QUARTERLY FINANCIAL PERFORMANCE PRESENTATION (3rd Quarter ending 31 December 2011)

3/15/12

QUARTERLY FINANCIAL PERFORMANCE PRESENTATION

(3rd Quarter ending 31 December 2011)Presented by: Ms Yvonne Chetty

Chief Financial Officer

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PRESENTATION LAYOUT

• 3rd Quarter Performance for 2011/12 – overview• 3rd Quarter Performance for 2011/12 – by Programme• Budget Composition per Programme for MTEF period• Forecast report for year end 31/03/12

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3rd QUARTER FINANCIAL PERFORMANCE FOR 2011/12

Overview – Economic Classifications

Vote 29: Energy11/12 Total

BudgetR’000

YTD BudgetR’000

YTD ActualR’000

YTD Var R’000

YTD Var

%

% of Total 11/12 Budget

expended

Total Energy 6,200,909 4,938,937 4,377,030 561,907 11.4% 70.6%

Compensation of Employees

183,317 134,520 137,325 (2,805) -2.1% 74.9%

Goods & Services 148,213 117,242 108,060 9,182 7.8% 72.9%

Transfers & Subsidies 5,861,467 4,680,507 4,128,515 551,992 11.8% 70.4%

Payments for Capital Assets 7,912 6,668 3,130 3,538 53.1% 39.6%

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• As at the end of the third quarter, the Department had disbursed a total of R4.37 billion or 70.59% of the total budget allocation for the 2011/12 financial year

• This total disbursement of R4.37 billion, was R561.9 million less than the available benchmark drawing of R4.9 billion from the National Revenue Fund, mainly due to the performance within the transfer payments classification.

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TRANSFER PAYMENTS

• The Department had a total of R4.7 billion available to transfer to entities or implementing agents and an actual of R4.1 billion was transferred, resulting in a variance of R552 million.

• The under spending of R552 million is mainly due to the following:Programme 2: Energy Policy & Planning

• Transnet pipeline – R375 million for December not transferred

Programme 3: Energy Regulation• Working for Energy Project – R17.5 million below budget• EEDSM Municipalities – R61.8 million not transferred

Programme 4: National Electrification Programme• INEP Municipalities – R88.7 million not transferred

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GOODS AND SERVICES

• The results reflected within the Goods and Services’ economic classification showed a R9.1 million year-to-date under spend.

• This is mainly due to an under spending within Professional Services as a result of the delay in the implementation of the Energy modelling system.

The saving will however be re-directed to other areas of spending to provide funding for the projected over spending under programme 1 and 4.

• The YTD spending within goods and services of programme 2 is R7.55 million below budget due to an under spending, but these unspent funds will be redirected to other areas within the Department.

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MAJOR COST DRIVERS (Top 5) -GOODS AND SERVICES AS AT 31 DECEMBER 2011

Expenditure Item 2011/12 Actual

Expenses 2011/12 Budget Balance

Travel and Subsistence 29,378,507 32,360,361 2,981,854

Cons/Prof: Business & Advisory Service 22,420,072 28,727,400 6,307,328

Lease Payments 17,667,555 30,649,000 12,981,445

Operating Payments 10,984,262 11,950,423 966,161

Venues and Facilities 5,593,474 6,023,100 429,626

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CAPITAL ASSETS

• Although spending in Capital assets increased from R2.3 million in the last quarter to R3.1 million in the current quarter, this performance was still below the Department’s initial plan and resulted in an under spend of R3.5 million.

• The Department had anticipated moving to the new office accommodation by 1 April 2012. The costs associated with this move, e.g. ICT costs, were catered for within this category. The move is delayed due to the internal processes at the Department of Public works.

• The EDI-H assets were also transferred to the Department and DoE purchased lower quantities of assets than originally planned.

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FINANCIAL PERFORMANCE AS AT 31 DECEMBER 2011 – OVERVIEW BY

PROGRAMME

99

Vote 29: Energy

11/12 Adjusted Budget

YTD Budget

YTD Actual Expenditure

YTD VARIANCE

YTD VARIANCE Percentage of

total 11/12 Adjusted budget

expendedR’000 R’000 R’000 R’000 %

TOTAL: Programme 6,200,909 4,938,937 4,377,030 561,907 11.4% 70.6%

Administration

198,140

146,065

150,753

(4,688) -3.2% 76.1%

Energy Policy & Planning

1,544,708

1,162,281

776,271

386,010

33.2% 50.3%

Energy Regulation

551,631

319,211

222,732

96,479

30.2% 40.4%National Electrification Programme

3,264,555

2,690,587

2,609,420

1,167 3.0% 79.9%Nuclear Energy and Regulation

641,875

620,793

617,854

2,939

0.5% 96.3%


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Programme 1: Administration

1010

Vote 29: Energy


YTD Budget


YTD VARIANCE



expendedR’000 R’000 R’000 R’000 %

198,140

146,065

150,753

(4,688)

-3.2% 76.1%

Compensation of employees

83,311

60,601

69,596

(8,995)

-14.8% 83.5%

Goods and Services

106,589

78,622

78,015

607

0.8% 73.2%

Transfers and subsidies

349

174

33

141

81.0% 9.5%Payments for Capital Assets

7,891

6,668

3,109

3,559

53.4% 39.4%


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Programme 1: Performance Overview

1111

• Total spent in Programme 1 is R150.7 million against a YTD budget of R146.1 million.

• The overall YTD shortfall of R4.7 million is mainly due to the overspending within the Compensation of employees classification

Compensation of Employees• A total of R69.6 million has been spent YTD from an available budget of

R60.6 million, resulting in a deficit of R9 million

• The over spending is mainly due to positions being filled additionally to the approved establishment

Transfers• Mainly due to reduced payments to departing employees – 141k

Capex• Mainly due to the relocation of the DoE to the Landbank Building – 3.5 mil


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Programme 2: Energy Policy and Planning

1212

Vote 29: Energy


YTD Budget


YTD VARIANCE



expendedR’000 R’000 R’000 R’000 %

1,544,708

1,162,281

776,271

386,010

33.2% 50.3%Compensation of employees

30,355

22,536

19,079

3,457

15.3% 62.9%

Goods and Services

14,353

14,745

7,192

7,553

51.2% 50.1%


1,500,000

1,125,000

750,000

375,000

33.3% 50.0%Payments for Capital Assets

-

-

-

-

- -

• Compensation of employees: Negatively affected by vacancies• Transfer payments: R375 million below budget due to the delay in disbursing the 3rd quarter

payment to Transnet in respect of the Petroleum pipelines• Goods and services: YTD spending within goods and services is R7.5 million below budget

due to an under spending in Travel & subsistence, Professional Services & Inventory: Stationery. Professional services has mainly been affected by the delay in the implementation of the Energy modelling system


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Programme 3: Energy Regulation

1313

Vote 29: Energy


YTD Budget


YTD VARIANCE



expendedR’000 R’000 R’000 R’000 R’000

551,631

319,211

222,732

96,479

30.2% 40.4%


47,232

34,797

33,323

1,474

4.2% 70.6%

Goods and Services

9,009

6,122

6,123

(1)

0.0% 68.0%


495,369

278,292

183,265

95,027

34.1% 37.0%

Payments for Capital Assets

21

-

21

(21)

0.0% 100.0%

• 30% overall under spent as at 31 December 2011 • Compensation of employees mainly due to vacancies• The under spending is mainly within the Transfer payments area• Transfer payments: R278.3 million was available for transfer as at the end of December and

only R183.3 million was transferred resulting in an under spending of R95 million


3/15/12

Programme 3: Energy Regulation

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Transfer payments details per entity/project:

• Working for Energy: – R17.5 million below budget. A reclassification request was declined by NT

• EEDSM Municipalities: – R61.8 million not transferred the result of Municipalities not adhering to contractual obligations

• EDIH: - Core funding of R11.76 million not transferred. A submission for reclassification has been submitted to National Treasury for approval.


3/15/12

Programme 4: National Electrification Programme

1515

Vote 29: Energy


YTD Budget


YTD VARIANCE

YTD VARIANCE

Percentage of total 11/12

Adjusted budget

expendedR’000 R’000 R’000 R’000 %

3,264,555

2,690,587

2,609,420

81,167

3% 79.9%


14,965

11,025

10,994

31

0.3% 73.5%

Goods and Services

5,305

4,533

5,220

(687)

-15.2% 98.4%


3,244,285

2,675,029

2,593,206

81,823

3.1% 79.9%


-

- -

-

- -

• The under spending is mainly within the Transfer payments area• The major contributor is the Conditional grants payable to municipalities, R88.7 million

below the projection in terms of DORA payment schedules• The approval for the revision of the drawings schedule was received after the December

pay run. Payments in the following period to be distributed as per the revised schedule


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Programme 5: Nuclear Energy and Regulation

1616

Vote 29: Energy


YTD Budget YTD Actual

Expenditure YTD

VARIANCEYTD VARIANCE

Percentage of total 11/12 Adjusted budget

expendedR’000 R’000 R’000 R’000 %

641,875

620,793

617,854

2,939

0.5% 96.3%


7,454

5,561

4,333

1,228

22.1% 58.1%

Goods and Services

12,957

13,220

11,510

1,710

12.9% 88.8%


621,464

602,012

602,011

1

0.0% 96.9%


-

-

-

-

- -

• Total spent R617.8 million against a YTD budget of R621 million.• The 0.5% under spending is within the compensation of employees due to

vacancies and savings within goods and services mainly in the Outsourced services expenditure category


3/15/12

TRANSFER PAYMENT SCHEDULE

Programme Projects & Entities 11/12 Adjusted

BudgetYTD Budget

31/12/11


31/12/11

YTD VARIANCE

31/12/11

R’000 R’000 R’000 R’000

Programme 2 Transnet Pipelines 1,500,000 1,125,000 750,000 375,000Programme 3 EEDSM - Municipalities 280,000 119,800 58,000 61,800 EEDSM – Eskom 118,800 90,000 90,000 0 REFSO 39,711 30,447 20,190 10,257 EDIH 11,758 8,820 0 8,820 WORKING FOR ENERGY

25,000 17,500 0 17,500 SANEDI 20,100 11,725 15,075 -3,350Programme 4 INEP - Municipalities 1,096,611 888,716 800,001 88,715 INEP - Eskom 1,737,813 1,426,345 1,426,345 0 INEP – Non-grid 127,861 77,968 85,860 -7,892 LOC 2010 WC 282,000 282,000 281,000 1,000Programme 5 NNR 35,430 15,978 15,977 1 NECSA 586,034 586,034 586,034 0Programme 1 Households 349 174 33 141 Total Transfers 5,861,467 4,680,507 4,128,515 551,992

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BUDGET COMPOSITION PER PROGRAMME FOR 2011/12 TO 2014/15

MTEF ALLOCATIONS

1818

2011/12 AdjustedBudgetR’000

12/13 MTEF allocation

R’000

13/14 Indicative Baseline

R’000

14/15 Indicative Baseline

R’000

Programme 6,200,909 6,805,903 6,389,935 7,008,524

Administration 198,140 181,745 184,087 193,702

Energy Policy & Planning 1,544,708 1,541,548 75,213 79,737

Energy Regulation 551,631 1,350,028 2,067,180 2,375,276

National Electrification Programme

3,264,555 3,136,294 3,410,148 3,706,096

Nuclear Energy and Regulation 641,875 596,288 563,307 653,713


3/15/12

2011/12 FINANCIAL PERFORMANCE

FORECAST FOR YEAR END 31/3/12

1919

Vote 29: Energy Adjusted Budget


29/2/12

YTDBALANCE

29/2/12

FORECAST/COMMITMENTS

For 31 March 2012

11/12 EstimatedFinal

Balance Ref.

R’000 R’000 R’000 R’000 R’000

TOTAL: ENERGY

6,200,909

5,460,970 739,939 682,288 53,565


188,212

168,345

19,867

19,867 - {A}

Goods and Services

162,283

122,580

39,703

39,703 - {B}


5,841,947

5,166,840

675,107

621,542 53,565 {C}Payments for Capital Assets

8,467

3,200

5,267

5,267 - {D}Payments for Financial Assets

- 5 (5) (5) - -


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2011/12 FINANCIAL PERFORMANCE

2020

11/12 EstimatedFinal

Balance

R million

PROJECT/ENTITY

53.5

COMMENT

EDIH

10.7

The Department ‘s request for a reclassification was declined by the NT as it deviated from the Virements ceiling of 8%. The Department has submitted a deviation proposal.

2010 Local Organising Committee

1.0

Balance will be surrendered to National Treasury.

EEDSM Municipalities

27.0

Challenges being experienced with some Municipalities, one in Port Elizabeth.

INEP Municipalities

13.5

Funding challenges are being experienced by one of the service providers. The Department is exploring various mechanisms to assist this service provider in providing the services.

Households 0.3

C. Transfer Payments• The estimated balance of R53.5 million is as follows:


3/15/12

Thank You!

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QUARTERLY FINANCIAL PERFORMANCE PRESENTATION (3rd Quarter ending 31 December 2011)

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