Department of Energy revised strategic plan & Annual performance plan 2012

NCOP Economic and Business Development

23 April 2012
Chairperson: Mr F Adams (ANC – Western Cape)
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Meeting Summary

The Department of Energy (DOE) noted that it had a revised strategic plan covering the period 2011 to 2016, and presented this as well as the Annual Performance Plan for 2012. The revised plans took into account the government priorities, the 2012 State of the Nation Address, and the Millennium Development Goals and signed Ministerial agreements, as well as the fact that the United Nations had declared 2012 as the year of Sustainable Energy Access. The particular focus was on energy efficiency, solving the triple challenges of poverty, inequality and unemployment, and renewable energy sources. Particular areas of emphasis included the finalisation of the Integrated Energy Plan, a finalisation of energy efficiency, implementation of the Integrated Resource Plan, electricity and national electrification programmes, clean energy, and security of supply. DOE had a new organisational structure and had changed the focus on some programmes. The full structure had been approved, but there was shortage of funding to implement it in its entirety. More detail was provided on the activities of Programme 2: Energy Policy and Planning, which aimed to finalise the Integrated Energy Plan, and had developed a Centralised Electronic Energy Data Repository. There was a 20-year infrastructre plan for liquid fuels, based on four aspects that were outlined and explained, and DOE would continue to monitor the construction of the Multi-Purpose Product Pipeline, and conduct awareness campaigns in relation to paraffin and Liquid Petroleum Gas (LPG). It had revised the Petroleum Products Act of 1977, and a coal policy paper had been drafted internally and would be published for public comment. The gas legislation was amended to allow for transporting of natural gas. The projections of Programme 3 were also outlined, in relation to licensing, inspection and testing, as well as stock level monitoring. The LPG retail pricing framework had been revised, and there was a bio-fuels pricing strategy, as well as fixed retail prices on paraffin and petroleum products, and drafting a new empowerment framework. Awareness campaigns were to be conducted on the new legislation. In relation to human resources, the plans and strategies were outlined, noting also increased risk awarenss and planning, and vetting policies. There would be attempts to recruit more disabled employees. The communications strategy was to be further developed.

The activities of the Office of the Chief Financial Officer were outlined, and it was noted that a petroleum licensing system and the Virtual Private Network had been implemented. Risk management again played a large part in the activities of this office. The anti-fraud and anti-corruption activities were outlined. DOE gave guidance and support to State Owned Companies and to the restructuring of the Central Energy Fund group of companies. The final audit and closing-out report for Electricity Distribution Industry Holdings (EDIH) would be given in this year. DOE’s international relations focused on the Southern African Development Community and use of resources for the benefit of the African Continent. All strategic objective targets for the energy programmes and projects consisted of projects for mainstreaming, uplifting or empowerment of disadvantaged and vulnerable groups.

An overview of financial performance was also given, noting an overall budget of R26.6 million, with a line item breakdown. The allocation for 2013/14 did not include R1.5 million for the Transnet pipeline. In Programme 3, the amounts for electricity supply and maintenance, to Eskom, would increase from R118.8 million in 2011, to R2 billion in 2014/15. DOE’s total transfer was R5.84 billion. Members asked questions about the awareness campaigns, the percentage of black staff in comparison to other demographic groups, changes in the service delivery environment, progress on the legislative changes, the backlog of R30 million, and a list of agencies that benefitted from the international member fees. The revised targets for processing of reports, and monitoring of funds to municipalities was also questioned, as well as the specific changes to the strategic plans, capacity for inspection, petrol supply and  the costs of a new building. All questions were to be responded to in writing.

Meeting report

The Chairperson noted apologies from the Minister and Members.

Ms Tandeka Zungu, Chief Operating Officer, Department of Energy, explained how the Department of Energy (DOE or the Department) had come with the revised strategic plans. They were in line with government priorities and the 2012 State of the Nation Address. The DOE would be focusing on energy efficiency, towards solving the triple challenges of poverty, inequality and unemployment. Ms Zungu also stated that the DOE would continue searching for renewable energy sources and seek an environment conducive to job creation, economic growth, poverty alleviation, as well as addressing the challenges of inequality.

Ms Zungu added that the DOE’s revised strategic plan was in line with the Department’s contribution to the Millennium Development Goals (MDGs) and government outcomes. It was also in line with the Minister’s signed Delivery Agreements on government outcomes 2, 4,6,7,8 and 10, and the Minister’s 2011 budget vote speech commitments. The United Nations had declared 2012 as the year of sustainable energy access, and the DOE sought also to deliver on that.

Ms Zungu listed the key focus areas for 2012/13 as:
-Finalisation of integrated Energy Plan
-Energy efficiency
-Implementation of the Integrated Resource Plan (IRP)
-The Electricity and national electrification programmes in which DOE had been involved in for a number of years)
-Clean energy
-Nuclear
-Ensuring security of fuel supply
-Contribution to job creation
-International Relations, with a focus on the Southern African Development Community (SADC) region and promotion of resources on the African continent.

Ms Zungu noted that the DOE’s strategic plan addressed the new organisational structure, and alignment framework. The current and past structure of the DOE included administration, hydrocarbons and electricity, nuclear and clean energy. The new structure of the DEO would be divided into administration, energy policy and training, petroleum regulation, nuclear energy, clean energy and programmes and projects. She stated that the DOE did not have the funds to implement the new structure at present, although it had been approved by the DOE and the Minister.

Ms Zungu then explained how the strategic outcome-oriented goals for the DOE were linked to government outcomes (see attached presentation for full details). These were the highlights of the strategic plan that she wished to present.

Mr Muzi Mkhize, Chief Director: Hydrocarbons, Department of Energy, explained that the existing Programme 2 (Hydrocarbons and Energy Planning) would be changing its name to “Energy Policy and Planning”. He added that the DOE had finalised the Integrated Energy Plan, through holding public stakeholder workshops and internal consultations, collection of data, drawing a policy options proposal and finalising the technical report\. He also stated that policy and research had developed the Policy Analysis Framework and approved key indicators.

The new programme had developed and put into operation the Centralised Electronic Energy Data Repository, and had improved the lag time for publications. These included the annual publication of the Energy price Report, Digest and Synopsis. He said that the Department had also introduced two new annual publications, which were to do with the review, and the outlook for, the energy sector. DOE improved the completeness of data disseminated to local, regional and international stakeholders.

The liquid fuels 20-year infrastructure plan included four aspects, which, in turn related to how decisions would be facilitated on domestic refining capacity, improved liquid fuels storage and distribution infrastructure, monitoring of strategic fuel stocks, and increased use of cleaner hydrocarbons. Mr Mkihze also added that the DOE would monitor the construction of the Multi Purpose Pipeline (MPP) and would also conduct Energy Awareness campaigns in relation to paraffin and Liquid Petroleum Gas (LPG). He also added that DOE would be implementing a LPG strategy.

The DOE had revised the Petroleum Products Act of 1977, and a coal policy paper had been drafted internally and would be published for public comment. DOE had participated in the drafting of the South African Coal Road Map, which would help with policy implementation and the carbon capture process. He also added that the gas legislation was amended to allow for transporting of natural gas.

Mr Mkihze continued that the new Programme 3 would be dealing with petroleum licensing and inspections. It was hoped to finalise industry applications within 60 days, and the DOE would conduct 1 500 site inspections. He added that the DOE’s samples and tests would be assisted by Central Energy Fund (CEF). Stock levels would be monitored, and the target was to complete arbitration requests and public complaints within 14 working days.

Mr Mkhize added that, in relation to Energy Programmes and Projects, the DOE had revised the LPG retail pricing framework and had implemented a regulatory accounts system and a Bio-fuels pricing framework. DOE had also placed a fixed retail price on paraffin and a revised price on petroleum products. DOE had drafted a new liquid empowerment framework, to align with the new Broad Based Black Economic Empowerment (BBBEE) Act. Finally, DOE would conduct awareness campaigns on the Petroleum Products Act and licensing in all provinces.

Mr George Mnguni, Deputy Director General: Corporate Services, Department of Energy, said that the DOE needed a Human Resources (HR) plan and would be delivering on a number of strategies around delivery of services. DOE also needed a new culture and set of value and ethics. A review of Phase 1 of the HR plan included the relocation of the DOE, and the implementation of facilities management frameworks, a records management plan, a review of what had been done to date on security risk, and continuation of that strategy, risk management, and a vetting policy for all personnel. Phase 2 of the HR plan included job evaluation, matching and placement, framework for the classification and management of staff. In this phase, there would also be a project to recruit disabled employees, a skill audits and HR policies and procedures.

Mr Mnguni also said that the legal services would be processed on time. There would be development of the communication strategy and a plan to address communications policies, procedures, internal communication and external projects. The DOE would also be in charge of departmental and ministerial events, branding, advertising and marketing.

Mr J Daniel, Chief Director: Finance and Supply Chain Management, DOE, listed the targets of the Office of the Chief Financial Officer. This office dealt with financial planning and management accounting, Annual Estimates of National Expenditure (AENE), whilst monthly and quarterly spending patterns were monitored and reported, along with in year management and branch expenditure reports, and reclassification. Debt and revenue were managed, and were accurately and timeously recorded, revenue was collected and recorded, and petty cash was accurately administered. It also managed departmental assets, asset verification and registers were reconciled to the General Ledger, as well as payments to creditors. The DOE was aiming for 100% compliance and reduction of audit findings. It also dealt with the ICT infrastructure and systems, a petroleum licensing system had been implemented, and the Virtual Private Network (VPN) was implemented, along with a mechanism to enhance energy data collection, storage and dissemination, an ICT disaster recovery site, and an integrated financial management system (IFMS) was implemented.

Ms Zungu listed the strategic objective targets of the Offices of the Chief Executive Officer. These included enterprise-wide risk management, comprising an approved risk management strategy, annual global risk assessments, an updated risk register, a risk response action plan and the Risk Management Charter and risk awareness.

Its anti-fraud and corruption activities included approval of a fraud prevention plan and policy, an ethics policy, a whistle-blowing policy, and code of conduct. Its strategic management and planning activities included drawing the strategic plan, and reviewing it where necessary, ensuring that the Annual Performance Plan complied with National Treasury requirements, putting the plans into operation, and making service delivery improvement plans. Its monitoring and evaluation activities included adherence to outcomes based monitoring, evaluation and reporting principles, internal performance monitoring, aligned to a programme of action, and giving oversight, guidance and support to State Owned Companies (SOCs), approval and implementation of the SOC framework and dealing with the restructuring of the CEF Group of Companies. It would also be doing the final audit and closing-out report for Electricity Distribution Industry Holdings (EDIH).

In the area of international relations, she noted again that the DOE would focus on the SADC region, with a specific intention of using resources for the benefit of the African continent. DOE was aligned with the plans of the Department of International Relations and Cooperation (DIRCO). DOE had developed a strategy plan after conducting a stakeholder survey. The DOE planned to initiate five or more new engagements with other countries, and to provide a monitoring and evaluation report on the signed bilateral and multilateral relations agreements. Quarterly and annual international relations reports would be provided.

Ms Zungu noted that the Office of the Director General monitored audit services, which would include a full spectrum internal audit service and a risk-based internal audit annual plan was complied, approved and implemented. An Internal Audit Charter existed, and the Audit Committee reviewed and monitored the implementation of corrective action and audit findings.

She noted that the strategic objective targets for the energy programmes and projects consisted of projects for mainstreaming, uplifting or empowerment of disadvantaged and vulnerable groups. The Annual Performance Plan also included programmes and projects identified in the other programmes.

Budget report
Mr Daniel presented the financial performance overview. The DOE had an overall budget of R26.6 million, and he illustrated and explained the split between Compensation of Employees of R 2.7 million, Goods and Services of R5.9 million, Capital Assets (which was unspent and would be used once the DOE moved to its new building) of R4.9 million, and transfer payments of R13.1 million. Of this last amount, R11.8 was transferred to EDIH, and was not required at the time.

Mr Daniel explained that under Programme 2, the allocation for 2013/14 did not include R1.5 million for the Transnet pipeline. In Programme 3, the amounts for electricity supply and maintenance, to Eskom, would increase from R118.8 million in 2011, to R2 billion in 2014/15. DOE’s total transfer was R5.84 billion.

Discussion
Ms B Abrahams (DA, Gauteng) asked how DOE would implement the awareness campaigns, whether non-government organisations would be used, in which provinces these would be held and how people would benefit.

Ms Abrahams asked why DOE had such a high percentage of black staff in relation to other demographic groups.

Mr K Sinclair (COPE, Northern Cape) asked about the changes in the service delivery environment. He also questioned the progress on the legislative changes, called for a breakdown of the energy centres mentioned in the presentation, asked what was to be done about the backlog of R30 million, and asked for a list of which agencies would benefit from the international member fees.

Another Member asked about the DOE’s revised targets for processing of reports, and who would be monitoring the funds that the municipalities received.

Other questions related to what exactly the DOE had revised, in the strategic plans, whether there was capacity to inspect all 1 500 sites, whether the country had adequate petrol supplies. Other questions related to the disability employment targets, and the cost of the new building, in comparison to lease costs on the old building,and who formed education committee.

The Chairperson requested that these questions should be responded to in writing.

The meeting was adjourned.

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