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Presentation to the Select Committee on Economic Development 2011/12 Annual Report. OPENING REMARKS Mr. G MNGUNI (ACTING DIRECTOR GENERAL 30 OCTOBER 2012. PRESENTATION. In November 2010 the department’s management came together for its annual strategic planning.

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Presentation to the select committee on economic development 2011 12 annual report

Presentation to the Select Committee on Economic Development

2011/12

Annual Report


Presentation to the select committee on economic development 2011 12 annual report

OPENING REMARKS

Mr. G MNGUNI

(ACTING DIRECTOR GENERAL

30 OCTOBER 2012


Presentation

PRESENTATION


Introduction

  • In November 2010 the department’s management came together for its annual strategic planning.

  • During this process we came out with seven strategic objectives which are aligned to government’s 12 outcomes as well as take into account the new government outcome based planning approach.

  • Our strategic plan and annual performance plan were based on several assumptions that included the availability of financial and HR resources.

  • As the Department of Energy, we are committed to the provision of an enabling platform for other sectors to speed up economic growth and transformation, create decent jobs and sustainable livelihoods

INTRODUCTION


Introduction1

  • During the year under review, the Department operated within an environment where:

  • The credibility in South Africa Energy policy trajectory was enhanced by the IPPs procurement process that we painstakingly championed, which I must add has received acclaim far and wide.

  • We now need to ensure that we collectively give it the final push.

  • On the geopolitical front, we had to contend and develop a response plan to the sanctions by the US and EU on the Islamic Republic of Iran.

  • The vulnerability of the refining sector was exposed with a number of refinery shutdowns which diverted some of our attention into monitoring contingency plan.

INTRODUCTION


Department s response to government outcomes

DEPARTMENT’S RESPONSE TO GOVERNMENT OUTCOMES


Department of energy

DEPARTMENT OF ENERGY

Presentation to the Select Committee on Economic Development

2011/12 Annual Report

Programme 1: Corporate Services

Mr George Mnguni

Deputy Director General


2011 12 annual report corporate services

2011/12 Annual Report Corporate Services

PRESENTATION OUTLINE

Key focus areas for 2011/12

Performance against targets/predetermined objectives

Challenges/way forward/conclusion


Presentation to the select committee on economic development 2011 12 annual report

2011/12 Annual Report Corporate Services

  • Key focus areas for 2011/12

  • The main focus areas for Corporate Services for the year under review were the following:

  • Provision of Human Resource and Auxilliary support Services;

  • Provision of Legal Support Services to the Ministry and the department; and

  • Provision of Communication and Knowledge Management Support Services.


2011 12 annual report corporate services1

2011/12 Annual Report Corporate Services

  • 2. Key Achievements/ Partially and Non Achievement areas for Corporate Services

  • HR Plan of the DoE finalised and implementation commenced;

  • Organisational Structure and Framework for Occupational Classifications not achieved because of prolonged consultation process with Employee Organisations;

  • Matching and placement of staff also delayed due to the aforementioned;

  • All HR Policies finalised on target and implementation is ongoing;

  • Turnaround time for filling of vacancies improved to remarkable three (3) months average through-out the year;

  • Interventions to maintain vacancy a rate of 9.6% against the approved Cabinet baseline of 15% , were also implemented;


2011 12 annual report corporate services2

2011/12 Annual Report Corporate Services

  • 2. Key Achievements/ Partially and Non Achievement areas for Corporate Services

  • All Performance Agreements and Workplans were finalised before 30 May 2011 as required and appropriate disciplinary sanctions imposed for non-compliance;

  • Performance reviews for staff also finalised before end of June 2011;

  • Public Service Wellness Framework was approved and implemented in the first quarter of 2011;

  • The Skills Audit and plan finalised and submitted to DHE and Setas as required ;

  • HRD Strategy and Training plan were finalised before end of June 2011 and implemented;

  • Managed to train 443 employees in both administrative and functional areas;

  • The DoE has exceeded the 50% representation target of women; and

  • All Presidential hotline cases were resolved.


2011 12 annual report corporate services3

2011/12 Annual Report Corporate Services

  • 2. Key Achievements/ Partially and Non Achievement areas for Corporate Services

  • The Records management plan is approved by National Archives and is being implemented;

  • Security Risk Management Plan is in place and implementation is ongoing;

  • Standard Operating procedures and Contingency plan finalised and implemented;

  • Alternative office accommodation was acquired through Public Works and DoE has settled in; and

  • On the Legal Services front, all legal request were finalised and a target of 50% exceeded with 66% of requests received dealt with within the prescribed time- frames.


2011 12 annual report corporate services4

2011/12 Annual Report Corporate Services

  • 2. Key Achievements/ Partially and Non Achievement areas for Corporate Services

  • The draft Communication Strategy was implemented- capacity constraints impacted negatively on the finalisation of strategy;

  • Communications policies and procedures could not be finalised because of capacity constraints, particularly at SMS level;

  • External projects including Public Participation Programmes and DoE events were continuously managed;

  • Daily and Weekly media monitoring and liaison services were provided as required;

  • Internal Communications plan was also developed and implemented; and

  • The Events calendar was developed and implemented on an ongoing basis.


2011 12 annual report corporate services5

2011/12 Annual Report Corporate Services

  • 2. Key Achievements/ Partially and Non Achievement areas for Corporate Services

  • The Marketing, advertising and branding plan was developed and implemented;

  • Publications services were also established/developed and implemented;

  • The Stakeholder Management plan was developed and implemented, except the strategy because of lack of capacity to do same in the relevant unit;

  • The Draft Knowledge Management Strategy was developed, but approval was delayed due to planned relocation to alternative building and lack of space.


2011 12 annual report corporate services6

2011/12 Annual Report Corporate Services

CHALLENGES AND WAY FORWARD

  • Recruitment of persons with disabilities was a challenge , thus the target of 2% could not be achieved- A strategy is developed and submitted for consideration;

  • Implementation of the structure at Macro-Organisational level has posed challenges relating to reporting and lines of authority- This will now be addressed through the matching and placement of affected employees, following a decision by the leadership of the DoE, after finalisation of the structure;

  • Establishment of a Knowledge Management Centre as well as development and implementation of a strategy and plan- This challenge has also been addressed following relocation of DoE to the new premises.


Annual financial statements and the report of the auditor general

Annual Financial Statements And The Report Of The Auditor General


Introduction2

  • The year under review, year 2011/12, is the second year that the Department of Energy has been operating as an independent department.

  • There has not been any significant increase in the Department’s budget allocation between the years 2010/11 and 2011/12.

  • Of the 12% increase between the two years, 10.6% went to transfers and subsidies and only 1.4% went to the Department’s operational budget.

  • The challenges of the inadequate baseline allocation for the Department resulting from the split of the Department of Minerals and Energy remain – however engagements between NT & DoE are in progress

INTRODUCTION


Introduction cont

  • From the 2011/12 total budget allocation of R6.2 billion, 95% went to transfers and these are:

    • Integrated National Electrification Programme - R3.2 billion;

    • Transnet’s New Multi-Product Pipeline - R1.5 billion;

    • NECSA - R586 million;

    • Energy Efficiency Demand Side Management - R398 million

    • And the balance were transfers to State Owned Entities and other smaller programmes.

  • Only 5% of the total budget was allocated for the Department’s operational needs, amounting to R305 million.

  • The Department spent 99.6% of its allocated 2011/12 budget.

INTRODUCTION (cont)


Financial performance

Statement of Financial Performance for the year ended 31 March 2012

Financial Performance


2011 12 budget overview

2011/12 BUDGET OVERVIEW


2011 12 budget overview1

2011/12 BUDGET OVERVIEW


Financial performance1

  • Analysis of financial performance:

  • The department’s total spending for the year was R6.174 billion (99.6%) of the total budget of R6.20 billion.

  • The above represents an under spending of 0.4% i.e R26.65 million.

  • A total of R12.95 million (49%) of the overall balance of R26.65 million remaining are for Transfer payments

  • The composition of the overall balance of R26.65 million is as follows:

  • Compensation of Employees:R.032 million

  • Goods & Services:R8.55 million

  • Transfer Payments:R12.95 million

  • Capital Assets:R5.13 million

Financial Performance


Financial performance2

  • Analysis of financial performance:

  • A rollover request was submitted to NT for the unspent budget amount of R26.65 million (Subsequently 25.83 million was approved)

  • The entire unspent budget amount for Goods and Services and Capital Expenditure was fully committed in the 2011/12 financial year.

  • Goods & Services

  • The Department processed payments for International membership fees to a total of R8.1 million.

  • These payments remained in the Department’s Commitments awaiting the release of the foreign funds by the Reserve bank

  • The Reserve bank transferred the funds to the relevant foreign recipients on the 2nd & 3rd of April 2012

Financial Performance


Financial performance3

  • Analysis of financial performance:

  • Transfer Payments

  • An amount of R11.8 million of the overall balance of R12.9 million within this category was attributable to funding specifically appropriated for the EDI-H was not transferred.

  • EDI had sufficient funding to meet their monthly obligations and other company liabilities.

  • A rollover request was submitted to National Treasury for this amount to be directed towards the operational costs of the ADAM project – which was subsequently approved.

  • CAPEX

  • Funds earmarked for capital assets could not be spent due to the delay of the DoE relocation. A request for a rollover of these funds was submitted to National Treasury and approved.

Financial Performance


Financial performance4

Financial Performance


Financial performance5

Detailed expenditure ( Top 5 Expenditure)

Financial Performance


Financial position

Statement of Financial Position as at 31 March 2012

Financial POSITION


Presentation to the select committee on economic development 2011 12 annual report

Analysis of financial position

  • Unauthorized Expenditure – R14.86m

  • The unauthorized expenditure of R14.86 million is due to an Infrastructure Grant transfer payments paid to the Mthonjaneni Municipality in May 2010.

  • The transfer was appropriated in the 2009/10 financial year , however the payment to the municipality was processed in March 2010, but transferred in May 2010 due to the system rejection of the banking details.

  • This amount is awaiting condonation and authorization from National Treasury. The department has subsequently implemented the necessary controls to avoid a recurrence.


Financial position1

  • Irregular expenditure – R39.75 million

  • All irregular expenditure incurred in the 2010/11 financial year has been condoned.

  • For 2011/12 financial year the R39.485 million irregular expenditure closing balance - 99% relates to lease payments for office accommodation. (R22.09 million of this amount is for the current year and R17.395 million is for the prior year).

  • All of the above irregular expenditures have been condoned subsequently to the year end.

Financial POSITION


Financial position2

  • Investments – R2.205 million

  • The department is a 100% shareholder in The South African Nuclear Corporation Limited (NECSA) and own 2,205 shares of R1 each

  • Current Liabilities – R26.935 million

  • The breakdown of the above is as follows;

  • R26.64M- surplus of voted funds, surrendered to NT

  • R218, 000- departmental revenue, surrendered to NT

  • R67 000 - owing to SARS – paid post year end

  • R3, 000 - owing to GEPF – paid post year end

  • (NB: Surplus funds account for 99% of the current liabilities).

Financial POSITION


Financial performance6

  • Report of the Auditor General

  • Audit opinion:

  • The department received an unqualified audit opinion, without any emphasis of matter.

  • The department has completed an action plan to address all outstanding AGSA findings.

  • Most of the audit findings were addressed by 31 July 2012

  • NB: All of the SOE’s reporting to the DoE have also received an unqualified audit opinion.

Financial Performance


Department of energy1

DEPARTMENT OF ENERGY

Presentation to the Select Committee on Economic Development

2011/12 Annual Report

Programme 1: Chief Operating Officer

Mrs Thandeka Zungu

Chief Operating Officer


Summary of performance against predetermined objectives

SUMMARY OF PERFORMANCE AGAINST PREDETERMINED OBJECTIVES


Branch performance

BRANCH PERFORMANCE

The COO Branch(Governance and Compliance) started operating in May 2010 with less than 1% capacity and consist of the following Chief Directorates:

Strategy and Risk Management

Monitoring, Evaluation and Reporting

State Owned Enterprise Oversight

International Coordination

Strategy and Risk Management

The Department held its 2nd strategic planning session in November 2011 which resulted in the production of 2011/12 – 2015/16 Strategic Plan and the 2011/12 Annual Performance Plan that are aligned to Government Outcome based approach.

The Department’ s revised Strategic Plan for 2011/12-2015/16 and the APP were tabled in Parliament in February 2012 and later presented to the Portfolio Committee on Energy and Select Committee on Economic Development.


Branch performance cont

BRANCH PERFORMANCE(CONT)

Strategy and Risk Management (cont)

The Department has established a Risk Management Unit which includes the Anti-Fraud and Corruption function during the year.

The Risk Assessments were conducted, the Risk Register was produced and mitigation strategies were put in place to enhance the control environment.

Standard Operating Procedures for various functional Units within the DoE have been developed.

Challenges/ partial and non-achievements

Implementation of the Enterprise-Wide Risk Management Strategy for the Department

Absence of risk management tool

Provision of the department’s Service Delivery Plan


Branch performance cont1

BRANCH PERFORMANCE (CONT)

Monitoring, Evaluation and Reporting

The Monitoring and Evaluation Unit during the period under review developed the DoE’s foundational M&E guidelines, namely the M&E Framework, M&E Policies, Procedures and Quarterly Performance Reporting templates as well as Data collection instruments

Reported on the department’s performance – quarterly and annually

Challenges/partial and non-achievements:

43% target achievement

Timeliness of management reports

Development and finalisation of the Department’s Standard Operating Procedures.


Branch performance cont2

BRANCH PERFORMANCE (CONT)

State Owned Enterprise Oversight

Provide oversight of state owned entities reporting to the Minister, monitor performance against approved plans and ensuring that all SOE Boards are fully capacitated by appointing board members for SANEDI, NERSA,CEF, and PetroSA .

The CEO of PetroSA was appointed during the 2011/12 FY.

During the year under review, oversight Quarterly meetings between the Minister and the Chairpersons of the SOE’s, the DG quarterly meetings with the CEO’s and the DoE officials and the SOE’s Executives were convened to review the entities Performance against the approved plans and implementation of improvement plans to enhance performance.

Following the Cabinet decision to halt the operations of the Electricity Distribution Industry Holdings, the branch is leading the process of winding up in collaboration with the appointed Administrator and EDIH Board


Branch performance cont3

BRANCH PERFORMANCE (CONT)

Challenges/partial and non-achievements

EDIH winding up by year end

Finalisation of the SOE Oversight Framework (approved draft) to accommodate the recommendations of the Presidential SOE Oversight Committee.

Sector risk management

Department’s compliance monitoring


Branch performance cont4

  • International Coordination

  • During the year under review, the Department Coordinated the African Ministerial Energy Conference which was attended by more than 40 Energy Ministers.

  • The Conference produced the declaration which outlines the Energy needs for the Continent and Political commitments to alleviate Energy Poverty.

  • The Department was responsible for the COP17/CPMP7 preparations.

  • The Minister of Energy visited the following countries during the year under review: Zambia, Mozambique, Botswana and Namibia

  • The DoE International Relations Strategy, was developed and approved.

  • All International Agreements/ MOU’s signed by the DoE has been audited during the year under review.

BRANCH PERFORMANCE (CONT)


Branch performance cont5

  • International Coordination (cont)

  • Agreements- declaration of Intent with the following Countries and Organizations were concluded: IEA, Swiss Confederation, Ghana, Lesotho, Denmark, Korea and DRC.

  • The SARi was signed with the United Kingdom, Germany, Denmark, Norway and European Investment Bank

  • The Department participated in Project Steering Committees that led to the DOI on SARi

  • Challenges/partial and non-achievements

  • Approval of the International Relations Strategy for the department – draft by year end

  • Approval – audit agreements signed by the department.

BRANCH PERFORMANCE (CONT)


Department of energy2

DEPARTMENT OF ENERGY

Presentation to the Select Committee on Economic Development

2011/12 Annual Report

Programme 2 : Hydrocarbons & Energy Planning

Mr. Tseliso Maqubela

Deputy Director General


Introduction3

INTRODUCTION

Purpose of the Branch: Undertake integrated energy planning to promote the sustainable use of energy resources by developing appropriate policies and regulations that promote the sustainable use of petroleum, coal gas and renewable energy sources.


A brief note of line functions

A BRIEF NOTE OF LINE FUNCTIONS

In order to achieve the government mandate this Programme performs the following functions:

Hydrocarbons and Energy Planning Management provides overall management of the programme.

Energy Planning promotes the sustainable use of energy resources through integrated energy planning (In terms of the National Energy Act, Act No. 34 of 2008, the Minister is required to publish and Energy Plan on a annual basis).

Hydrocarbons develop policy and regulations to manage petroleum, coal, and natural gas.

The Petroleum Controller is currently included under this sub-programme and is responsible for the administration and issuing of petroleum licenses, monitoring and enforcement of license conditions as prescribed by the Petroleum Product Act (Act No.120 of 1977) as amended.


Branch highlights

BRANCH HIGHLIGHTS

Operationalisation of the NMPP and facilitation of the linefill which improved infrastructure for security of supply.

Compliance inspections for Petroleum Licensing and the sting operations to uncover illegal fuel sales.

Petroleum Products Licensing Awareness Campaigns done in all provinces.

Participation of the Department in the development of the Coal Roadmap and the facilitation of its completion.

Implementation of the Regulatory Accounting Systems through introducing the framework in the fuel margins.

Intervention on new Job Industry Sites to facilitate accelerated job creation.


Branch highlights cont

BRANCH HIGHLIGHTS (CONT…)

Increase in turnaround time for processing of all applications that meet the acceptance criteria.

Development of Standard Operating Procedures for all processes thereby improving consistency in the application of the Law.

Blending value and break even price for biofuels established. Support mechanism not finalised.

Regulations on the Mandatory Provision of Energy Data promulgated.

CCS Road Map noted and supported to Cabinet.

Project Charter for the Centralised Energy Information Database completed

LFC Audit Report completed.

On behalf of the Director General the branch spearheaded Government Response to the sanctions imposed on IRAN by US and the EU.


Work in progress areas of improvement

WORK IN PROGRESS/AREAS OF IMPROVEMENT

Completion of the IEP

Underestimation of the complexity of the task given the resource constraints

Gas Amendment Bill not completed.

Petroleum Amendment Bill not completed.

Regulations on Cleaner Fuels Specifications not promulgated as was planned.

Regulations on Mandatory Blending of Biofuels not finalised.

Integrated Energy Centre programme delayed due to administrative and logistical challenges.

Strategic Stocks Framework not finalised

20 Year Plan not completed


Work in progress areas of improvement cont

WORK IN PROGRESS/AREAS OF IMPROVEMENT (CONT….)

Fuel Pricing Framework Review not completed

Principles for incentivising investments in cleaner fuels not done

LPG Strategy not completed (Tactical Move)


Challenges

CHALLENGES

Reluctance to submit/provide data

Human Resource Challenges Internally/skills

Unplanned Refinery outages and impact on personnel

Quality Management System issues

Inertia


Department of energy3

DEPARTMENT OF ENERGY

Presentation to the Select Committee on Economic Development

2011/12 Annual Report

Programme 3: Electricity & Clean Energy

MrOmpiAphane

Deputy Director General


Role and contribution to local manufacturing and the green economy

OUTLINE

Role and contribution to local manufacturing and the green economy

  • Energy efficiency and demand side management

  • Restructuring of the EDI and infrastructure rehabilitation

  • Pricing of electricity

  • Progress on SARi

  • CDM programmes

  • Appliance labelling


Presentation outline

PRESENTATION OUTLINE

  • Background

  • Electricity Pricing Policy Mandate

  • Electricity Pricing Policy Principles

  • Protecting the poor

  • Challenges and Status

  • Conclusion


Preferred bidders salient terms solar photovoltaic

PREFERRED BIDDERS SALIENT TERMS: SOLAR PHOTOVOLTAIC


Preferred bidders salient terms wind

PREFERRED BIDDERS SALIENT TERMS: WIND


Preferred bidders salient terms small hydro

PREFERRED BIDDERS SALIENT TERMS: SMALL HYDRO


Preferred bidder salient terms concentrated solar power

PREFERRED BIDDER SALIENT TERMS: CONCENTRATED SOLAR POWER


Preferred bidders provincial distribution

PREFERRED BIDDERS PROVINCIAL DISTRIBUTION


Presentation to the select committee on economic development 2011 12 annual report

SWH – MAKING THE TRANSITION TO LOCAL PRODUCT

1

2

3

WRAPPING UP PHASE - SUPPLY OF PRODUCT UP TO ~x SYSTEMS?

QUALIFICATION PHASE – CONVERSION TO LOCAL PRODUCT AS SPECIFIED

EXCLUSIVE PHASE – ONLY LOCAL STANDARD PRODUCT IS SUPPORTED

Designation of swh in August 2012Product not limited to local standardCall by SABS for submission of local content declarations by all participants in the NSHWHP, in line with SABS 1286 and in respect of the flat plate product as a national standardAnalysis of the scoring of the various existing products

  • Contracting only with qualified manufacturers

  • Selection of qualified product suppliers, up to maximum of ~7 manufacturers, using certain criteria

RESTRICTED


Presentation to the select committee on economic development 2011 12 annual report

ENERGY EFFICIENCY TARGETS NOT ACHIEVED

  • Energy Efficiency Target Monitoring System

    • This is in line with the EE Strategy, to develop a national target monitoring system covering all segments of the economy

    • Started but not completed, will make it possible to monitor whether 15% EE target by 2015 achieved

  • Savings verification mechanism

    • This entails the measurement and verification protocols, standards

    • Will cover the industrial, commercial, residential sectors

  • Energy Efficiency Campaign Strategy

    • Will improve awareness building beyond what Eskom’s 49m campaign does

    • Consented to by social partners at Nedlac

RESTRICTED


Presentation to the select committee on economic development 2011 12 annual report

Approves ring-fenced EEDSM funding through tariff

Policy framework including EEDSM strategy, action plan and funding

Nersa

Dept of Energy

Eskom

Collects and transfers ring-fenced funding

Transfers

Fund management and disbursement for approved projects

Programme Management Committee

DBSA

Project Approval, monitoring and reporting

Savings?

NEEA

Verifies the extent of the savings and confirms that transfer of funds ok

Transfers

Licensees and ESCOs

Initiate EEDSM interventions and apply for funding based on savings to be achieved

ENERGY EFFICIENCY INSTITUTIONAL ARRANGEMENTS


Presentation to the select committee on economic development 2011 12 annual report

Energy Efficiency Action Plan

  • Energy Efficiency Strategy to Cabinet in October 2012

  • Action plan with various initiatives, including:

    • Campaign for awareness building

    • Target setting for various sectors

    • Interventions in the residential (accelerated solar water heaters), commercial (public buildings), industrial sectors

  • Centralised funding mechanism, through tariff ring-fencing

  • Incentive schemes (standard offer programme plus tax incentives)

  • Energy Efficiency Target Monitoring System to keep track of performance relative to baseline

  • Measurement and verification system developed

  • Data collection in respect of various sectors


Presentation to the select committee on economic development 2011 12 annual report

EDI TARGETS NOT ACHIEVED

  • Approach to Distribution Asset Management implementation and funding plan for Metros

  • To map distribution infrastructure in distress, starting with Metros

  • To introduce a funding mechanism that takes municipalities out of cycle of underinvestment and service delivery lapses


Approach to distribution asset management

APPROACH TO DISTRIBUTION ASSET MANAGEMENT

  • Backlog is R35bn (2010 terms), to be eliminated over 10 years

  • Cabinet approached in October 2012 regarding the institutional approach for ADAM

  • Pilot projects to be implemented once approved, to improve service delivery in key municipalities

  • Funding is through tariff ring-fencing

  • Regulatory monitoring and enforcement to prevent relapse


Presentation to the select committee on economic development 2011 12 annual report

Approach to Distribution Asset Management

Phase2

Implementation Projects for NERSA audited municipalities and critical projects identified during Phase 1

Phase 1

Development of Business Case & Plan for ADAM Project

Phase 3

Development of National Maintenance and Refurbishment / Strengthening Backlog Plan

3b Analysis

3a Field Audits

3c Maintenance Backlog Execution (Critical Projects identified during Phase 3)

Phase 4

Maintenance Backlog Execution

Phase 5

Implementation of National Plan Refurbishment

& Strengthening Projects

Done

Commence

March 12

March 13

2020


Presentation to the select committee on economic development 2011 12 annual report

ELECTRICITY PRICING TARGETS NOT ACHIEVED

  • Inclining block tariffs (IBT) approved by NERSA to cushion the poor against increasing tariffs

  • Application in conventional and prepaid meters in Eskom areas done

  • Municipal prepaid meters only 60% configured, mainly due to financial sustainability problems emanating from IBT

  • Next round of tariff determination to be completed by March 2013 so pricing principles to be aligned with electricity pricing policy


Presentation to the select committee on economic development 2011 12 annual report

PRICING AND ELECTRICITY TARIFFS

  • MYPD methodology seeks to achieve the following objectives:

    • Ensure Eskom’s sustainability as a business, limit the risk of excess or inadequate returns, while providing incentives for new investment,

    • Ensure reasonable tariff stability and smoothed changes over time consistent with socio-economic objectives of the Government,

    • Appropriately allocate commercial risk between Eskom and its customers,

    • Provide efficiency incentives without leading to unintended consequences of regulation on performance

    • ensure consistency between price control periods


Pricing and electricity tariffs

Pricing and Electricity Tariffs

Sources: IRP2010, Eskom, Frost & Sullivan, EIUG


Cdm project portfolio

CDM PROJECT PORTFOLIO


Cdm approved project pipeline

CDM – APPROVED PROJECT PIPELINE


Conclusion

CONCLUSION

  • Other key programmes to ensure energy security

  • Revamp regulatory framework for new generation capacity,

  • ISMO legislation

  • Determinations under electricity regulations to introduce IPPs

  • Solar Park Concept and facilitation of the concept ,


Department of energy4

DEPARTMENT OF ENERGY

Presentation to the Select Committee on Economic Development

2011/12 Annual Report

Programme 4: Nuclear

Mr Zizamele Mbambo

Deputy Director General


Presentation outline1

PRESENTATION OUTLINE

Introduction

Key Focus Areas for 2011/12

Highlights for the Reporting Period 2011/12

Performance Against Targets

Challenges

Way forward/Conclusion


Introduction4

INTRODUCTION

The nuclear branch mandate include:

Implement Nuclear Energy Policy

Development of nuclear technology

Develop required nuclear regulations

Service Minister’s obligations in terms of nuclear legislation, NNR Act, Nuclear Energy Act, NRWDI

Implementation of the Radioactive Waste Management Policy and Strategy

Establish National Radioactive Waste Disposal Institute

Establish Radwaste Fund bill

Oversight of Nuclear Organizations linked to Department


Introduction cont1

INTRODUCTION (CONT..)

Ensure implementation of National Nuclear Disaster Management Plan

Decommissioning and decontamination of past strategic nuclear facilities

International Obligations

International cooperation of nuclear technology (IAEA)

Coordination of Bilateral and Multilaterals

Administer all matters related to nuclear non-proliferation as required by national and international agreements

Nuclear Non-Proliferation Directorate ensures that all nuclear material and equipments are accounted for and used for peaceful purpose only


Key focus areas

KEY FOCUS AREAS

Approved Nuclear Procurement Programme relative to IRP

Cabinet approval of phased decision making approach & Establishment of NNEECC

Nuclear Fuel Cycle Infrastructure developed for beneficiation of uranium to support new nuclear build priorities

Complete prefeasibility studies

Established National Waste Radioactive Disposal Institute

Approved Business Plan and Budget

Community outreach

Standardization of security measures at ports of entry including installation of Radiation Portal Monitors

Amendment of nuclear legislation

National Nuclear Regulator Act Amendment

Nuclear Energy Act Amendment

Nuclear Safeguards compliance inspections & audits

Funding provisions legislated for radioactive waste management


Highlights for the reporting period 2011 12

HIGHLIGHTS FOR THE REPORTING PERIOD 2011/12

During the period under review, in November 2011, Cabinet approved the establishment of the National Nuclear Energy Executive Coordination Committee (NNEECC).

The aim of NEECC is to oversee the roll-out of the nuclear build programme.

The NNEECC, headed by the Deputy President, is the authority for decision making, monitoring, and ensuring general oversight of the nuclear energy expansion programme.

The Phased Decision Making Approach was also approved

In May 2011, South Africa hosted an IAEA’s 2nd Regional Conference on Energy and Nuclear Power in Africa. Such events are important in order to foster exchanges and interactions on regional approaches to energy security.


Highlights for the reporting period 2011 12 cont

HIGHLIGHTS FOR THE REPORTING PERIOD 2011/12 (CONT)

In April 2011South Africa participated in the Review Meeting of the Convention on Nuclear Safety(CNS), which culminated into the June 2011 Ministerial CNS.

The Ministerial Conference was organised by the International Atomic Energy Agency.

South Africa undertook the necessary “stress” tests (safety re-assessment) on its nuclear installations, the recommendations resulting from this exercise will be implemented to ensure safety is maintained.


Highlights for the reporting period 2011 12 cont1

HIGHLIGHTS FOR THE REPORTING PERIOD 2011/12 (CONT)

The IAEA Self Assessment Review (Integrated Nuclear Infrastructure Review) was initiated during this reporting period.

The Review will be completed in the coming financial year.

The purpose is to systematically and methodically evaluate the gaps in our nuclear infrastructure that could delay or hamper progress of the nuclear new build.

The review is conducted accordance with the International Atomic Energy Agency’s milestones approach.

The amendments of the founding legislation as well as the development of new legislation for long-term funding provisions for radioactive waste management are being undertaken within the nuclear energy policy implementation.


Highlights for reporting period 2011 12 cont

HIGHLIGHTS FOR REPORTING PERIOD 2011/12 (CONT)

Consultations continue on the installation of appropriate radiation detection equipment at identified ports of entry.

This is a multi-stakeholder project involving both international and national stakeholders.

When this project is completed, South Africa will be able to prevent illicit trafficking of nuclear materials through our ports of entry.

Following the approval of the business case for the National Radioactive Waste Disposal Institute, physical establishment of the entity remains a challenge due to lack of funding. Processes to fund the operationalisation of the Institute in progress


Performance against targets

PERFORMANCE AGAINST TARGETS


Performance against targets1

PERFORMANCE AGAINST TARGETS


Performance against targets2

PERFORMANCE AGAINST TARGETS


Performance against targets3

PERFORMANCE AGAINST TARGETS


Performance against targets4

Performance against Targets


Challenges1

CHALLENGES

Human Capacity

Financial resources

Match commitments with resources


Way forward conclusion

WAY FORWARD/CONCLUSION

Continue preparatory work to rollout of new nuclear build programme

Continue implement phase decision making approach

Complete IAEA Integrated nuclear Infrastructure review

Implement the communication and stakeholder engagement strategy

Legislation amendments

Human and financial resources

Operationalize National Radioactive Waste Disposal Institute (NRWDI).

Ratify to Amended Convention of Physical Protection of Nuclear Material


Department of energy5

DEPARTMENT OF ENERGY

Presentation to the Select Committee on Economic Development

2011/12 Annual Report

Programme: 6 Programmes And Projects

Dr Wolsey Barnard

Deputy Director General


Integrated national electrification programme inep

INTEGRATED NATIONAL ELECTRIFICATION PROGRAMME (INEP)


Presentation to the select committee on economic development 2011 12 annual report

FUNDING MODEL


Inep s response to the 12 government outcomes

INEP’s response to the 12 Government Outcomes

INEP contributes to the following DoE and Government’s Outcomes Based Planning Approach:

Outcome 4 – Decent employment through inclusive economic growth;

Outcome 6 – An efficient, competitive and responsive economic infrastructure network

Outcome 7 –Vibrant, equitable and sustainable rural communities with food security for all

Outcome 8 – Sustainable human settlement and improved

quality of household life and

Outcome 9– A responsive, accountable, effective and efficient local government system.


Presentation to the select committee on economic development 2011 12 annual report

Electrification progress

  • Over 5.5 million households were connected to the grid between 1994 and 2011/12 (Sept 2012)

  • In period 2002 to 2011/12 over 50 000 households were supplied with non-grid technology (Solar panels – Renewable Energy)

  • Total installed PV SHS - 55 831

    • Eastern Cape- 11,412

    • Kwazulu Natal- 35,607

    • Limpopo- 8,812


Presentation to the select committee on economic development 2011 12 annual report

Slide 91


Presentation to the select committee on economic development 2011 12 annual report

Households without electricity

  • Households without electricity: ~3.4 million (Informal 1.2 mil and

  • formal 2.2 mil)

  • 75 % in Eskom supply area and 25% in municipalities supply

  • area.


Key focus areas for 2011 12

Key Focus Areas for 2011/12


Summary of achievements 2011 12 sept 2012

Summary of Achievements 2011/12Sept 2012


Eskom 2011 12 sept 2012

Eskom 2011/12 (Sept 2012)


Municipalities 2011 12 sept 2012

Municipalities 2011/12 (Sept 2012)


Presentation to the select committee on economic development 2011 12 annual report

Non grid – Solar home systems

2011/12 Financial year


Challenges2

Challenges


Challenges3

Challenges

Municipalities and Eskom

  • Slow delivery of electrification projects by Municipalities and certain Eskom regions.

  • Lack of skills within Municipalities – technical and project management.

  • Majority of Municipalities are not performing as required - internal procurement processes takes too long.

  • Eskom internal project management systems and ‘red type’ is slowing down delivery in certain regions.

  • Consulting engineers and contactors not geographically spread according to backlogs in country.

  • Municipalities do not have purchase bargaining power.

    Non-grid programme

  • Slow roll-out of non-grid connections due to negative political perceptions and practical short comings.

  • Current non-grid systems not addressing basic electricity needs - heating and cooking needs.

  • Non-grid service providers struggle to exist financially due to small customer base and rural location.

  • Regulations promulgated recently increase non-grid installation costs dramatically.


Challenges 2

Challenges (...2)

Electricity industry

  • Shortcomings in EDI are starting to have a very negative effect on the delivery of new connections.

  • Municipalities use electrification funds to do upgrading of existing networks.

  • Due to the nature of EDI, different electrification technical standards are implemented by Municipalities and Eskom.

    Funding and cost of connections

  • More and more connections done in rural areas – connections costs increase sharply and subsidy level have to be increased accordingly.

  • Electrification fund allocated in next 3 years will not increase annually above CPI - connection costs on average have increased annually by 12% over last 3 years.

  • Pressure is increasing on fund - received 4.2 times more applications from municipalities than what was available for 2012/13 financial year. Last 6 years INEP received 50% of the funding as projected in 2003/4 to address backlogs.

  • Annual budgetary process force projects to be planned and designed on an annual basis and not on a multi-year (project completion) basis.

  • High energisation/switch-on cost charged by Eskom. Municipalities have to pay up front, not as previously over 10 to 15 yrs period.

  • No soft loans or grants nationally or internationally available for normal grid extension, except if grid is renewable feed.

  • Difference in National and Local Government financial years.


Challenges 21

Challenges (...2)

Electricity industry

  • Shortcomings in EDI are starting to have a very negative effect on the delivery of new connections.

  • Municipalities use electrification funds to do upgrading of existing networks.

  • Due to the nature of EDI, different electrification technical standards are implemented by Municipalities and Eskom.

    Funding and cost of connections

  • More and more connections done in rural areas – connections costs increase sharply and subsidy level have to be increased accordingly.

  • Electrification fund allocated in next 3 years will not increase annually above CPI - connection costs on average have increased annually by 12% over last 3 years.

  • Pressure is increasing on fund - received 4.2 times more applications from municipalities than what was available for 2012/13 financial year. Last 6 years INEP received 50% of the funding as projected in 2003/4 to address backlogs.

  • Annual budgetary process force projects to be planned and designed on an annual basis and not on a multi-year (project completion) basis.

  • High energisation/switch-on cost charged by Eskom. Municipalities have to pay up front, not as previously over 10 to 15 yrs period.

  • No soft loans or grants nationally or internationally available for normal grid extension, except if grid is renewable feed.

  • Difference in National and Local Government financial years.


Challenges 3

Challenges (...3)

INEP

  • Planning, Monitoring and evaluation of electrification programme limited due to lack of resources – funding and HR;

  • Operational budget for 2012/13 cut for by 55%!

  • Limited national planning capacity within INEP – Eskom Distribution and Transmission expansion and planning is dictating electrification roll-out.

  • INEP resources are stretched, since more and more operational involved in municipal projects.

    General

  • EIA and land clam process that took sometimes more than two years to resolve;

  • Late delivery of housing projects.

  • Sharp increase in hard ware cost (transformers, switch gear, cables) – increase in base metals prices.

  • Corruption starting to become a serious issue.

  • Local manufactures cannot compete with low cost imported equipment


Presentation to the select committee on economic development 2011 12 annual report

Way Forward


Proposed solutions

  • Under current electrification delivery rate, funding allocations, in-efficiencies in the electricity distribution industry, universal access to electricity is not possible.

  • Developed a New Implementation Roadmap with assistance of IFC and extensive consultative process with all stakeholders.

  • New Implementation Roadmap

    • Electrification can not only been defined to be only a grid connection, since it is in some cases just too expensive to build infrastructure for a few households.

    • More electrification will have to be conducted by means of non-grid PV systems – move away from current 50 Wp systems to 150 Wp systems to ensure a better level of service.

    • The future roll-out of the electrification programme will have to follow a National Electrification Master plan that will be developed through municipalities IDP inputs and assistance of Eskom.

Proposed solutions


Proposed solutions cont 2

  • New Implementation Roadmap (cont.)

    • Improve the inefficiencies in the delivery of the electrification programme by managing Eskom and the Municipalities more tightly – will require additional funding to implement more monitoring measures (ex. electronic monitoring systems).

    • In order to improve efficiency, assistance will have to be given to struggling municipalities in delivering the electrification programme by utilizing the capacity of Eskom, larger municipalities, Metro’s, as well as to utilize MISA and INEP improved monitoring processes,

    • Additional funding will have to be made available to address certain “bottle neck” areas as identified by SIPs (etc. SIPs 1 and SIPs 6).

    • Universal access under current conditions is only possible in 2025, but with specific efficiency improvements and technology mix choices.

Proposed solutions (cont..2)


Universal access is a function of the funding available and the choice of technology mix

Universal access is a function of the funding available and the choice of technology mix

2027

2017

2018

2018

2019

2020

+R2 billion

2031

2019

2020

2020

2021

2022

+R1 billion

Additional funding per year

2037

2021

Base `case

2023

2023

2024

2025

(base case)

Mix 4

Mix 3, no temp. solutions for informal households

Mix 1

All grid

Mix 2

Most cost efficient technology mix

Mix 3(base case)

Mix 2, but all grid within 3km

Mix 5

Mix 3, but grid replaces mini-grids

Mix 6

Mix 3, grid connection for informal households

100

70

78

78

87

78

Technology mix

% of current unelectrified formal households to be connected to the grid


Rate of electrification to reach universal access by 2023

Rate of electrification to reach universal access by 2023

Electrification progress towards universal access

Million households

Long-term solutions

Total households to be electrifiedto reach universal access

Temporary solutions for

informal households

Cumulative households electrified

3.8

2.7 million formal households

11 years × ~345,000 households per year = 3.8 million households

1.1 million informal households

2013

14

15

16

17

18

19

20

21

22

23

24


Presentation to the select committee on economic development 2011 12 annual report

Thank you


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