DEPARTMENT OF ENERGY FOURTH QUARTER PERFORMANCE INFORMATION REPORT 22 AUGUST 2017

DEPARTMENT OF ENERGY FOURTH QUARTER PERFORMANCE INFORMATION REPORT 22 AUGUST 2017

INTRODUCTION: 4TH Qt 2016-17 PERFORMANCE INFORMATION
In carrying out its mandate, the Department formulates Energy policies, Regulatory frameworks and legislation, and oversees implementation to ensure energy security, promotion of environmental friendly energy carriers and access to affordable and reliable energy for all South Africans. The key achievements of the 4th quarter performance in financial year were : 5,087 GWh of electricity was generated over the past 12 months by 40 REIPP projects, including job creation, social upliftment and broadening of economic ownership 11,343 Non-grid connections were completed 85.44% of petroleum licence applications approved have more than 50% HDSA ownership in the 4rd Quarter Developed the electricity price path Enforcement notices issued in 90% of cases where non compliance is identified during routine compliance inspections In line with Cabinet directives of 2000 and GCIS guidelines of July 2013, the Department has achieved the set target for PPPs/Izimbizo which include opportunities for the 3-levels of government to interact with members of the public on energy policies, programmes and projects.

Programme 1: Financial Management Services, 4th Quarter 2016-17
Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 100% approved invoices paid within 30 days of receipt Achieved Vacancy rate below 10% maintained as per DPSA directive Vacancy rate reduced to 10% Not Achieved Vacancy rate increased to 13,76% Terminations increased relative to recruitment. Implementation of the HR Plan (Phase 4) Quarterly progress report on HR Plan N/a

Programme 1: Corporate Services , 4th Quarter 2016-17
Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 2% of people with disabilities employed as per Cabinet instruction Partially Achieved - 1.7% Terminations increased relative to recruitment. 50% of women in SMS positions as per Cabinet instruction Partially Achieved - 36% 10 foreign participants (advancement of the African Agenda in the Energy Sector) to promote the use of cleaner & safer energy carriers, reduce greenhouse gasemissions, promote knowledge transfer & enhance the Energy Sector as agreed with foreign partners 4 foreign participant (advancement of the African Agenda in the Energy Sector) to promote the use of cleaner & safer energy carriers, reduce greenhouse gas emissions, promote knowledge transfer & enhance the Energy Sector as agreed with foreign partners Achieved

Programme 1: Governance and Compliance 4th Quarter 2016-17
Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 18 foreign participants (advance Energy Agenda in the rest of the world) to promote the use of cleaner & safer energy carriers, reduce greenhouse gas emissions, promote knowledge transfer & enhance the Energy Sector as agreed with foreign partners 6 foreign participants (advance Energy Agenda in the rest of the world) to promote the use of cleaner safer energy carriers, reduce greenhouse gas emissions, promote knowledge transfer & enhanced Energy Sector as agreed with foreign partners Achieved 20 Izimbizo PPPs conducted 5 Izimbizo PPPs conducted 4 quarterly progress reports which detail the implementation of the 2014–2019 MTSF Outcomes 4, 6, 7, 8, 9 & 10 signed by DoE Minister 1 quarterly progress report which details the implementation of the 2014–2019 MTSF Outcomes 4, 6, 7, 8, 9 & 10 signed by DoE Minister

Programme 2: Policy and Planning, 4th Quarter 2016-17

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Annual Energy Balance (2014) published by March 2016 Annual Energy Balance (2014) published by March 2017 Partially Achieved. Draft Energy Balance completed. Enhancement of Central Energy Information Management System deployed Partially Achieved The CEIMS was completed after the end of the Financial Year. Study to determine macroeconomic impact of liquid fuel imports Studies to determine gas infrastructure Studies to determine benchmark costs for fuel production technologies & jobs impact Studies to determine gas infrastructure development costs including job creation potential Not Achieved. Achieved Resource constraints

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Submission of draft Amendment Bill for Ministerial approval for submission to Cabinet Submission of the draft GAB for Ministerial approval for submission to Cabinet Partially Achieved The process of submission for Cabinet approval yet to be finalized. Draft GAB completed. Submission of Draft Biofuels Regulatory Framework for Ministerial approval Submission of revised draft Biofuels Regulatory Framework for Ministerial approval Achieved Draft Petroleum Products Bill submitted for Ministerial approval for Cabinet submission Draft Amendment Act submitted for Ministerial approval for external consultation The performance progress was dependent on the completion of the SEIAS process, received on 31 March 2017. Submission of concept document for review of the Petroleum Pipelines Act, 2003 (Act No. 34 of 2003) for Ministerial approval Submission of concept document for review of Petroleum Pipelines Act, 2003 (Act No. 34 of 2003) for Ministerial approval Not Achieved

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Approval of regulations emanating from National Energy Regulator Act, 2004 (Act No. 47 of 2004) Approval of regulations emanating from the National Energy Regulator Act, 2004 (Act No. 47 of 2004) Partially Achieved Public consultation period was extended. Develop norms & standards for municipal electricity infrastructure asset management in concurrence with the regulator Inter-government consultation on norms & standards Develop norms & standards for municipal electricity infrastructure asset management in concurrence with the regulator Not Achieved Incomplete consultation processes Table the electricity price path to Cabinet for consideration Achieved Updated IRP for consideration by Cabinet

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Conclude contracts for coal, cogeneration & gas IPPs for additional power capacity as per the IRP Partially Achieved Coal and Cogeneration bids were successfully closed. Gas IPPs contracts outstanding. Conclude the offtake agreement Not Achieved Delays with regards to preferred bidders reaching financial close and outstanding finalization of contracts.

Programme 3: Petroleum and Petroleum Products Regulation, 4th Quarter 2016-17

Fourth Quarter Target (from APP)
Programme 3: Petroleum and Petroleum Products Regulation, 4th Quarter Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 1 500 retail site compliance inspections conducted 1 500 retail site compliance inspections conducted (cumulative target) Achieved 1 892 fuel samples tested 50% of licence applications approved have 50% BEE ownership 2 publications of the fuel prices & margin adjustment using RAS model 1 publication of the fuel prices & margin adjustment using RAS model 12 audit findings reports on the fuels prices 3 audit reports on the fuels prices

Programme 4: Programmes and Projects , 4th Quarter 2016-17

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 4 quarterly reports on allocation of funding & monitoring of progress on additional households to be electrified with grid electrification toward the 2016/17 target of in the National Electrification Plan 1 quarterly report on allocation of funding& monitoring of the progress on the additional households to be electrified with grid electrification toward the 2016/17 4th quarter target of " Achieved. NIEP for 2016/17 developed Partially Achieved Draft NIEP completed 4 quarterly reports on allocation of funding & monitoring of progress on additional households electrified with non-grid electrification toward the 2016/17 target of in the National Electrification Plan 1 quarterly report on allocation of funding & monitoring of progress on additional households electrified with non-grid electrification toward the 2016/17 4th quarter target of 6 500 Achieved

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 4 quarterly reports on electrification infrastructure projects planned/built toward the 2016/17 target of: - 3 new bulk substations built - 3 additional substations upgraded - 90 km new MV power lines constructed - 90 km of existing MV power lines upgraded 1 quarterly report on the allocation of funding & monitoring of progress on the building /upgrading of electrification infrastructure projects towards the 2016/17 targets of:- 3 new bulk substations built - 3 additional substations upgraded - 90 km new MV power lines constructed - 90 km of existing MV power lines upgraded Achieved 4 quarterly reports & 1 annual report with regard to development of rural IECs 1 quarterly report & 1 annual report with regard to development of rural IECs 4 quarterly reports on progress made with regard to construction & operation phases of IPP projects 1 quarterly report on progress made with regard to construction & operation phases of IPP projects

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 27 quarterly regional reports on performance of municipalities in implementation of INEP project 9 quarterly regional reports on performance of municipalities in implementation of INEP project Achieved 4 quarterly reports on conducted site & technical audits during INEP project implementations & monitoring of projects for 2016/17 1 quarterly report on conducted site & technical audits during INEP project implementations & monitoring of projects Implement project management business process Implementation of project management business process 4 project dashboards per year 1 project dashboard per year

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 1 annual report on infrastructure monitoring & compliance with implementation of non-REIPPP Generation Programme – peaker stations 1 quarterly report & 1 annual report on energy infrastructure development covering INEP (challenges, mitigation plans & interventions) Achieved System development & deployment of phase 1 of EDMS Partially Achieved Resource constraints Approved IEC strategy Approval of IeC strategy Partially achieved Draft IeC Strategy completed Approved gender, disability & youth & children policies Approval of gender, disability & youth & children policies

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Approved gender, disability & youth & children strategies Approval of gender, disability & youth & children strategies Partially Achieved Stakeholder consultation process incomplete for gender and disability and youth strategies. Report of municipality contracts concluded through DoRA for funding in 2016/17 Report of municipality contracts concluded through DoRA for funding in 2016/17 Achieved

Programme 5: Nuclear Energy, 4th Quarter 2016-17

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Consultation with impacted stakeholders on draft National Nuclear Disaster Management Plan completed Consultation with stakeholders on draft National Nuclear Disaster Management Plan completed Partially Achieved Public consultation not completed. Procurement of the Nuclear Build Programme as per procurement process completed Close-out report based on negotiations with strategic partner & commencing second tier procurement for lead term items. Procurement of nuclear power reactor as per procurement process completed Not Achieved Procurement process transferred to SOC/SOE. 4 progress reports on implementation of programme plan (Roadmap) 1 progress report on implementation of programme plan (Roadmap)

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Transactional Advisors utilised to advise Government on procurement & contract negotiations completed & all contract signed off All contracts signed off Transactional Advisors utilised to advise Government on contract negotiations Not Achieved Procurement process transferred to SOC/SOE. PMO established & operationalised to expedite rollout of Nuclear New Build Programme PMO established & operationalised to expedite rollout of Nuclear New Build Programme Implementation plan for procurement process for NFC facilities Implementation plan of procurement process for NFC facilities

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Monitoring of implementation of nuclear localisation & industrialisation strategy through PMO 1 monitoring report on nuclear localisation & industrialisation strategy through PMO Not Achieved Procurement process transferred to SOC/SOE. 75% of authorisation applications processed within 8-week time period Achieved

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 20 Nuclear Safeguard Compliance Reports submitted to DG 5 Nuclear Safeguard Compliance Reports submitted to DG Achieved 4 Nuclear Safeguard Compliance Audit Reports submitted to DG 1 Nuclear Safeguard Compliance Audit Report submitted to DG 4 Nuclear Security Compliance Reports submitted to DG 1 Nuclear Security Compliance Report submitted to DG

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Nuclear Security Compliance Report submitted to DG 1 Nuclear Security Compliance Report submitted to DG Achieved National Nuclear Regulator Act, 1999 (Act No. 47 of 1999) Amendment Bill revised, taking stakeholder comments into consideration Not achieved Draft Bill not completed Workshops with impacted stakeholders on National Radioactive Waste Management Fund Bill 6 public awareness campaigns & community outreach events held

Programme 6: Clean Energy, 4th Quarter 2016-17

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments 0.5 TWh of energy savings realised & verified from EEDSM projects Not achieved To be completer in 2017/18 due to retrospective nature of verification process. 15 additional municipalities for which energy consumption baselines have been developed annually Achieved Post-2015 National Energy Efficiency Strategy drafted & submitted for approval Report on post-2015 National Energy Efficiency Strategy submitted for Minister’s approval MW or petajoules of renewable energy introduced in line with MW or petajoules of renewable energy introduced in line with IRP

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Final National Biogas & Biomass Strategy implementation Incorporate stakeholder comments & finalise National Biogas & Biomass Strategy implementation Not Achieved Resource constraints Solar Water Heating Programme Implementation Plan Solar Water Heating Programme implementation Partially Achieved High local content baseline systems have been procured. Municipal Framework Agreements have been signed at 3 municipalities (i.e. Tlokwe, Sol Plaatjie and Bitou) Developed implementation plan for Energy & Climate Change Strategy in public buildings Not achieved. The target has been incorporated into the Smart Grid and EEDSM Programmes. Approved Annual Compliance Report on the 3rd Environmental Management Plan Edition Achieved

Planned Target 2016/17 (from 2016/17 APP) Fourth Quarter Target (from APP) Progress this Quarter ("achieved", or "partially achieved", or "not achieved", and support for the self-assessment) Comments Carbon Offset Administrative System established to support implementation of Carbon Tax Policy Awareness-raising campaigns in preparation of carbon offset implementation conducted Carbon Offset Administrative System established to support implementation of Carbon Tax Policy Partially achieved Consultation process incomplete and the Carbon Tax Policy not finalised.

Summary of Final Moderated Branch Progress, 4th Quarter 2016/17
Branches/Units Number of Quarterly targets in APP Achieved Quarterly Targets Partially Achieved Quarterly Targets Not Achieved Quarterly Targets Policy and Planning 13 1 6 6 Petroleum and Petroleum Products Regulation 4 0 Nuclear Energy 15 1 8 Clean Energy 9 3 2 4 Programmes and Projects 17 12 3 2 Corporate Services 1 Financial Management Services 0 Governance and Compliance Office of the Director-General Total 62 31 14 22

Challenges and Interventions
Mitigation Financial resource constraints reprioritisation High staff turnover staff retention and filing of critical positions Capacity and competencies within municipalities more support to SALGA Intergovernmental dependency improved intergovernmental relations Project management capabilities- Project Management Office has been established

Financial Reporting

Table of contents YTD-March 31 Financial Performance Report for 2016/17 Departmental Financial Performance Departmental Financial Performance Overview Transfer Payments Schedule

FINANCIAL PERFORMANCE FOR 2016/17
2016/17 Programme: Final Appropriation Actual Expenditure Variance Expenditure as % a of final Appropriation R'000 % 1. Administration 24,718 282,762 -35,744 114.50% 2. Energy Policy and Planning 40,164 39,878 286 99.30% 3. Petroleum & P Regulation 79,001 78,991 10 100.00% 4. Electrification and Energy Programme & Projects 5,714,645 5,678,659 35,986 99.40% 5. Nuclear Energy 879,834 872,451 7,383 99.20% 6. Clean Energy 589,894 560,101 29,793 94.90% Total 7,328,256 7,512,842 37,714 99.50% Econ Classification Compensation of Employees 318,297 321,466 (3,169) 101.00% Good and Services 371,031 360,532 10,499 97.17% Transfers and Subsidies 6,846,037 6,816,117 29,920 99.56% Payments for Capital Assets 15,162 14,700 462 96.95% Payments for Financial Assets 29 28 1 - 7,550,556

FINANCIAL PERFORMANCE OVERVIEW
Programme 1: Administration The programme was allocated R247 million, at year end the expenditure was R283 million resulting in overspending of R35.76 million (14.48%) attributable to: • The overspending of R5.53 million in compensation of employees as result of budget reductions implemented by National Treasury from the 2015 MTEF process, and an inadequate budget allocation to cater for filled posts. An overspending of R29.21 million was recorded across a number of items mainly in the following areas: • Operating leases for office accommodation and property payments as a result of increased payments associated with the relocation of several regional offices and budget reductions implemented in previous MTEF cycles. • Computer Services due to the procurement of a VPN system, additional software packages and the difference in the rand - dollar exchange rate associated with procurement of software licenses. • The net-budget overspending of R1.46 million in Transfer payments is due to foreign membership fees carried over from 2015/16 financial year. Programme 2: Energy Policy and Planning The expenditure in this programme is on par with the revised final appropriation. Programme 3: Petroleum and Petroleum Products Regulation

FINANCIAL PERFORMANCE OVERVIEW
Programme 4: Electrification and Energy Programme & Projects Management The net-budget underspending of R35.99 million or 0.58% is attributable to: • The under-spending of R1.91 million due to vacancies. • A payments of R34.08 million in Non-grid electrification programme was delayed due to physical verification that had to be performed by the Department for installed Solar Home Systems prior to the disbursement of payments. Programme 5: Nuclear Energy The net under spending of R7.38 million or 0.84% budget is mainly due to: • The delay in disbursement of payments in the NNBP project as a result of verification of deliverables charged in the invoice. Programme 6: Clean Energy The under-spending of R29.79 million or 5.05% budget is mainly due to: • Solar Water Heater Programme (SWHP) as a result of delays in concluding collaboration agreements with selected municipalities as key role-players in the installation phase of the SWHP. The installation related services that were delayed include, but are not limited to, social facilitation and technical feasibility assessments, which are contingent upon municipal identification of the targeted residential areas.

TRANSFER PAYMENTS SCHEDULE AS AT 31 MARCH 2017
Programme Programme / Project Final Appropriation Year to date transfer payments Available balance % Of Total Budget Expended R'000 R’000 % 1 Households 4,543 2,978 1,565 65.54% SETAs (EWSETA & CHIETA) 985 - 100.00% International membership fees 19,105 22,787 -3,682 119.27% 4 INEP Non-grid electrification 171,809 137,733 34,076 80.17% INEP - Eskom 3,526,334 INEP - Municipalities 1,946,246 5 South African Nuclear Energy Corporation 599,338 National Nuclear Regulator 40,936 National Radioactive Waste Disposal Institute 10,000 6 EEDSM - Municipalities 185,625 Solar Water Heater Project 320,326 320,314 12 South African National Energy Development Institute 20,625 TRANSFER PAYMENTS TOTAL 6,845,872 6,813,900 31,972 99.53%

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DEPARTMENT OF ENERGY FOURTH QUARTER PERFORMANCE INFORMATION REPORT 22 AUGUST 2017

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DEPARTMENT OF ENERGY FOURTH QUARTER PERFORMANCE INFORMATION REPORT 22 AUGUST 2017

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