DEPARTMENT OF ENERGY

1. DEPARTMENT OF ENERGY PRESENTATION OF THE 2011/12 MTEF STRATEGIC PLAN TO THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT Ms N Magubane Director -General

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

3. Introduction Mandate Ensuring 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 Vision 2014 A transformed and sustainable energy sector with universal access to modern energy carriers for all by 2014 Vision 2025 Improving our energy mix by having 30% of clean energy by 2025

4. Performance of DOE against the 2010 SONA Objectives Highlights: Contribution to successful hosting of the 2010 FIFA World Cup- Electricity and Fuel Supply Electrification of Households to effect Service Delivery. 195 479 grid and 8566 non-grid connections as at end March 2011 ISMO – Framework for IPP participation.

5. What informed our 2011/12 MTEF strategic plan 2011 State Of the Nation Address Government outcomes – 6 signed by Minister Government’s Outcome Based Strategic Planning approach Situational analysis – energy space Our organisational environment

6. Analysis of the 2011 SONA Emphasis on the need to Create Jobs Focus on Energy Efficiency 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 Broaden approach beyond the signed agreements – DoE mandate cuts across 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. Outcome based strategic planning Department has adopted this approach a year earlier. Approach focuses on the impact of our service delivery to the communities/end recipients Focus on outcomes and outputs – emphasis on outcomes Emphasis on government-wide outcomes oriented monitoring and evaluation, that is led by the Presidency Strategic plan reflects broad strategic outcomes of government

9. Outcome based strategic planning Aligns strategic planning, budgeting, monitoring and evaluation; and reporting Covers a 5 year period Improves the management and reporting of performance information

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 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 Capacity challenges (funding and personnel) As we start the 2011/12 financial year, DoE will continue to operate at 52% human capacity within the interim structure Gradual migration to the approved full structure during the MTEF starting mid 2011/12 Ministerial approval of the revised departmental structure – to be implemented during the MTEF period

14. DoE Strategic Objectives

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 IPPs in the electricity generation sector

16. Thank you

17. Budget Presentation of the Department of Energy’s 2011/12 MTEF budget Ms Y Chetty

18. 2010/11 BUDGET OVERVIEW

19. 2010/11 BUDGET OVERVIEW

20. 2010/11 POSSIBLE ROLL-OVER REQUEST

21. 2011 ENE ALLOCATED FUNDS

22. ENE ALLOCATED FUNDS PER ECONOMIC CLASSIFICATION

23. 2011 ENE ALLOCATIONS Total allocation for DoE for 2011/12 is R6.09 billion Major projects / programmes funded: Integrated National Electrification Programme – R3.208 billion National Energy Efficiency and Demand Side Management – R398.8 million Transnet (National multi-products pipeline) – R1.5 billion Renewable Energy Subsidy Scheme – R41.3 million

24. ENE – Current Payments

25. Costing of DOE establishment structure

26. Programme 1: Administration

27. Programme 2: Energy Policy and Planning

28. Programme 3: Energy Regulation

29. Programme 4: National Electrification Programme

30. Programme 5: Nuclear Energy and Regulation

31. Transfers and Subsidies

32. Branch Presentations Branch key focus areas • Hydrocarbons and Energy Planning • Electricity, Nuclear and Clean Energy • Corporate Services • Office of the COO

33. HYDROCARBONS & ENERGY PLANNING Mr. T. B Maqubela

34. 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

35. Policy development and reviews 2011/12 Review and amend the following legislations: Petroleum Products Act, No. 120 of 1997 – to address regulatory gaps Gas Act, No. 48 2001 – to include methane and gasses from other sources

36. 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

37. 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 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

38. 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

39. INSPECTIONS AND PLANNED TARGETS PER PROVINCE

40. LICENCE APPLICATIONS PER PROVICE: ACCEPTED AND ISSUED

41. LICENCE APPLICATIONS PER PROVICE: ACCEPTED AND ISSUED (Cont…)

42. INTERGRATED ENERGY CENTRE OPERATIONALISED AND PLANNED PER PROVINCE

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

44. Electricity, Nuclear & Clean Energy Mr. O. Aphane

45. 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.

46. 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

47. 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

48. 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

49. 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

50. 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