Presentation to the Select Committee on Economic Development Department of Energy’s 2012/13 Annual Report Ms. N. Magubane – Director General 13 November

PRESENTATION LAYOUT 2  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 3  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) 4  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 5  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 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) 6  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. 7

2012/13 BUDGET OVERVIEW Expenditure Per Economic Classification DETAILS Budget Actual spend 31/03/2013 Actual % on budget spend Rand’s MillionR'000 % Transfers and subsidies 6,304,841 6,276, % Compensation of Employees 206,763201, % Goods and Services 207,747170, % Payments for capital assets 15,127 10, % Payments for financial assets036 Total 6,734,478 6,658, % 8

Link of Financial and Non-financial performance Programme Planned Targets Achieved/ Budget R'000 Partially Achieved/ Actual spend Not Achieved/ Actual % budget spend Administration Budget 236,583219, % Energy Policy and Planning Budget 1,563,4031,544, % Energy Regulation Budget 1,139,7871,139, % 9

Link of Financial and non-financial performance Programme Planned Targets Achieved/ Budget R'000 Partially Achieved/ Actual spend R'000 Not Achieved/ Actual % budget spend R'000 National Electrification Programme92 16 Budget 3,147,8223,112, % Nuclear Energy and Regulation Budget 646,883642, % *Not all targets have financial implication. 10

High level performance information 11 Electricity  The deteriorating state of the electricity distribution infrastructure continues to be of great concern to the Department as it affects the pace of INEP  During the year R320m was allocated for the 2013/14 financial year to address the distribution infrastructure  Two metros and seven municipalities have been identified as part of the first pilot  The process of closing down EDIH was completed, pending the receipt of the deregistration certification

High level performance information (cont) 12 Electrification – INEP  We exceeded the annual target for electricity connections this year and achieved ;  Of the , non-grid connections totalled 9 343;  4 new substations were completed and 5 upgraded  A total of 275 km of new electrical lines were installed and another 85 km upgraded  Of 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) 13 Energy Policy and Planning  Continued with the implementation of the IRP  Draft 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 initiated  A policy discussion document outlining coal supply constraints and possible interventions was drafted  The Carbon Capture and Storage Road Map was endorsed by Cabinet  The Draft Gas Amendment Bill was pre-certified, submitted for Cabinet approval and released for public comments

High level performance information (cont) 14 Clean Energy  In August 2012, we reached financial close in respect of 28 bidders contracted to supply 1415MW under the REIPPP, and construction has commenced  The Standard Offer policy for Solar Water Heaters in place and SWH units had been installed by year end  The Solar Park feasibility study is back on track following the initial teething problems  Working for Energy MoU executed with SANEDI and annual workplan developed and funding allocation transferred  68 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) 15 Energy Efficiency and Demand Side Management  EEDSM monitoring tool was developed and implemented  Real time field update testing was demonstrated  Municipal EEDSM savings of just over 39 MW were confirmed  2,251 TWh annual savings confirmed by Eskom  Regulations for introducing EE Incentives Scheme

High level performance information (cont) 16 Petroleum  With the discontinuation of the supply of crude oil from Iran, it 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  No fuel supply shortages were experienced; corrective actions were implemented where necessary  Improved the process of ensuring all applications are processed within 90 days  1717 compliance inspections conducted  Biofuels Mandatory Blending Regulations were promulgated and draft Biofuels pricing framework developed

High level performance information (cont) 17 Nuclear  The 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 acceptance  During the year a number of public engagements were hosted by the department to address nuclear issues  The work of the NNEECC together with the Department continued in preparation for the nuclear built program  Draft IAEA external review of nuclear infrastructure report completed  The Africa Nuclear Conference took place on 18 March 2013

High level performance information (cont) 18 Energy Projects and Programmes  2 IEC's were successfully established namely, Mbizana in the Eastern Cape and Ulundi in KwaZulu-Natal  Energy 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 underway  The department has completed an action plan to address AGSA findings  Most of the audit findings were addressed by 31 July

CONCLUSION 20 THANK YOU