2012/2013 ANNUAL REPORT PRESENTATION TO THE ENERGY

PORTFOLIO COMMITTEEMs Nelisiwe Magubane

Director-General9 October 2013

25 November 2012

Presentation Layout

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Introduction

Non-Financial Performance (Performance Information Overview)

Financial Performance Overview

Conclusion

Non-Financial Performance

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•The service delivery environment

•Service delivery improvement plan

•Organisational environment

•Key policy developments and legislative changes

•Key capital projects

•Public Participation Programme

•SOE/Cs reporting to the Minister of Energy

•Performance Overview

The Service Delivery Environment

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Global energy agenda

•The global energy agenda has been dominated by: energy security, energy access, and the deployment of sustainable (renewable) energy.

•The Department’s focus within the global energy agenda has been on energy security through the diversification of energy mix, access to diversified energy markets, deployment of sustainable energy through the renewable energy program and energy access through engagements in local (continent) and international platforms.

•Energy security initiatives were undertaken through bilateral and multilateral engagements

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Petroleum

•The global petroleum environment has been characterised by the fluctuation in the crude oil prices

•The availability of petroleum products globally however, was ensured during the year.

•With the discontinuation of the supply of crude oil from Iran meant that South African oil companies had to find alternative sources of supply.

•As 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 country.

•APPA has focused on harmonisation of petroleum legation to attract investments in the upstream sector as well as conducting investigations in the intra African trade in petroleum products.

•The Department has continued to improve the turnaround time for processing applications and held 13 awareness campaigns.

The Service Delivery Environment (cont.)

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Nuclear

•Post the devastating earthquake and tsunami on March 11th at Fukushima Daaichi Nuclear Power Station, the nuclear industry in South Africa has been inundated with scrutiny from anti-nuclear lobbyists, especially environmentalists groups.

•This has created a need to intensify public awareness initiatives to present a balanced view in order to demystify nuclear energy and ensure public acceptance.

•During the year, the Department hosted a number of public engagements to address nuclear issues.

•As part of the global/IAEA Safety Action Plan to address the lessons learned from the Fukushima earthquake, South Africa responded by developing its National Safety Action Plan in line with the IAEA Safety Plan.

•For South Africa, the safety re-assessment culminated into a National Report on the implications of the Fukushima accident on Koeberg nuclear power plant and Safari-1 research reactor which was presented at the Extraordinary Meeting of the Convention of Nuclear Safety on Fukushima held in Vienna in August 2012.

The Service Delivery Environment (cont.)

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Electricity and Electrification•Less challenges in the electricity supply this year•INEP achieved 22 835 (11.2%) above target connections •Irrespective of the above number of connections achieved, the electrification rate has to be increased due to the large backlogs that are still existing in the country. •The programme is facing some challenges:

– lack of accountability by municipalities is a worrying factor..– The increased cost of base metals that are used to manufacture the

hardware components; – more households have to be electrified in deep rural areas where the

cost is much higher to implement; lack of infrastructure; – lack of skills and resources in municipal technical departments. to

plan; – different technical standards between Eskom and Municipalities.

The Service Delivery Environment

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Electricity and Electrification (cont)

•Post EDIH, a funding model to accelerate the rehabilitation of the electricity distribution infrastructure has been developed.

•R320 million of seed funding was made available from EDIH funds to pilot the ADAM programme and is to be augmented by either the tariff or fiscal based approach.

•As part of this pilot,7 municipalities and two metros have been identified.

The Service Delivery Environment (cont.)

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Clean Energy - SWH

• The objective of the solar water heating programme is to provide access to those social areas that need government support.

• To date the programme has achieved over 350 000 installations.

• We completed the standard offer policy aimed at funding the SWH programme.

• Some of the challenges experienced with the installations:1. The quality of roof structures in the identified areas,

2. water quantity and quality that are causing clotting of water pipes

3. Utilizing of cheap imported systems that have a high failure rate; and

4. Poor workmanship.

The Service Delivery Environment (cont.)

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Clean Energy - IPPs

• Reached financial close in August 2012, in respect of 28 preferred bidders – 1415 MW of renewable energy. Construction has already commenced.

• The bidders have committed approximately R1bn to be spent on women owned supply businesses.

• The Solar Park feasibility study has been completed.

Clean Energy - Biofuels

• The biofuels mandatory blending regulations were promulgated.

• The draft Biofuels Pricing Framework was also developed during the year.

• Finance Minister pronounced on the biofuels support mechanism in his 2013 appropriations bill tabling.

The Service Delivery Environment (cont.)

The Service Delivery Improvement Plan

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• The draft Service Delivery Improvement Plan has been completed.

• The plan is based on national priorities (as defined by the NDP), the Department’s strategic and operational plans.

• Department’s service delivery improvement priorities identified, are:– Electrifying the country

– Provision and installation of solar water heaters

– Improvement of the petroleum licensing process

– Improvement of the nuclear licensing process

• Process to be completed at the end of November 2013.

The Organisational Environment

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• Head Office relocated to Matimba House in Pretoria in August 2012

• Regional Offices – WC moved to Terraces Bld in Cape Town, negotiations for other offices with DPW ongoing.

• Staff compliment for the year was – total of 818 approved posts, 556 funded and filled, with 56 interns.

• Conducted a culture survey for the Department.

• IT environment – 97% network availability and no security breach for the period.

Key Policy Developments and Legislative Changes

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•Draft Strategic Stocks Petroleum Policy and Draft Stocks

Implementation Plan.

•Amendment of Regulations regarding Petroleum Products

Specifications and Standards.

•Draft Regulations regarding the Mandatory Blending of Biofuels with

Petrol and Diesel.

•Integrated Energy Plan (IEP) covering the period up to 2050.

•Development of a New Household Electrification Strategy.

As at the end of 4Q, 175 473 connections were reported. Final total for the year, after verification came to 202 835 new connections.

The target of 180 000 was exceeded due to the following contributions: Improved efficiencies as a result of being more involved in the

operational activities of implementers.

Good co-operation from Eskom and some municipalities

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INEP Performance (12/13)

Entity MTEF Allocations

Connections INEP (including

roll-overs)

Connections Own funding

Total Connections

Eskom (bn) R 1,879 368 121 041 21 831 142 872Municipalities (bn) R 1,151 443 50 620 50 620Non-grid (mil) R 86 400 9 343 9 343Total R 3,117,211 181 004 21 831 202 835

Public Participation Program

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04 April 2012 Umsobomvu Noupoort Community and stakeholder engagement on service delivery issues

05 April 2012 Frances Baard Kimberly PetroSA Sod Turning ( Computer Centre and the school hall)

15 May 2012 City of Cape Town University of Western cape

Opening of the laboratory

31 May 2012 City of Johannesburg Sandton Sun Hotel New Age and SABC Business breakfast

02 June 2012 North West Province Cyverskull and Ngobi Villages

Social infrastructure Presidential Monitoring and Evaluation visit, North West,

24 July 2012 Umzimkhulu Municipality Umzimkhulu Presidential Monitoring Visit to Umzimkhulu

31 July 2012 Matzikama Municipality Maskamsig Hall, Vrendendale

Electricity switch-on of Vanhrynsdorp 22KV MV line and houses and Public

engagement

 

31 July 2012 Matzikama Municipality Thusong Community Centre,Vredendale

Vanhrynsdorp Stakeholder engagement on energy issues

22 September 2012

Mosselbay Municipality Kwa Nonqaba Multipurpose Centre, Mosselbay

Handing over of the KwaNonqaba Multipurpose hall and Ilingelihle Centre for the elderly and community engagement

Public Participation Program

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25 September 2012 City of Johannesburg Summer Place Energy Efficiency Leadership Stakeholder Network

20 October 2012 Siyathemba Municipality Prieska Signing of the Solar Park MOU and Public engagement

27 October 2012 Thulamela Municipality Tswinga Electricity switch-on of Tswinga Village

09 November 2012 Umsobomvu Municipality Colesberg Launch of the Solar Water Heaters

19 November 2012 Mbizana Municipality Bizana Launch of Bizana IEC

04 December 2012 City of Johannesburg Protea Hotel Engagement with Historically Disadvantaged South

African Operating in the Petroleum Sector06 December 2012 Umsobomvu Municipality Noupoort Launch of the Solar Water Heaters

10 December 2012 Emthanjeni Municipality De Aar Sod turning for the Solar Capital Project

 12 June 2012 Mquma Cerhu village Celebrating 4 million household connections

15 June 2012 Polokwane Ralema and Nobody Electricity switch-on of Ralema and Nobody villages.Stakeholder and community engagement

24-29 June 2012 Mangaung University of Free State Awareness on the opportunities in the energy sector

26 October 2012 Umjindi Municipality Emjindini Trust Electricity switch-on of Umjindi and Verulum village

 

23 November 2012 Danhausser Municipality Moy and Hattingspruit

Electricity switch-on of Moy and Hattingspruit

 

State Owned Entities/Companies

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•Continued SOE/Cs engagements with the Minister, Director General and

department officials.

•Slow progress with the implementation of the Minister’s directive of two

years ago regarding the restructuring of the CEF group of companies by the

CEF board

•The EDIH winding up process was delayed CCMA case brought by ex EDIH

employees. The matter was finally settled and all the employees paid out in

December 2012. The company is in the process of being deregistered with

the CIPC.

•Internal oversight capacity has unfortunately not improved.

Performance Overview for 2012/13

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Branches/Programmes Planned targets

AchievedPartially achieved

Not achieved

Policy and Planning 36 10 21 5

Petroleum and Petroleum Products Regulations 16 6 7 3

Nuclear Energy 10 2 7 1

Clean Energy 32 16 11 5

Programmes and Projects 9 2 1 6

Corporate Services 29 22 5 2

Financial Management Services 25 24 1 0

Governance and Compliance 31 27 3 1

Director General’s Office 10 9 1 0

Total 198 [204] 118 57 23

Conclusion

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• The CFO will present the detailed Financial Performance Overview

• The detailed alignment of the DOE response to the following is

attached in a separate presentation:

– 2012 SONA

– MDGs, Government Priority Outcomes

– SOOGs 1 to 4

– SIPs

• Strategies to overcome the areas of under performance have been

developed by each Branch and also forms part of the attached

presentation.