slide1 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
UPDATE ON THE PILOT APPROACH TO DISTRIBUTION ASSET MANAGEMENT (ADAM) Mr. Goodman Nxumalo PowerPoint Presentation
Download Presentation
UPDATE ON THE PILOT APPROACH TO DISTRIBUTION ASSET MANAGEMENT (ADAM) Mr. Goodman Nxumalo

Loading in 2 Seconds...

play fullscreen
1 / 24

UPDATE ON THE PILOT APPROACH TO DISTRIBUTION ASSET MANAGEMENT (ADAM) Mr. Goodman Nxumalo - PowerPoint PPT Presentation


  • 62 Views
  • Uploaded on

UPDATE ON THE PILOT APPROACH TO DISTRIBUTION ASSET MANAGEMENT (ADAM) Mr. Goodman Nxumalo Energy Programmes and Projects 01 November 2013. Introduction. Electricity Distribution Industry overview Electricity Distribution Industry challenges Current state of EDI

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'UPDATE ON THE PILOT APPROACH TO DISTRIBUTION ASSET MANAGEMENT (ADAM) Mr. Goodman Nxumalo' - timothy-mason


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1

UPDATE ON THE

PILOT APPROACH TO DISTRIBUTION ASSET MANAGEMENT (ADAM)

Mr. Goodman Nxumalo

Energy Programmes and Projects

01 November 2013

introduction

Introduction

Electricity Distribution Industry overview

Electricity Distribution Industry challenges

Current state of EDI

Approach To Addressing the Challenges

Conditionality framework

ADAM Programme Implementation Model

Progress to date

Way forward

Allocations

Mini - ADAM Projects

PRESENT EDI TO PCE 2013-NOV

electricity distribution industry edi restructuring overview

Electricity Distribution Industry (EDI) restructuring overview

Over the last 20 years different attempts have been initiated to improve/restructure the EDI in order to address the various short comings.

In May 2001 the Cabinet approved the restructuring of the industry and established Electricity Distribution Industry Holdings (EDIH) to manage the process.

After years of attempting to find a workable model within the existing legislative environment, consultations with the various stakeholders, taking into account the energy security, legal implications, impact on local government and Eskom and existing regulations, it became evident that the restructuring process had to be reviewed.

PRESENT EDI TO PCE 2013-NOV

electricity distribution industry edi restructuring overview cont

Electricity Distribution Industry (EDI) restructuring overview (cont.)

The decision made by Cabinet (8th December 2010) was that EDIH would be wound up by the end of March 2011 and not to implement the REDs model.

In November 2012 Cabinet approved the ADAM Programme and the start of the first phase

This presentation is only focusing on the mini-ADAM pilot phase.

There is also a more long term policy process undertaken by DOE for the full implementation of the ADAM programme (EDI policy development in Policy and Planning Branch) .

PRESENT EDI TO PCE 2013-NOV

current state of edi

Current State of EDI

Unacceptable wide range of tariff differences

Significantly different service standards and practices

Lack of appropriate investment in the electricity distribution network assets

Challenges pertaining to technical/non technical losses and revenue management

Decrease in quality and reliability of electricity distribution to the end customer

Inadequate skills development for the industry

PRESENT EDI TO PCE 2013-NOV

current state of edi phase 1 initial assessment

Having done field visits to all 12 priority cities, the following observations were made:

    • Asset management strategies/plans and appropriate systems do not exist across the industry,
    • Municipalities and Eskom are not providing for sufficient investment in existing and planned distribution networks leading to a backlog in infrastructure upkeep.
  • The average age of the networks is in excess of 40 years.
  • 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.

Current State of EDI: Phase 1 Initial Assessment

PRESENT EDI TO PCE 2013-NOV

current state of edi phase 1 initial assessment cont

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.

  • The regulatory environment is not conducive to enforcing license conditions of distributors.

Current State of EDI: Phase 1 Initial Assessment (cont.)

PRESENT EDI TO PCE 2013-NOV

approach to addressing the challenges

Approach To Addressing the Challenges

It is important to address the challenges in a holistic and integrated manner

The Approach to Distribution Asset Management (ADAM) Turnaround Programme is a comprehensive, multi-year initiative targeted at addressing maintenance, refurbishment and strengthening shortcomings in key electricity distribution infrastructure.

Current practices in the EDI do not guarantee business sustainability and socioeconomic growth, while the associated increased operation of under-maintained plant is posing a significant risk to the industry.

The maintenance backlog has been attributed to inadequate investment in infrastructure that puts the country at risk of deepening the electricity crisis.

PRESENT EDI TO PCE 2013-NOV

approach to asset management

The NERSA Reports on the state of EDI infrastructure show that even though there are pockets of good performance as far as maintenance, reliability, control and networks go, a significant number of assets needs improvement.

Approach To Asset Management

PRESENT EDI TO PCE 2013-NOV

approach to asset management1

Approach To Asset Management

Through a study conducted by EDIH during 2008 it was revealed that the estimated maintenance, refurbishment and strengthening backlog in the distribution network amounted to R27,4bn (2008 values).

A holistic approach to asset management in the EDI is required to run parallel to the current work been done in the EDI.

PRESENT EDI TO PCE 2013-NOV

approach to asset management2

Approach To Asset Management

A business plan for addressing the backlog is already developed.

The current capital expenditure in the EDI is approximately R5 billion per annum and there are resource constraints which would make it difficult, if not impossible, to implement the business plan in a short period of time.

The backlog figure is not static and the longer it takes to address it, the larger the backlog will become and more importantly the need for funding and competent human resources to address this issue will increase.

DOE is in the process of appointing consultants to carry out an update on the EDI backlog analysis.

PRESENT EDI TO PCE 2013-NOV

approach to asset management3

Approach To Asset Management

PRESENT EDI TO PCE 2013-NOV

resourcing funding requirements summary

Resourcing: Funding Requirements Summary

  • It is essential that funding be sourced to move the ADAM programme beyond the first completed phase.
  • A phased funding required as indicated above, is required to initiate the ADAM programme.

PRESENT EDI TO PCE 2013-NOV

funding options

For Mini ADAM programme –

    • Assist municipalities with technical identification of most critical challenges
    • Development of Business plans
    • Engaging with consultants/contactors on work to be done
    • Monitoring of progress on a continuous basis.

R320 million available from MYPD2: (Transferred to DOE)

    • Implement as a pilot Mini ADAM programme wrt critical municipalities to test the broader ADAM principles.
  • Going forward tariff based
    • Part of allowance approved by NERSA
    • Ring fencing of tariff allocation for the purpose it is been allocated
    • Co-funding by municipality through soft loans

Funding options

PRESENT EDI TO PCE 2013-NOV

conditionality framework for mini adam

Each municipality participating would be expected to agree to:1.Contract signed between DOE and each qualifying municipality

2. Ring-fencing account of approved funding, 3. Submit rehabilitation plan for approval, 4. Report progress as prescribed

Conditionality framework for mini-ADAM

PRESENT EDI TO PCE 2013-NOV

adam programme implementation model
ADAM Programme Implementation Model

Cabinet approval

N.T.Mini ADAM Allocation R320m (ex EDIH surplus )

DoE

M.O.A (DOE-MUNIC)

Funding Level

Payment

Cash flow transfer Report- Annexure ‘D’

Recommend Approval to DoE

Metro/Municipality

Ring-fenced accounts

Each Metro/Munic

Project Manager

Programme Steering Committee(MASC):

Munics, NERSA, DoE, MISA, N.T, DBSA, Eskom

Present Projects

Technical Monitoring

Progress Reporting

Claim Payment

Monitoring DoE Team

Project Level Execution

Project 1

Project 2

Project n

Operations and Maintenance - Metro/Munic

PRESENT EDI TO PCE 2013-NOV

slide17

Mini–ADAMProgress to date

National Treasury re-allocated R320 million of the funds not been utilized by EDI Holdings to DoE to initiate the “Mini ADAM’ project.In order to kick start the process of implementing the ADAM Programme a “Mini” ADAM programme has been planned. The 2013/14 allocations for the “Mini ADAM” of R320 million was allocated to 7 municipalities and 2 Metros as critical emergency interventions is part of implementation of the overall ADAM strategy.Note: Due to the limited funding, only municipalities who required critical emergency interventions and responded in time (to fit in with National Treasury’s timelines) with enough information as required by DOE were considered.No further funding has been allocated in the next financial years for the Mini ADAM programme. In order to ensure that the “Mini ADAM” projects are conducted in a holistic manner, a broad base Steering committee was established.

PRESENT EDI TO PCE 2013-NOV

slide18

Steering Committee

The Key Role of the Mini ADAM Steering Committee (MASC) is to oversee the progress of the programme and ensure it is carried out satisfactorily.The MASC is comprised of:• Representatives (senior managers) of NERSA, MISA, DOE, DBSA ,N.T., ESKOM)• Any specialists, consultants or advisors may be called upon at any time if required.1. Considers and recommends approval of the business plans and achievement of outcomes.2. Ensures the project's scope aligns with the requirements of the stakeholder groups.3. Provides those directly involved in the project with guidance on project business issues. 4. Ensures effort and expenditure are appropriate to stakeholder expectations.5. Addresses any issue that have major implications for the projects.6. Keeps the project scope under control as emergent issues force changes to be considered.7. Reports on project progress to those responsible at a high level.

PRESENT EDI TO PCE 2013-NOV

slide19

Mini ADAM Allocations

PRESENT EDI TO PCE 2013-NOV

slide20

Mini ADAM Projects

PRESENT EDI TO PCE 2013-NOV

slide21

Mini ADAM Projects

PRESENT EDI TO PCE 2013-NOV

slide22

Mini ADAM Projects

PRESENT EDI TO PCE 2013-NOV

slide23

Way Forward

1. It is imperative that the reform momentum created through the mini-ADAM Program be maintained.2. Focus to be directed towards the regulatory challenges afflicting municipalities, including network rehabilitation, setting norms and standards for maintenance, monitoring compliance and enforcement.3. Ring fencing of tariff allocation and the monitoring of these allocations to ensure it is applied in for the purpose it was attended for. 4. Cooperation from all stakeholders and specially from Local Government who are responsible for service delivery must be forthcoming so thatthe program is successful. 5. Have to finalize long term solution of EDI challenges.

PRESENT EDI TO PCE 2013-NOV

thank you

THANK YOU

PRESENT EDI TO PCE 2013-NOV