Necsa Annual Report Presentation to the Portfolio Committee on Energy

by:Rob Adam / Dan Moagi / Mbali Mfeka

/ Chantal Janneker

19 October 2010

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Outline of Presentation

1.Mandate

2.Necsa Technical Matters

3.Necsa Human Resources

4.Necsa Finances

5.Necsa Outreach to the Community

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Necsa Technical Matters

Rob Adam – Chief Executive Officer: SA Nuclear Energy Corporation Ltd

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MandateNecsa derives its mandate from three regulatory frameworks:

The Nuclear Energy Act No 46 of 1999; The Nuclear Energy Policy (NEP) of 2008 Directives conferred on it by the Minister of Energy

The policy and legislative framework confirms Necsa’s central role for a coordinated SA nuclear industry.

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Nuclear Power Cluster

Advanced techno-economic feasibility studies for the nuclear fuel

cycle completed.

Inputs provided to the DoE IRP 2 public consultation process and

further inputs to be provided during November 2010.

Necsa’s Nuclear Manufacturing Centre (NMC) has made good

progress towards ASME III accreditation, in preparation for

localisation from SA’s nuclear energy new build programme.

Necsa has had to deal with the drastic downsizing of the PBMR

programme to prevent loss of scarce nuclear skills for SA

2009/10 Performance

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Radiation Products and Services Cluster

NTP Group revenue of R795 m (46% better than budget)

NTP also leading global supplier of medical isotopes

Successful conversion of SAFARI-1 reactor to LEU fuel

Necsa developed OSCAR-4 reactor core calculation system

won the NSTF award for “innovation by an organisation”

2009/10 Performance

Continues…

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Necsa as a Host of Nuclear Programmes Cluster

Necsa’s SHEQ system was upgraded to fully comply with NNR requirements

Necsa’s Emergency Control Centre was upgraded and Necsa played a vital role

during the 2010 World Cup in protecting SA’s ports of entry and stadia

R26.5m was invested in the refurbishment and upgrading of site infrastructure

and R15.2 m in the improvement of R&D infrastructure

Nuclear Skills Development Centre (NSD) trained 592 full-time student

equivalents and the NSD has received full accreditation as a Decentralised Trade

Test Centre from CHIETA

8 new innovations were completed during the past yearContinues…

2009/10 Performance

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Alignment with DoE Objectives and Government Outcomes

Department of Energy

Necsa’s activities are fully aligned with the DoE objectives as stated in

the 2010 ENE – Programme 4: Associated Services “South African

Nuclear Energy Corporation undertakes and promotes research and

development in the field of nuclear energy and radiation science. The

corporation is also responsible for various institutional obligations on

nuclear matters on behalf of the state”

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Alignment with DoE Objectives and Government Outcomes

Alignment with Government Priorities: Medium Term Strategic Framework (2009 – 2014)

Strategic Priority 1: Speeding up growth and transforming the economy to

create decent work and sustainable livelihoods

Strategic Priority 2: Massive programme to build economic and social

infrastructure

Strategic Priority 4: Strengthen the skills and human resource base

Strategic Priority 5: Improve the health profile of all South Africans

Strategic Priority 8: Pursuing African advancement and enhanced international

cooperation

Strategic Priority 9: Sustainable Resource Management and use

Strategic Priority 10: Building a developmental state including improvement of

public services and strengthening democratic institutions

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Localisation of Nuclear Manufacturing

Nuclear energy expansion programme estimated at R426 billion until

2030

Even 10% participation will bring revenue of ~R42billion to SA –

massive opportunity for local industrial development & job creation

Necsa NM already manufactures coded pressure vesels, heat

exchangers, storage tanks etc.

NM has already attained ISO 9001/2008 & ASME U-Stamp Certification

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Environmental Performance

Comprehensive environmental programme in place

Compliance to water permit rerquirements - no reportable events

occured

Compliance with environmental requirements of the Nuclear

License: Significant decrease in stack releases

Electricity consumption decreased by 2.2%

Water consumption increased by 7%

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Necsa Priorities for 2010/11

Responding to the IRP 2

Development of NM and its role in support of localisation

Completion of the LEU target plate development

Development of NTP’s role in the US isotope market

Launching of the Necsa Nuclear Science Centre

Including a nuclear security training course at the Nuclear Skills

Development Centre

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Necsa Human Resources

Dan Moagi – Group Executive: Human Resources

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Necsa Group Employment

Necsa staff complement increased from 1870 to 2113 during the

2009/10 financial year

Female employees increased from 508 to 608

Black employees increased from 986 to 1151

Black employees 52% against target of 49%

Selected SHEQ Statistics:

- workdays lost due to DI’s – improved by 56%

- TIR – improved by 17%

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Necsa Executive Management Composition

Designation Name Equity Classification and Gender

Chief Executive Officer Dr. Rob Adam White MaleGroup Executive: Human Resources Mr Daniel Moagi Black Male

Group Executive: Finance and Information Management

Ms Nishina Dayaram Black Female

Group Executive: Research and Development

Dr Petro Terblanche White Female

Group Executive: Marketing and Communication

Ms Chantal Janneker Black Female

Group Executive: Nuclear Technology Industrialisation

Mr Arie van der Bijl White Male

Group Executive: Strategy and Performance

Dr Van Zyl de Villiers White Male

Group Executive: Technical Services Mr Joseph Shayi Black MaleGroup Executive: Nuclear Compliance Dr Ramatsemela

MasangoBlack Female

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Human Resource Training Mentorship and coaching- first programme successfuly completed Graduate support programme:

- Graduates in training = 18

- Bursary students = 36 PBMR bursary holders transfered to Necsa Internships/Graduates = 40 Apprentices =24 Adult Basic Education: English=66, Maths=30 Damelin Leaderships = 79 learners

Necsa Finances

Mbali Mfeka – Senior Manager: Finance and Information

Management

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 2007/08 2008/09 2009/10 2010/11

R‘million R‘million R‘million R‘million

Sales 516 621 1,049 1,058

Government and Sundry Grants 345 439 472 527

Other Income 26 29 24 51

Finance Income 34 62 55 34

Total Income 921 1,151 1,600 1,670

Personnel and Personnel Related Expenditure

-376 -424 -525 -674

Other Expenditure -496 -649 -923 -808

Net Profit after Tax -11 80 164 129

Financial Performance and Projections for the Necsa Group

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Financial Performance and Projections For Necsa Corporate

 2007/08 2008/09 2009/10 2010/11

R‘million R‘million R‘million R‘million

Sales 193 183 248 310

Government and Sundry Grants 344 439 462 516

Other Income 74 25 35 49

Dividends 12 20 38 23

Finance Income 34 42 27 22

Total Income 657 709 810 920

Personnel and Personnel Related Expenditure

-342 -382 -464 -518

Other Expenditure -253 -328 -363 -401

Net Profit after Tax -7 16 -31 1

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Auditor-General’s Report

Unqualified report for 2009/10

Emphasis of matter

- Significant uncertainty relating to the taxpayer status

- Restatement of corresponding figures

- Material impairment of investment in subsidairy

- Contingency liability relating to PAYE

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Financial Constraints Necsa’s mandate was expanded by the publication of the Nuclear Energy Policy in 2008. However:

These expanded mandate functions have not culminated into increased baseline funding;

Whilst the Nuclear Energy Policy implementation strategy is still being formulated, SA is required to respond to new electricity generation capacity (IRP 2 – November 2010);

Misalignment between IRP 2 policy development and the national budget process introduces further challenges for Necsa going forward;

Necsa has already had to reprioritise its funding in order to begin preparing for the requirements of SA’s nuclear energy expansion (e.g. NFC, NMC, NSD, PBMR staff);

Despite the increased/expanded mandate, as well as the above requirements Necsa had its baseline reduced by R207 million over the 2010/11 to 2013/14 MTEF period.

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Implications if Additional Funding is not Secured

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Limited capability to invest in urgent upgrading and renewal

projects required to fulfil our role in terms of the NEA and NEP

Challenge to retain highly skilled scarce nuclear staff

Limited capability to run high level training programs especially

for new generation nuclear technical experts and leaders

Challenge to improve on risk and safety performance and comply

with stricter regulatory requirements

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Jeopardise Necsa’s capability to be prepared in time to support

SA New Build program and exploit the multitude of opportunities

offered to SA

An underfunded nuclear programme poses risks to SA in terms

of deteriorating infrastructure, skills scarcity and a delayed

nuclear energy expansion programme.

Implications if Additional Funding is not Secured

Necsa Outreach to the Community

Chantal Janneker- Group Executive: Marketing and Communication

Necsa Outreach to the Community

Radiation monitoring services: In support of the FIFA 2010 World Cup, 63 persons were recruited on contract from Necsa’s immediate and Vaalputs communities for training to carry out radiation monitoring tasks during the world cup

Necsa after the World Cup, have appointed 20 of these persons on a permanent basis to receive further training as RPO’s

Necsa emergency services to community in vicinity of Necsa’s site: fire calls 122, ambulance calls 221,

vehicle accidents assistance 152

Schools Outreach Programme: focusing on empowering historically disadvantaged Dinaledi Schools in science and maths training

NTP schools assistance: Various programmes to support Ennis Thabong Intermediary School-Meerhof, Re-e-Lwele Primary School- Broederstroom and Zilkaatsnek Primary School

Necsa-Vaalputs PSIF training agreement: transfer basic technical skills to the inhabitants of the Kamiesberg Municipality. NSD provides training to communities in basic technical skills and repairs to mechanical and electronic equipment. Necsa also provides for the training in Maths and science at Kharkams

Bursaries for 11 Namaqualand students at the NSDC

Necsa Outreach to the Community

Necsa Outreach to the Community Nuclear Visitors Centre: improving public perceptions on nuclear

energy is a big challenge to the nuclear industry.

The NVC is aimed at making a significant contribution towards the dissemination of accurate nuclear info to the public and improving public perceptions on nuclear.

Science week: In support of DST programme to develop interest in science and maths as career opportunities, Necsa also presented a programme attended by 2075 learners from 41 schools.

School and University site visits: Necsa hosted visits from various schools and universities with an interest in science and physics

Thank you! 30