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

PPC PRESENTATION ON THE

2010 MTEF STRATEGIC PLAN

CHIEF FINANCIAL OFFICER’S BRANCH

16 MARCH 2010

1

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

2

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

4

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

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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

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MTEC Proposal

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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 60,5 1 555,9 1 495,4 2 471,7

Electricity, Nuclear and Clean Energy

458,0 458,0 408,8 (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

MTEC proposal

8

-500

0

500

1000

1500

2000

2500

3000

3500

4000

2009/10 ENE MTEC Prop Fin Appro Variance

Admin

Hcep

Ence

Ass Servi

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

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DOE resource plan

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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

DOE resource plan

11

0

500

1000

1500

2000

2500

3000

3500

4000

Admin Hcep Ence Ass Servi

2010/11

2011/12

2012/13

DOE resource plan

12

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

DOE resource plan

13

0

1000

2000

3000

4000

5000

6000

7000

Co of Em Goods & Ser Trnsfer & Sub Pay of CapitAss

Total

2010/11

2011/12

2012/13

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

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Programme focus areas

CFO Office (Programme 1)1. Drive transformation policies2. Educate and Communicate with Stakeholders3. Implement Policies and Procedures4. Develop and Review Internal Processes5. Improve Turnaround Time6. Implement Service Level Agreements7. Improve Management and leadership

Capabilities8. Attract, Develop and retain Skills

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Programme focus areas (cont..)

9. Implement Effective Systems

10.Promote Core Values

11. Drive Innovation

12. Align Budget to Strategy

13. Maximize Utilization of Resources

14. Manage Costs effectively

15. Promote corporate governance

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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

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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

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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

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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)

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• 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)

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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

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- Conduct 360-degree Assessments on all employees



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• Improve Management and leadership • Capabilities





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Culture, Systems and People (Continue…)

• Drive Innovation

– Create an environment conducive to innovative thinking

– Quantify the monitory value associated with new innovations

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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

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The end…..

THANK YOU!

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

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