DEPARTMENT OF ENERGY PCE PRESENTATION ON THE DEPARTMENT’S 2012/13 ANNUAL FINANCIAL STATEMENTS Ms Yvonne Chetty Chief Financial Officer 1

INTRODUCTION The year under review, year 2012/13, is the third year that the Department of Energy has been operating as an independent department. The DOE’s budget allocation increased by 8.6% from R6.20 billion in 2011/12 financial year to R6.73 billion in the 2012/13 financial year. Of the 8.6% increase between the two years, 7.46% was allocated to transfers and subsidies and 1.14% allocated to the Department’s operational budget. 2

INTRODUCTION (continued) From the 2012/13 total budget allocation of R6.73 billion, 93.6% was allocated to transfers as follows: o Integrated National Electrification Programme – R3 billion; o Transnet’s New Multi-Product Pipeline – R1.5 billion; o NECSA – R568 million; o Energy Efficiency Demand Side Management – R1,02 billion The balance were transfers to State Owned Entities and other smaller programmes. Only 6.4% (or R429 million) of the total budget was allocated for the Department’s operational needs. The Department spent 98.9% of its allocated 2012/13 budget. 3

FINANCIAL PERFORMANCE Statement of Financial Performance for the year ended 31 March /13 R'000 TOTAL REVENUE 7,199,786 EXPENDITURE Current expenditure 373,677 Transfers and subsidies 6,350,900 Expenditure for capital assets 10,555 Payments for financial assets 36 TOTAL EXPENDITURE 6,735,168 SURPLUS/(DEFICIT) FOR THE YEAR 464,618 Voted Funds 75,494 Departmental revenue 2,516 Direct Exchequer receipts 387,618 Aid assistance (1,010)

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, % 5

2012/13 BUDGET OVERVIEW (continued) Per Programme DETAILS Budget 2012/13 Actual spend 2012/13 Actual % on budget spend R'000 % Totals 2012/2013 6,734,4786,658, % Administration 236,583219, % Energy Policy and Planning 1,563,4031,544, % Petroleum Regulation 1,139,7871,139, % Programs and Projects 3,147,8223,112, % Nuclear Energy 646,883642, % 6

2012/13 EXPENDITURE AGAINST THE TARGETS Administration Planned Targets Achieved Partially Achieved Not Achieved Corporate Services Governance & Compliance Financial Management Services Director General’s Office Total DETAILS Budget 2012/13 Actual spend 2012/13 Actual % on budget spend R'000 % Administration 236,583219, % 7

2012/13 EXPENDITURE AGAINST THE TARGETS (continued) Energy Policy & Planning Planned Targets Achieved Partially Achieved Not Achieved Energy Policy and Planning Total DETAILS Budget 2012/13 Actual spend 2012/13 Actual % on budget spend R'000 % Energy Policy and Planning 1,563,4031,544, % 8

2012/13 EXPENDITURE AGAINST THE TARGETS (continued) Energy Regulation Planned Targets Achieved Partially Achieved Not Achieved Energy Regulation Total DETAILS Budget 2012/13 Actual spend 2012/13 Actual % on budget spend R'000 % Energy Regulation 1,139,7871,139, % 9

2012/13 EXPENDITURE AGAINST THE TARGETS (continued) Programmes and Projects Planned Targets Achieved Partially Achieved Not Achieved Programmes and Projects Total92 16 DETAILS Budget 2012/13 Actual spend 2012/13 Actual % on budget spend R'000 % Programmes and Projects 3,147,8223,112, % 10

2012/13 EXPENDITURE AGAINST THE TARGETS ( continued ) Nuclear Energy Planned Targets Achieved Partially Achieved Not Achieved Nuclear Energy Total DETAILS Budget 2012/13 Actual spend 2012/13 Actual % on budget spend R'000 % Nuclear Energy 646,883642, % 11

FINANCIAL PERFORMANCE Analysis of financial performance: The department’s total spending for the year was R6.66 billion (98.9%) of the total budget of R6.73 billion. The above represents an under spending of 1.12% (or R75.49 million). A total of R28.14 million (37%) of the overall balance of R75.49 million remaining are for Transfer payments The composition of the overall balance of R75.49 million is as follows:  Compensation of Employees:R5.28 million  Goods & Services:R37.54 million  Transfer Payments:R28.14 million  Capital Assets:R4.57 million 12

FINANCIAL PERFORMANCE (continued) Analysis of financial performance: A rollover request was submitted to NT for the unspent budget amount of R69.34 million (Subsequently R28.07 million was approved) Compensation of employees The under-expenditure of compensation of employees by 2.55% is mainly due to delay in the implementation of SMS salary adjustment. The department had anticipated the SMS salary adjustment implementation to be effective from January 2013 however it was only implemented from April 2013 as per DPSA instructions. 13

FINANCIAL PERFORMANCE (continued) Analysis of financial performance: Goods & Services The under-spending of goods & services by 18.07% (or R37.54 million) is due to late receipts of invoices and delay in the delivery in goods and services. The following major payments could not be disbursed before 31 March 2013: o The development of the 20 year Liquid Fuels Infrastructure Road Map plan incorporating an audit of Refineries, an amount of R 2.3 million. o The review of the electricity distribution industry asset status report, subsequent development of a business case and the design of an integrated contract management system for the implementation of the asset rehabilitation programme, an amount of R11.8 million. 14

FINANCIAL PERFORMANCE (continued) Analysis of financial performance: Goods & Services The following major payments could not be disbursed before 31 March 2013: o The acquisition of an electronic monitoring tool to monitor the implementation of electricity connections and various energy projects, an amount of R 6.5 million Transfer Payments An amount of R28.07 million of the overall balance of R28.14 million within this category was attributable to funding specifically appropriated to the Non-Grid Households that was not transferred in full A rollover request was submitted to National Treasury for R28.07 million, for Non-grid - Solar Home Systems project (this request was subsequently approved) 15

FINANCIAL PERFORMANCE (continued) Analysis of financial performance: CAPEX The under-spending in Capex is due to the delay in the procurement processes as some of the projects and acquisition could not be finalised before year-end. 16

FINANCIAL PERFORMANCE (continued) 17

FINANCIAL PERFORMANCE (continued) Detailed expenditure ( Top 5 Expenditure) 18

FINANCIAL POSITION Statement of Financial Position as at 31 March

Unauthorized Expenditure – R14.86m The unauthorized expenditure of R14.86 million is due to an Infrastructure Grant transfer payments paid to the Mthonjaneni Municipality in May The transfer was appropriated in the 2009/10 financial year, the payment to the municipality was processed in March 2010, but transferred in May 2010 due to the system rejection of the banking details. This amount was condoned by National Treasury on 09 November 2011, however NT has not yet indicated if the approval was granted with or without funding. The matter is currently under discussion with National Treasury. FINANCIAL POSITION (continued) 20

FINANCIAL POSITION (continued) Irregular expenditure All irregular expenditure incurred in the 2011/12 and 2012/13 financial years has been condoned. Total irregular expenditure incurred during the financial year 2012/13 is R8.24 million. o R relates to non-compliance to SCM processes o R8.02 million relates to lease payments made directly to the Landlord, of Travenna Campus NB: In terms of the MoU between the DoE and the DMR during the split of DME, it was agreed DMR was to defray all accommodation costs and will be reimbursed by DoE for it’s portion of the expense. However DMR subsequently refused to accept the reimbursements from the DoE, the department was then forced to settle monthly payments directly to the Landlord. 21

FINANCIAL POSITION (continued) Investments – R2.2 million The department is a 100% shareholder in The South African Nuclear Corporation Limited (NECSA) and own 2,2 shares of R1 each Current Liabilities – R75.73 million The breakdown of the above is as follows; Surplus of voted funds, surrendered to NT R75.49 Million Departmental revenue, surrendered to NT R Owing to SARS -Paid post year end R Owing to GEPF - Paid post year end R (NB: Surplus funds account for 99.7% of the current liabilities). 22

REPORT OF THE AUDITOR GENERAL Audit outcomes for the last 3 years 2010/112011/122012/13 Audit OpinionUnqualified Support Function Corporate Services351 Information Technology063 Financial Management Services17143 Governance and Compliance762 Line Function1078 Total

REPORT OF THE AUDITOR GENERAL Audit opinion: The department received an unqualified audit opinion, without any emphasis of matter. The department has completed an action plan to address all outstanding AGSA findings. Most of the audit findings were addressed by 31 July

Thank you 25