DEPARTMENT OF ENERGY

1. DEPARTMENT OF ENERGY ENERGY PORTFOLIO COMMITTEE PRESENTATION ON THE 2011/12 MTEF STRATEGIC PLAN Ms N Magubane Director General

2. Structure of the Presentation Introduction DoE performance against the 2010 SONA What informed our 2011/12 MTEF strategy Analysis of the 2011/ 12 SONA DoE and government outcomes Outcomes based strategic planning process Situational analysis and the energy space/environment Organisational environment Department strategic objectives Policy development and reviews for 2011/12 Conclusion Branch presentations on focus areas

3. Performance of DOE on SONA 2010 Objectives Contribution to successful hosting of the 2010 FIFA World Cup- Electricity and Fuel Supply Electrification of Households to effect Service Delivery - 93 941 connections as at February 2011 ISMO – Framework for IPP participation. Draft Bill to be tabled in Cabinet by end of the financial year.

4. Performance Highlights - 2010 Completed Regulatory Accounting System Promulgated LPG Price Regulations Published the fuel specification & standard discussion paper Developed Regulations for strategic stocks to be maintained by oil companies Published the standard offer incentive scheme Completed the Integrated Resource Plan Established SANEDI

5. What informed our 2011/12 MTEF strategic plan 2011 State of the Nation Address Government outcomes Government’s Outcomes Based Strategic Planning approach Situational analysis – energy space Our organizational environment Inter- cluster activities Examination of past experience

6. Analysis of the 2011 SONA Emphasis on the need to Create Jobs Focus on Energy Efficiency Emphasis on renewable energy- procurement of power from Renewable Energy Power Producers Service Delivery with Electrification Focus Rural Development Need to work together with Private and Public Sector institutions SADC, AU, IBSA and BRICSA and Role of Energy Building Prosperity through Service Delivery

7. DoE and Government outcomes Approach has been to broaden our focus and response beyond outcomes in the signed delivery agreements by the Minister. Minister signed the following delivery agreements Outcome 4: Decent employment through inclusive economic growth Outcome 6: An efficient, competitive and responsive economic infrastructure network Outcome 8: Sustainable human settlement and improved quality of household life Outcome 10: Environmental assets and natural resources that are well protected and continually enhanced

8. Outcomes based strategic planning Department has adopted this approach a year earlier. Approach focuses on the impact of our service delivery to the community/end recipient Emphasis on outcomes oriented monitoring and evaluation approach that is led by the President Further aligns strategic planning and the budgeting cycle

9. Outcome based strategic planning(Cont) Covers a 5 year planning period vs the 3 year planning previous implemented. Overall management of performance information Strategic plan reflects broad strategic outcomes of government

10. Situational Analysis and the energy environment Service delivery environment Challenges of declining electricity generation capacity Need to fast track interventions that will improve the power supply-demand situation Government target of achieving 92% distribution penetration in accessing the electricity distribution grid by 2014 Stability of the electricity distribution infrastructure – and its financial impact

11. Situational Analysis and the energy environment Service delivery environment Growing demand on energy resources as the economy comes out of the recent economic crisis. Constraints on the supply of liquid fuels especially to the economic hub of the inland market. Impact of job losses and the urgent need to implement programmes that are labour intensive Fast tracking the introduction of clean energy in the energy mix Hosting of COP 17

12. Oil & Gas: Mozambique, Saudi Arabia, Namibia, Nigeria,Angola, Egypt, E.G, Brazil, Venezuela etc Multilaterals BRICSA,EU, AU, G20, IBSA, SADC, IEF, IEA IAEA, APPA Sustainable Energy: Climate Change Forums, UN, CSLF,CEM, IRENA, etc SELECTIVE LIST OF PARTNERSHIPS IN THE ENERGY SECTOR IN SOUTH AFRICA Electricity: SADC Skills & Capacity: China , Japan, IEA, IAEA etc APPA Energy sector International Partners Nuclear: France, USA China, Russia, S Korea, IAEA, AFCONE etc Funding & Technology: China, EU, France, USA, Norway, World Bank & Private & Sovereign Funds etc Bi-laterals Norway, Sweden, Switzerland, China, USA, Russia, Angola, BRIC Major Economies Forum

13. ORGANISATIONAL ENVIRONMENT Organisational/Performance Environment As we start the 2011/12 financial year, DoE will continue to operate at 65% human capacity within the interim structure Gradual migration to the approved full structure during the MTEF starting mid 2011/12 Appointment of two DDGs in line function early in the year and the implementation of the four line function branches

14. Department’s Strategic Objectives Enabling environment for secure energy supply is in place. Energy supply is secure for now and demand is well managed. An efficient, competitive and responsible energy infrastructure network Improved energy regulation and competition Efficient and diverse energy mix for universal access within a transformed energy sector Environmental assets and natural resources protected and continually enhanced by cleaner energy technologies Mitigation against, and adaptation to, the impact of climate change Good corporate governance for effective and efficient service delivery

15. Policy development and reviews 2011/12 Review and amend the following legislations: National Energy Regulator Act, No. 4 of 2006 – improve the governance structure of NERSA Electricity Regulator Act, No 4 of 2006 – provide for expropriation, improve licensing and address penalties Petroleum Products Act, No. 120 of 1997 – to address regulatory gaps Gas Act, No. 48 2001 – to include methane and gasses from other sources Introduce the ISMO Bill – to facilitate the introduction of IPPs in the electricity generation sector

16. BRANCH PRESENTATIONS • Hydrocarbons and Energy Planning • Electricity, Nuclear and Clean Energy • Corporate Services • Office of the CFO • Office of the COO

17. PROGRAMME 2 HYDROCARBONS & ENERGY PLANNING Mr. T. B Maqubela

18. Objectives Integrated Energy planning to promote the sustainable use of energy resources by developing appropriate policies and regulations that promote the efficient use of petroleum products, coal, gas and renewable sources.

19. PROGRAMME FOCUS AREAS Integrated Energy Planning Strategy – outlines the requisite processes, systems and structures for the development of the IEP. Cabinet approved IEPS Operational energy modelling system Public stakeholder workshop New Fuel specifications & standards- improve the quality of transport fuels to reduce harmful emissions and to align with international vehicle technology trends Discussion Paper has been published for comments. Regulations will be promulgated during the first quarter on 2011/2012 National LPG Strategy-expand the use of LPG for thermal application in the household sector. Submit the Strategy to Cabinet during 1st quarter of 2011/12 Revise maximum refinery gate price of LPG and the retail price to make LPG more affordable

20. PROGRAMME FOCUS AREAS (cont) National Strategic Fuels Stock Policy– set out the framework for the storage of fuels stocks by both government and oil companies. The Policy will be submitted to Cabinet during the 2011/12 financial year. Finalise the implementation Plan with National Treasury during the financial year Regulatory Accounting System- determine margins for each activity throughout the value chain Installation, testing and commissioning of the RAS 20 year Liquid fuels infrastructure Roadmap- Biofuels pricing Framework-development of a framework to guide the implementation of the biofuels strategy to expand the biofuels market Finalisation of the pricing framework during the 1st quarter of 2011/12

21. PROGRAMME FOCUS AREAS (cont) Integrated Energy Centres-provide access to energy services to the rural communities Involve more oil companies in the development of the IECs. Two IECs to be operationalised during the financial year Liquid Fuels Charter- Review progress on the implementation of the LFC since its inception Finalise the audit and review of the LFC Regulatory Accounting System- determine margins for each activity throughout the value chain Installation, testing and commissioning of the RAS 20 year Liquid fuels infrastructure Roadmap- determine the required distribution infrastructure through out the value chain and identify future refining capacity. Finalise the Roadmap by the 2nd Quarter of the financial year

22. CHALLENGES Failure to secure access of primary energy feedstock for liquid fuels Insufficient funding

23. PROGRAMME 3 Electricity, Nuclear & Clean Energy Mr. O. Aphane

24. OBJECTIVE Monitor developments in the electricity, nuclear and clean energy sectors. Improve and implement appropriate policies governing these sectors. Promote universal access to electricity by the broader South African population.

25. PROGRAMMES • Solar Water Heating • Integrated National Electrification Programme • Integrated Resource Planning • Independent System Market Operator • Independent Power Producers • Refit • Energy Efficiency Campaign and Awareness • Nuclear Safeguards • Nuclear Transaction

26. PROGRAMME FOCUS AREA Solar Water Heating Programme 250 041 Solar Water Heaters installed by March 2012 EEDSM Allocation – 18 000 units Rebate Programme, Private and Commercial Sector will fund the balance Integrated National Electrification Programme – Universal Access to Electricity 170 000 households connections by March 2012 through Municipalities and Eskom 10 000 connections through the Non-Grid programme

27. PROGRAMME FOCUS AREA Regulations for New Generation Capacity Standard Set for Procurement Documentation Request for Quotations launched for the Procurement of Power from IPPs Power Purchase Agreements signed Medium Term Risk Mitigation Plan (MTRMP) Implementation and monitoring of initiatives to balance supply-demand

28. PROGRAMME FOCUS AREA Energy Efficiency and Demand Side Management 1 TWh combined savings from EEDSM Awareness campaigns Implementation of Energy Efficiency initiatives and verification of savings Approach to Distribution Assets Management (ADAM) Mapping of distribution assets for six metros and identification of problem areas Approval of funding plan by Cabinet

29. PROGRAMME FOCUS AREA Approach to Distribution Assets Management (ADAM) Mapping of distribution assets for six metros and identification of problem areas Approval of funding plan by Cabinet REFIT Launch of the Procurement Plan Evaluate RFQs Conclude Agreements with IPPs IRP and ISMO IRP2010 approved by Cabinet ISMO bill approved for submission to Parliament

30. PROGRAMME FOCUS AREA Nuclear Safeguards Investigation on the removal of state system of accounting and control from Necsa Regulatory function currently discharged by Operator Nuclear Transactions Obtain Cabinet approval of the phased decision making approach Formation of Cabinet level coordination committee

31. CHALLENGES Human Resources Financial Constraints

32. PROGRAMME 1 Corporate Services Mr. G. Mnguni

33. Presentation Outline • INTRODUCTION • ORGANISATIONAL ENVIRONMENT 2.1 DEPRTMENT OF ENERGY 2.2 CORPORATE SEVICES • PERFORMACE OUTCOME & OUTPUTS OF CORP SERVICES: 3.1 KEY OUTCOME:GOOD CORPORATE GOVERNANCE FOR EFFECTIVE AND EFFICIENT SERVICE DELIVERY 3.2 PERFORMANCE OUTPUTS: • Provision of effective and efficient human resource services to the department; • Provision of effective and efficient auxiliary services to the department; • Provision of effective and efficient communication services to the department; and • Effective and efficient legal services provided to the department. 4. CONCLUSION

34. APPROVED INTERIM STRUCTURE OF DOE

35. APPROVED ORGANISATIONAL STRCTURE OF DOE

36. PERFOMANCE OUTPUT: Provision of effective and efficient human resource services to the department

37. PERFOMANCE OUTPUT: Provision of effective and efficient human resource services to the department

38. PERFOMANCE OUTPUT: Provision of effective and efficient auxiliary services to the department

39. PERFOMANCE OUTPUT: Provision of effective and efficient communication services to the department

40. PERFOMANCE OUTPUT: Effective and efficient legal services provided to the department

41. Office of the Chief Financial Officer Ms Y. Chetty

42. Branch: Financial Information and Supply Chain Management

43. Directorate: Expenditure Management

44. Directorate: Financial Planning & Management Accounting

45. Directorate: Supply Chain Management

46. Directorate: Supply Chain Management (Continue……)

47. Directorate: Supply Chain Management (Continue……)

48. Directorate: Information Technology

49. 2010/11 BUDGET OVERVIEW

50. 2010/11 BUDGET OVERVIEW