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PLASTICS CONVERTORS ASSOCIATION Presentation to NERSA ESKOM REVENUE APPLICATION: MULTI YEAR PRICE DETERMINATION . Polokw

Thanks very much Nonhlanhla, 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

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PLASTICS CONVERTORS ASSOCIATION Presentation to NERSA ESKOM REVENUE APPLICATION: MULTI YEAR PRICE DETERMINATION . Polokw

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  1. Thanks very much Nonhlanhla, 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 ­

  2. 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

  3. The Plastics Sector. Contribution to national economy per year = R32 billion. Share of National GDP =5-6% Users of electrical energy = 2nd (after Aluminium) Annual conversion of raw materials =1.2 m tons. Number of employees = 40 000 Packaging sector = 50% of sales ­ ESKOM REVENUE APPLICATION: MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010

  4. 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

  5. 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 ­

  6. 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 ­

  7. 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 ­

  8. Industry average as %age of sales =3% • Eskom Challenge. • Impact of proposed increases. • Industry average as %age of sales =3% ­ ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010

  9. 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

  10. 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% ­ ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010

  11. 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

  12. 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 ­

  13. 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 ­

  14. 35% Hertz !! Thank you ESKOM REVENUE APPLICATION:MULTI YEAR PRICE DETERMINATION.Polokwane 12th Jan 2010 ­

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