2010 – 11 MTEF STRATEGIC PLAN PRESENTATION TO THE PPC ON ENERGY Presentation by : Ms N Magubane Director General 15 March 2010

What informs our strategic plan? Government priorities State of the Nation Address National Budget Speech Budget Vote Speech

What informs our strategic plan? Cont./ Government priorities: Creation of decent work and sustainable livelihoods Education Health Rural development, food security and land reform The fight against crime and corruption

What informs our strategic plan? State of the Nation Address Over the next 3 years Govt. will spend R846 billion on public investment. Establishment of the Inter-Ministerial Committee on Energy, to develop a 20 year Integrated Resource plan Participation of Independent Power Producers and protecting the poor from rising electricity prices. Establishment of the Independent System Operator, separate from Eskom. 4

What informs our strategic plan? Cont./ National Budget Vote Speech Climate change issues Protection of the poor Public sector investment

DoE Budget Speech - 2009 The national strategic fuel stocks policy will be revised to include the holding of commercial stocks as well as emergency stocks (31 March 2010) We will spend considerable effort and time on the development of an Integrated Energy Plan. This would inevitably entail an intensive process of stakeholder engagement and consultation over the coming period (31 March 2010) 6

DoE Budget Speech - 2009 We will work with the departments of Environmental and Water Affairs, Transport and Trade and Industry to ensure that the roadmap for the new fuel standards and specifications is developed and that the stakeholder engagement process is completed by June 2010 This year we will establish South African National Energy Development Institute to conduct energy research and development as well as implement, more aggressively, energy efficiency and renewable energy programmes on behalf of Government ( 31 March 2010) 7

DoE Budget Speech -2009 Next year will mark 10 years since the inception of the Liquid Fuels Charter. We will, during the course of this year, initiate a process of reviewing the progress made in the last 9 years (31 March 2010) During this calendar year, we will establish the National Radioactive Waste Disposal Institute in order to manage and regulate radioactive waste material in accordance with international standards to ensure the protection of people, property and the environment (31 March 2010) generation. 8

DoE Budget Speech - 2009 In line with our non – proliferation initiatives, NECSA will complete the conversion of the SAFARI reactor from using Highly Enriched Uranium to Low Enriched Uranium (30 September 2009) To pronounce on the energy mix going forward, particularly with regard to the role and responsibilities of Eskom in relation to the Independent Power Producers (30 August 2009) 9

DoE Budget Speech - 2009 The Department will ensure that one million solar water heaters are installed in households and commercial buildings over a period of five years. This major programme has the potential to create up to one hundred thousand jobs across the value chain that will include manufacturing, installation and maintenance (31 March 2013) We will be engaging with the Clinton Foundation, whose objective is climate change mitigation, for the development of an Industrial Energy Park concept, focussing on concentrated solar power. 31 March 2010 10

DoE Budget Speech In addition, we intend to ensure that, through independent power producers, 400 MW of wind power is commissioned in the next three years 31 March 2012 We are aware that our country is literally festooned with a variety of initiatives particularly in the field of solar energy. These initiatives require a coordinated response. During the course of this year, we shall be convening a conference of all stakeholders organised in this industry so that, together, we develop a clear action plan going forward (31 March 2010) 11

DoE Budget Speech- 2009 In addition, we intend to ensure that, through independent power producers, 400 MW of wind power is commissioned in the next three years (31 March 2012) We are aware that our country is literally festooned with a variety of initiatives particularly in the field of solar energy. These initiatives require a coordinated response. During the course of this year, we shall be convening a conference of all stakeholders organised in this industry so that, together, we develop a clear action plan going forward (31 March 2010) 12

DoE Budget Speech -2009 The integrated resource plan or country plan will be gazetted within the next two months. This plan will indicate both the supply side options such as power stations of various technologies, and demand side options, particularly energy efficiency interventions (31 August 2009) It is our goal to displace at least 5% of crude oil based fuels with bio-fuels.  13

DoE Budget Speech - 2009 We have started a process that will enable us to provide a cushion for the indigent, and will develop an appropriate pricing policy framework to structure our tariff regime such that the indigent sections of our communities are insulated from increasing electricity tariffs. This would be over and above the Free Basic Electricity allocation, which municipalities are responsible for implementing with varying levels of success. This work is being undertaken with the social partners in business, labour and civil society. We are hoping to complete this process by September this year. 14

DoE Budget Speech - 2009 By the end of September this year, we will be launching the Engcobo, Inxuba Yethemba, Umhlonhlo rural electrification projects that will see an investment of R 170 million in the infrastructure development of Chris Hani and Alfred Nzo District municipalities (30 September 2009) Our contribution to the pilot project in Giyani will be R10 million for rural electrification and exploring the possibility for local electricity generation. 15

Department of Energy Strategic Plan

TABLE OF CONTENTS Introduction Strategic Overview and Objectives Organizational Environment Policy Development Key Focus Areas Resource Plan Conclusion

INTRODUCTION Year of Action – what this means for the DoE. Establishment of the DoE – has been in existence since June last year. Been sharing the budget and support services with DMR and is ready to operate independently effective 1 April 2010. Mandate of DoE has not changed – focus on uninterrupted, secure and affordable energy supply.

INTRODUCTION Some of the Energy challenges facing our country: Global economic crisis and its impact on energy cost, infrastructure development, job creation, service delivery. Roping in of Independent Power Producers and introducing energy efficiency and demand side interventions. Further diversifying of our energy mix – taking advantage of our natural resources. 19

INTRODUCTION Some of the Energy challenges facing our country (cont) Introducing second generation nuclear power stations for base-load purposes. Enforcing electricity price determination to stabalize the South African market. The need to gravitate away from fossil fuels. Promotion of investment in the liquid fuels industry. Ensuring security of supply, mainly for liquid fuels and electricity. 20

INTRODUCTION The revised mandate, mission and vision of the DoE: Ensure secure and sustainable provision of energy for socio-economic development MISSION To regulate and transform the sector for the provision of secure, sustainable and affordable energy

INTRODUCTION VISION 2014 A transformed and sustainable energy sector with universal access to modern energy carriers for all by 2014 VISION 2025 Improving our energy mix by having 30% of clean energy by 2025 22

DoE STRATEGIC OBJECTIVES Our strategic plan seeks to deliver results along the following eight strategic objectives: Ensure energy security. Achieve universal access and transform the energy sector. Regulate the energy sector. Effective and efficient service delivery. Optimal utilisation of energy resources. Ensure sustainable development. Enhance DoE culture, systems and people. Promote corporate governance. 23

ORGANISATIONAL ENVIRONMENT Budget split – 30/70 between DoE and DMR for support services – although functions have been duplicated. Impact of lesser budget – an interim ‘establishing’ structure that ensures all critical positions to establish a new department are filled immediately. Co-operation of SOEs – assistance with setting up of the new department. First phase of capacitating DoE completed – i.e matching and placement of DME personnel. 24

ORGANISATIONAL ENVIRONMENT Second phase – advertising and filling of vacant posts has started, plans to complete by end of the first quarter. Additional capacity to be obtained with the mid-term adjustments later in the year. Line function has maintained the two branches of Hydrocarbon & Energy Planning and Electricity, Nuclear & Clean Energy. Plans for gradual increase of the line function capacity to realise the full structure of the new DoE by end of the MTEF.

POLICY DEVELOPMENT Legislative focus for this year: The Seventh Constitutional Amendment Bill. The REDs establishment Bill – establish efficient regional electricity distributors. The Electricity Regulation Amendment Bill – appropriation of land for electricity infrastructure, provision for the establishment of ISMO. New Generation/IPP Regulation – provision of regulatory intervention to level the playing field in the electricity generation sector. 26

POLICY DEVELOPMENT Legislative focus for this year: The Petroleum Products Amendment Act, 2003 – update the overall governance in the liquid fuels sector. The National Energy Act, 2008 – empowers the Minister of Energy to execute certain initiatives to achieve security of supply, develop regulations for the provision of energy data, etc. Review of the fuel specification regulation – to advance cleaner fuels. 27

PROGRAMME FOCUS AREAS Hydrocarbons and Energy Planning Integrated Energy Planning Strategy – provision of an integrated energy plan that recognises the interdependence of all forms of energy, by the end of the year. Fuel specifications & standards LPG price regulation – support greater use of LPG for thermal purposes. Biofuels pricing framework – development of a framework to guide the implementation of the biofuels strategy to expand the biofuels market.

PROGRAMME FOCUS AREAS Hydrocarbons and Energy Planning (cont) Review of the Liquid Fuels Charter. Framework for the storage of strategic and commercial fuel stock. Development of the National Integrated Energy Modeling System Development of the Regulatory Accounting System

PROGRAMME FOCUS AREAS ELECTRICITY, NUCLEAR AND CLEAN ENERGY Integrated Resource Plan (IRP) – finalisation and roll out of the second phase ( IRP2). EDI Restructuring. Rehabilitation of electricity distribution infrastructure. Electrification programme (INEP) – financial year target of 150 000 households, 6 new bulk substations, all schools identified by Department of Education by June 2010.

PROGRAMME FOCUS AREAS ELECTRICITY, NUCLEAR AND CLEAN ENERGY (cont) EEDSM interventions – Solar Water Heater programme, the ‘standard offer’ rebate system on energy saving, incentives for the industrial sector on power conservation program and the commercial sector’s energy efficiency interventions Implementation of the Radioactive Waste Management Policy and Strategy – placement of the institutional framework for safe management and disposal of radioactive waste pl

PROGRAMME FOCUS AREAS SUPPORT SERVICES (Programme 1) Main focus is on the establishment of the new department – capacity and provision of skills. Setting up of governance structures – internal audit function, risk management and fraud prevention, procurement & financial committees Review of the international agreements – aligning them to government’s objectives. Communication strategy – profiling the department as the custodian of the country’s energy security. 32

OTHER FOCUS AREAS Monitoring of SOEs reporting to the Minister of Energy Generally SOEs are established as instruments of socio-economic advancement. SOEs should have the means to contribute to the improvement of the standard of living of the citizens of our country – create sustainable economic and social benefits. SOEs are the extended arm of government and need to advance government priorities.

PROGRAMME FOCUS AREAS Monitoring of SOEs (cont) Improving our SOE monitoring function will include: Shareholder’s annual strategic workshop/ meeting in July/August – articulation of government priorities and align strategies. Approval of budgets and business plans that balance government and commercial expectations.

PROGRAMME FOCUS AREAS Monitoring of SOEs (cont) Setting up of regular discussion forums between the department and the entities. Conduct shareholder quarterly performance reviews. 35

PROGRAMME FOCUS AREAS CFO Office (Programme 1) Drive transformation policies Educate and Communicate with Stakeholders Implement Policies and Procedures Develop and Review Internal Processes Improve Turnaround Time Implement Service Level Agreements Improve Management and leadership Capabilities Attract, Develop and retain Skills 36

PROGRAMME FOCUS AREAS CFO cont. Implement Effective Systems Promote Core Values 11. Drive Innovation 12. Align Budget to Strategy 13. Maximize Utilization of Resources 14. Manage Costs effectively 15. Promote corporate governance 37

DOE RESOURCE PLAN Per programme 2009/2010 2010/2011 2011/2012 2012/2013 Programmes Revised Estimate Medium term expenditure estimates MTEF Baseline Administration 68,2 104,2 127,7 106,9 Hydrocabons and Energy Planning 54,4 1 5558,6 1 564,4 1 571,2 Electricity, Nuclear and Clean Energy 327,5 408,8 513,7 116,5 Associated Services 3 290,1 3 463,8 3 553,6 3 744,0 Total 3 740,2 5 535,4 5 739,6 5 538,7 38

DOE RESOURCE PLAN Per economic classification 2009/2010 2010/2011 2011/2012 2012/2013 Programmes Revised Estimate Medium term expenditure estimates MTEF Baseline Current Payments 194,5 202,1 235,6 220,7 Transfer and Subsidies 3 543,1 5 328,7 5 499,1 5 312,8 Payments of Capital Assets 2,6 4,6 5,0 5,3 Total 3 740,2 5 535,4 5 739,6 5 538,7 39

CONCLUSION In conclusion, we want to: Invest in building a formidable TEAM ENERGY that is able to effectively discharge our responsibilities, serve the masses of our people and make a difference in their lives.

THANK YOU! 41