Date of presentation: 08 October 2013 The Presidency Department of Performance Monitoring and Evaluation DoE Progress on the Outcomes Presentation to the Parliamentary Portfolio Committee on Energy

The Presidency: Department of Performance Monitoring and Evaluation Mandate of DPME Established in January 2010, the Department of Performance Monitoring and Evaluation has been mandated by the President and Cabinet to: Facilitate the development of plans /delivery agreements for cross-cutting priorities or outcomes of government, and monitor and evaluate the implementation of these plans/delivery agreements Monitor the performance of individual national and provincial government departments and municipalities Monitor frontline service delivery Manage the Presidential Hotline Carry out evaluations Promote good monitoring and evaluation practices in government Provide support to delivery institutions to address blockages in delivery. 2

The Presidency: Department of Performance Monitoring and Evaluation Delivery Agreements A Delivery Agreement is a charter between all the key stakeholders who need to work together to achieve the outcome.  Performance Agreements between President and outcome coordinating Ministers requested them to work with other key stakeholders to develop detailed Delivery Agreements for each outcome  Delivery Agreements describe key activities, sub-outputs, outputs, indicators, and targets, identify required inputs and clarify roles and responsibilities of each key body which contributes to the achievement of the outcome  Performance Agreements between President and other Ministers also requested them to work with the coordinating Ministers on relevant delivery agreements  National Treasury guidelines for strategic plans indicate that departments’ strategic plans and APPs must reflect their commitments to delivery agreements –should also be monitored by Parliament 3

The Presidency: Department of Performance Monitoring and Evaluation 1.BASIC EDUCATION: Quality basic education 2.HEALTH: A long and healthy life for all South Africans 3.SAFETY: All people in South Africa are and feel safe 4.EMPLOYMENT: Decent employment through inclusive economic growth 5.SKILLS: Skilled and capable workforce to support an inclusive growth path 6.ECONOMIC INFRASTRUCTURE: An efficient, competitive and responsive economic infrastructure network 7.RURAL DEVELOPMENT: Vibrant, equitable, sustainable rural communities contributing towards food security for all 8.INTEGRATED HUMAN SETTLEMENTS: Sustainable human settlements and improved quality of household life 9.LOCAL GOVERNMENT: Responsive, accountable, effective and efficient Local Government system 10.ENVIRONMENT: Protect and enhance our environmental assets and natural resources 11.INTERNAL AND EXTERNAL RELATIONS: Create a better South Africa, a better Africa and a better world 12.PUBLIC SERVICE: An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship 4 The outcomes to which DoE contributes

The Presidency: Department of Performance Monitoring and Evaluation Department of Energy’s role in relation to outcome 6 Outcome 6: An Efficient, Competitive and Responsive Economic Infrastructure Network Output 1: Improving competition and regulation Output 2: Ensure reliable generation, distribution and transmission of electricity Output 3: To ensure the maintenance and strategic expansion of our road and rail network, and the operational efficiency, capacity and competitiveness of our sea ports Output 4: Maintenance and supply availability of our bulk water infrastructure Output 5: Communication and information technology Output 6: Develop a set of operational indicators for each segment 5

The Presidency: Department of Performance Monitoring and Evaluation Department of Energy’s role in relation to outcome 9 Outcome 9: Responsive, accountable, effective and efficient Local Government system Output 1: Implement a differentiated approach to municipal financing, planning and support Output 2: Improving Access to Basic Services Output 3: Implementation of the Community Work Programme Output 4: Actions supportive of the human settlement outcomes Output 5: Deepen democracy through a refined Ward Committee model Output 6: Administrative and financial capability Output 7: Single Window of Coordination 6

The Presidency: Department of Performance Monitoring and Evaluation Department of Energy’s role in relation to outcome 10 Outcome 10:Protect and enhance our environmental assets and natural resources Output 1: Quality and quantity of water resources enhanced Output 2: Greenhouse gas emissions reduced, climate change impacts mitigated & air/atmospheric quality improved Output 3: Sustainable environment management Output 4: Biodiversity protected 7

The Presidency: Department of Performance Monitoring and Evaluation 8 Overall progress against the outcomes (Q1 2013/14) Progress as planned or completed, on schedule, milestone or target met Progress with activity but not on schedule Strong likelihood that milestone or target will not be achieved within the planned timeframe

The Presidency: Department of Performance Monitoring and Evaluation 9 Overall progress against the outcomes (Q1 2013/14) Progress as planned or completed, on schedule, milestone or target met Progress with activity but not on schedule Strong likelihood that milestone or target will not be achieved within the planned timeframe

The Presidency: Department of Performance Monitoring and Evaluation 10 Progress on Outcome 6 Output 2: Ensuring reliable generation, distribution and transmission of energy Sub-outputTargetsProgress reported for 1 st Quarter 2013/14DPME comments 2.1 Create regulatory and institutional structures for the introduction of viable Independen t Power Producers (IPPs) and start process for the participatio n of IPPs in 2010 ISMO Bill enacted by 2011/12 Financial and technical Due Diligence conducted by 2011/12 Systems and change management process put in place to make ring-fenced ISMO functionally independent of Eskom by 2012/13 The ISMO Bill was adopted by the Parliamentary Portfolio Committee on Energy in March 2013 and is currently awaiting approval. It has since been reclassified as Section 76 legislation and will now follow the NCOP approval process. Once the Bill has been ratified into law, the process to establish ISMO as a State Owned Company will start. IPPs -New generation capacity regulations under the Electricity Regulation Act have been promulgated. IPP process has progressed on Renewable energy. Functions to facilitate introduction of IPPs have been ring-fenced in Eskom. Good progress made by the DoE in developing the legislation as well as starting the participation of IPPs. Substantially likely to be achieved by end of term, but not in full. DPME

The Presidency: Department of Performance Monitoring and Evaluation 11 Progress on Outcome 6 Output 2: Ensuring reliable generation, distribution and transmission of energy Sub-outputTargets Progress reported for 1st Quarter 2013/14 DPME comments 2.2 Develop a funding and implementation plan and reduce the electricity distribution infrastructure maintenance backlog of R27.4bn to R15bn by 2014 Funding and implementation plan in place by March 2011 Report detailing a map of distribution assets for 50% of all Municipalities by 2012/13 Initiate interventions, monitor rehabilitation projects and reduce backlog by R8bn in 2012/13 The Cabinet has approved Approach to Distribution Asset Management (ADAM). All Metros have been mapped in respect of the status of their electricity distribution infrastructure. Allocations have been made to 7 municipalities and 2 Metros and members of a steering committee have been appointed. Actual rehabilitation of distribution infrastructure is not being reported. Municipalities are using some electricity revenues for maintenance. Nersa tariffs have a component for maintenance. Target reduction of backlog to R15bn by 2014 is not yet assessed DPME

The Presidency: Department of Performance Monitoring and Evaluation 12 Sub-outputTargets Progress reported for 1 st Quarter 2013/14 DPME comments 2.3 Household access to electricity should be 92% by 2014 Targets for 13/14: (1) households electrified (2) 500 schools electrified (3) solar electricity home systems installed (4) Expansion of electrification by additional households through non-fiscal funding The department connected households (Grid) and 2341 households (Non-grid) in the 1 st quarter. Expansion of INEP through non- fiscal funding and other fiscal grants is making progress: Since August 2012, four municipalities were approved by DBSA board, namely Mbizana, Matatiele, Mnquma and Umzimvubu % of household now access electricity No progress on schools reported While good progress is noted, the 92 % target may be difficult to be achieved by the end of the financial year DPME Progress on Outcome 6 Output 2: Ensuring reliable generation, distribution and transmission of energy

The Presidency: Department of Performance Monitoring and Evaluation 13 Sub-outputTargets Progress reported for 1 st Quarter 2013/14 DPME comments 2.4 Develop a funding model for electricity generation build programme to ensure security of supply Funding model developed and submitted to Cabinet by 2010/11 Eskom developed a R300bn funding model in % of the funding requirement has been secured as at 30 June 2013 While good progress has been made for securing much of the IRP2010, work needs to be done on the nuclear build programme before there is clarity on Eskom’s role and the funding model for nuclear. Progress on Outcome 6 Output 2: Ensuring reliable generation, distribution and transmission of energy DPME

The Presidency: Department of Performance Monitoring and Evaluation 14 Sub-outputTargetsProgress reported for 1 st Quarter 2013/14DPME comments 2.5 Long- term energy mix diversificatio n to address the security of energy supply and requirement s for renewable energy (1)Extend IRP, covering 25 year window by December 2010 (2) Issue licences in accordance with IRP implementatio n – 2000MW installed in 2013/14 (3) Accelerated 1 million Solar Water Heaters roll-out by 2013 (4) Demand Side Management (9 TWH saving) (1) The IRP was approved by Cabinet and promulgated in (2) ) Approx 2 400MW of renewable energy IPPs selected as preferred bidders. Window two - 28 preferred bidders reached financial close and signed Implementation Agreements in November Window one projects are currently under construction and should be ready to supply power to the grid at least by The signing of agreements between preferred bidders and the Minister of Energy took place in May Bid documents for Window 3 for 1000MW of distributed generation in rural areas were prepared and the draft treaty regarding Grand Inga 1 Hydro project was negotiated. (3) solar water heaters have been installed in all Provinces by the end of the 1 st quarter. (4) 67.8 MW of savings were achieved in the 1 st quarter of 2013/14. (1)IRP completed and implementation commenced (2)Good progress (3) and (4) Good progress but target unlikely to be achieved Progress on Outcome 6 Output 2: Ensuring reliable generation, distribution and transmission of energy DPME

The Presidency: Department of Performance Monitoring and Evaluation 15 Sub-outputTargets Progress reported for 1 st Quarter 2013/14 DPME comments 2.6 Migrate Eskom coal from road to rail Rehabilitate coal haulage roads (joint responsibility with DPE and DoT) Additional 370 km coal haulage roads rehabilitated by 2013/14 in addition to the 380 km by 2012/ /14: 29mpta coal on rail, and 11.8mpta on road Eskom has completed Camden and Tutuka containerised coal terminals. The Majuba heavy-haul line project is now underway. Eskom planned to transport 12.2 million tons by rail in 2012/13 (against a target of 19mtpa) once the Tutuka rail facility was operating. Actual transported was 10.1 mt. 2.5 mthave been moved on rail during the 1 st quarter. Unlikely to be achieved 2.7 Restructuring of the electricity distribution industry Decision on the end state of EDI Holdings by 2010/11 EDI restructuring process was terminated. The project will be excluded in the revised Delivery Agreement. 2.8 Setting cost reflective tariffs while cushioning the poor from increasing electricity costs Develop targeting framework for qualifying beneficiaries in collaboration with municipalities by /14: 100% coverage of qualifying beneficiaries Estimated national implementation of FBE is about 70% to all indigent household’s customers and there is diverse number of challenges, including lack of funding. Progress noted DPME

The Presidency: Department of Performance Monitoring and Evaluation 16 Progress on Outcome 9: Output 2: Improve access to basic services Sub-outputTargets Progress reported for 1 st Quarter 2013/14 DPME comments 2.4 Increased access to basic electricity Support the delivery of electricity bulk infrastructure through the provision of grant funding for the upgrading of electricity reticulation by 2014 Provide grant funding to build and upgrade 40 substations by 2014 (10 per annum) Provide grant funding to build 1560 km MV lines by % of households use electricity. No details provided by COGTA in its report on bulk lines and substations. DoE and DCoG (& MISA) should apply the Cabinet Lekgotla decision to establish service delivery management structures per sector and prepare a Programme Information Management System, including pipeline of projects per municipality to address capital and maintenance backlogs. This should be coordinated with PICC:SIP 6 DPME

The Presidency: Department of Performance Monitoring and Evaluation 17 Progress on Outcome 10: Output 2: Reduce greenhouse gas emissions reduced, climate change impacts mitigated & air/atmospheric quality improved Sub-outputTargets Progress reported for 1 st Quarter 2013/14 DPME comments 2.3 Renewable energy deployed Percentage of power generated that is renewable ( GWh by 2014) Construction has already begun for projects constituted by the MW of the MW of renewable energy programme from the first and the second bid windows of the REIPPP. At 100% production a power plant of 1 MW will produce 8.76 GWh pa; therefore the current allocation of 2459MW will produce about GWh if the capacity is available by 2014 Progress is evident, but the measurement of the use of RE must be reported in order to track progress. 2.5 Efficient energy use 12% energy efficiency improvement by Solar Water Heaters have been installed and 28 municipalities have been allocated funds to implement the Energy Efficiency and Demand Side Management (EEDSM) Programme through installation of energy efficient street and traffic lighting; retrofitting of municipal buildings with energy efficient lighting as well as correction Power Factor in wastewater treatment plants Reporting is required on the extent of actual reductions in accordance with the target. DPME

The Presidency Department of Performance Monitoring and Evaluation 3 Year Comparison on DoE Outcome 6 4th Quarter Data for Financial Years: 2010/11, 2011/12, and 2012/13

The Presidency: Department of Performance Monitoring and Evaluation 19 Sub-output4 th Quarter 2010/114 th Quarter 2011/124th Quarter 2012/ Create regulatory and institutional structures for the introduction of viable Independent Power Producers (IPPs) and start process for the participation of IPPs in 2010 A ring-fenced entity for the procurement of electricity from the Independent Power Producers (IPPs) established, with contracts already signed with four IPPs and 277MW of electricity added to the national grid The ESEID Cabinet Committee approved the draft ISMO legislation in March 2011, for tabling at Cabinet The ISMO Bill to be deliberated in parliament in May 2012, with the intended finalization of Q Renewable Energy IPP Programme underway. To date, 1415MW of preferred bidders have been appointed, with the intention for them to commission before end The ISMO Bill was adopted by the Parliamentary Portfolio Committee on Energy in March It has since been reclassified as Section 76 legislation and will now follow the NCOP approval process. Once the Bill has been ratified into law, the process to establish ISMO as a State Owned Company will start. IPPs -New generation capacity regulations under the Electricity Regulation Act have been promulgated. IPP process has progressed on Renewable energy

The Presidency: Department of Performance Monitoring and Evaluation 20 Sub-output4 th Quarter 2010/114 th Quarter 2011/124th Quarter 2012/ Develop a funding and implementation plan and reduce the electricity distribution infrastructure maintenance backlog of R27.4bn to R15bn by 2014 The ADAM project, outlining the blueprint to rehabilitate distribution infrastructure completed. The Approach to Distribution Asset Management (ADAM) proposal has been completed. Pilot projects to be initiated by June Cabinet approved the Cabinet Memo on Approach to Distribution Asset Management (ADAM). a pilot project is being implemented wherein nine municipalities have been allocated funding for infrastructure refurbishment.

The Presidency: Department of Performance Monitoring and Evaluation 21 Sub-output4 th Quarter 2010/114 th Quarter 2011/124th Quarter 2012/ Household access to electricity should be 92% by 2014 A total of households have been connected to electricity in the current financial year Eskom electrification programme was able to connect house holds by 31 March 2012 In the last quarter under review, households were electrified. Eskom electrified and Municipalities electrified and non-grid was Overall 86 percent electrified.

The Presidency: Department of Performance Monitoring and Evaluation 22 Sub-output4 th Quarter 2010/114 th Quarter 2011/124th Quarter 2012/ Develop a funding model for electricity generation build programme to ensure security of supply No information reported on this item By 31 March 2012, Eskom had secured 77.6% of the funding required for the Capital Expansion Programme (Medupi, Kusile, Ingula, RTS, Transmission projects and refurbishments Projects) Eskom has continued to focus on export credit agencies, development finance institutions and the domestic money market for its funding requirements. In this regard, Eskom has secured over 80 percent of the funding requirement for the build programme up to 2017.

The Presidency: Department of Performance Monitoring and Evaluation 23 Sub-output4 th Quarter 2010/114 th Quarter 2011/124th Quarter 2012/ Long-term energy mix diversification to address the security of energy supply and requirements for renewable energy The Integrated Resource Plan was approved by Cabinet in March 2011 The Integrated Resource Plan developed and adopted after thorough public consultation. The RE requirements outlined to constitute 40% of all future investment till (1)IRP approved that provides long term generation targets and mix. (2) Approx 2 400MW of renewable energy IPPs selected as preferred bidders. Window two - 28 preferred bidders reached financial close and signed Implementation Agreements in November Window one Projects are currently under construction and should be ready to supply power to the grid at least by (3)By end-March solar water heaters were installed; the rules for the Energy Conservation Scheme were completed after stakeholder engagement; the residential and industrial energy efficiency initiatives have reduced demand by 1.4TWh. (4) the rules for the Energy Conservation Scheme were completed after stakeholder engagement; the residential and industrial energy efficiency initiatives have reduced demand by 1.4TWh.

The Presidency: Department of Performance Monitoring and Evaluation 24 Sub-output4 th Quarter 2010/114 th Quarter 2011/124th Quarter 2012/ Migrate Eskom coal from road to rail Rehabilitate coal haulage roads (joint responsibility with DPE and DoT) Eskom and the Transnet Freight Rail (TFR) have not yet concluded the necessary agreements to facilitate the migration And Service Level Agreements (SLA) between SANRAL and the Mpumalanga Department of Public Works, Roads and Transport not yet finalised. 8.5 Mt of Eskom coal on rail (35.5 Mt on road) in 2011/12 Eskom has completed Camden and Tutuka containerised coal terminals. The Majuba heavy- haul line project is underway. Eskom planned to transport 12.2 million tons by rail in 2012/13 once the Tutuka rail facility was operating. The actual amount transported was 10.1 million tons. 2.7 Restructuring of the electricity distribution industry Cabinet decision concluded to terminate the REDS process EDI restructuring process terminated. In the revised Delivery Agreement, the project will be excluded. 2.8 Setting cost reflective tariffs while cushioning the poor from increasing electricity costs The Inclining Block Tariffs (IBT), which provides preferential tariffs for the indigent, have been incorporated into the NERSA tariff determination for 2010/12. As tariffs increase, three cushioning mechanisms in place – (a) inclining block tariffs, currently under implementation, (b) free basic electricity, (c) solar water heating Estimated national implementation of FBE is about 70% to all indigent household’s customers and there is diverse number of challenges, including lack of funding.

The Presidency: Department of Performance Monitoring and Evaluation Ke ya lebogaKe a leboha Ke a lebogaNgiyabonga NdiyabulelaNgiyathokoza Ngiyabonga Inkomu Ke a lebogaNgiyabonga NdiyabulelaNgiyathokoza Ngiyabonga Inkomu Ndi khou livhuha Thank you Dankie Ke ya lebogaKe a leboha Ke a lebogaNgiyabonga NdiyabulelaNgiyathokoza Ngiyabonga Inkomu Ke a lebogaNgiyabonga NdiyabulelaNgiyathokoza Ngiyabonga Inkomu Ndi khou livhuha Thank you Dankie