BUDGETARY REVIEW AND RECOMMENDATION
REPORT OF THE PORTFOLIO COMMITTEE ON ENERGY ON THE PERFORMANCE OF THE DEPARTMENT
OF ENERGY FOR THE 2011/12 FINANCIAL YEAR, DATED 23 OCTOBER 2012.
The Portfolio
Committee on Energy, having assessed the performance of the Department of
Energy and its entities, reports as follows:
1. Introduction
1.1. The role of the Committee
The mandate of the Portfolio Committee on Energy (the
Committee) is underpinned by the provisions of the Constitution of the
·
Conduct
oversight on behalf of the National Assembly, over the actions of the Department
of Energy (the Department) in order to ensure Executive accountability for the
delivery of services to the people of
·
·
Oversee
and review all matters of public interest relating to the public sector and energy
to ensure service delivery;
·
·
Ensure
compliance by the Department and its entities
to relevant legislation (financial and other); and
·
·
Monitor
the expenditure of the Department and its entities and to ensure regular
reporting to Parliament, within the scope of accountability and transparency.
According
to Section 5 of the Money Bills Amendment Procedure and Related Matters Act,
No. 09 of 2009 (the Act), the National Assembly, through its committees, must
annually assess the performance of each national Department The Act further
provides that the Committee must submit an annual Budgetary Review and
Recommendations Report (BRRR) for each Department that falls under its
oversight responsibilities for tabling in the National Assembly.
It is
expected that BRR Reports are considered by the Committees on Appropriations
when it is considering and reporting on the Medium Term Budget Policy Statement
(MTBPS).
1.2 Processes in compiling the
Budgetary Review and Recommendations Report
The
committee, in undertaking the process of compiling this report, considered the
following source documents and engagements:
·
Annual
Report briefings, in terms of Section 65 of the Public Finance Management Act,
No. 1 of 1999, which requires that Ministers table the annual reports and
financial statements for the Department and public entities to Parliament.
·
·
Briefing
by the Auditor-General of SA (AGSA) on the audit outcomes of the Department of
Energy and the entities reporting to it.
·
Briefing
by the Department of Performance Monitoring and Evaluation on the performance
of the Department of Energy on its:
o
Delivery
outcomes; and
o
Management
Performance
2. Department of Energy
2.1. Introductory Remarks by the Director-General
In November 2010 the Departments
management came together for its annual strategic planning. During this process,
the Department came out with seven strategic objectives which are aligned to
governments 12 outcomes as well as take into account the new government
outcome based planning approach. Its strategic plan and annual performance plan
were based on several assumptions that included the availability of financial
and human resources.
During the year under review, the Department
operated within an environment where:
The
credibility in South Africa Energy policy trajectory was enhanced by the Independent
Power Producers (IPPs) procurement process the Department
painstakingly championed
On
the geopolitical front, the Department had to contend and develop a response
plan to the sanctions by the
The
vulnerability of the refining sector was exposed with a number of refinery
shutdowns which diverted some of our attention into monitoring contingency
plan.
Departments Strategic objectives |
Governments outcomes |
Energy supply is secured and
demand is well managed |
Government outcome 4 |
An efficient, competitive and
responsive energy infrastructure network |
Government outcome 6 |
Improved energy regulation and
competition |
Government outcome 6 |
Efficient and diverse energy mix
for universal access within a transformed energy sector |
Government outcome 4 |
Environmental assets and natural
resources protected and continually enhanced by cleaner energy technologies |
Government outcome 10 |
Mitigation against, and adaptation
to, the impacts of climate change, |
Government outcome 10 |
Good governance for effective and
efficient service delivery |
Government outcome 12 |
2.2. Corporate Services
The Human Resource Plan of the Department
was finalized and implementation commenced. However, the Organizational
Structure and Framework for Occupational Classifications was not achieved
because of prolonged consultation processes with the Employee Organizations.
Further to the afore-mentioned, the matching and placement of staff was also
delayed. The turnaround time for filling of vacancies has improved to a
remarkable three months on average. Interventions to maintain a vacancy rate of
9.6 percent against the Cabinet approved baseline of 15 percent were also
implemented and achieved.
All performance agreements and workplans were finalized before 30 May 2011 as required and
appropriate disciplinary sanctions were imposed for non-compliance. Performance
reviews for staff was also finalized before the end of June. The Public Service
Wellness Framework was approved and implemented in the first quarter of 2011. The
Skills Audit and plan was finalized and submitted as required. The Human
Resource Development (HRD) Strategy and Training plan were finalized before the
end of June 2011 and implemented. The Department further managed to train 443
employees in administrative and functional areas. The Department has exceeded
the 50 percent representation target of women; and All Presidential hotline
cases were resolved. Alternative office accommodation was
acquired through the Department of Public Works and the Department is settling
in.
The Draft Knowledge Management
Strategy was developed, but approval was delayed due to planned relocation to
alternative building and lack of space.
Challenges include the following:
Recruitment
of persons with disabilities was challenge , thus the target of 2 percent could not be achieved- A strategy
is developed and submitted for consideration;
Implementation
of the structure at Macro-Organizational level has posed challenges relating to reporting and
lines of authority- This has now been addressed through matching and placement
of affected following a decision by the leadership of the Department, after finalization
of the structure; and
Establishment
of a Knowledge Management Centre as well as development and implementation of a
strategy and plan- This challenge has also been addressed following relocation
of the Department to the new premises.
2.3. Operations
The
Department established a Risk Management Unit which includes the Anti-Fraud and
Corruption function during the year. The Risk Assessments were conducted, the
Risk Register was produced and mitigation strategies were put in place to
enhance the control environment. Standard Operating Procedures for various functional Units
within the Department was developed. Challenges include: Implementation of the
Enterprise-Wide Risk Management Strategy for the Department, absence of risk
management tool, provision of the Departments Service Delivery Plan
The Monitoring and Evaluation Unit
during the period under review developed the Departments foundational M&E
guidelines, namely the M&E Framework, M&E Policies, Procedures and
Quarterly Performance Reporting templates as well as data collection
instruments reported, on the Departments performance quarterly and annually.
Challenges include: 43 percent target achievement, timeliness of
management reports, development and finalization of the Departments Standard
Operating Procedures.
The Department provides oversight of
state owned entities reporting to the Minister, monitor performance against
approved plans and ensuring that all SOE Boards are fully capacitated by
appointing board members for SANEDI, NERSA, CEF, and PetroSA. The CEO of
PetroSA was appointed during the 2011/12. During the year under review,
oversight Quarterly meetings between the Minister and the Chairpersons of the
SOEs, the DG quarterly meetings with the CEOs and the Department officials
and the SOEs Executives were convened to review the entities Performance
against the approved plans and implementation of improvement plans to enhance
performance. Following the Cabinet decision to halt the operations of the
Electricity Distribution Industry Holdings, the branch is leading the process
of winding up in collaboration with the appointed Administrator and EDIH Board.
Challenges include: EDIH winding up by year end; finalisation of the SOE
Oversight Framework (approved draft) to accommodate the recommendations of the
Presidential SOE Oversight Committee; Sector risk management; and the Departments
compliance monitoring
During the year under review, the Department
Coordinated the African Ministerial Energy Conference which was attended by
more than 40 Energy Ministers. The Conference produced the declaration which
outlines the Energy needs for the Continent and Political commitments to
alleviate Energy Poverty. The Department was responsible for the COP17/CPMP7
preparations.
The Minister of Energy visited the
following countries during the year under review:
2.4. Hydro-Carbons and Energy Planning
Highlights of this branch include
the operationalisation of the NMPP and facilitation
of the landfill which improved infrastructure for security of supply. Compliance
inspections were undertaken for Petroleum Licensing and the sting operations to
uncover illegal fuel sales. The Department further conducted Petroleum Products
Licensing Awareness Campaigns done in all provinces. Participation
of the Department in the development of the Coal Roadmap and the facilitation
of its completion. Implementation of the Regulatory
Accounting Systems through the introduction of the framework in the fuel
margins. Intervention on new Job Industry Sites to
facilitate accelerated job creation. Increase in turnaround time for
processing of all applications that meet the acceptance criteria. Development of the Standard Operating Procedures for all processes
thereby improving consistency in the application of the law. Blending
value and break even price for biofuels established.
Support mechanism not finalized. Regulatory on mandatory provision of Energy
Data promulgated. IEP Draft Strategy presented to Cabinet. LFC Audit Report
completed. On behalf of the Director General the branch spearheaded Government
Response to the sanctions imposed on
Some of the activities to be
undertaken by the Department which is still work in progress or which has been
completed include the following:
·
Formulation
of the Integrated Energy Plan,
·
underestimation
of the complexity of the task given the resource constraints;
·
Gas
Amendment Bill not completed;
·
Petroleum
Amendment Bill not completed;
·
Regulations
on Cleaner Fuels Specifications not promulgated as was planned; Regulations on
Mandatory Blending of Biofuels not finalized;
·
Integrated
Energy Centre programme delayed due to administrative and logistical
challenges;
·
Strategic
Stocks Framework not finalized; the 20 Year Plan not completed;
·
Fuel
Pricing Framework Review not completed;
·
Principles
for incentivizing investments in cleaner fuels not
done; and
·
The
LPG Strategy not completed (Tactical Move).
Challenges include: Reluctance to
submit/provide data, Human Resource challenges (internally/skills); Unplanned
Refinery outages and impact on personnel; Quality Management System issues; and
inertia.
2.5. Nuclear
Highlights
in the branch include:
During
the period under review, in November 2011, Cabinet approved the establishment
of the National Nuclear Energy Executive Coordination Committee (NNEECC). The
aim of NEECC is to oversee the roll-out of the nuclear build programme. The
NNEECC, headed by the Deputy President, is the authority for decision making,
monitoring, and ensuring general oversight of the nuclear energy expansion
programme.
In
May 2011,
The
amendments of the founding legislation as well as the development of new
legislation for long-term funding provisions for radioactive waste management
are being undertaken within the nuclear energy policy implementation. Consultations
continue on the installation of appropriate radiation detection equipment at
identified ports of entry. This is a multi-stakeholder project involving both
international and national stakeholders. When this project is completed,
Challenges include:
Human
Capacity
Financial
resources
Matching
commitments with resources
2.6. Clean Energy & Electricity
With
regard to the Energy Efficiency Target Monitoring System, this is in line with
the Energy Efficiency (EE) Strategy, to develop a national target monitoring
system covering all segments of the economy. The Department started the
process, but it is not completed. The savings verification mechanism (EE) entails
the measurement and verification protocols and standards, which will cover the
industrial, commercial, residential sectors. On the issue of the Energy
Efficiency Campaign Strategy, the Department will improve awareness building
beyond what Eskoms 49m campaign does.
On
the issue of the Distribution Asset Backlog which is currently R35bn (2010
terms), the aim is to eliminate this over 10 years. Cabinet was approached in
October 2012 regarding the institutional approach for Approach to Distribute
Asset Management (ADAM). Pilot projects are to be implemented once approved, to
improve service delivery in key municipalities. Funding is through tariff
ring-fencing and regulatory monitoring and enforcement will be implemented to
prevent a relapse.
Inclining
block tariffs (IBT) was approved by NERSA to cushion the poor against
increasing tariffs. The application in conventional and prepaid meters in Eskom
areas was done. Municipal prepaid meters were installed where only 60 percent was
configured, mainly due to financial sustainability problems emanating from the
Inclining Block Tariffs (IBT). The next round of tariff determination will be
completed by March 2013, so the pricing principles need to be aligned with the electricity
pricing policy.
2.7. Integrated National
Electrification Programme (INEP)
Over
5.4 million households were connected to the grid between 1994 and 2011/12.
Province |
Electrified Houses: Municipalities & Eskom |
|
985 156 |
|
360 880 |
|
651 005 |
KwaZulu Natal |
889 744 |
|
526 747 |
|
129 114 |
|
949 545 |
|
639 901 |
|
372 605 |
Total |
5, 503 857 |
In
the period 2002 to 2011/12 over 50 000 households were supplied with non-grid
technology (Solar panels Renewable Energy).
The total photovoltaic solar heater
systems installed - 55 831
KwaZulu Natal - 35,607
According
to the Department, non-grid
electrification programmes will in future not only be implemented in concessionary
areas, but in a limited basis in other areas in country.
`
With regard to households without
electricity, the figures are as follows:
Households
without electricity: ~3.4 million (Informal 1.2 million and formal 2.2 million)
75
percent are in Eskoms supply area and 25 percent in the
municipalities supply area.
2.8. Challenges experienced by the Department
of Energy in the different programmes:
Slow delivery of electrification
projects by municipalities and certain Eskom regions.
The lack of skills within municipalities
technical and project management.
The majority of Municipalities are
not performing as required - internal procurement processes takes too long.
Eskom internal project management
systems and red tape is slowing down delivery in certain regions.
Consulting engineers and contactors
not geographically spread according to backlogs in country.
Municipalities do not have purchase
bargaining power.
2.8.2.
Non-grid programme
Slow roll-out of non-grid
connections due to negative political perceptions and practical short comings.
Current non-grid systems not
addressing basic electricity needs - heating and cooking needs.
Non-grid service providers struggle
to exist financially due to small customer base and rural location.
Regulations promulgated recently
increase non-grid installation costs dramatically.
2.8.3.
Electricity industry
Shortcomings in EDI are starting to
have a very negative effect on the delivery of new connections.
Municipalities use electrification
funds to do upgrading of existing networks.
Due to the nature of EDI, different
electrification technical standards are implemented by Municipalities and
Eskom.
2.8.4.
Funding and cost of connections
More and more connections need to be
done in the rural areas connections costs increase sharply and subsidy level have to be increased accordingly.
Electrification fund allocated in
next 3 years will not increase annually above CPI while connection costs on
average have increased annually by 12 percent over the last 3 years.
Pressure is increasing on fund -
received 4.2 times more applications from municipalities than what was
available for 2012/13 financial year. Last 6 years INEP received 50 percent of
the funding as projected in 2003/4 to address backlogs.
Annual budgetary process force
projects to be planned and designed on an annual basis and not on a multi-year
(project completion) basis.
High energisation/switch-on
cost charged by Eskom. Municipalities
have to pay up front, not as previously over 10 to 15 yrs period.
No soft loans or grants nationally
or internationally available for normal grid extension, except if grid is
renewable feed.
Difference in National and Local
Government financial years.
2.8.5.
INEP
Planning, Monitoring and evaluation
of the electrification programme is limited due to the lack of resources funding and HR;
The operational budget for 2012/13 was
cut by 55 percent
Limited national planning capacity
within INEP Eskom Distribution and Transmission expansion and planning is
dictating electrification roll-out.
INEP resources are stretched, since
more and more operational issues are involved in municipal projects.
2.8.6.
General
EIA and land claim processes that take
more than two years to resolve;
Late delivery of housing projects.
Sharp increase in hard ware cost
(transformers, switch gear, cables) increase in base metals prices.
Corruption starting to became a
serious issue.
Local manufactures cannot compete
with low cost imported equipment.
2.9. Proposed solutions to the
challenges
2.9.1.
INEP
Obtained
IFC funding to do an analysis of INEP and the Electrification process.
Various
inefficiencies have been identified within Municipalities and Eskom
Use Eskom
and some Metros to render assistance to struggling municipalities with project
management to ensure that the electrification projects are implemented
effectively (MOU signed in this regard between CoGTA
and Eskom).
National
electrification Master plan link with PICC SIP projects.
Tighter
control over performance of municipalities Provincial Energy Forums,
withdrawal of funds if not utilized immediately, re-gazetting etc.
Possibility
of a national purchasing office for Eskom, when in full operations to investigate
the possibility to roll out to Municipalities Will decrease hardware cost for
projects by 10 -15 %!
2.9.3.
Electricity industry
Stimulate/protect
local manufacturing of hardware need surety of electrification figures and
annual roll-out.
2.9.4.
Non-grid programme
Upgrade of
current 50 Wp systems to 150
- 200 Wp systems Industry to assist with technology
initiatives.
Increase
number of connections via non-grid technology, due to increased cost of grid
extension in rural areas and low consumption levels.
Grand
funding available for non-grid electrification projects, if policies are known
and connections protected for a given period.
Establishment
of non-grid utilities economics of scale.
Selected
non-grid projects to be rolled-out in rest of country INEP assistance to
Municipalities
2.9.5.
General
INEP will
not request at this stage an above CPI increase in the annual electrification
budget before the various options regarding improving the efficiencies in
delivery the programme more effectively is not fully been implemented and the
effect been proved Foreseen by 2014/15 updated processes will be in place the
full effect been experienced.
Revised
universal access date been moved to 2025 This was modelled taking into
consideration the implementations of the various efficiency gains are
implemented.
More
emphasis on non-grid options in areas where grid will not be possible or to
expensive to roll out.
Will also
allow for a limited grid supply for informal settlements under certain
conditions, together with a limited non-grid option where grid is not possible.
Larger
involvement of Eskom in electrification projects, especially in the 23 District
Municipalities that have been identified under the PICC SIP 6 programme.
2.10. Annual Financial Statements and the report of the Auditor-General
2.10.1. Introduction
The
year under review, year 2011/12, is the second year that the Department of
Energy was operating as an independent Department. There has not been any
significant increase in the Departments budget allocation between the years
2010/11 and 2011/12. Of the 12 percent increase between the two years, 10.6
percent went to transfers and subsidies and only 1.4 percent went to the Departments
operational budget. The challenges of the inadequate baseline allocation for
the Department resulting from the split of the Department of Minerals and
Energy remain however engagements between National Treasury and the Department
are in progress.
From
the 2011/12 the total budget allocation of R6.2 billion, 95 percent went to
transfers, which include:
·
Integrated National Electrification
Programme - R3.2 billion;
·
Transnets
New Multi-Product Pipeline - R1.5 billion;
·
NECSA - R586 million;
·
Energy Efficiency Demand Side
Management - R398 million
·
And
the balance was transfers to State Owned Entities and other smaller
programmes.
Only
5 percent of the total budget was allocated for the Departments operational
needs, amounting to R305 million. The Department spent 99.6 percent of its
allocated 2011/12 budget.
The
Department was granted approval by National Treasury to shift an amount of
R41.32 million appropriated as transfers and subsidies for the REFSO, on
condition that a provision is made from the approved funds for the office
accommodation lease cost of R21.8 million and the Independent Power Producer
(IPP) unit set-up costs, estimated at R 4 million.
The Departments total spending for
the year was R6.174 billion (99.6
percent) of the total budget of R6.20 billion. The afore-mentioned represents
an under spending of 0.4 percent i.e. R26.65 million. This under spending was generally caused by undue delays in
procurement and transfer processes. On 31 March
2012, the Department had an unspent amount of R26.65 million and a roll over of
R26.84 million to the 2012/13 financial year.
The
composition of the overall balance of R26.65 million unspent funds is as
follows:
·
Compensation of Employees :R.032 million
·
Goods & Services :R8.55 million
·
Transfer Payments :R12.95 million
·
Capital Assets :R5.13
million
2.10.2. Unauthorized expenditure
The unauthorized expenditure of
R14.86 million due to an Infrastructure Grant transfer payments paid to the
2.10.3. Irregular expenditure
All irregular expenditure incurred
in the 2010/11 financial year was condoned. For 2011/12 financial year the
R39.485 million irregular expenditure closing balance - 99 percent relates to
lease payments for office accommodation (R22.09 million of this amount is for
the current year and R17.395 million is for the prior year). All of the above
irregular expenditures have been condoned subsequently to the year end.
2.10.4. Report of the Auditor-General of SA (AGSA)
The Department received an unqualified audit opinion, without any
emphasis of matter. Despite the unqualified audit opinion the Department
however showed some weaknesses in its financial controls that led to unauthorized
expenditure amounting to R14.86 million and irregular expenditure of R39.485
million. The Department has completed an action plan to address all outstanding
AGSA findings. Most of the audit findings were addressed by 31 July 2012. All
of the SOEs reporting to the Department has also received an unqualified audit
opinion.
2.11. Observations and findings
·
The
Department is supposed to be in the forefront of energy policy and planning.
However, due to budgetary constraints this it difficult to achieve.
·
The
Department is in constant discussions with the National Treasury, on its
funding requirements.
·
The
Department spent 99,6 percent of its allocated budget
during the period under review.
·
The
Department is aware that more priority needs to be placed on Energy Efficiency.
The Energy Efficiency Strategy which was developed by the esrtwhile
DME, is being revised by the Department and currently inputs
from various stakeholders were widely canvassed.
·
The
household Energy Efficiency Strategy will be prioritized by the Department as a
matter of urgency and with a focus on diversifying households energy mix.
·
On
the restructuring of the energy sector, the Department will seek Cabinet
guidance.
·
The
synergy between the Department and its entities is still lacking. The
monitoring and evaluation of the Department over the entities, reporting to
them, need to be strengthened.
·
Members
raised concern that the monitoring and evaluation of funds transferred to the
entities and municipalities is quite compromised and such needs to be
reinforced. The Department made an undertaking to include performance targets
when conducting oversight over the entities.
·
With
regard to the Independent Power Producers (IPPs),
there are supposed to be specific agreements, between the Department and IPPs. The Department will undertake to ensure that these
agreements are reached by the end of the financial year.
·
On
the issue of obtaining the necessary information/data from stakeholders, there
are regulatory mandates in the energy sector (liquid fuels in particular) which
compels stakeholders to provide the information. However, the main concern of
the Department is the way the information is packaged. Because of the sectors
competitiveness, stakeholders are reluctant to divulge the necessary
information.
·
Prior
the split of the Department of Minerals and Energy, most emphasis relating to
skills development, focused on the mining industry and very little on the
energy side. The Department acknowledged that they are playing catch up with
regard to skills development in the energy sector and that the sector is under
tremendous stress especially the liquid fuels sector and the electricity
sector.
·
The
Department pointed out that they have learned a lot during the auditing of the
refineries process (the Department have however not indicated what those
findings are).
·
The
Department does have bi-lateral agreements with SAs neighbouring countries, especially in the liquid fuels and
electricity sector.
·
The
Department is currently experimenting with the roll-out of smart-grid
technology.
·
According
to the Department, there is a budget of R400m (of the former EDI Holdings),
which municipalities are able to access for specific projects or infrastructure
development initiatives. However the Department has set certain criteria, which
must be fulfilled, for municipalities to access these funds and these funds
will be ringfenced for that specific programme. This
is in an effort by the Department to encourage correct behaviour by
municipalities.
·
With
regard to the Inclining Block Tariff (IBT), the Department pointed out that
co-operation between all three spheres of government is crucial. According to
the Department local government has a by-law which requires one (1) electricity
meter per site. In the event that a site has for example three homes or
households within one property, all three need to be metered separately for IBT
to be effective.
·
On
the issue of consultants vis
a vis in-house specialists, the Department pointed
out that consultants are temporary, where they are called in to address a problem
and leave. In other words, they are a short term solution.
·
A
concern of the Department is the planning cycles between that of the Department
and its entities. Entities use to plan ahead of the Department, with the result
that there was no alignment. The Department has undertaken to address this as
matter of priority including a combined risk management strategy will be jointly
developed.
·
With
regard to the necessary skills in the Department, the Department pointed out that
a skills audit is performed, after which the Workplace Skills Plans will be developed,
where training needs are identified.
·
Current
publications of the Department are internally focused however outward focus
will be considered in future.
·
Clean
Development Mechanism (CDM) initiatives are small and very expensive projects. The
Department confirmed that they have very little influence over the process on
what can be done. The Department hopes to develop a booklet to inform
communities on CDM.
·
The
Top 40 energy users in SA signed the Energy Efficiency Accord at the COP17.
·
The
Department pointed out that there are overlaps with regard to energy efficiency
at municipal level. Municipalities include energy efficiency in their municipal
tariff settings, while energy efficiency has already been applied for in ESKOMs multi year price determination application. The Department
emphasized that a centralized effort is needed.
·
The
National Energy Efficiency Agency will be the referee with regards to energy
efficiency, to determine effectiveness - including savings on current
programmes.
·
The
Department highlighted that there is a need to tighten the acceptance criteria
when it comes to licensing of fuel.
·
Even
though the New Multi-Product Pipeline (NMPP) is finished, the infrastructure relating
to the linkages - at the end of the pipeline is not in place. The Department
did however state how the other pipeline can still be utilized.
·
The
Department acknowledged that governance practices in the Integrated Energy
Centres are a concern and a challenge. However, where Total SA is involved in
the IECs, they are undertaking to address the
challenges. Because IECs are run by communities,
there are governance issues which impede their success. The Department of Trade
and Industry and the Independent Development Trust was approached to assist the
Department in embedding governance issues in cooperatives.
·
The
Department relies on the oil companies, relating to the quality of the fuel
sold to customers. There is currently no independent verification measure in
place to determine the quality of fuel. Department confirmed that this makes
them very uncomfortable.
·
One
the issue of smart-grid technologies, members raised concern that the
conceptualization thereof have not been done by the Department.
·
The
Electricity Efficiency Demand-Side Management campaign is fragmented and need
to be consolidated.
·
The
continental drive especially in the SADC region is lacking.
·
Public
Participation Programmes through partnerships with other spheres is lacking
especially municipalities.
3. Briefing by the Minister of
Energy, Hon D Peters on the outcomes of the service delivery agreements
The
Minister of Energy signed the following performance agreements with the
President:
3.1. Outcome 6: An efficient,
competitive and responsive economic infrastructure network
Output 1: Improving competition and
regulation:
Establishment of the Independent System and Market Operator (ISMO) The Bill was introduced in
Parliament after stakeholder consultation at NEDLAC. A due diligence process was
initiated to investigate the possible transfer of the transmission assets into
the ISMO. It is anticipated that the legislation will be finalized by the first
quarter of 2013, where after the state-owned company will become operational.
Building of the New Multi-Purpose Pipeline (NMPP) between
Output 2: Ensure
reliable generation, distribution & transmission of energy:
Generation:
Introduction
of Independent Power Producers (IPPs) The Renewable
Energy IPP procurement process is underway to facilitate IPPs
that will generate power side by side with Eskom. Approximately 2400MW of
renewable energy IPPs was selected as preferred
bidders for the generation of power using wind, solar and small-hydro
technologies starting in 2012.
Electricity
generation/build programme (Completion of OCGT IPP 100MW) Contract
negotiations have been completed and reached commercial close. Awaiting
signature of proven power purchase agreement once conditions precedent (including
government guarantees) imposed by Eskom are fulfilled.
Distribution
& Transmission:
Develop a funding and implementation
plan and reduce the distribution infrastructure maintenance backlog of R27.4
Billion to R15 billion by 2014:
o
Funding and implementation Plan was
in place by March 2012(MYD 3).
Restructuring of the Electricity
Distribution Industry:
o
The Approach to the Distribution
Asset Management (ADAM) proposal was completed.
Address the backlog challenges in
the maintenance of the electricity distribution infrastructure;
Development of Substations;
Household
access to electricity to be 92 percent by 2014 ( Details in slide no 3.2)
3.2. Outcome 10: Environmental
assets and natural resources that is well protected and continually enhanced
Development & implementation of policies to reduce
greenhouse gas emissions & climate change impacts, & improve
air/atmospheric quality.
Output 2: Reduce greenhouse gas emissions, enhance
measures to adapt to climate change impacts and improved air quality
2.3
Renewable energy deployment
Sub -output
2.5: Efficient energy use:
2.5.1.
Energy efficiency improvement of 12
percent by 2015
Completed
the Second review of the National Energy Efficiency Strategy (Consultation
with Residential and Commercial Building sector, Mining and Industrial
Sector, Business Unity South Africa and National Business Initiative and sector
workshops held during the course of 2011 (i.e. etc)
The
Energy Efficiency Campaign was consulted upon extensively and was launched
during COP 17.
3.3. Additional outcomes co-signed
by the Minister of Energy
3.4. Observations and findings
4. Department of Performance
Monitoring and Evaluation:
4.1. Performance of the focusing on
the service delivery agreements
The outcomes are the governments main
initiative to achieve effective spending on the right priorities.
·
Aim is to improve service delivery
by:
o
Introducing whole-of-government
planning linked to key outcomes, clearly linking inputs and activities to
outputs and the outcomes
o
Implementing the constitutional
imperative for cooperative governance by negotiating inter-Departmental and
inter-governmental delivery agreements for the outcomes
o
Increasing strategic focus of
government
o
Making more efficient and effective
use of limited resources by introducing more systematic monitoring and
evaluation
4.1.1. Outcomes to which the Department
contributes
·
Economic
Infrastructure: An efficient, competitive and responsive economic
infrastructure network
·
Local
government: Responsive, accountable, effective and efficient Local Government
system
·
Environment:
Protect and enhance our environmental assets and natural resources
Table 1: Progress
on the Outcomes
Sub-output |
Target |
DPME
comment |
Progress on Outcome 6 Output 2: Ensuring reliable generation, distribution and
transmission of energy (Outcome 9: Responsive,
accountable, effective and efficient Local Government system is also covered
under output 2) |
||
Develop a funding and implementation plan and reduce
the electricity distribution infrastructure maintenance backlog of
R27.4bn (baseline in 2009) to R15bn by
2014 |
Funding and implementation plan in
place by March 2011
Report detailing a map of
distribution asset status for 50 percent of all Municipalities by 2012/13
Initiate interventions, monitor
rehabilitation projects and reduce backlog by R8bn in 2012/13 |
The planning work is behind
schedule
Difficult to ascertain whether
R8bn reduction in backlog in 2012/13 will be met or whether it is adequate,
because the Department is not reporting on municipal rehabilitation
expenditure using own funds. Municipalities are already receiving maintenance
funding through Nersa approved tariffs. |
Household access to electricity should be 92 percent
by 2014 |
Targets for 12/13: (1) 180 000 households electrified (2) 500 schools electrified (3) 10 000 solar electricity home systems installed (4) Expansion of electrification by additional 200
000 households through non-fiscal funding |
According to DBE data percentage
of schools with electricity improved from 57 percent in 2002 to 86 percent in
July 2011. Between 2008 and 2010 an additional 1000 schools were electrified.
DPME not optimistic that the 92
percent electrification target will be reached by 2014. |
Develop a funding model for electricity generation
build programme (Eskom Capex) to ensure security of supply |
Funding model developed and submitted to Cabinet by
2010/11 (DPE) |
While good progress was made for securing much of
the IRP2010, much work needs to be done on the nuclear build programme,
before there is clarity on Eskoms role and the
funding model for nuclear. |
Long-term energy mix diversification to address the
security of energy supply and requirements for renewable energy |
(1) Extend IRP, covering 25 year window by December
2010 and issue licences in accordance with IRP implementation 1000MW
installed in 2012/13 (2) Accelerated 1 million Solar Water Heaters
roll-out by 2013 (DoE, (3) Demand Side Management (9 TWH
saving in 2012/13) |
(1) IRP completed and implementation commenced (2)The solar water heating installation programme is
a little behind schedule. (3) More attention needs to be paid to reporting on,
and increasing actual demand-side savings. |
Migrate Eskom coal from road to rail Rehabilitate coal haulage roads (joint
responsibility with DPE and DoT) |
Additional 380 km coal haulage roads
rehabilitated by 2012/13
2012/13: 19mpta coal on rail, and
23.5mpta on road |
Delivery agreement target for coal on rail by the
end of 2012/13 is 19 million tons which is unlikely to be achieved. Progress on coal roads also seems to be slow |
Restructuring of the
electricity distribution industry |
Decision on the end state of EDI
Holdings by 2010/11 |
Distribution infrastructure maintenance backlog at
municipal level still needs to be addressed |
Setting cost reflective tariffs while cushioning the
poor from increasing electricity costs |
Develop targeting framework for
qualifying beneficiaries in collaboration with municipalities by 2011.
2012/13: 100 percent coverage of
qualifying beneficiaries |
Better mapping and targeting of indigent households
needed for FBE, CFLs and solar geysers, for IBT
not to penalise the poor |
Progress on Outcome 10: Output 2: Reduce greenhouse gas emissions
reduced, climate change impacts mitigated & air/atmospheric quality
improved |
||
Renewable energy deployed |
Power generated that is renewable (10 000 GWh by 2014) |
While progress is evident, some intervention is
required on Upington Solar and to clear obstacles
to enable the rapid realisation of the REIPP construction. Measurement of current use of Renewable Energy must
be reported in order to track progress. |
Efficient energy use |
12 percent energy efficiency improvement by 2015 |
Whilst progress is noted, reporting is required
on the extent of actual reductions in
relation to the target percentage |
*Source:
Presentation document Tuesday 10 October 2012
4.2. Management Performance of the Department
of Energy
4.2.1. Background
In June
2011, Cabinet approval for annual assessments of management performance of
national and provincial departments using the Management Performance Assessment
Tool (MPAT) was approved. The aim is for effective and efficient translation of
inputs into outputs through good management practices which is important for
improving service delivery. The aim is also to develop a culture of continuous
improvement and sharing of good practice.
The
assessment will be done against 31 management standards in 17 management areas.
These standards are based on legislation and regulations. The standards were
developed collaboratively (with National treasury, Department of Public Service
and Administration, Office of the Public service Commission, Office of the
Auditor-General and Offices of the Premier). This is a joint initiative, where
the Office of the Premier facilitates provincial departments, the DPME
facilitates national departments.
4.2.2. Moderation
The 2011/12
assessment results for the national departments have been published on the DPME
website. Results of the 2011/12 reflect the self-assessment only. DPME only
started the MPAT assessments in 2011/12 and tested the moderation process in
that year. For the 2012/13 assessments DPME will ensure detailed peer
moderation of self-assessments, and will publish the moderated results.
However, self-assessment results for the 2011/12 financial year are still useful because management were generally frank in
assessing themselves and because the results provide a picture of managements
own view of its performance and how it needs to improve.
4.2.3. MPAT Compliance ratings
Level |
Description |
Level 1 |
Non-compliance
with legal/regulatory requirements |
Level 2 |
Partial
compliance with legal/regulatory requirements |
Level 3 |
Full
compliance with legal/regulatory requirements |
Level 4 |
Full
compliance and doing things smartly |
4.1.2. Observations and findings
5. Audit outcomes by the
Auditor-General of SA (AGSA) for the Department of Energy
Table 2:
Audit outcomes of the Department and its entities
Audit opinions |
08-09 |
09-10 |
10-11 |
11-12 |
Department
of Energy |
n/a* |
n/a* |
Unqualified |
Unqualified |
Nuclear
Energy Corporation of |
Clean
audit |
Clean
audit |
Clean
audit |
Unqualified |
Central
Energy Fund (CEF) |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
PetroSA |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
Nuclear
Energy Corporation of |
Clean
audit |
Clean
audit |
Unqualified |
Unqualified |
South
African National Energy Research and Development Institute (SANEDI) |
n/a** |
n/a** |
n/a** |
Unqualified |
EDI
Holdings |
Unqualified |
Clean
audit |
Unqualified |
Unqualified |
National
Nuclear Regulator (NNR) |
Unqualified |
Unqualified |
Unqualified |
Unqualified |
*Source:
Presentation document Wednesday 10 October 2012
n/a* The Department was only
established during the 2010-11 financial year
n/a** The entity was only established
during the 2011-12 financial year
AUDIT OPINION |
CLEAN AUDIT OPINION: No
findings on PDOs and compliance |
UNQUALIFIED with
findings on PDOs and compliance |
QUALIFIED AUDIT OPINION
(with/without findings) |
DISCLAIMER/ADVERSE
AUDIT OPINION |
5.1. Key focus areas of the audit
include the following:
5.2. Other
matters of interest
Table 3: Unauthorised expenditure
Auditee |
Unauthorized expenditure |
|||
Movement |
Amount |
Amount |
||
1 |
Department of Energy |
|
- |
R14.9m |
Table 4: Fruitless and wasteful expenditure
Auditee |
Fruitless and wasteful expenditure |
|||
Movement |
Amount |
Amount |
||
1 |
Department of Energy |
|
- |
- |
2 |
Nuclear Energy Corporation of |
|
- |
- |
3 |
Central Energy Fund (CEF): Group (excluding
PetroSA) |
|
R0.175m |
R3.4m |
4 |
PetroSA |
|
R35.8M |
R21.6m |
5 |
Nuclear Energy Corporation of |
|
R1.5m |
R0.1m |
6 |
South African National Energy Research and
Development Institute (SANEDI) |
|
- |
- |
7 |
EDI Holdings |
|
R0.52m |
R0.00 |
8 |
National Nuclear Regulator (NNR) |
|
R0.2m |
R0m |
Table 5: Irregular expenditure
Auditee |
Irregular expenditure |
|||
Movement |
Amount |
Amount |
||
1 |
Department of Energy |
|
R22.3m |
R112.3m |
2 |
Nuclear Energy Corporation of |
|
R0.4m |
R0.9m |
3 |
Central Energy Fund (CEF): Group (excluding
PetroSA) |
|
R47.4m |
R.2m |
4 |
PetroSA |
|
R27.4m |
R17m |
5 |
Nuclear Energy Corporation of |
|
- |
- |
6 |
South African National Energy Research and
Development Institute (SANEDI) |
|
- |
- |
7 |
EDI Holdings |
|
- |
- |
8 |
National Nuclear Regulator (NNR) |
|
- |
R21.5m |
*Source:
Presentation document 10 October 2012
5.3. Observations and findings
6. National Nuclear Regulator (NNR):
Annual Report 2011/12
6.1. Highlights
Nuclear installations and entities under the
regulatory oversight of the NNR did not expose workers to harmful levels of
radiation or caused nuclear damage to the environment in 2012. The Board and
its Committees were successful in fulfilling their fiduciary duties during the
period under review and continued to discharge their mandate in accordance with
the set charters and King III Code of Good Governance. In light of the
Fukushima Daiichi accident the NNR directed Eskom and the South African Nuclear
Energy Corporation (NECSA) to perform safety assessments on the Koeberg and
SAFARI-1 nuclear installations The safety assessments were completed during the
period under review and the NNR is of the view that the said facilities are
sufficiently robust to withstand events such as tsunamis and earthquakes in
terms of their design basis.
As part of the continual improvement of safety and in
preparation for potential new nuclear projects, the NNR participated in the
South African Governments Integrated Nuclear Infrastructure Review (INIR)
process. This process will culminate in
the production of a National Report that will be presented to the Executive
Ministerial Committee responsible for the nuclear new-build expansion programme
for
On 1 July 2011 the NNR began to operate under a new
structure. This occurred after several
months of intensive work involving both internal and external
consultation. The organisational
restructuring process entailed a comprehensive review of the NNR structure and
processes, with the aim of streamlining the organisation to improve efficiency
and operations
During the period under review, the NNR continued to
manage the allocated financial resources conservatively. Total operating revenue for the year was
R125,6 million, R88,7 million of which was derived from services rendered to
holders of nuclear licences (Koeberg Nuclear Power Station and NECSA), and
holders of certificates of registration (mines and small users of radioactive
materials and processing), and R35,4 million from a direct government grant
6.2. Regulation of Nuclear
Activities
The facilities and actions currently under the
regulatory control of the NNR include the Koeberg nuclear power station, the Pelindaba nuclear fuel cycle, production, and research
facilities, the Vaalputs nuclear waste repository and mining and minerals
processing facilities / activity.
The NNRs regulatory process
entails authorisation, safety case review and assessment, development and
issuance of regulations, and the undertaking of compliance assurance and
enforcement activities as appropriate.
6.3. Compliance
Assurance Inspections
In order to verify degree of compliance with the
conditions of authorisation, the NNR undertakes independent regulatory
inspections. During the reporting period the NNR conducted a total of 333
inspections which comprised of;
Occupational
exposure at Koeberg Nuclear Power Plant, NECSA, Pelindaba
Site, NECSA, Vaalputs Radioactive Waste Disposal site and mining and mineral
processing facilities were within prescribed regulatory limits
Projected
public exposure at Koeberg Nuclear Power Plant, NECSA, Pelindaba
Site, NECSA, Vaalputs Radioactive Waste Disposal site was within the prescribed
regulatory limits.
With regard to special case mines, for a mine to be
classified as a special case mine by the NNR the potential of the monthly dose
rate must be 1.7mSv and above, or the projected dose of 20mSv should be
exceeded
The NNR has identified 17 mining and mineral
processing facilities with the potential to exceed the set regulatory limit of
20mSv/a if not closely monitored. These facilities
continue to implement appropriate corrective measures such as engineering and
administrative controls to ensure that all dose levels are kept ALARA as part
of the on going monitoring programme.
6.4. International
Cooperation
IAEA Joint Convention on the Safety of Spent
Fuel Management and on the Safety of Radioactive Waste Management : The
NNR coordinated and submitted South Africas
national report to the Joint Convention on the Safety of Spent Fuel
Management and on the Safety of Radioactive Waste Management to the Joint
Convention Secretariat in October 2011.
IAEA Convention on Nuclear Safety: The
NNR participated in the 5th Review meeting of the contracting parties to the
IAEA Convention on Nuclear Safety.
IAEA Convention on Nuclear Safety: The
NNR participated in the 5th Review meeting of the contracting parties to the
IAEA Convention on Nuclear Safety. The NNR participated at the fifth Review
Meeting of the Contracting Parties to the Convention on Nuclear Safety (CNS)
held at the Headquarters of IAEA in
The NNR participated in the following Committees,
Technical Projects and Forums;
Nuclear Safety Standards Committee
(NUSSC)
Radiation Safety Standards Committee
(RASSC)
Waste Safety Standards Committee
(WASSC)
Transport Safety Standards Committee
(TRANSSC)
Commission on Safety Standards (CSS)
IAEA Technical Co-operation Project
SAF9004
IAEA Technical Co-operation Regional
Project RAF/0/033
Multinational Design Evaluation
Programme (MDEP)
6.5. Regional Cooperation
Within the regional African context,
The NNR continued to represent
6.6. Public
Safety Awareness
Tudor Shaft Informal Settlement:
6.7. Human
Resources
During the period under review, the NNR went through a
process of restructuring, which resulted in a leaner and flatter
structure. With the filling of the new
posts created by the restructure, new senior management was born. Significant performance improvements have
since been registered and the NNR continues to enjoy innovation, quality work
output and a generally positive work ethic.
Of the 21 terminations 12 were as a result of retrenchments due to the
restructuring process, five were resignations while one person retired and one
was terminated through a disciplinary process.
Two NNR employees passed away.
The statistics reflect a healthy level of labour turnover and a stable
work environment.
6.8. Financial
Performance Analysis
The NNR revenue grew by 14 percent from the previous
financial year mainly from the increase on authorisation fees. The compensation
of employees increased by 10 percent from the previous financial year due to
the minimal growth on capacity and annual cost of living adjustment. The
Depreciation costs in the same period increased by 138 percent in line with the
leasehold assets associated with the new HQ in Centurion occupied through an
operating lease with an option to purchase. The move to the new office resulted
in 15 percent decline on maintenance costs during the year under review. Overall
the NNR realised an operating surplus of R1,2 million
which is just below 1 percent of the total budget
6.9. Financial
Report Auditor-General
The NNR obtained an unqualified audit report for the
third year in succession during 2011/12 financial year.
The Auditor General found and reported the following
with regard to performance information:
Management did review and address time frames during
the 2nd quarter of the financial year. The organisation continues to monitor
and scrutinise performance information on quarterly basis to ensure accuracy
and completeness of reported performance
The AGSA found and reported non compliance with Section
55 of the PFMA due to significant changes on the Annual Financial Statements
particularly property, plant and equipment and cash and cash equivalents
Management has already acquired a new asset management
system which calculates correctly and has relevant accounting standards built
in to ensure maximum compliance. All vacant positions within finance component have
been filled with suitably skilled resources and maximum quality is envisaged. The
above recruitment emphasized versatility of candidates across broader financial
administration activities and the team is being developed and capacitated to do
more than their sole responsibilities.
The following were further identified as critical by
the AG:
Irregular expenditure of R5,8
million was noted though it was condoned during the same year. The expenditure
was around the lease of the NNR HQ and management concluded the acquisition of
the building. The Irregular expenditure was reduced to a closing balance of
zero during the year under review and controls are in place to ensure maximum
compliance with the rules and regulations.
6.10. Overview
by the Audit Committee of the NNR
The Audit and Risk Management Committee (Committee)
operates in terms of its charter approved by the board. It is a board committee
and consists of five
non-executive directors. The Chairperson of the Committee is a Chartered
Accountant and Certified Internal Auditor and he is an independent
non-executive director. The Committee members consist of members of the Board
and one independent member. The committee was constituted to include experts in IT Assurance, Risk
Management, Finance, Audit and Nuclear Science.
The committee undertakes its work in accordance with
the annual plan derived
from its charter.
The CEO, CFO, Internal Audit & Risk Manager and
Auditor General of South Africa (AGSA) have a standing invitation to the
Committee meetings. The committee reports to the board at least quarterly. The Committee meets least
quarterly.
The Committee
meets to address the roles and responsibilities as detailed in the Committee
Terms of Reference (TOR), including: financial and sustainability reporting;
internal financial controls; external audit process; internal audit process;
risk management; information technology ; Performance management and the
Committee recommends to the Board for approval matters that were considered in
terms of its TOR.
Challenges
The absence of a CFO for the major
part of the year, reducing reports review capability.
Material errors detected before
submission of AFS to the AGSA.
Changes in the Regulations during
the year, resulting in differences in interpretation.
Moving to the new building,
resulting in asset issues.
Limited funding resulting in limited
ability to plan and forecast appropriately.
6.11.
Observations
7. SA Nuclear Energy Corporation (NECSA):
Annual Report 2011/12
7.1. Highlights of the period under
review
7.2. Performance: Key Performance
Indicators
·
Operational KPIs that
were exceeded:
7.3. Overview of Revenue Generators of the NECSA Group
7.3.1. NTP
Group
NTP was established as a wholly owned subsidiary of NECSA
in 2003 and operates as a commercial subsidiary of NECSA. NTP routinely serves
customers in 60 countries on six continents with a range of radiation-based
products and services and is one of the worlds leading producers of radiochemicals, radiopharmaceuticals and other radiation
technology-based products. NTP Group mainly generates the NECSA Groups
external revenue and achieved sales of R 842 million during the 2011/12
financial year, in the face of challenging global market conditions.
7.3.2. Pelchem SOC Ltd (Pelchem)
Pelchem
was established as a wholly owned subsidiary of NECSA in April 2007. It has a proud record of more than 25 years
experience in locally produced fluorspar beneficiation. Pelchem
maintains a portfolio of fluorochemical business
activities that serve local and international markets while playing a leading
role in the SA Fluorochemical Expansion Initiative
(FEI). Pelchem is the only company in the Southern
Hemisphere which produces fluorochemicals from
fluorspar.
7.3.3. Nuclear Manufacturing Centre (NMC)
NMC is a NECSA
commercial business unit with vast experience and specialised capabilities in
manufacturing. NMC can fabricate high quality products and plant components
from a wide range of metals and exotic alloys. ASME III certification is
critically important for NECSAs nuclear
manufacturing capabilities in providing a platform for leveraging localisation
opportunities that will arise from the nuclear power reactor new-build
programme for the fabrication of high level nuclear reactor equipment. NMC is
thus aligned with the Governments policies and objectives as outlined in the
Industrial Policy Action Plan 2 (IPAP2). NMC achieved sales of R 44.0 million
during the 2011/12 financial year
7.3.4. Analytical and Calibration Services (ACS)
ACS is a NECSA
business unit that supports NECSAs compliance with
Nuclear, safety, health and environmental regulatory and license requirements,
including compliance to process and/or product specifications. ACSs services comply with the strict nuclear industry
requirements. Since most ACS services are not available from any other
laboratories in
7.3.5. Nuclear
Liabilities Management (NLM)
NLM is a NECSA business unit that provides radioactive
waste management services. These professional and cost effective Radioactive
Waste Management and Radiation Protection services are also offered to external
clients. NLM was authorised by Government (Department of Energy and Department
of Health) to accept radioactive waste from external generators and small users
for further management and eventual disposal. NLM achieved sales of R 15m for
the 2011/12 financial year.
7.4. Skills
Development at NECSA
The Nuclear Skills Development (NSD)
Centre continues to
grow and fulfill its mandate in terms of the National Skills Development
Strategy. The quality of training at NSD is of a high standard and is partnered
with several clients externally such as:
·
Department
of Public Works (100 students)
·
Development
Bank of
·
Alstom (55 students)
·
DB
Thermal (35 students)
·
Others
on job creation projects (88 students)
In its
Decentralized Trade Test Centre (DTTC), the following was achieved:
·
Conducted
120 pre-tests to determine the readiness of candidates for the final trade
tests,
·
280
candidates received trade test preparation required by the SETAS and
·
245
candidates wrote the artisan trade tests.
·
207
passed (84.5 percent)
7.5. SAFARI-1 today
Main benefits of SAFARI-2
7.6. NECSA
Group: Human Capital
The NECSA Groups staff complement decreased by 4.59
percent, from 2,179 in 2010/11 to 2,097 at the end of the reporting period. The
number of contract staff decreased from 311 in 2010/11 to 199 in 2011/12, in
line with NECSAs strategy to co-ordinate and
consolidate its workforce to deliver on its strategic mandate.
Reasons for retrenchments
Doubling of licence fees
Reduced Dividends from Subsidiaries
compared to income
7.7. Radio-active
Waste Management
Currently NECSA has Ministerial delegation to carry
out the responsibilities of the National Radio-active Waste Management
Institute (NRWMI
7.8. Observations and findings
8. National Energy Regulator of SA
(NERSA): Annual Report 2011/12
8.1. Introduction
NERSAs
Strategic Objectives are linked to the following National outcomes that the
Minister of Energy has entered into a Performance Agreement with the President:
A long and healthy life for all
South Africans;
Decent
employment through inclusive economic growth;
An
efficient, competitive and responsive economic infrastructure network;
Sustainable human settlements and
improved quality of household life;
Environmental
assets and natural resources that are well protected and continually enhanced;
and
An
efficient, effective and development oriented public service and an empowered,
fair and inclusive citizenship.
8.2.
Achievements Electricity Industry Regulation
Tariffs:
o
Concurrence
of the Energy Regulator with the determination made by the Minister of Energy
in line with section 34 of the Electricity Regulation Act, 2006 (Act No. 4 of
2006) on the procurement process for renewable energy; and
o
Held six provincial
workshops on electricity resellers / trading.
Generation:
Distribution:
Successful mediation of the dispute
between the Chiawelo community and Eskom after the
acceptance of NERSAs report on Testing of
Disputed Electricity Prepaid Meters in Chiawelo,
Licenses
Licenses
granted Generation (5) and Distribution (1)
8.3. Achievements
Piped-Gas Industry Regulation
Pricing and Tariffs:
o
Determination of inadequate
competition as contemplated in Section 21(1) (p) in the Gas Act, in the
piped-gas industry. The determination is a condition precedent for the
implementation of the Methodology to Approve Maximum Prices for Piped-Gas which
was also approved in the period under review;
o
Approved:
Aggregated (average) piped-gas
prices for 2010 for different categories of customers in various provinces;
maximum prices for Greenfields customers for 2010 and for distributors and reticulators for 2010/11;
minimum prices for Gas for 2010/11;
compliance with regulatory discounts
for 2010; and
price
capping mechanism for 2009 and 2010.
o
Approved the following transmission
tariffs:
ROMPCOs
quarterly transmission tariffs; and
Transmission tariff for Transnet
Pipelines for the pipeline from Secunda to Durban
South (Lilly Pipeline) for 2011.
Compliance Monitoring:
o
Notices of non-compliance:
Issued 13 notices of non-compliance
following findings that Sasol Gas did not adhere to
licensing requirements in certain areas; and
Sasol
Gas reimbursed four of its small customers after a finding that they failed to
grant appropriate discounts prescribed.
Other
o
Conducted three workshops on
Dialogues on gas infrastructure development and investment:
Findings:
o
Price uncertainty;
o
Regulatory / policy uncertainty; and
o
Creditworthy off-taker (most likely
electricity generation).
8.4.
Achievements Petroleum Pipelines Industry Regulation
Tariffs:
Compliance Monitoring:
8.5.
Financial performance
Actual
levies collected amounted to R141.6 million, received from the following
sources:
o
Electricity
industry R67.8 million
o
Piped-Gas
industry R42.2 million
o
Petroleum
Pipelines industry R31.6 million
The under recovery of the levies, compared to the budget is
due to the actual volumes of product transported being below the volumes
projected by the industry. The actual expenditure for the period 1 April 2011
to 31 March 2012 amounted to R179.4 million. This represents an underspending
of 14.8 percent compared to the budgeted amount of R210.6 million.
Expenditure
categories in relation to the other expenditure
o
Operating
Expenses = 30 percent
o
Employment
Costs = 57 percent
o
Consultant
fees = 8 percent
o
Regulator
Members remuneration = 5 percent
Total
irregular expenditure not yet condoned at year end was R85 242 and fruitless
and wasteful was R356.00
NERSA
received an unqualified audit opinion with an emphasis of matter from the Auditor-General
for the 2011/12 financial year
Matter
of emphasis misstatement of previous year figures
8.6. Observations and findings
NERSA has continued its tradition of
receiving an unqualified Audit Report for 2011/2012;
NERSA was re-elected as Chair of the
Regional Electricity Regulatory Association (RERA); and
NERSA was re-elected to serve as a
member of the Executive Committee of the African Forum for Utility Regulators
(AFUR).
The regulation of the three energy
industries characteristically continues to pose challenges in that the Energy
Regulator is required to balance the conflicting interests of licensees,
investors, consumers/end-users and the policy maker.
NERSA has achieved its regulatory
mandate through projects set for the 2011/2012 financial year it completed 66 percent of its
planned Business Plan activities for 2011/12.
According to NERSA, there are
regulatory frameworks within which they operate, relating to those institutions
(e.g. municipalities) who do not comply. NERSA stated that they left it to the
industry to self-regulate and enforce compliance, but it was found that it does
not work in practice. NERSA admitted that the current legislation leaves them
light handed, and that compliance need to be reinforced.
Resignations of the Chief Financial
Officer and the Head of Human Capital had no way hampered the operations of
NERSA.
Due to the different financial years
between ESKOM and NERSA there were delays in submitting its reports to NERSA.
The old
With regard to the impact of the
transport strikes, a Task team was established to ascertain which areas were
hardest hit, as some areas were worse off then others.
ESKOM must submit its Multi-Year
Price Determination 3 (MYPD 3) by 18 October 2012, and NERSA is confident that
they will make their deadline to finalise its processes by 28 February 2013.
On the issue of wheeling charges
there is methodology to deal with this.
NERSA has a Regulated Clearing
Account facility, which deals with cost overruns by operators. These funds can
be clawed by NERSA from the operator, without placing any burden on the
consumer.
With regard to the storage of
liquefied petroleum gas, it remains a concern especially the coastline. Efforts
are underway to build storage capacity at Coega (
The working relations between the
CEO and the Commissioners were reluctantly accepted.
9. SA National Energy Development
Institute: Annual Report 2011/12
9.1. SANEDIs
staff compliment
9.2. Renewable
Energy Centre of Research and Development (RECORD)
The vision of
the centre is to facilitate Renewable Energy research coordination,
collaboration and dissemination of national and international RE energy
knowledge contributing towards a sustainable low carbon energy future. Is
mission is to be recognised as the foremost institution for RE research
coordination and collaboration in SA
RECORD is intimately involved with establishment of wind
(SAWETC) and solar (CSTDI) energy training centres in
RECORD has printed a publication encompassing all
previous areas of SANEDI funded research and a gap/opportunity analysis thereof.
RECORD has a project management package articulated for industrial partners who
wish to engage in research from the applied to pilot/demonstration phase.
RECORD is engaging with various institutions and
associations with regards to RE technology standards development, in order to
facilitate this wherever there is a need.
9.3. Energy Efficiency and SANEDIs role
The Department
has indicated that SANEDI should not be involved in EE-implementation. The focus has shifted towards integrated M
& V, including consolidated reporting & training. SANEDI was requested
to assist in co-ordinating SWH communication activities amongst all
stakeholders.
9.4. SANEDI:
Audit Committee
9.4.1. Audit
Committees: Key activities during the financial year
According to
the Audit Committee, although deficiencies in the internal control were
identified, management implemented corrective actions to remedy them. No
deviations came to light during the Audit Committees interventions with management
on compliance with policies or delegated authority. According to the Audit
Committee the internal audit charter, staffing skills and structure is
appropriate and adequate to render a clean audit. SANEDI has regular
interaction with the AGSA, monitoring of activities, budgets etc.
The AGSA Findings
- SANEDI is in a transitional period of 18 months and most of the findings are
attributable to this. Risk
Management Processes were adequate and effective in evaluating and mitigating
risk exposures regarding governance, operations and information systems.
Internal
Audit provides the audit committee with reasonable assurance that the majority
of internal controls are appropriate and effective. This is achieved by means of the risk
management process, as well as the identification of corrective actions and
suggested enhancements to the controls and processes. From the various reports of the internal
auditors, the audit committee noted that matters indicating any deficiencies in
the system of internal control have been brought to management's attention and
corrective measures are being implemented.
9.4.2. Corporate
Governance
AGSA is
of the
opinion that SANEDI
continues to strive
towards complying with
sound principles of
corporate governance. As per their
discussions with SANEDI management, management confirms that the content and
quality of monthly and quarterly reports prepared and issued by the Chief
Executive Officer during the year under review were properly formulated and
have complied with the PFMA in this regard
9.4.3. Risk
Management
The Board assigned
the oversight of the risk management function to the Committee. A formal risk
assessment was undertaken for the year ending 31 March 2012 with quarterly
reviews, updates and reports.
Consequently, internal audit used this assessment to prepare the 3 year
rolling strategic plan and the annual operating audit plan. The committee
monitored the significant
risks faced by
the company through
reviewing risk reporting
and participation in
the risk assessment workshop. We are satisfied that significant risks were
managed to an acceptable level.
9.5.
Observations and findings
Members noted that the bulk of SANEDIs work during the period under review has taken
place during its transitional period.
Members commended SANEDI for its
excellent performance thus far.
Members reassured SANEDI that they
will support them in their awareness campaign process.
10. Central Energy Fund and its
subsidiaries: Annual Report 2011/12
10.1. Central Energy Fund (CEF)
10.1.1. Financial Results
10.1.2.
Auditor-General findings
The CEF Group
received an unqualified opinion for
2011/12; however, certain matters of emphasis were raised:
Table 6: Major Audit findings
Findings |
Action |
Irregular expenditure (procurement processes not
followed group-wide) |
Procurement processes are being reviewed for
compliance gaps with remedial actions then implemented |
Performance against objectives non-achievement of
planned targets; operating budgets not aligned to objectives (group-wide) |
Differentiation between strategic and operational
objectives with a new approach to budgeting. External consultant used to
advise |
Ineffective human resource management; lack of an HR
plan and key positions not filled |
Some critical positions are due to be filled
shortly. Group wide skills audit initiated |
Environmental audit (mainly PetroSA Voorbaai, landfill, offshore exploration wells) |
Environmental compliance raised to board level |
Major uncertainties include Brass ( |
Scenario analyses are being considered for
understanding possible future trajectories |
*Source:
Presentation document 18 October 2012
10.1.3.
Progress on Renewable Energy Projects
Existing
portfolio of projects where the CEF seek to enhance, extract or protect value
include: Philips Maseru Lighting, the Darling Wind Farm and the MethCap SPV1 Waste-to-energy.
The CEF have a couple of projects currently in
intensive care where they are trying to recoup the value. Efforts are still at
an early stage (Darling Wind Farm and Cape Cleaner Energy (CCE).
10.2. Strategic Fuel Fund (SFF)
10.2.1. Financials
The entity's
net profit for the period amounted to R390,2 million
(2011: R451,5 million). During the 2012 financial year, the crude oil market
experienced some difficulties and resulted in a significant drop in storage
rental income. The profit decreased by 10 percent from the previous year.
The Minister
of Energy issued a Ministerial Directive authorising the acquisition of diesel
for the National Multi Product Pipeline (NMPP). The total volume of diesel
acquired was 154,744,400 litres, valued at R1,049
billion. The stock is managed by
Transnet on behalf of SFF. The South African Revenue Service recognises SFF
Association (NPC) as an Agent of the State, and has therefore deregistered SFF
for VAT and the company is exempt from Income Tax in terms of Section 10(1)(c)
of the Income Tax Act. Irregular expenditure for 2011/2012 amounted to R36K
10.2.1. Strategic
Stock
The strategic Stock (crude oil) is presently at 10.3mBbls as
per Directive. The Department task team is currently reviewing the
strategic stock policy
10.2.3. Strategy for addressing insufficient
funding
SFF needs funding for both infrastructure and the purchase
of crude oil. The Department and SFF will discuss a funding strategy.
10.2.4. BEE access to storage facility
SFF is
issuing RFPS on open tenders. This gives equal opportunity to companies
wanting to store crude oil. The challenge for BEE companies is to secure
funding for crude procurement, storage and holding costs for the crude. During the 2011/12 financial year
SFF trained 30 women on Oil Trading and related issues. A follow up on progress
these trainees have made is planned
10.2.5. Spare
Capacity Utilization
Spare
capacity in Saldanha is rented out to third parties.
Income derived from this is utilised to fund the mandate of SFF. The Milnerton facility is undergoing refurbishment. SFF is
considering various options to make the tank farm available for storage.
10.3. African Exploration Mining and
Financing Corporation (AEMFC)
10.3.1. Progress thus far
Mined 1.7 million tons as at end September 2012
Sold 1.5 million tons rest in stock
Employ 256 people 54 directly
AEMFC offer 2 bursaries in Engineering and 3 internships safety, admin and geology
Finalising the new Kusile Powerstation
supply contract
10.3.2. Highlights
Production
and Sales volumes are ahead of
estimates
Over 80 percent of local people from the nearby Phola township are employed
Mine safety was preserved
In line with
required Eskom coal qualities
The State Owned Mine is self sustaining
Clean
audit from the AG (areas of improvement)
10.3.3.
Challenges
Funding
the State Owned Company for future growth
The mining and transport industry strikes
Gender
representation - Board and
Senior management
Mining rights processing delays
10.4.
Petroleum Agency SA (PASA)
10.4.1. Licensing and Regulation
All
applications received were processed within the legislated time frames, where 41 submissions were finalized. The
Agency continues to monitor and enforce compliance with legislation,
particularly environmental compliance.
10.4.2. Shale Gas
The Agency has stressed its determination to remain
objective in order to carry out its mandate successfully.
10.4.3. Data
Management
There is massive interest in data both on and offshore,
where the Agency made R31 million income from data sales, however the information
management software is reaching its end of life. The Agency has undertaken a
data management infrastructure review and an investigation into the possible
replacement of software is underway. All newly acquired data will be catalogued
and indexed.
10.4.4. Referee and player
According
to PASA, in this industry the term referee and player generally refers to an
entity which is responsible for both the exploration for, and Production of,
oil and gas and the licensing
and monitoring of both activities. SOEKOR was just such an entity. This was the
reason for the separation of SOEKOR to form the two separate entities, PetroSA
and the Petroleum Agency. Current functions performed by the Agency are
accepted as good industry practice. Promotion function entails resource
evaluation and the promotion of petroleum opportunities to the industry within
regulatory prescripts. There is thus no conflict between promotion and
regulatory functions, according to PASA. Other organizations which play a
similar role to the Agency - Norwegian Petroleum Directorate, Crown Minerals
New Zealand: Petroleum and Minerals, INP Mozambique
10.5. iGas
10.5.1.
Background
iGas
was established by a Cabinet resolution in 2000, in order for SA to have a
hydrocarbon as development company. iGas
value is around R1,93 Billion, with cash of R 104 million.
10.5.2. Performance
against objectives
A. Manage iGas interest in
the Rompco Pipeline
Oversee efficient operation and
management of Rompcos assets;
New opportunities for gas usage in
Ensure continued dividends to
shareholders.
B.
LNG to Power
Development of commercial case and support
government decisions on LNG to power.
LNG regasification
plant supplying gas to a 2400 MW power plant.
Designs complete and EIA specialist
studies completed in previous years.
C.
Finalise the opportunity to import
more gas from
Work progressed to a joint venture
agreement draft, handed over to PetroSA to progress.
D. Investigate the viability of LPG usage in
In October 2011 PetroSA were given
this task to progress.
E. Start
the feasibility of the supply of gas to markets:
Basic work complete, reported to
Board and iGas was requested to continue with low
expenditure.
F. Progress the west coast gas transmission pipeline
studies:
Worked with Forest Exploration,
their focus changed to progressing a power plant
onshore at
G. Maintain an iGas presence
in the natural gas communities:
iGas
commented on all relevant NERSA documents on gas and attended and presented
papers at a variety of conferences. iGas is the country representative
of the International Gas Union (IGU). The IGU held a gas forum seminar at
COP-17.
10.6. South African Supplier
Development Agency (SASDA)
Table 7: Performance indicators
against objectives
Objective |
Output |
Indicator |
Progress |
Undertake Supplier Development initiatives |
Selection of suppliers & Assess |
Supplier Shortlist & complete Assessments |
Completed. Training programme to commence. |
Establishment of SASDA as supplier Dev. Of choice |
Appointed by PetroSA for CSDP & DoE input on LFC
|
Appointment by PetroSA. Input document to LFC |
Appointment not done by PetroSA. SASDA participation
withdrawn by DoE. |
Development of existing & new suppliers with
participating SOEs |
Develop 15 companies with SOEs |
Approved ED plan with committed budget |
No progress on this front with SOEs. |
Development of existing & new suppliers with
participating SOEs |
Develop 30 companies with participating oil
companies |
Approved ED plan with committed budget |
Developed 44 companies with approved ED plan and
budget |
Operate a sustainable Verification unit |
Obtain SANAS accreditation and achieve turnover
target |
SANAS accreditation. Achieve revenue target |
SANAS accreditation attained. Revenue target not
met. |
*Source: Presentation document 18
October 2012
10.7. Observations and findings
CEF Carbon, in general achieved its targets,
but company is in close down mode.
Training of Clean Development
Mechanism (CDM) trainees through CSA was completed.
With
regard to the progress of Renewable Energy Projects, the CEF is seeking
to build value in the following project pipelines: Solar Water Heaters, Solar
Park Feasibility, ENER G Landfill gas to electricity, Thin Film Solar
Technology (TFST)
Members commended the CEF for
restructuring itself and committed to more engagement in future.
Members raised concern that CEF has
not developed an exit strategy for the AEMFC to the Department of Mineral
Resources.
The review on the
CEF sees the losses incurred as
venture capital for new businesses.
The CEF had a strategic session with
its subsidiaries to discuss the issue of irregular spending,
AEMFCs
move to the DMR will impact the balance sheet of the CEF.
SFFs
mandate is to store crude oil, and now they are also storing white product.
Storage prices are regulated by the
market.
When tank storage capacity becomes
available, SFF puts it out for tender (RFP)
There is still oil in the Ogies mines, however the quantity thereof is not known. The
Council for Scientific Industrial Research (CSIR) is on site at Ogies. SFF is working closely with the Department of
Mineral Resources and the Department of Water and Environmental Affairs in
addressing relevant issues at Ogies mine.
11. PetroSA: Annual Report 2011/12
11.1. Key highlights
With regard to financial performance and sustainability, PetroSA
received an unqualified audit opinion. The Group profits rose 54 percent year
on year to ~R1.3 billion in 2011/12. Progress was made on Project Ikhwezi, which is intended to extend the
PetroSAs
safety record is within acceptable range, but more focus must be placed on
leading indicators (e.g. near misses) is needed. Fifteen (15) incidents
occurred, with appropriate remedial action taken to avert a recurrence
On Project Mthombo, together with Sinopec,
with which PetroSA signed a Joint Study Agreement, where they are currently
reviewing the business case in view of new clean fuels requirements and
demand/supply projections. PetroSA bought Sabre Oil and Gas Holdings Ltd in
With regard to transformation, progress is being made on
women recruitment, but more is still needed. PetroSA is experiencing
difficulties in recruiting people with disabilities, but they have offered
bursaries to selected students with disabilities. PetroSA further built a
specialised fuels research centre at the University of the
11.2. Project
Ikhwezi
11.3. Financial
Performance
Revenue increased due to a 2 percent increase in sales
volumes and a weaker rand against the dollar (30 percent). Cost of sales increase as a result of
an increased sales of purchased product and again
a weaker rand against the dollar (30 percent). Other apex declines included freezing of posts and other
cost- saving initiatives. The investment
income decreased due to the decline in interest rates, despite higher cash reserves
The property, plant and equipment were less than the
budget due to delays in the Ikhwezi drilling project.
On other financial assets there
was an under-spent mainly due to delays in downstream entry. There were
furthermore increases in inventory and
trade receivables due to the increased sales of purchased product. PetroSAs cash
balance was higher than the budget due to the delay in acquisitions
11.4. Audit
opinion
The PetroSA group was issued with an unqualified audit
opinion. An emphasis of matter, which does not modify the audit opinion, was
raised for the following items:
Significant
Uncertainties - The sale of Brass Exploration Unlimited and
PetroSA Nigeria (SOC) Ltd was recognised during the financial year. The
disposals are still subject to litigation in the Nigerian judicial system.
Material
Impairments - Impairments of loans to PetroSA Egypt (SOC) Ltd, R197m
(2011: R945m), and PetroSA Equatorial Guinea (SOC) Ltd, R1, 412m (2011: R nil),
were incurred.
11.5. Other Legal and Regulatory Requirements
Predetermined
Objectives - There were no material findings on predetermined
objectives
Achievement
of Planned Targets - 38 percent of total targets not achieved
Annual
Financial Statements - Annual financial statements
submitted for auditing were not prepared in all material aspects in accordance with
the prescribed reporting framework and as required by the PFMA and the
Companies Act.
Material mis-statements of non-current and current assets identified
by the auditors were
subsequently corrected
National
Environmental Management Act - Timely corrective action was not
implemented with regards to contamination at the operating facilities.
11.6.
Observations and findings
Fruitless and wasteful expenditure
of R36m and irregular expenditure of R27m were incurred by PetroSA.
Certain
goods and services of a transaction value above R15k for quotations and R1m for tenders were procured without
inviting competitive bids
Members raised concern over the lack
of a risk management strategy with special reference to the exploration in
The aim of PetroSA going downstream
is to diversify its income source, and to be ultimately an integrated oil
company.
On the issue of the gas finds in
PetroSA will soon have acreage in
Project Ikhwezi
will sustain the Mosselbay GTL plant to 2020.
PetroSAs
performance management budget grew from R90m (2010) to R350m (2011). PetroSA
pointed out that their current Performance Management System will be reviewed.
The Committee indicated its
intention of engaging PetroSA more frequently in future
12. Conclusion
During the
period under review, the following factors influenced the environment within
which the Department of Energy operated:
·
The
credibility of
·
On
the geo-political front, the Department had to contend and develop a response
plan to the sanctions by the
·
The
vulnerability of the refining sector was exposed with a number of refinery
shutdowns which diverted some of its attention in terms of monitoring contingency
plans.
Overall
performance is 57 percent whilst the Department spent 99,6
percent of its allocated budget during the period under review. The operational
efficiency especially of utilizing resources will be under intense scrutiny
during the current financial year.
This is the
third Budgetary Review and Recommendations Report this committee is processing.
However, this report may have to be substantially compared to the second report
(2011) given that the Department was only established in 2009.
The operations
of the Department is, in part, displaying signs of or actually beginning to
mature as a distinct institution after its separation from the Department of
Mineral Resources, due to the Departments emergence from a state of transition
after the separation. Notwithstanding resource constraints and other challenges
which compromise the performance of the Department, there was notable
improvement of its performance.
The
performance of branches that handle the Energy Efficiency and oversight on
State Owned Enterprises, is unfortunately less than
satisfactory.
There were
external factors such as electricity infrastructure backlog, unresolved cross-subsidization
municipal services by income from electricity sales, to name but a few which
have compromised the performance of the Department.
The
Portfolio Committee on Energy recognizes some of the achievements by the Department
are dependent on other Departments or agencies of the government as well as
other spheres of government. As such this, from time to time, compromises its
performance profile.
The
Portfolio Committee on Energy applauds the Department and its entities on no
findings by the AGSA with regards to Human Resources and Information and
Communication Technology.
The
Portfolio Committee on Energy also expresses its concerns about the apparent
lack of progress on the New Nuclear Build Programme.
Given the
challenges that obtain the energy sector there must be an emphasis on the
urgency of generation and finalisation of relevant policies where appropriate.
The
introduction of the Audit Committees in the BRRR process, albeit their debut,
painted a fair picture about the Department and SOEs
under its supervision.
Notwithstanding
the above challenges, the Department under the leadership of Minister Peters,
Deputy Minister Thompson and the Director-General, Ms Magubane,
have been resilient enough to grow the Department and also enhance its
performance and effectiveness in a number of respects.
13. Recommendations
Having
assessed the performance of the Department of Energy, the Portfolio Committee
on Energy recommends that the Minister of Energy should ensure the following:
·
The
Department of Energy expedites the conclusion of outstanding policy strategies
and programmes in order to position itself in the forefront of energy policy
and planning. These strategies and programmes should include the following:
o
Strategic
Fuel Policy,
o
Energy
Efficiency Strategy,
o
Approach
to Distributions Asset Management (ADAM),
o
Restructuring
of the electricity industry,
o
Electricity
Pricing Policy,
o
Bio-Fuels
Policy,
o
Replacement
of Regional Electricity Distributors (REDs),
o
Free
Basic Alternative Energy (FBEA),
o
Cost
Recovery Mechanism for cleaner fuels,
o
Review
of the Integrated Resource Plan (IRP),
o
Review
of the Renewable Energy White Paper,
o
Integrated
Energy Plan, and
o
Household
Energy strategy.
·
The
Department of Energy mobilises at least 30 percent of
the needed funding for the infrastructure backlog in conjunction with the National
Treasury, by the end of the 2012/13 financial year.
·
The
Department of Energy ensures that the restructuring process of the Central
Energy Fund is concluded within the 2012/13 financial year.
·
The
Department of Energy submits an update on how it has addressed recommendations
of the Budgetary Review and Recommendations report of both 2010 and 2011 by the
end of the 2012 calendar year.
·
The
Department of Energy submits a report to the Committee relating to the Internal
Audit Control strategies and plans on how to achieve clean audits for both the Department
of Energy and its entities.
·
The
Department of Energy submits a strategy and plan on its role and contribution in
responding to climate change and based COP 17 resolutions. This strategy/plan
should be submitted within three months after the adoption of this Report by
the House.
·
The
Department of Energy mobilises for skills development
in the energy sector by ensuring a definite review and rollout of non-grid
electrification policy and programmes within the 2012/13 financial year.
·
The
Department of Energy extends the Household Energy Strategy to include efficiency
and access to household appliances.
·
The
Department of Energy and its entities develops a strategy on synergy between the itself and its entities within 2012/13 financial year.
Such a strategy should include monitoring and evaluation of funds transferred
to entities including municipalities.
The Department of Energy formulates policy and develops a strategy
on energy data management especially collection including measurement of use of
Renewable Energy reporting in order to track progress. This should be done
within the 2012/13 financial year.
·
The
Department of Energy addresses outstanding issues with the Independent Power
Producers (IPPs) that have received Renewable Energy
Independent Power Producer Programme (REIPPP) contracts by the end of the
calendar year.
·
The
Department of Energy develops skills development programmes in the energy
sector especially the liquid fuels sector and the electricity sector within the
2012/13 financial year.
·
The
Department of Energy develops a plan on smart-grid policy and strategy is
developed within the 2012/13 financial year.
·
The
Department of Energy ensures corporate services especially skills development,
legal services and monitoring and evaluation have adopted plans by the end of
the 2012 calendar year.
·
The
Department of Energy develops a plan relating to Public Participation Programme
through partnerships, especially with municipalities to be adopted within this
financial year.
·
The
Department of Energy ensures that an independent verification mechanism is in place
to determine the quality of liquid fuels within this financial year.
·
The
Department of Energy ensures the readiness of South African Nuclear Energy
Corporation and the National Nuclear Regulator for the New Nuclear Build
Programme is visibly geared up within this financial year.
·
The
Department of Energy ensures the full utilization of the National Multi-Purpose
Pipeline (NMPP) for various liquid fuel products by end of current financial
year.
·
The
South African Nuclear Corporation works out a turnaround strategy to avert further
retrenchments.
·
The
Department of Energy formulates an exit strategy for the African Exploration
and Financing Corporation by the end of the year, including compensation for its
establishment by the Central Energy Fund within the 2012/13 financial year.
·
The
Department of Energy facilitates financing mechanisms for Clean Development
Mechanism by the end of the financial year.
·
The
Department of Energy submits a report on the Ogies
Mines environment challenges within the 2012/13 financial year.
·
The Department of Energy builds internal capacity to
generate policies and legislation as a priority by end of the 2012/13 financial
year
·
The Department of Energy formulates a strategy and develops
a plan on how to maintain targets on universal access on electricity whilst
shifting deadline from 2014 to 2025. These strategy and plan to be finalized
before the end of the 2012/13 financial year.
·
The Department of Energy develops a funding and
implementation plan in order to reduce the electricity distribution
infrastructure maintenance backlog of R27.4 billion to R15 billion by 2014.
This plan to include the following:
o
Funding and implementation plan in place by March 2011,
o
Report detailing a map of distribution asset status for 50%
of all Municipalities by 2012/13
o
Initiate interventions, monitor rehabilitation projects and
reduce backlog by R8bn in 2012/13
·
The Department of Energy develops a plan that will ensure
that household access to electricity would be 92 per cent by 2014. This plan
should be completed before end of the 2012/13 financial year.
·
The Department of Energy formulates a strategy and develops
a plan to regain momentum on solar water heating installation programme
schedule. This strategy and plan should be completed before end of the 2012/13 financial
year
·
The Department of Energy develops a plan on how reporting on
demand-side savings will be improved. This plan should be finalized before end
of the 2012/13 financial year
·
The Department of Energy formulates a strategy and develops
a plan on how better mapping and targeting
of indigent households needed for Free Basic Electricity, Compact Fluorescent Light Bulbs and solar geysers, for
Inclined Block Tariffs.
·
The Department of Energy presents an intervention strategy
and plan which is required on Upington Solar Park Project and to clear obstacles to
enable the rapid realisation of the Renewable Energy Independent Power Producer
Programme (REIPPP) construction by end of this calendar year
·
The Department of Energy formulates an intervention strategy
and plan how to expedite the SARi programme, by end
of the current financial year
·
The Department of Energy presents an intervention strategy
and develops a plan on how 12 per cent energy efficiency improvement target by 2015 will be achieved
·
The Department of Energy submits, during the 2012/13
financial year, a report on the New Nuclear Build Programme. This report should
articulate the following:
o
Funding model of, the New Nuclear Build Programme,
o
Eskoms role, and
o
The Departments role.
·
The
Department of Energy ensures that programme and requisite resource mobilization
plans are in place before end of the 2012 calendar year.
Report to
be considered.