DEPARTMENT OF ENERGY PPC PRESENTATION ON THE DOE STRATEGIC PLAN AND BUDGET VOTE Mr L Mulaudzi Acting Chief Operating Officer 16 April 2013

DEPARTMENT OF ENERGY

PPC PRESENTATION ON THE DOE STRATEGIC PLAN AND BUDGET VOTE

Mr L MulaudziActing Chief Operating Officer

16 April 2013

2

STRATEGIC PLAN

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BACKGROUND – 2009/10

• Department of Energy was established in May 2009

•Strategic Plan should cover a period of at least five years

•Ideally from the first planning cycle following an election

•DoE published Strategic Plan for 2010/11 – 2014/15

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BACKGROUND – 2010/11

•Government adopted the Outcomes Based Approach in 2010

•Minister signed Delivery Agreements for Outcomes 2, 6 and 10

•DoE adapted Strategic Plan to the Outcomes Based Approach

•DoE published new Strategic Plan for 2011/12 – 2015/16

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BACKGROUND –– 2011/12 (1)

•Treasury published Framework for Strategic Plans and Annual Performance Plans.

•Framework determines a generic format for Strategic Plans and Annual Performance Plans.

•Requirements of Framework indicates need to align Strategic Plan with Framework

•Minister also signed Delivery Agreements for Outcomes 4 and 8.

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•Analysis of Agreements indicates no need to expand Goals; and need to illustrate alignment of Goals with Agreements.

•DoE implemented Monitoring and Evaluation System. M&E foundational documents created (DOE M&E Framework, M&E Policies and Procedures, Quarterly reporting templates, and Improvement Plan templates

(2012/13).

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•A Risk Management structure, which includes a fraud prevention strategy, in line with section 38 of the PFMA is in place to ensure that an effective and efficient risk management system and good governance is

maintained, monitored and evaluated on a regular basis.

8

BACKGROUND – 2011/12 (4)

•DoE reviewed Strategic Plan to align Strategic Plan with Framework, illustrate alignment of Goals with Agreements and Provide for additional Outputs.

•DoE published Revised Strategic Plan for 2011/12 – 2015/16 and Annual Performance Plan for 2012/13.

9


•Cabinet adopted an infrastructure plan consisting of 18 Strategic Integrated Projects (SIPs) of which the Minister of Energy chairs one of the projects; co-chairs two projects;

participates in 10 projects; and has observer status in five projects.

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•Analysis of SIP’s indicates no need to expand Goals; and need to illustrate DoE’s contribution to SIP’s.

•Minister also signed Delivery Agreements for Outcomes 7 and 9.

•Analysis of Agreements indicates no need to expand Goals; and need to illustrate alignment of Goals with Agreements

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•DoE Budget Programmes aligned to Organisational Structure allows for alignment of Strategic Plan with Budget Structure; and ENE.

•AG’s Management letter raise issues on alignment of Strategic Plan with Budget Structure, SMART’ness of Performance Indicators and Targets.

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•Challenges faced with compilation of Business Plans; and quarterly and monthly Reporting (timeliness and quality)

– indicates the need to review Performance Indicators and Targets

•DoE reviewed Strategic Plan to illustrate alignment of Goals with Agreements; and align Strategic Plan with Budget Structure and ENE.

13


•DoE published Annual Performance Plan for 2012/13 with an appendix to effect the following amendments to the Revised Strategic Plan for 2011/12

– 2015/16, i.e, table reflecting the alignment of Goals with Delivery Agreements, Strategic Outcomes Oriented Goals, and Strategic Objectives

STRATEGIC OUTCOMES ORIENTED GOALS

1. Security of Supply – To ensure that energy

supply is secure and demand is well managed.

2. Infrastructure – To facilitate an efficient,

competitive and responsive energy infrastructure

network.

3. Regulation and Competition – To ensure that

there is improved energy regulation and

competition.


4. Universal Access and Transformation – To

ensure that there is an efficient and diverse energy

mix for universal access within a transformed

energy sector.

5. Environmental Assets – To ensure that

environmental assets and natural resources

protected and continually enhanced by cleaner

energy technologies.


6. Climate Change – To implement policies that

adapt to and mitigate the effects of climate

change.

7. Corporate Governance – To implement good

corporate governance for effective and efficient

service delivery.

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DELIVERY AGREEMENTS PURSUED BY GOALS (1)OUTCOME GOAL DEPARTMENTAL CONTRIBUTION

2 – A long and

healthy life for

all South

Africans

4 - Universal

Access and

Transformation

Electrification of clinics & health centres through

INEP; introduction of more affordable & cleaner

source of energy; Liquefied Petroleum Gas (LPG) for

household heating & cooking needs, Free Basic

Electricity (FBE), Inclining Block Tariffs (IBT) & Solar

Water Heaters (SWH).

4 – Decent

employment

through

inclusive

economic

growth.

1 - Security of

Supply

3 - Regulation

and Competition

Energy security project implementation & local

industrialisation of the main value chains to sustain

economic growth and job creation.

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6 – An efficient,

competitive and

responsive

economic

infrastructure

network.

2 –

Infrastructure

Ensure reliable generation, distribution &

transmission of electricity, implement IPPs

Programme, address the backlog challenges in the

maintenance of the electricity distribution

infrastructure; the building of the NMPP between

Durban & Johannesburg to ensure a reliable &

sustainable supply of liquid fuels inland.

7 – Vibrant,

equitable and

sustainable rural

communities

and food

security for all

4 - Universal

Access and

Transformation

Electrification of rural households & building of bulk

infrastructure through INEP concentrating on 23

district municipalities that have been identified by the

Department of Cooperative Governance & Traditional

Affairs (CoGTA) and the Department of Rural

Development & Land Reform (DRDLR) as the areas

in the country that have the most deprived

municipalities.

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8 – Sustainable

human

settlement and

improved quality

of household

life.

4 - Universal

Access and

Transformation

Contribute to support households & business via the

Electrification Programme & the job opportunities

presented by the Electrification Programme, the

Integrated Energy Centres (IEC’s), the installation &

maintenance of solar systems & SWH.

9: A responsive,

accountable,

effective &

efficient local

government

system.

4 - Universal

Access and

Transformation

Electrification of households through INEP &

increased service delivery by all municipalities.

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10–Environmental

assets and

natural resources

that are well

protected and

continually

enhanced.

5 - Environmental

Assets

6 - Climate Change

Development & implementation of policies to

reduce greenhouse gas emissions & climate

change impacts, & improve air/atmospheric

quality.

12-An efficient,

effective and

development

orientated public

service and an

empowered, fair

and inclusive

citizenship

7-Corporate Services To implement good corporate governance for

effective and efficient service delivery.

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STRATEGIC INTEGRATED PROJECTS (SIP)SIP DEPARTMENTAL CONTRIBUTION

6 Integrated Municipal

Infrastructure project

(CHAIR)

The Department is the lead Ministry for this project. The

Department has appointed DBSA as the implementing

agent responsible for developing the Business Plan and for

the programme management of the SIP. A Business Plan

has been submitted to the Presidential Infrastructure

Coordinating Commission (PICC) for review.

8 Green energy in

support of the South

African economy

(CO-CHAIR)

This SIP is co-chaired by Minister Patel. IDC has just been

appointed as the implementing agent responsible for

developing the Business Plan and for the programme

management of the SIP.

10 Electricity

transmission and

distribution for all

(CO-CHAIR)

This SIP is co-chaired by Minister Gigaba. Eskom has been

appointed as the implementing agent responsible for

developing the Business Plan and for the programme

management of the SIP.

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STRATEGIC INTEGRATED PROJECTSSIP

1 Unblocking the Northern Mineral Belt with the Waterberg as the catalyst

2 Durban-Free State-Gauteng logistics and industrial corridor

3 South Eastern node and corridor development

4 Unlocking the economic opportunities in North West Province

5 Saldanha-Northern Cape development corridor

7 Integrated urban space and public transport programme

9 Electricity generation to support socio-economic development

14 Higher education infrastructure

17 Regional integration for African cooperation and development

18 Water and Sanitation Infrastructure Master Plan

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STRATEGIC OBJECTIVES – PROGRAMME 1STRATEGIC OBJECTIVE OBJECTIVE STATEMENT

1.1 Finance and

Supply Chain

Management

To provide financial management, accounting,

supply chain and asset management services to the

Department.

1.2 Corporate Support To provide corporate support to the Department.

1.3 Governance and

Compliance

To ensure good corporate governance and

compliance by the Department and State owned

entities.

1.4 International

Coordination

To support the Minister, Deputy Minister, Director-

General, Department and Energy Sector with their

international engagements and obligations.

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STRATEGIC OBJECTIVES – PROGRAMME 2 (1)STRATEGIC OBJECTIVE OBJECTIVE STATEMENT

2.1 Demand

Management

Improve energy security by regulating demand and

introducing a diversified mix of energy generation

technologies.

2.2 Competition Improve energy security by improving efficiency

through competition in the energy sector.

2.3 Energy Policy Improve energy security by developing key

indicators to effectively monitor the energy sector

policies on an on-going basis.

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2.4 Energy Planning Improve energy security by planning interventions

to expand energy infrastructure by developing a

policy framework for the integrated energy plan, the

integrated resource plan, the liquid fuels

infrastructure roadmap, the transmission

development plan and the major distribution

infrastructure plan over the medium term.

2.5 Energy Publications Improve energy security by publishing an annual

energy statistics report to facilitate information

based decision making.

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2.6 Distribution Asset

Management Plan

Improve energy security by address current and

envisaged energy supply and distribution

constraints by developing the approach to

distribution asset management plan for the

rehabilitation of critical municipal electricity

distribution infrastructure.

2.7 Liquid Fuels

Infrastructure Plan

Improve energy security by develop and implement

the liquid fuels 20-year infrastructure plan over the

medium term to improve liquid fuels energy

security.

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STRATEGIC OBJECTIVES – PROGRAMME 3(1)STRATEGIC OBJECTIVE OBJECTIVE STATEMENT

3.1 Regulatory

Accounting System

Strengthen the regulatory framework in the

petroleum products industry by implementing the

regulatory accounting system to have a

transparent reimbursement framework for

rewarding investment in the liquid fuels sector by

2013/14.

3.2 Sector

Transformation

Facilitate the improved participation of historically

disadvantaged individuals in the petroleum sector

by awarding 25 per cent of all petroleum license

applications to historically disadvantaged

individuals in each year of the medium term.

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STRATEGIC OBJECTIVES – PROGRAMME 3(2)STRATEGIC OBJECTIVE OBJECTIVE STATEMENT

3.3 Compliance

Monitoring and

Enforcement

Ensure compliance with the Liquid Fuels Charter

and technical, legal and commercial licensing

conditions.

3.4 Petroleum Licensing Regulate the Petroleum Industry (manufacturing,

wholesaling & retailing) through License

adjudication.

3.5 Fuel Price Regulation Regulate fuel prices.

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4.1 Universal Access Manage, coordinate, monitor and report on

programmes and projects to promote/enhance

universal access to energy.

4.2 Electricity Distribution

Asset Management

Improve the quality of electricity distribution by

addressing the rehabilitation of municipal

electricity distribution assets through on-going

monitoring and evaluation of distribution asset

management.

4.3 Project Management Ensure the efficient management of projects by

enhancing the application of project management

business principles to assist programme and

project managers on an on-going basis.

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4.4 Electricity

Infrastructure/Industry

Transformation

Coordinate, monitor and report on the

implementation of programmes and projects

focused on the development, improvement and

transformation of the energy generation,

refinement, transmission and distribution industry

and infrastructure.

4.5 Community Upliftment Identify, implement, manage and coordinate

programmes/projects aimed at the

mainstreaming/upliftment/empowerment of

disadvantaged/vulnerable groups and increase

public awareness on energy issues.

4.6 Regional Information,

Inspections and

Liaison

Obtaining information relevant to planning, do

physical inspections on the execution of Access to

Energy projects and liaise between beneficiaries

of projects, service providers and the Department.

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5.1 Nuclear Security Regulate the security of nuclear material and

facilities by adhering to nuclear security

obligations, developing and publishing appropriate

regulations by 2013/14.

5.2 Nuclear Control and

Accounting

Strengthen the control of and accounting for

nuclear materials and related equipment by

enforcing the relevant legislation, regulations and

facilitating the installation of monitoring equipment

at identified ports of entry in conjunction with the

South African Revenue Service by 2013/14.

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5.3 Radioactive Waste

Management

Promote the safe management and disposal of

radioactive waste by establishing and ensuring the

full operation of the National Radioactive Waste

Disposal Institute, as provided for in the radioactive

waste management policy and strategy, by

2014/15.

5.4 Nuclear Energy

Expansion/Infrastruct

ure Development

To develop and ensure the implementation of a

framework for nuclear energy

expansion/infrastructure development.

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6.1

Climate Change and

Environment

Manage climate change and environmental matters

through regulations and monitoring to mitigate the

risk of environmental impact by -

- publishing strategies and plans by 2014/15; and

- developing a regulatory framework that supports

carbon capture and storage test injection by 2016.

34


6.2

Energy Efficiency and

Demand Management

Promote and facilitate energy efficiency and

demand management by:

- monitoring and reporting on energy savings on an

ongoing basis;

- coordinating, monitoring and reporting on the

progress and impact of energy efficiency and

demand management strategies by 2015; and

- reviewing the energy efficiency tax incentive and

energy conservation schemes by 2014/15.

35


6.3 Energy Management

Plan

Improve demand management by facilitating the

development of an energy management plan by

2014/15.

6.4

Renewable Energy

Ensure the integration of renewable energy into the

mainstream energy supply of South Africa by

planning and coordinating initiatives and

interventions focused on the development and

improvement of the renewable energy market

through:

- improving the generation capacity of renewable

energy to at least 42 per cent in 2030;

36


6.4

Renewable Energy

- facilitating approval of the Renewable Energy

White Paper by 2013/14;

- implementing awareness campaigns from 2013/14

onwards; and

-installing 1 million solar water heating units by

2015/16.

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SELECTED PERFORMANCE INDICATORS (1)GOAL INDICATOR PLANNED PERFORMANCE

1 - Security of

Supply

Megawatt reduction in

electricity demand per year.

100 MW reduction in

electricity demand.

Number of terawatts per hour of

energy savings realised in

energy efficiency and demand

side management and verified

from energy efficiency and

demand side management

projects.

12 TWh energy savings

realised in energy efficiency

and demand side

management and verified

from energy efficiency and

demand side management

projects.

38


2 –

Infrastructure

Number of new bulk

substations built per year.

6 new bulk substations built.

Number of additional

substations upgraded per year

10 additional substations

upgraded.

Kilometres of new medium

voltage power lines constructed

per year.

350 kilometers of new

medium voltage power lines

constructed.

Number of municipalities in

which the refurbishment of key

electrical networks will take

place per year.

9 municipalities in which the

refurbishment of key

electrical networks took

place.

39


3 - Regulation

and

Competition

Number of new petroleum retail

site inspections per year.

1 500 new petroleum retail

site inspections executed.

Number of additional petroleum

license applications approved

per year.

1 000 additional petroleum

license applications

approved.

4 - Universal

Access and

Transformation

Number of new operational

integrated energy centres

established per year.

2 additional IEC’s

established.

Number of additional

households electrified per year.

200 000 additional

households electrified.

Number of non-grid

connections per year.

15 000 additional household

connected through non-grid

technologies.

40


Value of expenditure on black

economic empowerment and

small, medium and micro

enterprises per year.

R 933 million of expenditure

with black economic

empowerment and small,

medium and micro

enterprises.

5 -

Environmental

Assets

6 - Climate

Change

Number of solar water heating

units installed in residential and

commercial sectors per year.

129 679 solar water heating

units installed in residential

and commercial sectors.

Number of new renewable

energy projects subsidised per

year.

3 new renewable energy

projects subsidized.

7 - Corporate

Governance

No performance indicators

selected.

Not applicable.

41

DEPARTMENT OF ENERGY

2013/14 BUDGET VOTE THEME


42

Over the medium term, and in 2013/14 DoE’s

focus will remain on the following key areas:

•Implementation of the Integrated Resource Plan

(IRP2010) and in response to the NDP DoE will

ensure that SA has an adequate supply of

electricity and liquid fuels by 2025 and that 98%

of the population has access to grid and non-grid

electricity.


43

• Gas and other renewable resources will make

out 20 000 MW of the additional 45 000 MW

needed by 2030.

• With the introduction of IPPs, the proposed

ISMO Act will make a significant contribution

ensuring security of electricity supply as

envisaged by IRP 2010.


44

• In line with DoE’s previous years commitments

(APP) we have finalised the data collections

and energy modelling which are essentials

elements of developing the Integrated Energy

Plan (IEP).

• The Department will table the draft IEP Report

in Cabinet at the end of 1st quarter of 2013/14

FY.


45

• Once the approval of the latter is obtained DoE

will release the document for public comments

and consultation during the first three quarters of

the financial year.

• The department will enhance the draft IEP by

incorporating all comments before tabling the final

IEP in Cabinet for adoption.


46

• The second window of the RE-IPPP reaches

financial close at the end of this month and it

represents approximately 1200 MW renewable

energy capacity, an estimated investment value of

R28 billion.


47

• Window three (totaling about 1000 MW) and last

window of our August 2011 renewable energy

allocation of 3600 MW is now open for bidding,

and is expected to close in August of 2013.

This will include a concentrating solar power

allocation.


48

• DoE will continue to work with all stakeholder

and data providers to enhance and improve

the quality of statistics that we publish.

• The focus over the medium term will be on

expanding the Electrification Programme

(INEP) to increase the number of household

connections to the grid.


49

• DoE will promote Energy Efficiency and

Conservation through the expansion of the

Solar Water Geyser Programme.

• The focus will be to increase access to

modern energy sources implemented by

Eskom and municipalities to reach a target of

electrifying 645 000 households by 2015/16.


50

• The department will also provide support to Local Government and Municipalities to address challenges experienced in the provision of electricity.

• The National Multi-Purpose Pipeline (NMPP) will be completed in this medium term by Transnet for the supply of petroleum products to the inland markets.


51

• The department will conduct petroleum retail

site inspections to ensure compliance with

policy and legislation.

• DoE will advance energy efficiency in the

country by coordinating initiatives and

interventions focused on the improvement of

the energy efficiency markets.


52

• With regard to State-Owned Entities, the Central

Energy Fund (CEF) will undertake the group re-

organisation which commenced in 2011/12 FY.

• The re-organisation plan for 2013/14 includes the

filling of all Senior Management vacancies and

finalisation of the iGas incorporation into PetroSA

and the African Exploration hiving-off.


53

• The CEF (SOC) will complete the solar park

feasibility studies and conduct investigations

for the development of new projects in the

clean and renewable energy space.

• PetroSA’s projects to support and extent the

Gas to Liquid refinery will be on stream during

2013/14 FY.


54

• The technical studies for the Liquified Natural Gas

(LNG) Import Projects are expected to be completed

during the FY.

• The feasibility and front end engineering and design

studies for the Mthombo Project are expected to be

advanced during the year.

• SANEDI will continue to ensure that effective internal

systems and process are implemented to ensure

energy efficiency in the South African economy.


55

• SANEDI will also finalise the Solar Road Map

processes in collaboration with International

Energy Agency (IEA), DOE, Department of

Science and Technology; and the Technology

Innovation Agency (TIA).

• The SANEDI will complete all its current Carbon

Capture Storage (CCS) project, i.e. Zululand

Project, the COCATE Transport Project.


56

• The Shale Gas investigation work plan will began

to be implemented by SANEDI during the 2013/14

FY.

• The NECSA will continue with its programme to

establish Low enriched Uranium fuel and target

plate fabrication capabilities.

• Investigations for the replacement of the SAFARI-

1 is expected to continue during the financial year.


57

• NERSA will over the medium term focus on

improving oversight by conducting compliance

audits.

• To rectify the existing electricity maintenance

backlogs and support completion, the regulator

will ensure effective economic regulation by

developing appropriate regulatory frameworks.


58

• The EDIH has finally been closed down. All

outstanding liabilities were settled as at 28

February 2013 and the close out report is being

finalised . The company will be deregistered once

the final audit report of financial accounts has

been received from the Auditor General.


59

• Furthermore, NNR will continue to establish the

emergency control centres, environmental sample

testing facilities, Koeberg Nuclear Power Station

and new steam generator project.

• The National Radioactive Waste Disposal Institute

(NRWDI) will be established in 2013/14 with a

mandate to fulfil the institutional obligation of

managing the Disposal of Radioactive Waste on a

national scale.


60

• Minister and DG have quarterly review meetings

with SOE Executives (Chairpersons & CEOs) as a

strategy to monitor and enhance the performance

of SOEs. These meetings focus on cross cutting

strategic issues to enable knowledge sharing

between the entities. This also provides the

platform for the Minister and DG to assist the

SOEs to address any challenges they experience

in implementing their mandates.


61

• All group SOEs are directed to constitute

Chairpersons and CEO’s fora to monitor the

performance of subsidiaries

• All Board members and SOEs senior

management are vetted and are required to

submit annual declarations of financial interests

• SOEs perform Annual Board performance

appraisals with the help of external experts.


62

• Our strategic focus regarding international

relations will be the promotion of energy

security, securing of resources for human and

technical support in the energy sector,

capacity building in scarce and critical skills,

technology transfer, industrialisation and job

creation.


63

• DoE will embark on the number of international

engagements to find solutions to energy challenges

and to explore funding opportunities that could be

made available to South African investors in the

energy sector.

• DoE's engagement and participation in climate change

will continue to direct and advocate for South Africa’s

role in the SADC and the African Continent at large

with regard to issues of energy.


64

• Among the on-going endeavours in the continent and

elsewhere in the world, DoE will be implementing a

Memorandum of Understanding (MOU) on the Grand

Inga Project.

• The implementation of the agreement pertaining to the

new refinery projects and the implementation agreement

on financial and technical support offered by Norway,

European Union and BRICS countries to promote clean

energy technologies and energy access will continue.


65

• Our dialogue with partners will continue in the

continent to help Africa to strategize on how

best to raise, mobilise and administer funding

to deliver energy access to those in need.

• DoE will continue to engage with its counter-

parts in the SADC to strengthen the Southern

African power pool.


66

• DoE will also play a leading role in the

organisations and platforms such as the Clean

Energy Ministerial (CEM), the International

Renewable Energy Agency Forum and the

International Energy Forum.

• In order to achieve our developmental goal, DoE

will also continue to focus on the internal capacity,

enabling us to carry our mandate.


67

• All funded 560 positions were filled by

September 2012.

• DoE will also commence operations based on

the approved organisational structure in this

calendar year.

68

Thank you

Documents

DEPARTMENT OF ENERGY PPC PRESENTATION ON THE DOE STRATEGIC PLAN AND BUDGET VOTE Mr L Mulaudzi Acting Chief Operating Officer 16 April 2013