Presentation to the Select Committee on Economic

Development

Department of Energy’s 2012/13 Annual Report

Ms. N. Magubane – Director General13 November 2013

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PRESENTATION LAYOUT

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Introduction Department’s organisational health and its capacity to

deliver on government policy objectives Link the non financial performance with the financial

results High level performance of the department Issues raised by the Auditor General – 2012/13 Audit

Report Conclusion

INTRODUCTION

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For the past few years, the global energy agenda has been dominated by: energy security, energy access, and the deployment of sustainable (renewable) energy.

The Department’s focus within this global energy agenda has continued to be on energy security through: diversification of the energy mix – continued

implementation of the IRP2010; access to diversified energy markets; deployment of sustainable energy – through the

renewable energy program; and engagements in local (continent) and international

platforms – areas of capacity, skills development and funding.

INTRODUCTION (cont)

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We have kept the lights on, the factory machines operating, cars, busses and trains running, over the past financial year.

Our partnerships with all relevant stakeholders have continued to bare fruit as we ensured that energy supply is secured.

Major investments in the REIPP programme

Department’s organisational health and its capacity to deliver on government

policy objectives

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There was a slight improvement in the financial resources this year: The 2012/13 budget allocation increased by 8.6% to

R6.73 billion. 93.6% (R6.3 billion) was allocated to transfers and

subsidies and 6.4% (R 429.7 million) went to the operational budget.

The department spent 98.9% of its allocated budget; Staff compliment was – 818 total approved, 556 funded and

filled, with 56 interns; The vacancy rate was kept at below 15%.

Department’s organisational health and its capacity to deliver on government

policy objectives (cont)

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Through our planning process, we identified the Strategic Outcome oriented goals (SOOGs) that speak to the NDP and government outcomes (2, 4, 6, 7, 8, 9 and 10) as indicated on page 41 of the Annual Report.

We have also participated in the following Strategic Integrated Projects (SIPs) programme – SIP 6 and 8 (Lead Ministry), SIP 10 (Co-chaired) and participated in SIP 2-5, 7, 9, 14, 17 and 18

Other programmes that the department engaged in include: INEP Renewable Energy IPP Programme Solar Water Heater Programme Nuclear Review Programme

Financial Performance From the 2012/13 total budget allocation of R6.73 billion,

93.6% was allocated to transfers as follows: Integrated National Electrification Programme – R3.1

billion; Transnet’s New Multi-Product Pipeline final instalment –

R1.5 billion; NECSA – R568 million; Energy Efficiency Demand Side Management – R1,02

billion for the Solar Water Heaters programme The balance of transfers went to State Owned Entities and

other smaller programmes. R429 million (6.4%) of the total budget was allocated for the

Department’s operational needs.

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2012/13 BUDGET OVERVIEWExpenditure Per Economic Classification

DETAILS Budget Actual spend 31/03/2013

Actual % on budget spend

Rand’s Million R'000 R'000 %

Transfers and subsidies 6,304,841 6,276,700 99.6%

Compensation of Employees 206,763 201,485 97.4%

Goods and Services 207,747 170,208 81.9%

Payments for capital assets 15,127 10,555 69.8%

Payments for financial assets 0 36

Total

6,734,478

6,658,984 98.9%

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Link of Financial and Non-financial performance

Programme Planned Targets

Achieved/BudgetR'000

Partially Achieved/

Actual spend

Not Achieved/ Actual % budget spend

Administration 95 82 10 3

Budget 236,583 219,486 92.8%Energy Policy and Planning 68 26 32 10

Budget 1,563,403 1,544,913 98.8%

Energy Regulation 16 6 7 3Budget 1,139,787 1,139,476 100.0%

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Link of Financial and non-financial performance

Programme Planned Targets

Achieved/BudgetR'000

Partially Achieved/Actual spend

R'000

Not Achieved/ Actual % budget

spendR'000

National Electrification Programme 9 2 1 6Budget 3,147,822 3,112,376 98.9%Nuclear Energy and Regulation 10 2 7 1Budget 646,883 642,733 99.4%

*Not all targets have financial implication.

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High level performance information

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ElectricityThe deteriorating state of the electricity distribution infrastructure continues to be of great concern to the Department as it affects the pace of INEPDuring the year R320m was allocated for the 2013/14 financial year to address the distribution infrastructureTwo metros and seven municipalities have been identified as part of the first pilotThe process of closing down EDIH was completed, pending the receipt of the deregistration certification

High level performance information (cont)

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Electrification – INEPWe exceeded the 180 000 annual target for electricity connections this year and achieved 202 835 ;Of the 202 835, non-grid connections totalled 9 343;4 new substations were completed and 5 upgradedA total of 275 km of new electrical lines were installed and another 85 km upgradedOf the total allocation of R 3.1 bn for INEP all but R 36.4 million were transferred to the implementing agencies (Eskom and Municipalities)

High level performance information (cont)

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Energy Policy and PlanningContinued with the implementation of the IRPDraft IEP Report was completed.Recommendation on the final ISMO Bill submitted to National Assembly.NEDLAC consultation process for ERA and NERA completed. Development of models to inform the 20 Year Liquid Fuels Infrastructure Plan initiatedA policy discussion document outlining coal supply constraints and possible interventions was draftedThe Carbon Capture and Storage Road Map was endorsed by CabinetThe Draft Gas Amendment Bill was pre-certified, submitted for Cabinet approval and released for public comments

High level performance information (cont)

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Clean EnergyIn August 2012, we reached financial close in respect of 28 bidders contracted to supply 1415MW under the REIPPP, and construction has commencedThe Standard Offer policy for Solar Water Heaters in place and 353 188 SWH units had been installed by year endThe Solar Park feasibility study is back on track following the initial teething problemsWorking for Energy MoU executed with SANEDI and annual workplan developed and funding allocation transferred68 CDM project proposals received (64 PDD’s and 4 PINs)Participated in COP 18 UNFCCC negotiations. COP 18 outcome report completed and approved

High level performance information (cont)

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Energy Efficiency and Demand Side ManagementEEDSM monitoring tool was developed and implementedReal time field update testing was demonstratedMunicipal EEDSM savings of just over 39 MW were confirmed2,251 TWh annual savings confirmed by EskomRegulations for introducing EE Incentives Scheme

High level performance information (cont)

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PetroleumWith the discontinuation of the supply of crude oil from Iran, it meant that South African oil companies had to find alternative sources of supplyAs a result, South Africa’s imports of crude oil from the African continent reached 41%, which signified the continent’s growing role in the supply of crude oil to our countryNo fuel supply shortages were experienced; corrective actions were implemented where necessaryImproved the process of ensuring all applications are processed within 90 days1717 compliance inspections conductedBiofuels Mandatory Blending Regulations were promulgated and draft Biofuels pricing framework developed

High level performance information (cont)

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NuclearThe growing interest in nuclear created the need for the department to intensify public awareness initiatives to present a balanced view in order to demystify nuclear energy and ensure public acceptanceDuring the year a number of public engagements were hosted by the department to address nuclear issuesThe work of the NNEECC together with the Department continued in preparation for the nuclear built programDraft IAEA external review of nuclear infrastructure report completedThe Africa Nuclear Conference took place on 18 March 2013

High level performance information (cont)

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Energy Projects and Programmes 2 IEC's were successfully established namely, Mbizana in the Eastern Cape and Ulundi in KwaZulu-NatalEnergy Awareness campaigns held:

• Mangaung Learners Focus Week informed 250 learners on career opportunities in energy

• Eastern Cape Road-show informed 100 women on business opportunities in energy

• Mangaung Youth Career Expo informed young people on the DoE, and career/ business opportunities in energy

• Side Event at the CSW in New York informed women and youth on career/ business opportunities in energy\

• Take-a-girl-child-to-work initiative informed young girls on the DoE an the importance of taking “STEM” subjects.

REPORT OF THE AUDITOR GENERAL Audit opinion:

For the third year running, the department received an unqualified audit The AG raised concerns on the performance information and plans to improve are underwayThe department has completed an action plan to address AGSA findingsMost of the audit findings were addressed by 31 July 2013

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CONCLUSION

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THANK YOU