QUARTERLY FINANCIAL PERFORMANCE PRESENTATION (1 st Quarter ending 30 June 2013)

QUARTERLY FINANCIAL PERFORMANCE

PRESENTATION(1st Quarter ending 30 June 2013)

Presented by: Ms Yvonne Chetty Chief Financial Officer

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PRESENTATION LAYOUT

2013 roll-over –progress

1st Quarter Financial Performance:Overview per Economic ClassificationTop 5 Major Cost Drivers (Goods & Services)Overview per ProgrammeTransfer Payment Schedule for 2013/14

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2013 Roll-over Requested

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Vote 29: Energy12/13

Unspent BudgetRollover

RequestedApproved Roll-

overR’000 R’000 R’000

TOTALS 75,496 69,343 28,072 Compensation of employees

5,278 0 N/A

Goods and Services 37,541 21,271 0

Transfers and subsidies 28,141 48,072 28,072 Payments for capital Assets

4,572 0 N/APayments for Financial Assets

-36 0 N/A

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2013 Roll-over Requested –Cont.

•As at the end of the 2012/14 financial year, the Department reported a total unspent budget of R75.5 million

•A total of R69.3 million was motivated for to the National Treasury to be rolled-over into the 2013/14 financial year in order to off-set expenditure carried over from the 2012/13 financial year

• The 2012/13 expenditure, which were to be finalized in the current financial year were as follows:Procurement of various goods and services R21.3 millionTransfer payments: - Non-grid electrification programme R28.1 million - Electrification transfers to municipalities R20 million

•From the total request of R69.3 million, only R28.1 million for the Non-grid electrification programme was approved by the National Treasury

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2013 Roll-over Requested –Cont.

•Therefore, DoE has to cater for an additional R21.3 million from its 2013/14 goods and services budget allocation.

•The electrification transfer to various municipalities of R20 million that was not approved, is still under query with the National Treasury.

2013/14: 1st QUARTER FINANCIAL PERFORMANCE Overview – per Economic Classification

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Vote 29: Energy

{A} {B} {C} {D} {E} 2013/14 2013/14 2013/14 2013/14 2013/14 2013/14

Original YTD YTD YTD YTD Budget

Budget Budget Actual VARIANCE VARIANCE Expended

R’000 R’000 R’000 R’000 % %

Total Energy 6,598,172 1,236,385 907,450 328,935 26.60% 13.75%Compensation of Employees

247,562

61,886

54,601

7,285 11.77% 22.06%

Goods & Services 218,057 45,494 23,723 21,771 47.85% 10.88%

Transfers & Subsidies 6,124,192

1,128,424 828,771 299,653 26.56% 13.53%

Payments for Capital Assets

8,361

581

355

226 38.90% 4.25%

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1st QUARTER FINANCIAL PERFORMANCE FOR 2013/14• The Department had a budget of R1.24 billion available for its operations

during the reporting period• Total spending during this period was a total of R907.45 million or 73.4%

which resulted in a budget under-spend of R328.94 million or 26.6% attributable to the following:

Transfer payments: • A budget balance of R299.65 million or 26.6% of the total 1st quarter

budget remained due to unspent funds in the following programmes: Energy Efficiency Demand Side Management (EEDSM)-Eskom

programme (R267.9 million), INEP Non-grid project (R24.1 million) and National Radio Active Waste Disposal Institute (R7.8 million). Compensation of employees: • R7.29 million (11.8%) under budget attributable to vacancies which are

in the process of being filled following the prioritization of positions by the Departmental Organizational Development Committee (DODC) and the final approval by the Finance Committee (FC).

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1st QUARTER FINANCIAL PERFORMANCE FOR 2013/14

Goods and services: •R21.8 million (47.9%) unspent as a result of projects, which at the beginning of the financial year were projected would have commenced by the first quarter, which could not commence due to delays in procurement processes•Revision of initial plans. Through the internal spending plans process conducted as a directive of the FC, branches/programmes reviewed their initial plans and revised these in accordance with the prevailing circumstances. •The result is that, some spending plans have now been moved to the following periods, however, the Drawings schedule approved by the National Treasury can only be amended later in the year.

MAJOR COST DRIVERS (Top 5): GOODS AND SERVICES

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COST DRIVERS - GOODS AND SERVICES

2013/14

1st Quarter

Rand thousand R'000Travel and subsistence 8,500Operating leases 3,397Consultants and professional services: Business and advisory services 2,840Communication 1,520Audit Cost: External 1,093Total 17,350

COST DRIVERS - GOODS AND SERVICES2012/13

Year End 2013Rand thousand R'000Travel and subsistence 35,680Operating leases 28,865Operating payments 24,513Property payments 23,373Consultants and professional services: Business and advisory services 15,360Total 127,791

• Total spending on Goods & services R23.72 m• The top 5 costs accounts for 73% of the total

spend• Spending on travel and subsistence constituted

36% of the total Departments goods and services expenditure, 50% being accounted by the Administration programme

• Operating leases is mainly for office accommodation lease rentals for head office and all regional offices

• Travel and subsistence and Operating leases expenditures were the highest cost drivers in 12/13, the trend continued in the 1st quarter of 2013/14

2013/14: 1st QUARTER FINANCIAL PERFORMANCE Overview – per Programme

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Vote 29: Energy

{A} {B} {C} {D} {E} 2013/14 2013/14 2013/14 2013/14 2013/14 2013/14 Original YTD YTD YTD YTD BudgetBudget Budget Actual VARIANCE VARIANCE ExpendedR’000 R’000 R’000 R’000 % %

TOTAL: 6,598,172 1,236,385 907,450 328,935 26.60% 13.75%

Administration 220,958 50,358 41,110

9,248 18.36% 18.61%Energy Policy & Planning 51,156 10,091

10,192 -101 -1.00% 19.92%

Energy Regulation 49,723 10,792

7,388

3,404 31.54% 14.86%Electrification & Energy Programme Management

3,942,769

422,169

392,825

29,344 6.95% 9.96%

Nuclear Energy and Regulation

709,992

431,337

419,194

12,143 2.82% 59.04%

Clean Energy 1,623,574 311,638 36,741 274,897 88.21% 2.26%

Programme 1: Administration

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Vote 29: Energy


Total 220,958 50,358 41,110 9,248 18.36% 18.61%Compensation of employees

115,317

28,827

25,760

3,067 10.64% 22.34%

Goods and Services 97,204 20,923 14,924 5,999 28.67% 15.35%Transfers and subsidies 356 90 71 19 21.11% 19.94%Payments for capital assets

8,081

518

355

163 31.47% 4.39%

• Compensation of employees: Variance is mainly due to vacancies. The Department, through relevant structures, has since taken a decision to prioritize positions in line function branches particularly in Electrification and Energy programmes and projects management and Nuclear Energy branches. Funding will be shifted appropriately

• Goods and services: The unspent budget is mainly as a result of the status of the office accommodation leases item which recorded a budget balance of approx. R5 million. It was anticipated that a claim will be received at

the end of the quarter from the DPW for shared accommodation, at the regions with DMR.

Programme 2: Energy Policy and Planning

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Vote 29: Energy


Total

51,156

10,091

10,192 -101

-1.00% 19.92%Compensation of employees

34,200

8,547

8,186

361 4.22% 23.94%

Goods and Services 16,956 1,544 2,006 -462 -29.92% 11.83%Transfers and subsidies - - - - 0.00% 0.00%Payments for capital assets

-

-

-

- 0.00% 0.00%

• The over spend in Goods and services, attributable to timing difference is, off-set by the under-spending in compensation of employees.

Programme 3: Energy Regulation

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Vote 29: Energy


Total

49,723

10,792 7,388

3,404 31.54% 14.86%

Compensation of employees

26,111

6,527

6,790

-263 -4.03% 26.00%

Goods and Services 23,612 4,265 569 3,696 86.66% 2.41%Transfers and subsidies - - 29 -29 0.00% 0.00%Payments for capital assets

-

-

-

- 0.00% 0.00%

• Goods & services: The process of appointing a service provider to undertake the fuel specification testing project, is currently underway. It was initially anticipated that the project would commence in the first quarter.

Prog.4: Electrification & Energy Programmes Management

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Vote 29: Energy


Total3,942,769

422,169 392,825 29,344 6.95% 9.96%

Compensation of employees

46,294

11,574

8,541

3,033 26.21% 18.45%

Goods and Services 29,274 5,750 3,465 2,285 39.74% 11.84%Transfers and subsidies 3,866,951 404,782 380,819 23,963 5.92% 9.85%Payments for capital assets

250

63

-

63 0.00% 0.00%

• Compensation of employees: Variance due to vacancies particularly of additional positions, the funding of which was reprioritized during the 2013 MTEF process. After the commencement of the financial year, additional positions, over and above those factored during the MTEF process, were approved and additional funding for these will be shifted to this branch following the finalization of the relevant processes

• Goods and services: Variance is mainly attributable to the under spending in Computer services item of R1.8 million. This allocation was a provision for the running of the reporting tool/energy programme’s monitoring tool. The tool was not acquired as planned in the 12/13 financial year

• Transfer payments: The balance is entirely due to the performance of the Non-grid electrification project, which reported a R24.1 million underspend or a 100% variance. The delay in the finalization of service providers’ contracts contributed to the variance. This situation has since being rectified with spending expected to commence during the

July month.

Programme 5: Nuclear Energy and Regulation

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Vote 29: Energy


Total

709,992

431,337

419,194

12,143 2.82% 59.04%Compensation of employees

12,898

3,225

2,487

738 22.88% 19.28%

Goods and Services 23,175 6,046 2,441

3,605 59.63% 10.53%Transfers and subsidies 673,919 422,066 414,266

7,800 1.85% 61.47%

Payments for capital assets

-

-

-

- 0.00% 0.00%

• Goods and services: An intensive Nuclear awareness campaign, planned to commence in the first quarter could not be undertaken due to conflicting priorities and had to be shifted to the following periods. The appointment of a service provider to determine the cost of nuclear in relation to the new nuclear build programme was also delayed contributing to the overall variance.

• Transfers and subsidies: Variance entirely attributable to the transfers to the National Radio Active Waste Disposal Institute which could not be made as planned due to the pending appointment of the Board members.

Programme 6: Clean Energy

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Vote 29: Energy


Total

1,623,574

311,638

36,741

274,897 88.21% 2.26%Compensation of employees

12,742

3,186

2,837

349 10.95% 22.26%

Goods and Services 27,836 6,966 318

6,648 95.43% 1.14%Transfers and subsidies 1,582,966 301,486 33,586 267,900 88.86% 2.12%Payments for capital assets

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-

-

- 0.00% 0.00%

• Goods and services: The main cost drivers in this branch are specifically for undertaking Clean energy/energy efficiency awareness campaigns and audits. The spending plan has been adjusted as the awareness campaigns will commence in August 2013 to year end.

• Transfers and subsidies: The reported variance, R267.9 million, in the EEDSM-Eskom programme is as a result of the payment to Eskom that could not be effected pending the finalization of funding contract associated with the implementation contract.

1st QUARTER TRANSFER PAYMENT SCHEDULE FOR 2013/14

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Programme Projects & Entities

{A} {B} {C} {D} {E}2013/14 2013/14 2013/14 2013/14 2013/14 Original YTD YTD YTD YTDBudget Budget Actual Variance Variance R’000 R’000 R’000 R’000 %

Programme 6

EEDSM - Municipalities 180,722

-

-

- 0.00%EEDSM – Eskom 1,267,900 267,900 - 267,900 100.00%SANEDI 134,344 33,586 33,586 - 0.00%

Programme 5

NNR 48,360 29,348 29,348 - 0.00%NECSA 592,182 384,918 384,918 - 0.00%Membership fees(IAEA) 13,577 - - - 0.00%Waste Disposal Ins 19,800 7,800 - 7,800 100.00%INEP - Municipalities 1,314,772 - - - 0.00%

INEP - Eskom 2,141,027 380,682 380,682 - 0.00%

INEP – Non-grid 91,152 24,100 - 24,100 100.00%Programme 4 ADAM 320,000 - - - 0.00%Programme 1 Households 356 90 237 -147 -163.33% Total Transfers 6,124,192 1,128,424 828,771 299,653 26.56%

1st QUARTER TRANSFER PAYMENT SCHEDULE FOR 2013/14

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YTD, the transfer payments reflected a budget under spend of R299.7 million (26.6%) mainly due to the following:

•EEDSM –Eskom: -R267.9 million planned for transfer to Eskom for the Solar Water Heaters/geysers programme could not be paid due to delays in finalizing the implementation contract with Eskom. The contract has since been finalized and awaiting sign off while the funding contract is being reviewed by affected parties.

•INEP Non-grid: -R24.1 million remained unspent due to delays with the extension of contracts. The extension of service contracts has since been signed and spending is expected in the following period.

•NRAWDI: -R7.8 million could not be transferred to the institute, as planned, pending the establishment of the management structure, i.e. board of directors.

Thank You!

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QUARTERLY FINANCIAL PERFORMANCE PRESENTATION (1 st Quarter ending 30 June 2013)

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