2010 – 11 MTEF STRATEGIC PLAN PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT

1. 2010 – 11 MTEF STRATEGIC PLAN PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT Presentation by : Ms N Magubane Director General 13 APRIL 2010 1

2. DOE TEAM AND PRESENTATION OUTLINE • Team Presentation • What informed out strategic plan • Programme 1 - Administration • Update on the split of the DME • Programme 2 – Hydrocarbons and Energy Planning • Programme 3 – Electricity, Nuclear and Clean Energy • Budget allocation • Conclusion 2

3. WHAT INFORMS OUR STRATEGIC PLAN? Government priorities State of the Nation Address National Budget Speech Budget Vote Speech 2010 Cabinet Lekgotla’s Resolution Sector specific challenges 3

4. WHAT INFORMS OUR STRATEGIC PLAN?(CONT.) • Government priorities: • Creation of decent work and sustainable livelihoods • Education • Health • Rural development, food security and land reform • The fight against crime and corruption 4

5. WHAT INFORMS OUR STRATEGIC PLAN?(CONT.) State of the Nation Address Over the next 3 years Govt. will spend R846 billion on public investment. Establishment of the Inter-Ministerial Committee on Energy, to develop a 20 year Integrated Resource plan Participation of Independent Power Producers and protecting the poor from rising electricity prices. Establishment of the Independent System Operator, separate from Eskom 5

6. WHAT INFORMS OUR STRATEGIC PLAN?(CONT.) • National Budget Vote Speech • Climate change and global energy supply • Protection of the poor from rising cost of electricity • Public sector investments 6

7. DoE BUDGET SPEECH - 2009 Review of the national strategic fuel stocks policy (31 March 2010) Development of an Integrated Energy Plan (31 March 2010) Review of the fuel standards and specifications ( June 2010) Establish South African National Energy Development Institute ( 31 March 2010) Review of the Liquid Fuels Charter (31 March 2010) 7

8. DoE BUDGET SPEECH - 2009 Establish the National Radioactive Waste Disposal Institute (31 March 2010) Conversion of the SAFARI reactor from using Highly Enriched Uranium to Low Enriched Uranium by NECSA (30 September 2009) Promotion of the energy mix - Independent Power Producers (30 August 2009) Roll-out of one million solar water heaters in households and commercial buildings over a period of five years. 8

9. DoE BUDGET SPEECH - 2009 Formalise engagement with the Clinton Foundation, to facilitate the development of an Industrial Energy Park concept, focussing on concentrated solar power (31 March 2010) Establishment of the National Radioactive Waste Disposal Institute ( 31 march 2010) Commissioning of the 400 MW of wind power through the independent power producers, over the next three years (31 March 2012) Gazetting and/or publishing of the integrated resource plan or country. 9

10. DoE BUDGET SPEECH - 2009 Displacement of 2% of crude oil based fuels with bio-fuels. Develop an appropriate pricing policy framework to structure our tariff regime such that the indigent sections of our communities are insulated from increasing electricity tariffs. Launching of the rural electrification projects, Engcobo, Inxuba Yethemba &, Umhlonhlo that will ensure R 170 million investment in the infrastructure development of Chris Hani and Alfred Nzo District municipalities (30 September 2009) 10

11. JANUARY CABINET LEKGOTLA RESOLUTIONS 2010 • Integrated infrastructure plan • Implementation of the industrial policy • 2010 FIFA World Cup – progress, challenges and interventions required • Inter - cluster activities 11

12. OBJECTIVES OF ENERGY SECTOR • Increasing access to affordable energy services • Improving energy governance • Stimulating economic development • Managing energy – related environmental and health impacts • Securing supply through diversity 12

13. PRESSURES FACED BY THE SECTOR Energy security International cooperation Access to energy Climate change (Clean energy) Poor economic regulation Energy sector Skills and capacity Demand management Diversity of supply Upward pressure on cost of energy Safety 13

14. DEPARTMENT OF ENERGY STRATEGIC PLAN 2010/11 14

15. TABLE OF CONTENTS • Introduction • Strategic Overview and Objectives • Organizational environment • Policy Development • Key Focus Areas • Resource plan • Conclusion 15

16. MANDATE & MISSION The revised mandate, mission and vision of the DoE: MANDATE • Ensure secure and sustainable provision of energy for socio-economic development MISSION • To regulate and transform the sector for the provision of secure, sustainable and affordable energy 16

17. VISION In line with government’s planning for both medium and long term, we developed visions for both horizons VISION 2014 A transformed and sustainable energy sector with universal access to modern energy carriers for all by 2010 VISION 2025 Improving our energy mix by having 30% of clean energy by 2025 17

18. DoE STRATEGIC OBJECTIVES Our strategic plan seeks to deliver results along the following eight strategic objectives: Ensure energy security. Achieve universal access and transform the energy sector. Regulate the energy sector. Effective and efficient service delivery. Optimal utilisation of energy resources. Ensure sustainable development. Enhance DoE culture, systems and people. Promote corporate governance. 18

19. ORGANISATIONAL ENVIRONMENT Budget split – 30/70 between DoE and DMR for support services – although functions have been duplicated. Impact of lesser budget – an interim ‘establishing’ structure that ensures all critical positions to establish a new department are filled immediately. Co-operation of SOEs – assistance with setting up of the new department. First phase of capacitating DoE completed – i.e matching and placement of DME personnel. 19

20. ORGANISATIONAL ENVIRONMENT • Second phase – advertising and filling of vacant posts has started, plans to complete by end of the first quarter. • Additional capacity to be obtained with the mid-term adjustments later in the year. • Line function has maintained the two branches of Hydrocarbon and Energy Planning and Electricity, Nuclear and Clean Energy. • Plans for gradual increase of the line function capacity to realise the full structure of the new DoE by end of the MTEF. 20

21. POLICY DEVELOPMENT Legislative focus for this year: The Seventeenth Constitutional Amendment Bill. The REDs establishment Bill – establish efficient regional electricity distributors. The Electricity Regulation Amendment Bill – appropriation of land for electricity infrastructure, provision for the establishment of ISMO. New Generation/IPP Regulation – provision of regulatory intervention to level the playing field in the electricity generation sector. 21

22. POLICY DEVELOPMENT Legislative focus for this year: The Petroleum Products Amendment Act, 2003 – address non-compliance in the liquid fuels sector. The National Energy Act, 2008 – empowers the Minister of Energy to execute certain initiatives to achieve security of supply, develop regulations for the provision of energy data, etc. Review of the fuel specification regulation – to advance to higher and cleaner fuels. 22

23. CONCLUSION PROGRAMME SPECIFIC PRESENTATIONS TO FOLLOW THANK YOU 23

24. 2010/11 MTEF STRATEGIC PLAN PROGRAMME 1 ADMINISTRATION PROGRAMME 4 STATE OWNED ENTITIES Mrs. T.N Zungu 24

25. PROGRAMME FOCUS AREAS SUPPORT SERVICES (Programme 1) Main focus is on the establishment of the new department – operational structures, capacity and provision of skills. Setting up of governance structures – internal audit functions, audit committee, risk management and fraud prevention, procurement and finance committees, etc. Review of the international agreements – aligning them to government’s objectives. 25

26. PROGRAMME FOCUS AREAS SUPPORT SERVICES (Programme 1)cont Communication strategy – profiling the department as the custodian of the country’s energy security. Strengthening our SOE oversight function – improving processes, alignments and capacity. Finance – complying with financial legislation from day 1. 26

27. PROGRAMME FOCUS AREAS SUPPORT SERVICES (Programme 1)cont Communication strategy – profiling the department as the custodian of the country’s energy security. Strengthening our SOE oversight function – improving processes, alignments and capacity. Finance – complying with financial legislation from day 1. 27

28. SOEs REPORTING TO THE ENERGY MINISTER Research and Development CEF (PTY) Ltd – CEF group of companies made up of entities with commercial, strategic, licensing and developmental roles. Has 5 operating subsidies. Involved in the search for appropriate energy needs of SA, SADEC and Sub-Saharan Africa region. NECSA – promotes research and development in the field of nuclear energy and radiations science. 28

29. SOEs REPORTING TO THE ENERGY MINISTER Regulators National Energy Regulator of SA (NERSA) – responsible for the issuing of licenses, setting and/or approving tariffs and prices, monitoring and enforcing compliance with license conditions. National Nuclear Regulator (NNR) – regulates the diverse activities in the nuclear sector, protect persons, property and environment against nuclear damage. 29

30. SOEs REPORTING TO THE ENERGY MINISTER Other EDI Holdings – restructuring of the existing electricity distribution entities into 6 financially viable Regional Electricity Distributors (REDs). 30

31. SOEs REPORTING TO THE ENERGY MINISTER Research and Development CEF (PTY) Ltd – CEF group of companies made up of entities with commercial, strategic, licensing and developmental roles. Has 5 operating subsidies. Involved in the search for appropriate energy needs of SA, SADEC and Sub-Saharan Africa region. NECSA – promotes research and development in the field of nuclear energy and radiations science. 31

32. SOEs REPORTING TO THE ENERGY MINISTER Other EDI Holdings – restructuring of the existing electricity distribution entities into 6 financially viable Regional Electricity Distributors (REDs). 32

33. SOE OVERSIGHT Introduction SOEs are the extended arm of government and need to advance government priorities. SOEs are established as instruments of socio-economic advancement. SOEs should have the means to contribute to the improvement of the standard of living of the citizens of our country – create sustainable economic and social benefits. 33

34. DOE OVERSIGHT ROLE Alignment of strategies and plans - Ensure the balance between government priorities and commercial priorities of these entities. Shareholder board appointments Board participation by departmental representatives Monitoring and evaluation of entities’ performance Oversight on the electrification programme – as defined in the Division of Revenue Act. Applies to both Eskom (schedule 7) and the Municipalities (schedule 6) 34

35. TRANSFERS TO SOEs 2010/11 Transfers: 35

36. CONCLUSION In conclusion, we want to invest in building a formidable TEAM ENERGY that is able to effectively discharge our responsibilities, serve the masses of our people and make a difference in their lives. 36

37. THANK YOU 37

38. UPDATE ON THE SPLIT PROCESS Mr G Mnguni

39. BACKGROUND/OVERVIEW • May 2009 – President announced the split of DME into two departments; viz Department of Energy and Mineral Resources; • National Macro Organization Steering Committee (NMOS) was established to oversee the process of re-organizing government departments; • Various work-streams were formed to focus on specific functions such as, Organizational Scoping HR audits, Change Management and Communication,; Labour and Legal Services; Infrastructure and Assets; ICT; Finance and Budgets. • An internal steering committee for the split was established and work stream leaders were appointed; and • A consolidated transitional plan was compiled and progress reports by Work streams are being submitted to the Departmental Steering Committee every second week.

40. UPDATE ON THE SPLIT • Departmental structures have been designed and approved by both Executing Authorities (i.e. Ministers); • Allocation of funding for newly created positions has been obtained, but for critical posts only; and • All new positions in Support Services have been job profiled and evaluated.

41. UPDATE ON THE SPLIT • The matching and placement of all employees was finalised on 12/03/2010; • Formal placement of all employees on separate Persal systems was finalised on 15/03/2010 ( DOE & DMR ); • Budget systems were posted on 23/3/2010 and the first & successful test salary run was done on the 02/04/2010; and • Reports are continuously generated and any anomalies between BAS and Persal are being attended to prior to the 15/04/2010.

42. UPDATE ON THE SPLIT • Recommendations for placement has been considered by both DGs and approval for placements has been given; • Formal placement letters have been issued to all affected employees in Support Services; • Confirmation/acceptance of placements are being done in writing; • In cases where people are not satisfied with the results of the placement, an appeal process will commence; and

43. UPDATE ON THE SPLIT • All vacant (funded) positions are being advertised in the National media in line with the Public Service Regulations; • All employees that have been placed in both Dept, are eligible to apply for higher/ lateral transfers; and • Advertising of positions is being done in line with the departmental Recruitment and Selection policy.

44. UPDATE ON THE SPLIT • Both Departments have been created on Persal; • Identification and grouping of HR Administration activities for both Departments was finalised by 31 March 2010 and implemented on 1 April 2010 (e.g. Service benefits; leave; Medical Aid Schemes; Subsidies; etc); • A Review of the current DME HR Plan was commenced on 1st April 2010 and will be finalised by end of June 2010; and • A Review of the current HR Policies, practices and delegations will also commence w.e.f 1 April 2010 and finalised by end of May 2010.

45. THANK YOU

46. 2010/11 MTEF STRATEGIC PLAN PROGRAMME 2 HYDROCARBONS & ENERGY PLANNING Mr. T. B Maqubela 46

47. PROGRAMME FOCUS AREAS Hydrocarbons and Energy Planning Integrated Energy Planning Strategy – provision of an integrated energy plan that recognises the interdependence of all forms of energy, by the end of the year. Fuel specifications & standards LPG price regulation – support greater use of LPG for thermal purposes. Biofuels pricing framework – development of a framework to guide the implementation of the biofuels strategy to expand the biofuels market. 47

48. POLICY DEVELOPMENT The Petroleum Products Amendment Act, 2003 – improved governance of the petroleum sector. Review Charter that is annexed to the Act; provide waivers i.r.o. fuel specifications; etc. 2010/11: Approval for public consultation The National Energy Act, 2008 – to enable integrated energy planning and ensure energy security 2010/11: Will commence with promulgation of Regulations for mandatory provision of data. Review fuel specification & standards – Roadmap for tightening of specs and standards for cleaner fuels in pursuance of improved SHEQ Opposition by oil majors 48

49. PROGRAMME FOCUS AREAS • Integrated Energy Plan (IEP) – to develop integrated short-, medium- and long-term plans for the energy sector in South Africa taking into cognisance the convergence of energy carriers, plethora of technologies and that energy exists everywhere • LPG price regulation – support greater use of LPG for thermal purposes. • Biofuels pricing framework – to guide and enable the implementation of the Biofuels Strategy through appropriate pricing and manufacturer assistance mechanisms • Strengthen monitoring and enforcement of compliance 49

50. PROGRAMME FOCUS AREAS – (CONT.) • Review of the Liquid Fuels Charter – to usher in a new empowerment dispensation for the Liquid Fuels industry • Revision of Strategic stocks policy - framework for the storage of strategic and commercial fuel stocks. • Current economic environment not conducive • Development of an energy modeling system for South Africa as a tool to develop an IEP • Development of an appropriate pricing mechanism of Regulatory Accounting throughout the liquid fuels value chain to promote the appropriate behaviour i.r.o. investments • Develop integrated energy centres (IeCs) – to contribute to the eradication of energy poverty 50