1. BUDGET REVIEW AND RECOMMENDATIONS REPORT
Presented by : Ms N Magubane
Director General
20 October 2010
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2. DoE Management Team Mrs. Thandeka Zungu: COO
Mr. Dakalo Netshivhazwaulu: Acting CFO
Mr. Ompi Aphane: Acting DDG of Electricity, Nuclear & Clean Energy
Ms Tshilidzi Ramuedzisi: Chief Director Energy Planning
Mr Muzi Mkhize: Chief Director Hydro Carbons
Ms Yolisa Mapekula: Office of the Director General
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3. Presentation outline Overall Departmental budget review
Personnel budget outlook.
Austerity measures adopted to contain expenditures.
Unfunded key activities.
Overview of Programme(s) performance.
Conclusion.
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4. Introduction
Last week we presented and certain issues were raised by the Committee.
The presentation has taken into account these issues:
Further breakdown of expenditure per Programme
Consolidated and detailed Programme Performance
More details on previous slides 11-17:
INEP
SWH
Liquid Fuels Masterplan
Integrated Energy Plan
Etc.
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5. Departmental budget per Programme
2010/11
Initial
R’000
Roll Overs
Adjusted
Allocation
Expenditure
YTD
Exp as %
Of Budget
Administration
104,205
60,257
57.83
Hydrocarbons and Energy Planning
1,558,608
402,196
25.80
Electricity, Nuclear and Clean Energy
408,817
29,132
7.13
Associated Services
3,463,760
1,618,750
46.78
Total
5,535,390
2,110,335
38.12
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6. Budget per Economic Classification
2010/11
Initial
R’000
Expenditure
YTD
Exp as %
Of Budget
Compensation of Employees
132,994
64,354
48.39
Goods and Services
69,129
47,981
69.41
Payment of Capital Assets
4,600
2,882
63.66
Transfers and Subsidies
5,328,667
1,995,118
37.44
Total
5,535,390
2,110,335
38,12
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7. Departmental ENE Allocations
2009/2010
2010/2011
2011/2012
2012/2013
% Share of total budget 2009/10
Programmes
Revised Estimate
Medium term expenditure estimates
MTEF Baseline
Current Payments
194,5
202,1
235,6
220,7
3.65
Transfer and Subsidies
3 543,1
5 328,7
5 499,1
5 312,8
96.27
Payments of Capital Assets
2,6
4,6
5,0
5,3
0.08
Total
3 740,2
5 535,4
5 739,6
5 538,7
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8. Adopted Austerity Measures
Restriction on international travelling
Restriction of internal catering
Review of international commitments for affiliations
Stringent measures for control of tele- communication costs
Review of internship programme
Restriction of advertisement on commercial media
Review of process for appointment of consultants
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9. Key unfunded activities
Area
Amount (R’000)
NERT
10,000
FIFA tournament
150,000
Clean Energy operations
3,420
International Affiliations
11,000
Accommodation
9,000
Establishment of SANEDI
17,000
Electrification Internship Programme
3,000
Total
203,420
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10. Programme 1 (Admin): Budget per Economic Classification
2010/11
Initial
R’000
Expenditure
YTD
Exp as %
Of Budget
Compensation of Employees
46,789
22,618,118.67
48.34
Goods and Services
52,194
35,162,054.62
67.37
Transfers and Subsidies
329
34,650.76
10.53
Payment for Capital Assets
4,891,590.00
2,642,661.70
54.02
Total
104,204,998.00
60,457,485.75
58.02
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11. Programme 1: Key Projects
Filing of vacancies
Payment turn around time
Procurement spent on HDSA
Internship programme
Bursaries
Training
Presidential Hotline
Employment Equity
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12. Programme 1: Key Activities – Filling of Vacancies
Structure
No. of posts
Interim Structure (initial)
325
Additional funded Positions
206
Filled Positions
458
Vacant posts 73
Total funded posts
531
Unfunded posts
394
Approved structure
925
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13. Programme 1: Key Activities Cont…
Activity
Target
Progress
Payment turn around time
30 days
19 days
Procurement spent on HDSA
40%
41%
Internship programme
1 per Directorate 55
Bursaries 52
Training
R1,4Million
R85,623
Presidential Hotline
78 raised
3 outstanding
Employment Equity
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14. Programme 2 (HEP): Budget per Economic Classification
2010/11
Initial
R’000
Expenditure
YTD
Exp as %
Of Budget
Compensation of Employees
44,604,002.00
23,210,809.33
52.04
Goods and Services
14,003,999.00
7,280,767.94
51.99
Transfers and Subsidies
1,500,000,000.00
375,000,000.00
25.00
Total
1,558,608,001.00
405,491,577.27
26.02
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15. Programme 2 (HEP): Key Projects
Fuel strategic stock policy
LPG price regulations
Fuel specifications and standards
25 year Fuel Liquid Infrastructure Plan
Petroleum pricing framework
Transnet Multi Product Pipeline
20 Year Integrated Energy Plan
National Integrated Energy Modelling System
SANERI/SANEDI
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16. Electricity Chief Directorate: Progress Reporting.
Project
Planned Completion date
Financial Implications
Comment/Status
Development of the fuel strategic stocks policy & the relevant regulations
March 2011
None
The Strategic Stocks Regulations were published for public comments on 23rd Sept
Deadline for submission of comments is 23 October 2010
The draft Policy is still under discussion in the Department.
Development of the LPG Price Regulations
July 2010
The Regulations were Promulgated on 14th July 2010
Review of the fuel specifications & standards
March 2011
A draft position paper is currently under discussion in the Department and would thereafter be presented to the Inter-Departmental Task Team.
Once considered by IDTT it will be published for public comments.
Electricity Chief Directorate: Progress Reporting.
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17. Electricity Chief Directorate: Progress Reporting.
Project
Planned Completion date
Financial Implications
Comment/Status
Development of the 25 year fuel liquid infrastructure plan
March 2011
R 4 million
The TOR was published on 1st October 2010 & compulsory briefing session to potential Bidders will be held on 18th November 2010.
The project should be completed within 6 months after signing the contract.
Development of petroleum pricing framework
R2.5 million (2010/11)
R200k p.a
The Regulatory Accounting Models for BSS, Coastal storage, secondary distribution, and secondary storage and handling has been finalised.
The final report will be completed by 22 October 2010.
Transnet Multi Product Pipeline
R1.5 billion pa
Delays due to environmental and technical challenges (to Dec 2011)
Electricity Chief Directorate: Progress Reporting.
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18. Electricity Chief Directorate: Progress Reporting.
Project
Planned Completion date
Financial Implications
Comment/Status
Development of the Integrated Energy Plan
March 2011
R3 million for the energy modelling exercise
Governance structure which includes relevant government departments established.
IEP methodology developed and approved
Draft plausible futures complete.
Development of the Integrated Energy (Implementation ) Strategy
None
Draft IEP Strategy completed and circulated for comment by other government departments.
Electricity Chief Directorate: Progress Reporting.
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19. Electricity Chief Directorate: Progress Reporting.
Project
Planned Completion date
Financial Implications
Comment/Status
Development of the National Integrated Energy Modelling System
March 2012
R3 million for phase 1
R90 million for entire system
Process of acquiring service provider to develop model for IEP in progress.
Centralisation of energy data which is currently collected by the Department has started
Regulations for the Mandatory Provision on Energy Data
March 2011
None
Draft regulations have been gazetted & stakeholder engagement process held.
Amended regulations have subsequently been reviewed by State Law Advisors.
Stakeholder inputs obtained & amended regulations forwarded to relevant government departments for inputs.
Electricity Chief Directorate: Progress Reporting.
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20. Electricity Chief Directorate: Progress Reporting.
Project
Planned Completion date
Financial Implications
Comment/Status
Establish the South African National Energy Development Institute (SANEDI)
March 2012
2011/12: R491million
2012/13: R601 million
2013/14: R787million
Business case for the establishment of SANEDI updated after input from National Treasury and DPSA
Final recommendations made to the Minister
Publish Energy Digest and Energy Price Report
March 2011
None
Data collection in progress and skeletal structures started
Electricity Chief Directorate: Progress Reporting.
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21. Programme 3 (ENCE): Budget per Economic Classification
2010/11
Initial
R’000
Expenditure
YTD
Exp as %
Of Budget
Compensation of Employees
35,450
20,892
58.93
Goods and Services
8,789
6,872
78.19
Payment of Capital Assets 27
0.00
Transfers and Subsidies
364,578
1,368
0.37
Total
408,817
29,132
7.12
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22. Programme 3 (ENCE): Key Projects
IRP 2010
ISMO
Electricity Regulation Act, 2nd amendment bill
Independent Power Producers
REDs
Standard offer policy
INEP
Solar Water Heaters
Nuclear
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23. Electricity Chief Directorate: Progress Reporting.
Project
Planned Completion date
Financial Implications
Comment/Status
Integrated Resource Plan 2010
December 2010
None
Draft report presented to IMC –Energy.
Draft report released to general public for consultation.
Establishment of Independent System and Market Operator (ISMO).
July 2010
Draft Establishment Bill sent to other government departments
Electricity Regulation Act, Second Amendment Bill
June 2010
Awaiting finalization of ISMO Bill in order to incorporate and align.
DoE 1000MW IPP
PPA negotiations 95% complete.
Expected Financial Close Feb 2011
Establish Regional Electricity Distributors
None Directly
Cab memo prepared for IMC on way forward.
Standard Offer Policy on Energy Efficiency and Demand Side Management.
Done and sent to NERSA for implementation.
Electricity Chief Directorate: Progress Reporting.
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24. Electricity Chief Directorate: Progress Reporting.
Project
Planned Completion date
Financial Implications
Comment/Status
Nuclear
March 2011
None
Radioactive Waste Management framework and institutional arrangements
Electricity Chief Directorate: Progress Reporting.
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25. Programme 3 (ENCE): Key Projects Contin…
TRANSFER PAYMENTS
Original Budget
2010/11
Exp YTD Sep 2010
Available balance
Act Exp as a % of Budget Allocation
R'000 %
REFSO
20,700
488
20,212
2.36%
EDSM - Eskom
108,900
62,221
46,679
57.14%
EDSM - Municipalities
220,000
57,510
162,490
26.14%
Working Energy Project
20,000
0.00%
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26. Project report: Non Grid Electrification Programme Start: 01 April 2010 Finish: 31 March 2011
Deliverable
Completion date
Funding
Comment/Status
Install 1,000 SHS in Limpopo (Solar Vision)
31 March 2011
R6 million
Some areas identified and rollout will start immediately after material delivery
Install 4,000 SHS in Central KZN (KeS)
R24 million
More than 50% of areas identified. Installations in progress
Install 4,000 SHS in Northern KZN (NuRa)
Areas identified and waiting for council resolution. Material ordered and installations will start after confirmation
Install 1,500 SHS in Eastern Cape (Ilitha)
R 9 million
Areas are being identified and negotiated with Municipalities. There were delays due to availability of GIS data
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27. SWH Roll-Out : tariff funded programme
Roll out area
Number of Units
Remark
Nelson Mandela Bay
Commenced 20 July Units already rolled out. Eskom agreed to ring fence the rebate for the units. The plan is to roll out 5000 units per month. A launch for the programme is being planned with NMB awaiting Presidency on the availability of the President.
Bloemfontein
40 000
MOU signed and 300 rolled already out
Kroonstad
MOU signed
Ekurhuleni
MOU is being finalised.
Potchefstroom
8 000
MOU signed and roll out is being finalised. Roll-out commences 04 October
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28. SWH Roll-Out : tariff funded programme
Roll out area
Number of Units
Remark
Mossel Bay
MOU signed and 400 rolled already out
Saldanha Bay
Target to be confirmed
MOU signed and roll-out commences 04 October
KZN (various munics)
MOU’s have been signed for total of in KZN
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29. SWH Roll-Out : fiscal funded programme
Roll out area
Number of Units
Remark
Sol Plaatje Municipality
5400
Committed Eskom tender is at advanced stage and negotiations with suppliers now completed. Transfer of funds to ESKOM targeted for 28 October. Roll out expected end of October 2010.
Naledi Municipality
Tshwane Municipality
10400
Eskom has been appointed as the roll out agent for the municipality and this project forms part of the Eskom tender
Noupoort
6000
Committed 200 units for 2010 financial-year. Proposed inclusion in 2010/11 financial year.
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30. Number of Units settled through Eskom rebate programme to date
A total number of claims has been received as of end of August 2010
Eskom confirmed that they have settled 8700 units through the rebate programme.
The reason for the variance (1900 units) between the two figures is because of the delays in the Measurement and Verification process.
Target of total 6500 units for October in Bloemfontein, Kroonstad, Mossel Bay, Potchefstroom and Saldanha
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31. Roll out of High Pressure Systems
DoE exploring programme with CEF to make funding available to cover the gap between the consumer willingness-to-pay and the installation cost.
Modelling exercise to be completed end-October 2010
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32. Spending patterns- INEP (‘000)
; 2%
; 1%
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33. SWH Program Objective
Presentation outline
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34. SWH Program Targets
Presentation outline
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35. Experience with Tariff Based Rebate Program - Eskom
Presentation outline
Experience with Tariff Based Rebate Program - Eskom
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36. Comments from market on rebate programme
“We are currently averaging 100 – 200 per month (reflected in Eskom stats)” - One big national player
“Burst geyser is not good time to sell SWH”
“Rebate programme just isn’t doing it for market”
“Market needs a serious shake-up”
“It would be embarrassing to give you our sales numbers”
3126 installed on Eskom rebate from Jan 2009 – Apr 2010
Average for 3 months of new rebate level = 443 units per month
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37. Experience with new diversified approach
Presentation outline
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38. Presentation outline What is in the pipeline?
Program funded from fiscus to install systems – Eskom managed and due to start in November 2010
Program involving local banks and insurance industry to install residential systems without any rebates
Voluntary program by industry in lieu of their contribution to energy efficiency
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39. What are the key challenges that will increase rate of rollout if addressed?
Presentation outline
Capital cost of imported components and systems is too high (R for 150 liter)
Funding
Skills shortages – necessary for safe scaled up installations
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40. Presentation outline Addressing the challenges
Skills program initiated with CETA, eSETA, donors – unit standards developed and accredited training available
Various initiatives to manufacture locally – preference will be applied for local systems when rebates are applied for
Additional fiscal allocations applied for, plus tariff-based rebate cemented in Integrated Resource Plan (Nersa will be compelled to make adequate rebates available in the future)
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41. Programme 4: Associated Services
Entities
2010/11
Initial
R’000
Expenditure
YTD
Exp as %
Of Budget
Necsa activities
474,458
436,267
91,95
Decommisioning projects
77,710
71,229
91,66
Security
9,401
8,444
89,82
Safari recactor
12,541
11,265
National Nuclear Regulator
19,954
9,762
48,92
EDI Holdings Company
61,582
31,036
50,83
Non grid service providers
68,200
National Portion - Eskom
1,719,810
783,337
45,55
Conditional grants to Local Governments
1,020,104
262,410
25,72
Total
3,463,760
1,618,750
46,73
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42. END…..
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