Dr Willie de Beer, Chief Operations Officer,

EDI Holdings, Gauteng, South Africa

18 - 22 May 2009CTICC, Cape Town,

SOUTH AFRICA

Smart power choicesfor Africa

Presentation Overview

• Maintenance in Context

• Approach to Maintenance

• Invest or Not to Invest

• Critical Success Drivers

• Electricity Distribution Industry (EDI) Reality Check

• Conclusion

Maintenance in Context

Maintenance is not:

•Simply the activities related to the repair of equipment

when they failed or

•A reactive action by default

Maintenance is:

•An integral part of the execution of an integrated asset

management philosophy

•The execution of well planned activities to keep plant

and equipment in a sound and reliable state of

performance

Approach to Maintenance

• It is essential for any asset centric organisation to

have a well defined asset management strategy,

underpinned by a clearly defined maintenance

philosophy and execution strategy

• Various maintenance programs are available, amongst

others:

– Reactive Maintenance

– Preventative Maintenance

– Predictive Maintenance

– Reliability Centered Maintenance

Invest or Not to Invest

• Maintenance is measurable

• Effective Maintenance will improve plant performance

and reliability

• Effective maintenance program will contribute to

resource optimisation

• Good plant performance will contribute to customer

satisfaction

• Effective maintenance will enhance the business

sustainability

Critical Success Drivers …1

Best in class organisations look well beyond just

compliance from a maintenance perspective:

• Maintenance costs as % of gross margin: 4% to 5%

• Plant/equipment availability: SAIDI = 53 min

• ( > 99%)

• Customer satisfaction: > 80%

• Backlog compliance > 95%

• Work allocation analysis 80/20 rule or better

Preventative Maintenance

• Overall Equipment Effectiveness >90%

• Spare parts availability > 90%

Critical Success Drivers …2

• Expected function identification of equipment

• System component classification

• Failure mode and effect analysis

• Defined operating regime and protocol

• Effective system design

• Correct equipment procurement

• Correct installation

• Condition based monitoring

• Root cause failure analysis

• Regular process and practice review

• Competent maintenance practitioners

EDI Reality Check …1

• Asset management strategies/plans and appropriate

systems do not exist across the industry, which

supports the November 2003 NERSA survey that only

2% of their surveyed respondents were able to

indicate what corrective actions they were taking

while 45% failed to even identify areas requiring

corrective action

• Municipalities and Eskom are not providing for

sufficient investment in existing and planned

distribution networks which resulted in an estimated

backlog of R27.4 billion

EDI Reality Check …2• Demand growth exceeds the loading capacity of the

networks which will amongst others pose a significant

risk to the effective introduction of Energy Efficiency

Strategies.

• While the industry suffers from a lack of reliable data

and appropriate measurement, all indications are that

network reliability is decreasing which is evident in the

increase in the number of outages due to poor

performing networks and incidents related to electric

cable and associated equipment theft

• NERSA survey of 110 electricity distribution entities

indicated that only 33% of these entities had sufficient

competent staff

Entity Total Backlog Maintenance RefurbishmentShort term

StrengtheningRED ONE R 3,851,578,245 R 385,157,825 R 1,155,473,474 R 2,310,946,947RED TWO R 5,132,373,764 R 513,237,376 R 1,539,712,129 R 3,079,424,259RED THREE R 2,186,296,025 R 218,629,602 R 655,888,807 R 1,311,777,615RED FOUR R 6,413,148,398 R 641,314,840 R 1,923,944,519 R 3,847,889,039RED FIVE R 4,158,350,649 R 415,835,065 R 1,247,505,195 R 2,495,010,389RED SIX R 5,627,399,914 R 562,739,991 R 1,688,219,974 R 3,376,439,948

Total R 27,369,146,995 R 2,736,914,699 R 8,210,744,098 R 16,421,488,197

EDI Reality Check …2Summary of EDI Backlog

Conclusion …1

• Maintenance is not a “coincidence”

• To ensure business sustainability and customer

satisfaction, all asset centric organizations must have a

well integrated asset management strategy

• You might get away with insufficient or ineffective

maintenance, refurbishment and strengthening in the

short term; however it is guaranteed, it will catch up

with you and you will pay the price

Conclusion …2

• Not to effectively invest in maintenance,

refurbishment and strengthening is a well defined

recipe for business disaster

• If you do not understand the fundamentals of asset

management, get out of an asset centric business or

find competent people who can carry you, before you

are embarrassed

Significant Challenges ?