Transcript PCA ESKOM REVENUE (animations)

I have attached to this mail my presentation and a copy of the letter sent in advance.
To make arrangements please contact Ms Edith Mkhabela on 012 401 4756 .
Kind regards,
Mike
PLASTICS CONVERTORS
ASSOCIATION
Presentation to NERSA
ESKOM REVENUE APPLICATION: MULTI
YEAR PRICE DETERMINATION.
Polokwane 12th Jan 2010
Presenter CV.
Mike Bullock
Part time employee PCA 2009- now.
National Diploma Plastics Technology
University of East London UK 1974
.
Technical, sales and production positions
Manufacturing, training and trading experience.
MD Metal Box CA Plastics Div 1976-82.
MD Aries Plastics 1982-86.
CEO Plastics Industry Training Board 1990-2000
CEO Plastics Convertors Association 2000- 2009
ESKOM REVENUE APPLICATION: MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
The Plastics Sector.
Contribution to national
economy per year
Share of National GDP
Users of electrical energy
(after Aluminium)
Annual conversion of
raw materials
Number of employees
Packaging sector
= R32 billion.
=5-6%
= 2nd
=1.2 m tons.
= 40 000
= 50% of sales
ESKOM REVENUE APPLICATION: MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
The Plastics Industry
Expects
An uninterrupted supply of
Good quality electricity
At a competitive price
ESKOM REVENUE APPLICATION: MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Pressures on the Plastics
Industry.
Raw material price increases based on
world oil prices
.
Wage increase demands for labour
above inflation rate.
World recession
.
Limited benefit from FIFA World Cup and
Gautrain.
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Pressures on the Plastics
Industry (cont)
Plastics becoming uncompetitive
compared with metal and board.
Industry already at high levels of
efficiency so little opportunity to improve.
Packaging sector customers unable to
accept above inflation price increases.
Eskom price increases.
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Actions taken by the plastics
Industry.
Raw materials.
Reduction of import duties from 10%
to 0% over 3 years.
Cost of labour.
Negotiating within the MEIBC for a
Special Plastics Wage Table @ 65%.
Cost of Energy
Challenging Eskom’s price increases.
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Industry average as %age of sales =3%
Eskom Challenge.
Impact of proposed increases.
Industry average as %age of sales =3%
Year
Increase Rev ave
%age
Adjust Recovery
for
from
Inflation margin
8%
3.24%
0.76%
Year 1
35%
4%
Year 2
35%
5.5%
3.5%
2.0%
Year 3
35%
7.4%
3.8%
3.6%
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Industry average as %age of sales =3%
The Plastics Recycling Sector.
The industry recycles about 175 000 tons per
year of plastics.(14.5%)
It uses about 3 times the amount of energy
for transportation, washing, drying and
processing when compared with normal
plastics processing.
Run by entrepreneurs with no subsidies.
Creates over 3000 fulltime and about 15 000
informal jobs.
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Industry average as %age of sales =3%
Eskom Challenge.
Impact of proposed increases on the
Plastics Recycling sector..
Industry average as %age of sales =11%
Year
Increase Rev ave
%age
Year 1
35%
15%
Adjust
for
Inflation
8%
12%
Recovery
from
margin
Year 2
35%
20%
13%
7%
Year 3
35%
27%
14%
13%
3%
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Industry average as %age of sales =3%
Eskom Challenge.
Consequences of proposed increases on
the Plastics Recycling sector.
Energy to the sector would have to be
subsidised.
Companies would close down.
Serious environmental impact
Increase pressure on landfill.
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Eskom Challenge (cont)
Supply policy ought to be reviewed,
direct or through Municipality.
Introduce a competitive environment
because now we are being asked to fund
inefficiencies.
Generating capacity on mines must be
more competitive than shipping in coal.
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
Conclusion
Plastics will not be able to absorb the
proposed increases without serious loss of
markets and jobs.
The National economy cannot afford
bleeding in a sector contributing 6% to the
GDP.
Eskom must shoulder its responsibilities
in a responsible manner.
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010
35%
Hertz !!
Thank you
ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010