PPC PRESENTATION ON THE CHIEF FINANCIAL OFFICER’S BRANCH 2010 MTEF STRATEGIC PLAN CHIEF FINANCIAL OFFICER’S BRANCH 16 MARCH 2010

Presentation Outline Introduction DME financial resources split 2010 MTEF allocation MTEC Proposal 2010/11 allocations per programme 2010/11 allocations per economic classification Potential challenges Programme focus areas Conclusion

Introduction The President of the Republic announced the formation of the Department of Energy in May 2009 The Minister of the department was appointed with immediate effect Agreement reached to split fully wef 01 April 2010 3

Introduction (cont..) The agreement included retention of financial administration with the DG DMR until the end of 2009/10, as the hosting Accounting Officer The DOE held its strategic plan during August 2009 Proposed structure was presented to the DPSA during November 2009

DME Financial Resources Split Line function programmes were attached to new respective departments with their resources accordingly Support function split ratio of 70(DMR): 30 (DOE) was proposed based on the line function personnel attached to each department Amount transferred is approximately R75m for 2010/11 5

MTEC proposal The MTEC proposal involved mainly reprioritization of funds after Treasury ruled out any possibility of new funding An amount of R150 million was re-allocated from INEP to support services Benefit- DOE nothing whereas DMR about R65 million The amount was then ear-marked for transfer back to DOE as it was reprioritised from the related programmes Treasury has already been informed formally of the decision An agreement between the two DGs was drafted and is awaiting approval 6

MTEC Proposal 7 Programme 2009/10 ENE MTEC Proposal Final Appropriation Variance (Fin App-Proposal) Variance as a % of Proposal Administration 75,5 189,5 104,2 (85,3) (45,0) Hydrocarbons and Energy Planning 60,5 1 555,9 1 495,4 2 471,7 Electricity, Nuclear and Clean Energy 458,0 408,8 (49,2) (10,7) Associated Services 3 556,0 3 378,3 3 463,8 85.5 2,5 Total 4 150,0 4 086,4 5 535,4 1 449,0 35,5 7

MTEC proposal 8

2010 MTEF Allocation Total allocation for DoE for 2010 is R5,535 billion Major projects funded: Integrated National Electrification Programme- R2,808 billion Demand Side Management-R 329 million Renewable Energy –R36 million Energy modelling system –R20 million Transnet pipeline – R1,5 billion 9

Medium term expenditure estimates DOE resource plan 2009/2010 2010/2011 2011/2012 2012/2013 Programmes Revised Estimate Medium term expenditure estimates MTEF Baseline Administration 68,2 104,2 127,7 106,9 Hydrocarbons and Energy Planning 54,4 1 5558,6 1 564,4 1 571,2 Electricity, Nuclear and Clean Energy 327,5 408,8 513,7 116,5 Associated Services 3 290,1 3 463,8 3 553,6 3 744,0 Total 3 740,2 5 535,4 5 739,6 5 538,7 10

DOE resource plan 11

Medium term expenditure estimates DOE resource plan 2009/2010 2010/2011 2011/2012 2012/2013 Programmes Revised Estimate Medium term expenditure estimates MTEF Baseline Current Payments 194,5 202,1 235,6 220,7 Transfer and Subsidies 3 543,1 5 328,7 5 499,1 5 312,8 Payments of Capital Assets 2,6 4,6 5,0 5,3 Total 3 740,2 5 535,4 5 739,6 5 538,7 12

DOE resource plan 13

Potential financial challanges Funding of New Generation Capacity (always funded from savings) Discontinuation of energy efficiency (demand side management) allocation on the final year of the MTEF cycle (2012/13) to be replaced by tariffs Structure not fully funded Universal access costs projections far above the allocated budget

Programme focus areas CFO Office (Programme 1) Drive transformation policies Educate and Communicate with Stakeholders Implement Policies and Procedures Develop and Review Internal Processes Improve Turnaround Time Implement Service Level Agreements Improve Management and leadership Capabilities Attract, Develop and retain Skills 15

Programme focus areas (cont..) Implement Effective Systems Promote Core Values 11. Drive Innovation 12. Align Budget to Strategy 13. Maximize Utilization of Resources 14. Manage Costs effectively 15. Promote corporate governance 16

Promote and transform the mineral sector Drive transformation policies Increase the % of procurement spend benefiting targeted groups (HDI, Women, etc) Recruitment in line with equity targets Educate and Communicate with Stakeholders Conduct Supplier information sessions Improve accessibility of procurement opportunities Increase number of Historically Disadvantaged SA’s participation in departmental procurement 17

Effective and efficient service delivery Develop, Review and Implement Policies and procedures Conduct gap analysis on policies Develop new policies where none exist Review existing policies to be in line with best practice. Develop new procedures where none is in place Review existing procedures for alignment to revised policies Document and streamline internal processes for efficiency 18

Effective and efficient service delivery (Continued…) Improve Turnaround Times Establish current level of compliance Development corrective measures where there are gaps Continuously Monitor adherence to prescribed time frames Implement Service Level Agreements Identify Strategic Service Providers Sign and register SLAs with all strategic Service Providers Monitor adherence to signed SLAs 19

Culture, Systems and People Improve Management and leadership Capabilities Create a culture and environment for Managers to complete Management Courses Conduct 360 degree Assessments on all employees Implement corrective measures where gaps are identified Develop PDP for all managers (Level 9 and above) 20

Culture, Systems and People Attract, Develop and retain Skills Create a conducive working environment Improve turnaround time for filling vacant position Develop and implement PDPs for all employees (below level 9) 21

Culture, Systems and People (Continue…) Implement Effective Systems Increase the Availability of IT Systems Develop and ICT user awareness strategy Monitor and take corrective action on all ICT related complaints/incidents Promote Core Values Implement and monitor achievement of service delivery improvement initiatives Identify and ensure that all key personnel are vetted. Conduct workshops to create awareness of departmental core values 22

Culture, Systems and People Improve Management and leadership Capabilities Create a culture and environment for Managers to complete Management Courses Conduct 360-degree Assessments on all employees Implement corrective measures where gaps are identified Develop PDP for all managers (Level 9 and above) 23

Culture, Systems and People Improve Management and leadership Capabilities Create a culture and environment for Managers to complete Management Courses Conduct 360 degree Assessments on all employees Implement corrective measures where gaps are identified Develop PDP for all managers (Level 9 and above) 24

Culture, Systems and People Improve Management and leadership Capabilities Create a culture and environment for Managers to complete Management Courses Conduct 360 degree Assessments on all employees Implement corrective measures where gaps are identified Develop PDP for all managers (Level 9 and above) 25

Culture, Systems and People (Continue…) Drive Innovation Create an environment conducive to innovative thinking Quantify the monitory value associated with new innovations 26

Conclusion Phase in approach in implementation of new structure is critical in maintaining spending in line with available budget over the MTEF period Consistency in implementation of planned activities is vital for stabilization of financial capacity of the department Overall, available funding will be sufficient to set up and sustain the operations of the department for the foreseeable future only if the R65 million transfer from DMR is successful 27

The end….. THANK YOU! 28