The Department of Energy(DoE) presented its first quarter expenditure report for the current financial year, and said it had been allocated an annual budget of R7.45 billion, of which R617 million was for the operation of the Department. The balance was allocated to transfer payments which went to public entities and municipalities. The expenditure at the end of the first quarter had been R889 million, which had resulted in an under-spending of R612 million. It had a total of 30 quarterly performance targets, and 18 of these had been achieved
Members sought clarity on why the submission of invoices had been delayed, and if there was a system in place to make this process more efficient. They wanted to know the reasons for the under-spending. They asked about the number of vacant positions, and why they should not just be written off if they were not being filled. Why had there been a delay in the implementation of the annual increase? Why had the Department had to pay the State Attorney for legal costs? What were the prospects of catching up on the under-expenditure, because the rationale for budget cuts was under-expenditure, and it currently seemed as if the DOE was asking for money which it did not need or use.
The Department assured the Committee that the slow start was a normal characteristic, and although this was not sufficient as a justification, they were confident that they would meet all their targets and catch up on the under-expenditure as the financial year continued.
Department of Engergy: First quarter report
Ms Camagwini Ntshinga, Chief Director: Financial and Supply Chain Management, Department of Energy (DoE), said the DOE had been allocated an annual budget of R7.45 billion, of which R617 million was for the operation of the Department. The balance was allocated to transfer payments which went to public entities and municipalities. The expenditure at the end of the first quarter had been R889 million, which had resulted in an under-spending of R612 million.
Programme 1 (Administration)
Expenditure amounted to R63 million, which was an under-expenditure of R5.,32 million. The reasons for this were the pending recruitment for prioritised posts, and the delayed implementation of wage agreements and cost of living adjustments.
Programme 2 (Energy and Policy Planning)
There had been expenditure of R9.73 million, and an under-spending of R3 million, the main reason for which had been the compensation of employees.
Programme 3 (Petroleum and Petroleum Products Regulation)
Expenditure had been R17.44 million, and and the under-spending of R4.7 million had been mainly due to the compensation of employees and membership fees to multilateral international bodies.
Programme 4 (Electrification and Energy Programme and Project Management).
This programme had represented the bulk of the budget. A total of R256 million had been spent, leaving a total of R582 million rand unspent. Payments to Eskom had been delayed to allow for proper implementation and reporting before disbursing the June transfer. The commencement of disbursements for the non-grid household programme would commence as soon as all supply chain management (SCM) processes were finalised and approved
Programme 5 (Nuclear Energy)
This programme saw an expenditure of R517 million. The net under-spending of R1.51 million was mainly due outstanding claims from the State Attorney in relation to the Earthlife judgment delivered against the Department with costs.
Programme 6 (Clean Energy)
There had been expenditure of R24 million. The underspending of R15.66 million was mainly due to disbursements to consultants and advisory services pending finalisation of SCM processes for projects.
The DOE had a total of 30 quarterly targets. 18 of these had been achieved. None of the seven targets, which were for policy and planning, had been achieved, and action was still to be taken in this regard.
In the area of petroleum regulation, five targets had been set and three were achieved. The four targets allocated to nuclear energy had been achieved, as had three of the five targets for clean energy. The one governance and compliance target had been achieved, and the office of the Director General (DG) had achieved both of its targets.
Ms D Senokoanyane (ANC) sought clarity on why the submission of invoices had been delayed, and if there was a system in place to make this process more efficient. She also wanted to know about under-spending by the Department, and the reasons for this.
Mr A McLoughlin (DA) asked the delegation about the number of vacant positions, and why they should not just be written off if they were not being filled. He was concerned about the delay in the implementation of the annual increase, and wanted to know the reason for this. He asked what had been received in return for the R256 million spent under Programme 4 (Electrification and Energy). With regard to Programme 5 (Nuclear Energy), he wanted to know why the Department had had to pay the State Attorney, and why legal costs were included in the budget.
The Chairperson wanted to know about any possible prevention measures and the prospects of catching up on the under-expenditure, because the rationale for budget cuts was under-expenditure, and it currently seemed as if the DOE was asking for money which it did not need or use. She also wanted to know when and if the vacant positions would be filled.
Ms M Manana (ANC) sought clarity on the vacant posts as well. Another concern she brought up was the under-expenditure issue.
Department of Energy’s response
Mr Thabane Zulu, Director General: Department of Energy said that the absence of skilled personnel had a direct negative effect on the Department’s ability to meet targets and be efficient in certain areas of work. He reassured the Committee that they would catch up on the under-expenditure, and said that the first quarter was usually a slow start for the DOE.
Ms Ntshinga addressed the question of outstanding invoices, and confirmed that the DOE did work with the Department of Public Works (DPW) to make sure they got the invoices. She also agreed that this was not a valid justification for the inefficiency in this regard. The under-expenditure was related to wage negotiations. These had been finalised in June, but when the DOE made budget projections, National Treasury required a projected increase, and the DOE was expected to follow this the whole year. The Department would catch up as the year went on, and would eventually make up for the under-expenditure.
A DoE official said that 90% of the budget involved transfers, and if all financial targets were met it would look like money was being spent without performance targets being met, when in reality the skewed picture was due to the fact that certain targets required more money than others.
Ms Manana (ANC) thanked the DOE for the responses, and asked that they submit a report detailing their plans to catch up on the under-spending as soon as possible.
Ms Senokoanyane told the DOE that they should be more clear with regards to saying which targets were completely unachieved and which targets were partially achieved, as this made a difference when they needed to have meetings with the Committee.
Mr Zulu assured the members that the DOE would provide them with the requested report within the following week so that they could go through it.
The meeting was adjourned.