom close to R800mBulk of debt was due to BLA take overFormer White Municipalities were reluctant to take over former BLAs as a result hereofThis created a problem with the formation of TLCs

  • Bulk Debt Agreements with MunicipalitiesA process chaired by the then Transvaal Provincial Administration was embarked on to find a solutionThe process included various stakeholdersIn 1995 an agreement was reached with Eskom to write back some of the debt in such a way that the culture of payment was restored.

  • Bulk Debt Agreements with MunicipalitiesThe parties agreed that:30th June 1995 be used as a cut off point for the Municipal debtAll amounts owed to Eskom before this date be put in suspense account 1 and accrue no interestAll debt accumulated from 01 July 1995 up to the date when the Bulk Debt Agreement was signed be put into suspense 2 account and accrue interest

  • Bulk Debt Agreements with MunicipalitiesThe current account and suspense 2 accounts be paid on due date without failOn settlement of the suspense 2 account, suspense 1 would be written backShould the municipality default on its current account, both suspense1 & 2 become due and payableThe choice to take advantage of this arrangement depended on the individual municipality.

  • Bulk Debt Agreements with Municipalities

    Sheet1

    BULK DEBT AGREEMENTS

    (REGION) LOCAL AUTHORITYSUSPENSE A/C NO. 1SUSPENSE A/C NO. 2SUSPENSE A/C NO. 3LAST DATE OF PAYMENT

    Breyten TLCR2,652,399.222,099,546.45September 1, 2000

    Clocolan Transitional CouncilR10,434.08August 1, 1998

    Cullinan (Refilwe)R6,117,342.27R886,850.26December 1, 2001

    ErmeloR13,729,698.28December 31, 2001

    Greater JHB Metropolitan CouncilR64,240,892.74October 1, 1997

    Heidelberg TCR13,507,804.80December 15, 1999

    Highveld Ridge TLCR24,250,513.31* R6,308,812.81January 1, 1999

    North East Rand Metropolitan Council [Khayalami Metro]R248,585,470.55R54,789,588.77May 1, 2002

    Ogies TLCR4,749,290.30R15,744,567.01January 1, 1998

    Potchefstroom TLCR23,092,732.56**R3,729,698.28December 1, 1999

    Sasolburg TLCR27,618,789.74April 24, 2000

    Springs City CouncilR152,007,682.32R26,150,597.05June 1, 2002

    WitbankR21,124,015.72May 31, 1998

    TOTALR599,034,666.67R96,684,752.83R886,850.26

    Sheet2

    BULK DEBT AGREEMENTS

    (REGION) LOCAL AUTHORITYTOTAL OWEDSUSPENSE A/C NO. 1SUSPENSE A/C NO. 2SUSPENSE A/C NO. 3FINAL DATE OF PAYMENT

    TOTAL0.00.00.00.0

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  • Results of Bulk Debt AgreementsBDAs have performed very wellDebt owed by municipalities have been normalisedThere are still a few municipalities which are being monitored closelyThe risk on bulk debt is currently manageableMunicipalities, Eskom and communities have benefited from this.

  • Take-over of for BLA Customers

    The failure of BLA to manage supply and pay bulk debtAssets and customers taken over by agreement with communities Debt of BLAs written -off against assetsProjects initiated to normalise infrastructure and service deliveryLimited success wrt to payment levelsBilling, account management and meter reading also not efficient after take-overs.

  • Challenges with take over areasAccount management processesAccuracy of billsFrequency of meter readingsIntegrity of metering equipmentHigh level of account estimationsData integrityQuality of SupplyNeed for refurbishment and upgrade of major installationsHigh level of equipment theft and vandalismIllegal connections

  • Challenges with take over areasPre take-over issuesLow tariffs viz EskomsFlat rateIneffective debt managementSocial issuesAffordabilityLack of respect of service infrastructureTolerance of vandalismPressure groups taking advantage of the situationOther services competing for same income

  • Soweto Payment levels - %

  • Soweto payment levels Jan 01 Dec 01

    Chart1

    0.5

    0.5

    0.7

    0.8

    0.84

    0.59

    0.56

    0.71

    0.53

    0.5

    0.47

    0.4

    Month

    Percentage

    Sheet1

    January50%

    February50%

    March70%

    April80%

    May84%

    June59%

    July56%

    August71%

    September53%

    October50%

    November47%

    December40%

    Sheet2

    Sheet3

  • Payment Levels

  • Background of SDFIncreasing debt in Central Region to R1.4bImplementation of stricter credit management practicesIncrease tensions between Eskom and communitiesCustomer complaints about service delivery issuesNeed for a consultative approach

  • Background to SDFThe formation of the SDF was preceded by a various discussions with wide range stakeholders in the Central Region through:mass meetingsbriefings of various committees of both Local and Provincial governmentroadshows involving the DPE Ministercustomer forums meetings with community leaders and organisations

  • Background (cont..)SDF endorsed on 30 November 2001Minister J Radebe sponsored the SDFStakeholders represented on the SDF:SANCOHuman Rights CommissionCity of Johannesburg CouncilCity PowerDPEDPLGGauteng Provincial GovernmentSedibeng CouncilTshwane MetroVarious residents associations

  • SDF - Building BlocksThe six categories of focus within the Service Delivery Framework are:

    Infrastructure

    Provide electricity

    Build capacity

    Normalise

    Service

    Provide electricity

    Build capacity

    Normalise

    Provide safe environment

    Outstanding Debt

    Address outstanding debt

    Illegal Practices

    Stop illegal practices

    Affordability

    Settle current accounts

    Implement 50 kWh free basic electricity

    Governance

    Strengthen governance structures

    Strengthen community/customer interfaces

  • SDF ObjectivesThe objectives of the SDF are to:Develop a joint undertaking between Eskom, Stakeholders and CustomersDevelop a community-centric solutionAddress service delivery issues, problems and barriersSee solution as a journey instead of a single eventStart with Central Region for later application in similar areas

  • Principles of SDF:Specified debt part of SDF

    Normalisation of operational and social issues

    SDF accountability of all stakeholders

    Payment of current account first priority

    Normal credit management part of SDF

    Addressing of illegal practices

    Joint communication interventions by all stakeholders

    Review of the SDF:

  • Business Operations Prog.120 000 customers pledged support to SDF63 000 faulty meters replacedEstimations reduced from 58% to 20% since Oct 02Extensive communication on various issuesExtensive internal awareness All in all Investment made = R62m

  • Additional Projects 2003

  • Key SDF DevelopmentsImplementation of Debt Relief decisionPayment plan for outstanding debtResumption of Credit ManagementConversion to Prepayment MetersUpdate on Free Basic Electricity

  • Debt ReliefEskom Council approval for write-off of debt incurred before 31 September 2001 in the SDF arrears in Central Region based onhigh level of disputed accounts in the Regionhistory of the take-over areas in Centralfacilitate effective credit management Announcement on 30 April 2003The process will take appr. 3 months to implementThe debt to be written off is R1.391b

  • Payment Plan All debt incurred from 1 May 2002 is all due

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