SOUTH AFRICAN NATIONAL ENERGY RESEARCH INSTITUTE (PTY) LTD | ANNUAL REPORT 2008/09
0355
www.saneri.org.za
ANNUAL REPORT ANNUAL REPORT 2008/09
{
vision
}
To be the pre-eminent world class energy research, development and demonstration institute
ENERGY INNOVATION FOR LIFE
#
mission
To transform the Energy Research and Development Sector in South Africa by ensuring a culture of innovation is maintained in the development of technology based products and solutions and by strengthening the human capital component of the sector.
*
values Innovation Transparency Equity Public Interest Efficiency
SANERI ANNUAL REPORT 2009
ENERGY INNOVATION FOR LIFE
COMPANY INFORMATION
SANERI
Country of incorporation South Africa Nature of business and principle activities To undertake research and technology development in order to exploit and utilise the energy resources of the Republic and Southern Africa. Directors Mr M Damane Dr C Cooper Mr J Marriot Dr M Pyoos Ms N Mlonzi Ms N Magubane Mr K Nassiep Mr I Patel (Alternate to Dr M Pyoos) Mr S Tyatya (Alternate to Ms N Magubane) Registered Office CEF House, Block C, Upper Grayston Office Park, 152 Ann Crescent, Strathavon, Sandton, 2031. Johannesburg. Business Address CEF House, Block C, Upper Grayston Office Park, 152 Ann Crescent, Strathavon, Sandton, 2031. Johannesburg
Postal Address P O Box 786141 Sandton 2146 Holding Company CEF (Pty) Ltd incorporated in South Africa Auditors Auditor-General Company Secretary CEF (Proprietary) Limited Company Registration 2005/017430/07
SANERI ANNUAL REPORT 2009
1
ENERGY INNOVATION FOR LIFE
TABLE OF
CONTENTS
COMPANY INFORMATION
I
BOARD OF DIRECTORS
2-3
CHAIRMAN’S REPORT
4-5
CEO’S REPORT
6 - 13
ABOUT SANERI
14 - 15
SANERI’S THEMATIC AREAS OF FOCUS
16
RESEARCH HIGHLIGHTS
17 - 33
HUMAN CAPITAL DEVELOPMENT
34 - 39
ANNUAL FINANCIAL STATEMENTS
40 - 85
ACKNOWLEDGEMENTS
86
KEY TO ABBREVIATIONS
87
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
LIST OF
TABLES
TABLE 1: REPRESENTATIVES ON CSC
26
TABLE 2: MASTER’S STUDENTS
37
TABLE 3: PHD STUDENTS
38
TABLE 4: POST-DOCTORAL STUDENTS
39
FIGURE 1: MANAGEMENT AND STAFF PROFILE
15
FIGURE 2: CARBON CAPTURE AND STORAGE TIMELINE
18
FIGURE 3: BRAIN CHART OF BIOFUELS COMMUNITY PROJECT
25
FIGURE 4: GREEN TRANSPORT PROGRAMME
30
FIGURE 5: BURSARIES AWARDED TO STUDENTS BY RACE AND GENDER
35
FIGURE 6: BURSARIES AWARDED TO MASTERS STUDENTS BY RACE AND GENDER
36
FIGURE 7: BURSARIES AWARDED TO PHD STUDENTS BY RACE AND GENDER
38
FIGURE 8: BURSARIES AWARDED TO POST-DOCTORAL STUDENTS BY RACE AND GENDER
39
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
BOARD OF
DIRECTORS
Mr M B Damane
Mr K Nassiep
Dr C Cooper
Chairman
CEO
non-executive
SANERI (Pty) Ltd
SANERI (Pty) Ltd
BProc
CIS
DPHIL(Energy)
Other Boards
Ms N Mlonzi
LLB
BSc (CHB)
Hons. in Business
BSc (Honours)
Management and Other Boards
MSC Engineering (Mech)*
Administration
*current SFF, iGAS
South African National Other Boards
Energy Association
CEF (Pty) Ltd.
Other Boards SA Civil Aviation Authority, WOESA, ECON Oil, Worthytrade, Fort Cox College, Uvimba Finance
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
BOARD OF DIRECTORS
Ms N Magubane
Mr J Marriot
Dr M Pyoos
MBA
BSc Chemical
Doctorate: Technology
BSC Electrical
Engineering
Management
Engineering
BSc Economics Other Boards Other Boards Energy Frontiers International
Tshumisano Trust
South African National
South African National
Science and Technology
Biodiversity Institute
Forum
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
REPORT FROM THE
CHAIRPERSON
T
his report brings the South African National
A major event that occurred during 2008 was the
Energy Research Institute (SANERI), to its third
passing of the National Energy Act, 2008 (No. 34 of
year of operation. As a research organisation,
2008). This new legislation is expected to have a
one might expect the outputs of the Institute to be
significant effect on SANERI. Chapter 4 of the Act
observed only over a longer period of time. However,
sees the establishment of an entity designated the
tangible results can already be seen, as described in
South African National Energy Development Institute
this Annual Report.
(SANEDI). The function of SANEDI is to undertake
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
REPORT FROM THE CHAIRPERSON
work with respect to energy efficiency and energy
This financial year saw the operationalising of the
research and development, which is also precisely
SANERI’s first Centre of Research and Development;
SANERI’s current mandate. Moreover, section 13 of
namely the Centre for Carbon Capture and Storage.
the Act provides for the staff and assets and liabilities
This Centre envisions that a carbon capture and storage
of SANERI to be taken over by SANEDI once the new
demonstration plant will be operational in South Africa
entity is operationalised. The Act gives a legislative
by the year 2020. The mission of the Centre is therefore
mandate for energy efficiency and energy research
to develop the human and technical capacity to
and development, thereby strengthening the current
undertake the envisioned commercial demonstration
functionality of SANERI. The Department of Minerals
plant in South Africa. The Centre is financially supported
and Energy and the Department of Science and
by local industry, as well as international funding.
Technology and SANERI are currently discussing the framework and timing for the operationalising
Another fruit of SANERI’s international co-operation is
of SANEDI. In the meantime, SANERI is continuing
the development of the Wind Atlas of South Africa that
its activities for the betterment of energy supply and
will form a precursor to the harnessing of wind energy
demand in South Africa.
in South Africa. This project is generously supported by the Royal Danish Embassy and Global Energy
Energy demands and the environmental impact
Fund, through the South African Wind Energy Project
caused by said demands, by their nature, are
in co-operation with RISØ DTU, the Danish research
international matters. To this end, co-operation with
institute.
other prestigious energy institutions is the subject of the many memoranda of understandings that
In the process of addressing the energy needs of South
have been signed by SANERI thus far. In this way,
Africa, SANERI is scheduled to further its international
SANERI aims to stay up-to-date with the international
linkages. An outward focus with an inward delivery.
norm. For example, SANERI under full membership for the first time, attended the executive meeting of the International Energy Agency’s Greenhouse Gas Research Programme held in Washington during November, 2008. As such, SANERI’s participation at the above mentioned programme was able to determine the direction of research important to our
M Damane
specific circumstances in South Africa. SANERI is also
Chairman: SANERI
in the process of making application to join three more such International Energy Agency Implementation Agreements.
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
REPORT FROM THE
CEO
The impact of the economic downturn on R&D spending
collapse. The energy sector is certainly not immune to the global recession and the evidence is seen in the decline in investment in most areas of capital investment, with conventional coal-fired and nuclear
The 2008/9 financial year has seen the worst financial
powered plants the worst affected. There is a noticeable
crisis hitting international markets since the 1980s and
yet limited decrease in investment in renewable energy,
if the current trend continues unabated, may yet rival
according to a UNEP-funded study in 2008. In particular,
the Great Depression of the 1920s in terms of market
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
REPORT FROM THE CEO
SANERI and Industry – building a framework for deployment of cleaner energy technologies
the private equity funds have largely withdrawn from participation in large renewable energy projects. South Africa is, to some extent, shielded from the full brunt
of
the
global
recession
through
sound
Corporate South Africa, despite its willingness to
fiscal policy on behalf of the Ministry of Finance,
support national initiatives aimed at introducing clean
supported substantially by the National Credit Act.
Regulations
borrowing
by
under
placing
this more
Act
have
stringent
energy technologies, has been slow in taking the
limited
initiative in developing large infrastructure projects
checks
in this area. A classic case in point is the proposed
and balances in place, putting the responsibility
100 MW Concentrating Solar Power plant scheduled
for debt recovery squarely on the shoulders of
for construction in Upington by Eskom. The financial
the lenders. Despite this commendable foresight on
implications of the new build programme, combined
behalf of government, the Reserve Bank has been
with lower than expected tariff increases over the past
forced to revise its GDP growth forecast from 3% to
year or so have resulted in Eskom delaying a decision
0% for the coming year. This places undue pressure on
to continue with this pilot project. The country is richly
the competitiveness of South Africa’s industrial sector,
endowed with solar energy and it is inconceivable that
the biggest contributor to GDP in the country.
South Africa has not and is not ready to implement such promising technology to harness the power of the sun.
Where countries or companies are forced to find
SANERI has therefore entered into discussions with
savings in their operating budgets, it is usually the
Eskom regarding possible participation in this project,
R&D budget that is sacrificed first. South Africa is no
which has the potential to be a national demonstration
exception in this regard and 2008/9 saw only a 5%
project.
increase in the budget of SANERI, despite inflation in the form of CPIX reaching 12.2% in June 2008. As a
Positive collaboration has, however, emanated from the
direct result of the limited increase in budget, SANERI
establishment of the Centre for Carbon Capture and
has had to introduce business efficiency measures
Storage. The centre aims to develop and undertake the
in order to provide the same quality of service to the
first commercial-scale pilot project of carbon capture
energy sector.
and storage in South Africa by 2020. The centre comprises industry partners such as Anglo, Sasol and Eskom, with Xstrata as potential partners. There is a strong international presence in the support for
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
REPORT FROM THE CEO
the centre, notably from the Norwegian Government.
implementing the National Energy Efficiency Strategy
The centre was launched formally by the Minister of
of 2005. The dilemma with directives is that they don’t
Minerals and Energy, the Hon. Buyelwa Sonjica, M.P.
have legal weight beyond the immediate scope and
and the Norwegian Ambassador to South Africa, on
powers conferred by the relevant Act. A decision
the 30th March 2009.
was taken in 2006 to provide a legal mandate for the operations of SANERI and NEEA, giving rise to
Other centres, such as the Green Transport Centre
the section in the National Energy Bill that made
and the Renewable Energy Centre of Research and
provision for the establishment of the National Energy
Development will be accessible to the public. Industry
Development Institute, SANEDI. The Act, containing
have already been approached for their support of
the establishment provision, was promulgated by then
these centres.
State President Kgalema Motlanthe. The process of establishing SANEDI is expected to be concluded only by the end of 2009/10.
The National Energy Act, 2008 (Act No. 34 of 2008)
An important distinction between SANERI and SANEDI is the envisaged attention to overcoming barriers to
SANERI was formally established by Cabinet decision
commercial deployment of technologies, through
in 2003 and this decision was implemented in the
demonstration and pilot projects, Public Private
form of a ministerial directive, issued by then Minister
Partnerships and innovative financing mechanisms.
of Minerals and Energy, Phumzile Mlambo-Ngcuka, in
Implicit in this approach is the consideration of ways
2004. The directive was issued under the legal mandate
to facilitate technology transfer and development of the
provided by the CEF Act, (Act 38 of 1977). The National
appropriate skills set to enhance energy R&D capacity
Energy Efficiency Agency, NEEA, was also established
in the country.
by ministerial directive in 2005, as a means of
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
REPORT FROM THE CEO
Key Results for 2008/9 The Institute has continued to grow from strength to strength and now serves a wider community in terms of its outreach. The following achievements in 2008/9 bear mentioning as they have impacted largely on the area in which they were implemented.
Projects •
A study focusing on promoting gender in the
biofuels sector has seen the publishing of a book,
in which guidelines are provided to women who
wish to participate in this area. This work has
resulted in a pilot project in Cradock, in which an
opportunity for a women-owned business has
been created, in partnership with CEF’s EDC
division.
•
A study on standby power losses has been
concluded, in which the electrical losses attributed
to appliances in the household being left in
standby mode, have been determined. The study
forms an integral part of the process to develop a
strategy to reduce electricity consumption and
losses in this sector.
•
A study on the available power from standby
diesel generators has been concluded. The study
has highlighted the location, size and availability
of the suitable generators that could be contracted
to provide power during blackouts in the future.
SANERI ANNUAL REPORT 2009
11
•
A Corsa Lite vehicle, sponsored by General
Motors, has been converted to full electric power
and is now being tested at the University of
Stellenbosch. If successful, another vehicle will
be retrofitted and subjected to more tests before
considering possible commercialisation with an
industry partner.
•
A revised wind atlas for South Africa has been
proposed and SANERI is now in the process
of convening all the relevant industry specialists
to support the work being done in Denmark, by
Risoe National Laboratories.
•
The fuel spray injector system, to test various
liquid fuels, has been purchased and is now
installed at Wits University. The spray injector will
allow for the testing and optimisation of fuel types,
to allow for more efficient use of liquid fuels.
•
The Green Transport Centre has been approved
by the Board of Directors and is now under
construction at its location in Midrand. The centre
will allow for the retrofit of vehicles to enable them
to run on alternative fuel types, such as LPG, LNG,
bio-ethanol, biodiesel and electricity. Refuelling
plants for these different fuel types will also
be installed at the centre, to provide a measure of
sustainability for the centre.
ENERGY INNOVATION FOR LIFE
REPORT FROM THE CEO
•
A number of business plans for the partnership
of SANERI with companies involved in the green
transport sector have been developed. The
projects relate to CNG, LPG and biodiesel projects
and will be developed for implementation in
2009/10.
Carbon footprint for the institute As a responsible corporate citizen, SANERI has assessed its carbon footprint, based on international best practice. This involves the determination of average carbon dioxide emissions from travel (local and international), meals, stationery and energy consumption in the office. The footprint for 2008/9 was
Human Capital Development •
determined to be 237 tons CO2. At a carbon price of 10 euro/ton, it translates into an offset cost of about
Bursary support Programme
SANERI
continues
to
support
R26 000 that will be spent on an emission-reducing the
project in South Africa. More information on this subject
previously
can be found on page 32 of this report.
disadvantaged students who have applied for bursaries for postgraduate studies in line with SANERI
Audit Results
priorities. In 2008/9, SANERI has supported a total of 18 (eighteen) Masters and 6 (six) Doctoral students. Two post-doctoral students have been supported as
I am pleased to announce that SANERI has once again,
well.
for the third consecutive year of its existence, received a clean audit report from the Auditor General’s office.
•
This is indicative of the hard work on the part of staff
Hub & Spoke Model
in SANERI to ensure transparency and integrity in all aspects of SANERI’s work.
SANERI established its Energy Efficiency and DSM Hub in the year, at the University of Pretoria. The
This supports the Institute’s values, which incorporate
Hub, under the guidance and leadership of Prof. Xia
the abovementioned elements of transparency and
will focus on human capital development, primarily
integrity.
based on Masters and Doctoral studies in energy efficiency and demand side management. The
As a state entity it is vital that the public and government
abovementioned hub is the second to be established,
receive the best quality service, with the optimal use
after the establishment of the Hub for Renewable and
of state funds. I am therefore pleased that the Auditor
Sustainable Energy at the University of Stellenbosch
General concurs with the internal audit function in
in 2006/7.
CEF that SANERI is indeed a responsible and welladministered institute.
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
REPORT FROM THE CEO
Recognition I would like to take the opportunity to thank the outgoing Minister of Science and Technology, Mr. Mosibudi Mangena, as well as the Deputy Minister of Science and Technology, Mr. Derek Hanekom for their inspirational leadership and guidance during the year. The Board of Directors of SANERI, in particular its Chairperson, Mr Mputumi Damane, are thanked for their leadership and strategic vision that helps guide our activities. Lastly, I would like to thank the universities, industry participants, donors, NGOs, government officials and very importantly the staff of SANERI, for their efforts in bringing modern, clean and affordable energy to the nation’s poorest. Thank You
KM Nassiep Chief Executive Officer
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
ABOUT
SANERI
T
he South African National Energy Research Institute (SANERI) became operational during the year 2006 through the joint efforts of the Department of Minerals and Energy and the Department of Science and Technology. Following a Cabinet decision, SANERI was
established under a Ministerial Directive. Its objectives are: •
To increase energy research and development
•
Transforming
in South Africa
researcher groups to more adequately represent
the demographic profile of the country in terms
of gender and race.
•
To increase human capacity in energy research
and
the
composition
of
energy
SANERI was established as a company in the CEF Group. The CEO, Mr Kadri Nassiep was appointed in August 2006 and Senior Managers were appointed in December of the same year. The organisation has since recruited the staff essential to the day to day functioning of the organisation. This Annual Report highlights SANERI’s activities for the 2008/9 financial year. By the end of the financial year, SANERI was operating with a staff consisting of 12 members. Below is the breakdown of race profile per employment category:
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
ABOUT SANERI
Figure 1: Management and staff profile WM
CM
IM
BM
CF
WF
IF
BF
EXECUTIVE MANAGEMENT
1 1
1
1
MANAGER: ADMINISTRATION & FINANCE
1 1
SYSTEM ADMINISTRATOR 1
PROJECT MANAGERS
1
RESEARCH ASSISTANTS 1
1 PERSONAL ASSISTANT
REFRESHMENT OFFICER 1
2
SENIOR MANAGEMENT
1 1
2
1
1
1 1 5
Participation in and the management of fifty three (53)
The abovementioned is carried out with due
research projects, three (3) Hubs, 3 Spokes, three
cognizance to SANERI’s nine thematic areas, which
(3) Chairs and fifty one (51) bursaries has been a
were identified in the 10th order Draft National Energy
major activity, particularly in the last quarter of the
R&D Strategy. The abovementioned strategy was
financial year. It goes without saying that SANERI’s
developed by industrial experts, government and
participation and management in these activities will
academia, under the auspices of the Department of
continue to increase with time.
Science and Technology.
The exciting Green Transport Technology Programme has been operating successfully within SANERI following the conclusion of an agreement between SANERI and the Department of Science and Technology, that the Green Transport Technology Programme will be housed and managed within SANERI. The aim of the programme is to showcase South Africa’s capabilities regarding the use of alternative fuels and technologies for transport. The priorities of SANERI are to: •
Undertake in-house energy research (primary
function) and
•
Develop human capacity within this field.
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
SANERI’S THEMATIC
AREAS
A
lthough the draft National Energy R&D
The highlights of some of the research themes are
Strategy of South Africa (2006) has not yet
elaborated on in the pages to follow.
been approved by Cabinet, it clearly spells
out objectives and priorities for SANERI to focus on. The priority areas are as follows: •
Energy Infrastructure Optimisation
•
Energy Efficiency and Demand Side
Management
•
Impact of Energy Use on the Environment
•
Use of Energy to Stimulate Socio-
Economic Development
•
Cleaner Fossil Fuel Use (including clean
coal)
•
Renewable Energy
•
Alternative Energy Sources (including
fuel cells and hydrogen)
•
Energy Planning and Modelling
•
Energy Policy Research
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
RESEARCH
HIGHLIGHTS
ADVANCED FOSSIL FUEL USE
CARBON DIOXIDE GEOLOGICAL STORAGE ATLAS
South Africa’s reliance on fossil fuels – especially
A previous study undertaken by the CSIR for the
coal - continues. Notwithstanding the progress being
Department of Minerals and Energy indicated that the
made in renewable energies and energy efficiency
geological storage of carbon dioxide was feasible in
measures, we will be reliant on fossil fuels for
South Africa –with there being capturable emissions
decades to come. Eskom is building two more coal
and potential storage sites. During 2008, a multi-year
fired electricity stations, with a possibility of a third
development of an Atlas to locate and characterise
station after their announcement to defer the next
potential geological storage sites, commenced.
nuclear station. Another synfuel plant is also being
PetroSA, Anglocoal, Eskom, Sasol and SANERI
investigated. The continued use of fossil fuels – until
jointly finance that project. The Carbon Storage Atlas
nuclear and renewable can take over – therefore
is scheduled for publication mid 2010.
needs to take into account externalities, especially the mitigation of greenhouse gases with their commensurate impacts on climate change.
CENTRE FOR CARBON CAPTURE AND STORAGE
CARBON CAPTURE AND STORAGE
Throughout 2008, negotiations were undertaken for a Centre for Carbon Capture and Storage
Carbon Capture and Storage comprises a portion of
within SANERI. The result is that the Centre was
the menu of measures that might be utilised to mitigate
operationalised on 30 March, 2009. The Centre is
the emissions of greenhouse gases as a transition
a Private/International/Public Partnership financed
measure until renewable and nuclear energies can
from local industry, SANERI, government and
play a leading role. As one of the major pressures
international sources.
on the use of fossil fuels relates to the emissions of
which the Centre will operate will be valid for
greenhouse gases, carbon capture and storage is a
a period of five years. Thereafter, the success
priority focus area for research.
of the Centre will be appraised and continued
Initially, the Charter under
work would be the subject of a new governing document.
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
Figure 2: Carbon capture and storage timeline 2004
2010
{
Preliminary potential investigation Done
2015
2020
}
Capture technologies Transport technologies Geological storage technologies Monitoring & verification & remediation Economics Risk assessments Legal/Regulatory environment Human capacity building Public outreach
Yes there is potential
Objective: CCS Demo Plant Operational by 2020
TEST CO2 INJECTION EXPERIMENT
GEO STORAGE ATLAS GEO STORAGE ATLAS UPDATE DEMO PLAN
The programme for the Centre (illustrated in Figure 2) will
technology,
dioxide - that is just over 20 million tonnes per
through regulation, to public outreach. South Africa
year. The major apprehension that limited this potential
emits over 400 million tonnes of carbon dioxide
value was the up-scaling of the current technology.
per
address
year.
issues
Of
those
ranging
from
addressed a mitigation ‘wedge’ of 5% of carbon
emissions,
approximately
60% are capturable and therefore available for carbon
Consider that 40 Mt of carbon dioxide per year
capture and storage. Within the capturable emissions,
could be stored geologically in South Africa over 100
approximately 30 million tonnes per year of ~95%
years. In that case a total storage capacity of 4 Gt
pure carbon dioxide is emitted by the synthetic fuel
would be required. A theoretical study [M Cloete,
industry . In other words, the majority of the capture
CGS] has indicated an upper limit storage capacity
process – and approximately 50% of the cost – will
of the order of 100 Gt could be available. Most of
already have been completed.
that pertains to deep saline aquifers and was based
1
on
preliminary
calculations.
This
‘back-of-the-
It is not contemplated that all of the captureable
envelope’ estimate may also be supplemented by
emissions will be subject to geological storage.
some extra prospects of depleted gas fields and
The International Energy Agency (IEA), estimates
enhanced coal-bed methane recovery. The apparently
that 19% of mitigation ‘wedges’ could be achieved
good storage capacity potential gives incentive to
by carbon capture and storage. South Africa’s
proceed with the programme.
‘Long Term Mitigation Scenario’ planning exercise
1.
Sasol and PetroSA
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
INTERNATIONAL CO-OPERATION
HIGH PRESSURE FUEL INJECTOR
Greenhouse gas emissions and climate change are
A High Pressure Fuel Injector has been installed and
international matters that require an international
commissioned at the University of the Witwatersrand.
solution. To this end, SANERI is participating actively
The equipment enables the testing of liquid fuels
in international activities related to carbon capture and
and spray injectors for internal combustion engines.
storage, including the following:
The characteristics of fuel injection and the spray patterns associated with injectors are one of the
(a) South Africa, with SANERI as the contracting party,
determining factors for engine efficiencies. The
took up its seat at the International Energy Agency’s
abovementioned equipment will be able to test new
Greenhouse Gas Implementing Agreement at the
formulations of bio-fuels as well as mineral-based
November 2009 meeting in Washington.
liquid fuels. Post-graduate students are eager to undertake studies that make use of the facility as two
(b) SANERI participated in the formation workshop of
such students have already started their research.
the International Performance Assessment Centre – a
The High Pressure Fuel Injector is a strong attraction
centre based at the University of Regina, Canada. As a
for students and a catalyst for decision-making
member of this organisation, SANERI will have access
regarding which fields of study they will undertake.
to expertise associated with risk and performance
The equipment is available to third parties – terms and
assessments for carbon dioxide geological injection
conditions apply.
projects. (c) SANERI was invited to take part in the formation workshop of the Global Carbon Capture and Storage Initiative – a financially supported proposal of the Australian government to address the gap between demonstration
and
implementation
of
carbon
capture and storage plants. SANERI is a Founding Member of the Global Carbon Capture and Storage Initiative and such membership will facilitate SANERI to access expertise on carbon capture and storage implementation.
Left. A piped gas storage facility. Right: A High Pressure Fuel Injector at the University of Witwatersrand.
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
END USE AND INFRASTRUCTURE
monitored for soil and water contamination. The project conclusions noted, are that both the cities of Johannesburg and Cape Town have developed
THE ENVIRONMENTAL IMPACT OF ENERGY USE BY THE AUTOMOBILE SECTOR: A CASE OF JOHANNESBURG AND CAPE TOWN
strategies to monitor and address emissions from vehicles. Most strategies are not yet implemented however, Cape Town seemed to be ahead of most cities in its efforts to build a sustainable transport system.
This project is being carried out by the CSIR. The
Significant legal, regulatory and fiscal obstacles
project aims to understand the negative environmental
need to be dealt with at national level to facilitate
impact of automotive energy use and to identify
the implementation of some strategies and more
measures that can be adopted to minimise such
stakeholder interaction to share lessons, would
impact in the South African context. The objectives
eliminate the wasteful repetition of efforts. The
of the project are to analyse the environmental effects
problem of maintenance and scrapping of old cars
of automobile energy use and supply in both Johannesburg evaluate and
and
Cape
whether
other
measures
Town,
in
order
infrastructure
planning
would
negative
reduce
that tend to be the worst polluters, is complex and
to
needs a comprehensive solution. During this project, student development which is also
environmental impacts, and also to evaluate the environmental,
social
and
economic
costs
key to the mandate of SANERI took place. The following
of
students were developed: Dikeledi Pitso (female,
reducing environmental impact and thereby make
black, CSIR, MSc), Kgaugelo Chiloane (female, black,
recommendations for policy makers. At the end of the
Wits, PhD), Lethabo Mosomane (female, black, CSIR,
study SANERI will receive a final report containing
Hons) and five other students under Prof Stuart Piketh
conference papers and journal articles on the
at Wits.
subject.
The abovementioned research has impacted on
The results of the project have shown that, in general,
pollutant
concentrations
recorded
South Africa as a whole through the considerable
in
student capacity built at various levels (Honours
Johannesburg and Cape Town are not comparable
to PhD) and nurturing the students’ interest in the
(with the exception of carbon monoxide). Significantly higher
sulphur
dioxide,
hydrogen
subject of transport and environment. A forum for
sulphide,
stakeholder interaction has been established through
nitrogen oxide, nitrogen dioxide, benzene, toluene
the two stakeholder workshops. This could continue for
and ammonia concentrations were recorded in
facilitation of broader dialogue between municipalities
Cape Town than in Johannesburg, while ozone
and the government in tackling the various issues
concentrations were lower in Cape Town. Pollutant
identified by the project. DME and DEAT participated
concentrations showed a strong correlation with
in the final policy-oriented workshop. The City of
prevailing meteorological conditions and underlying
Tshwane was also added to the group and engaged
topography, which influence the dispersion of
enthusiastically in the policy dialogue.
potential of pollutants. There were some compliance shortcomings identified at the few service stations
From left: Kele Pitso and Lethabo Mosomane, student participants
SANERI ANNUAL REPORT 2009
20
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
Final stakeholder policy workshop held at CSIR Pretoria (photo) and CSIR Stellenbosch
STANDBY GENERATORS - DETERMINING THE POSSIBLE CONTRIBUTION TO DEMAND SIDE MANAGEMENT IN SOUTH AFRICA
Highest
The Energy Research Centre, at the University of
The conclusion of the project is that a very good
Cape Town is responsible for the Standby Generator
opportunity
project. The project aims to examine the conditions
generators instead of building more gas turbine
under which the use of existing standby generators
stations to satisfy national electricity needs. If the
may be beneficial to the South African electricity
recommendation is implemented in the country, it
system, by removing load from the grid. The output
will lead to a reduction of the need to build peaking
of the project will be a fully detailed report, including a
stations and there could be an emergency backup to
comprehensive database of opportunities, as well as
our national grid.
density
is
commercial/retail
buildings
in Sandton. Implementation method has been suggested.
exists
to
utilize
existing
considerations for implementation. The results of the study revealed that over 3500MW capacity is available at unit size >75kVA.
Standby generators remove the load from the electricity grid.
SANERI ANNUAL REPORT 2009
21
ENERGY INNOVATION FOR LIFE
standby
RESEARCH HIGHLIGHTS
CLEAN ENERGY SOLUTIONS
The consensus of the workshop was that the potential
SOUTH AFRICAN OCEAN ENERGY NETWORK
resource
of
wave
power
along
8 000 and 10 000 MW of South Africa’s future electricity
The first South African workshop on Ocean Energy with
supply. Most of this will be along the west and south
a focus on Wave and Ocean Current Energy was held
coast of the country. Many studies have been done
in the Western Cape on Thursday, 21 February 2008 in
on wave and ocean capacity along our shores – the
the lovely settings of an African boma at the Spier
verdict is that the latent power that is available is
Conference Centre. The workshop was hosted by
promising. The main challenge is cost and finding the
the Centre for Renewable and Sustainable Energy
right technology. This potential source could go a long
Studies on behalf of the South African National
way in contributing to the Department of Minerals and
Energy Research Institute (SANERI) and Eskom’s
Energy’s Renewable Energy target of 10 000 GWh to
Research and Innovation Department (ERID). The goal
be supplied by 2013. It was estimated that by 2013 up
of the workshop was to develop a roadmap for the
to 24 MW of wave power could be installed contributing
development of an ocean energy industry in South
84 GWh of the overall target.
Africa.
Above and facing page: Delegates attend the inaugural workshop of the South African Ocean Energy Network
SANERI ANNUAL REPORT 2009
the
South African coast could contribute between
22
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
The main barriers to harvesting the energy from the
•
There is a variety of data sets available in the
country at various organisations, mapping the
ocean were identified as:
ocean energy resource. It was proposed that a
•
The lack of financial incentives or even clarity of
common, public repository of all existing ocean
who will purchase the electricity and at what price.
energy data for South Africa be established by
The main mechanism to stimulate competition
June 2009.
and a free market will be the introduction of a
feed in tariff aimed specifically at electricity from
In general the participants expressed a concern
ocean energy resources, something Eskom and
that South Africa is reactive on energy issues and
the Government have talked about but there has
the exploitation of renewable energy seems to be
been no implementation to date.
confronted by many obstacles. Renewable energy is
•
The existing complex legislative framework,
workshop ended on a positive note and participants
especially pertaining to ocean energy, where
are optimistic that the untapped resource along our
it is not always clear which laws apply or which
coastline will in future contribute significantly to the
Government departments are responsible to
energy mix of the country.
issue the relevant permits.
not given the priority like other energy sources. The
The participants unanimously agreed on the following short term actions: •
SANERI, through its Centre for Renewable and
Sustainable Energy Studies at Stellenbosch
University
Research and Innovation will champion the
interest of Ocean Energy in South Africa.
•
A network of ocean energy stakeholders will be
established with ongoing communication through
a website and e-mail, with regular workshops
and conferences to interact.
•
Vision and mission statements will be developed
for the role of ocean energy in South Africa.
•
A base of expertise will be established to advise
government (at all levels), developers, Eskom and
financial institutions on the various aspects of
ocean energy.
•
Eskom and SANERI have embarked on a joint
collaboration
demonstration of Ocean energy technologies in
SA. This may culminate in the establishment
of a Wave Test Centre (a demonstration site in the
ocean where developers can test their wave
energy converters).
and
to
Eskom’s
promote
Department
research
for
and
SANERI ANNUAL REPORT 2009
23
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
A site was identified for the construction of the demonstration plant on a plot just outside of Potchefstroom. A small building was identified as suitable for the training. The participants from the Vyfhoek community painted the building and also chose a name for the project. They chose to call the project: VYFHOEK THUSANANG. It means help each other in every possible way.
SANERI ASSOCIATE CHAIR:
The objectives for the Biofuels community project, are skills development through training and practical
BIOFUELS COMMUNITY PROJECT
application and transfer of knowledge from the University to the community. Research that is being
From the outset of this research initiative, a
done in the North-West University laboratories by
community project where the local community could
post-graduate students is directly applied to the
directly benefit from the Biofuels research, was
community biofuels project.
envisioned. Our rural communities have traditionally not shared in the first economy and during the last
Initially the Biofuels community project involved an
few years the situation has worsened as municipal
integrated
services have collapsed in many parts of the
of
North-West Province. Many people do not have access
and
plant
for
biodiesel
the
production
from
feedstock
provided by the community. It became clear early
to work opportunities and do not have ready access
on that a single biofuels project would not be
to electricity and clean running water. It is believed
sufficient to reach the intended objectives and
that biofuels production can be used as a vehicle
that a more holistic approach was necessary.
to empower local communities to create new work
There were already other community projects
opportunities while learning new skills and creating
being run through different departments within the
new markets for the goods they produce.
SANERI ANNUAL REPORT 2009
biofuels
bio-ethanol
24
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
Figure 3: Brain chart of biofuels community project
VEGETABLE GARDENS
Training: Cactus havesting methods Elementary science Measurement techniques Hazop training
Training: Crops choices Planting practices Harvesting practices Crop rotation Marketing of products
Ethanol gel production
Strategy for collection of oil seed
Crop Production
Ethanol Production Plant
Marketing Advertising distribution strategy
Training: Oil extraction process Oil refining practices Hazop training
ETHANOL
Biodiesel Production Plant
Training: Algae farming practices Algae collection practices
Extraction & refining of oil
Training: Operator training Basic chemistry Materials handling Hazop training
Energy & mass integration strategy
Production of cellulose based gelling agent
Cacti collection strategy
Production strategy for starch, sugar, and oil seed production
FEEDSTOCK
Production of Algae oil
ETHANOL CO collection strategy
Packaging & distribution
GLYCERINE
Production of animal feed
Glycerine purification ETHANOL
Strategy for distribution of DDGS to cattle feedlots Marketing Advertising strategy
Packaging & distribution
Training: Soap chemistry Saop making basics
Soap production
LIFEPLAN ABET
North-West University and these could be used to slot
West University is directly applied in the bio-ethanol
in with the biofuels project. Some of these projects are
and biodiesel plants as well as the soap factory, the
LIFEPLAN (Prof Annemarie Kruger) and ABET (Adult
DDGS processing and the cactus processing.
literacy). During the first stage of the project, participants The community project centers around an integrated
from the community will start with the LIFEPLAN
bio-ethanol and biodiesel production plant (see Figure
training, followed by soap making skills. During
3). Training in the different aspects of the project is
this
continuous and specific to the group that will be
bioethanol plant will be procured, constructed and
performing a specific task in the project. The overall
commissioned. During the second stage of the
project comprises an agricultural leg, a bioethanol
project, participants from the community will be
plant, a biodiesel plant, a small soap factory, a
trained in running the bioethanol plant, as well as taught
vegetable garden (LIFEPLAN), a small glass factory
how to collect and prepare cacti for the production of
(LIFEPLAN), a small needlework factory (LIFEPLAN),
gelling agent for producing ethanol gel fuel. In the third
an animal feed processing leg, a cactus processing
stage of the project, the components for the biodiesel
leg and a marketing and distribution leg. The research
plant will be procured, the plant will be constructed
done by the Associate chair: biofuels group at the North
and commissioned and participants of the community
SANERI ANNUAL REPORT 2009
25
time,
the
different
components
ENERGY INNOVATION FOR LIFE
of
the
RESEARCH HIGHLIGHTS
Left: Participants from Vyfhoek community painting the training hall. Right: LIFEPLAN training for participants from Vyfhoek community. Water and electricity have been connected at the site. There is a piggery and a feedlot next to the site and a pit has been prepared to collected sewage from the feedlot and the piggery to produce biogas, which will run the boiler for the demonstration plant.
are to be trained in running the envisioned plant.
The Biofuels community project was launched
During this stage, participants will also be taught how
unofficially on the 12th of November 2008 with the
to collect the oil seeds and to extract and refine the
creation of a Community Steering Committee (CSC)
oil for biodiesel production purposes. It is envisioned
that will drive the project and make the necessary
that the ethanol plant will be commissioned with maize
decisions to enable the proper roll-out of the different
starch while the biodiesel plant will be commissioned
phases of the project. The CSC members are shown
with used vegetable oil. A complete business plan
in Table 1.
for procuring funds is in the process of being drawn up by the Project Manager and the Associate Chair. This business plan is necessary to procure funds for the full-scale community project.
Table 1: Representatives on CSC
Member
Affiliation/Role
Ben Zweli
Cattle farmer, owner of Engen filling station in Ikageng. Ikageng representative
Tina Tseladimitloa
Small farmer in Vyfhoek community, owner of recycling business, Vyfhoek representative
Jan Paulsin
Farm worker in Vyfhoek community, Ikageng resident, workers’ representative
Gideon Murule
Farmer in North-West Province near Zeerust, NAFU NW representative
Sanette Marx
SANERI Associate Chair, NWU representative
George Obiero
Microbiologist, NWU representative
Gert Kruger
Farmer, Agri Engineer and Project Manager/Facilitator
Hannes Smit
Translator, Trainer and Farm Manager
SANERI ANNUAL REPORT 2009
26
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
ENERGY, DATA AND KNOWLEDGE MANAGEMENT: BIOFUELS - SANERI RESEARCH FINDINGS PUBLISHED AS A BOOK
In
2006/07
SANERI
funded
a research project whose main objective was to study local, continental biofuels
and
international
projects.
The
aim
was to identify strategies that would promote the participation particularly of rural women in the biofuels industry. The primary findings of this study together
with
other
projects
from other countries have been published as a book. The book has since become a useful resource for policy makers and investors who have the imperative to address specific needs of women if the South African government objective of using the new biofuels industry to close the gap between the two economies, is to be achieved.
SANERI ANNUAL REPORT 2009
27
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
From left: You can now log onto the Energy Technology Data Exchange and share knowledge with other global users. www.etde.org
ETDE
•
Avoiding duplication of research effort and
learning from expected and unexpected results.
Energy Technology Data Exchange Implementing
•
Jump – starting research at a point further along
Agreement for SANERI’s participation as a member
than anticipated.
in this Agreement became effective as of 5 November
•
Identifying which countries and people are
2008.
involved in particular research areas.
The Energy Technology Data Exchange (ETDE),
•
Promoting international cooperation in energy
an
research and development.
Energy Agency (IEA). ETDE’s mission is “To provide
•
Understanding how countries deal with energy
Governments, industry and the research community
related environmental and climate change
in the member countries with access to the widest
issues.
and technology and to increase dissemination of this
•
Finding approaches to energy use including
information to developing countries.”
policy and economic factors, alternative and
renewable energy sources and conversation
aspects.
•
Finding a historical perspective on energy
issues.
The Government of South Africa accepted the invitation from the Executive Committee of the IEA
on behalf of South Africa. The participation of SANERI
international
energy
information
exchange
agreement formed in 1987 under the International
range of information on energy research, science
ETDE World Energy Base or ETDEWEB is the internet tool for disseminating the energy research and technology
information
that
is
collected
and
exchanged. It includes a federated searching option for one stop searching of related science sites. Users in member countries and many developing countries
In addition to energy research and technology
have access privileges to ETDE’s information.
information from the ETDE member countries, the database contains citations published worldwide regarding coal and global climate change information.
Some known user benefits include:
This broad coverage comes as a result of cooperation •
Staying abreast of recent developments in various
with other international partners. The database also
research areas (including some basic science
contains information collected by the US Department
sites).
of Energy since 1974.
SANERI ANNUAL REPORT 2009
28
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
Clockwise from right: Building to house project management team, workshops, exhibition and training, and demo vehicles for security purposes. Space will be used to display vehicles. TSI 1 EV sponsored by Eskom and an EV Game Viewing Vehicle
GREEN TRANSPORT PROGRAMME
Platform, SANERI is responsible for the incubation of educational programmes such as an interdisciplinary, inter-university, systems-oriented masters degree
The South African National Energy Research Institute
programme to deal with hydrogen, fuel cells and
(SANERI) is hosting a Green Transport Programme on
alternatives in the energy & transport sectors. Another
behalf of the Department of Science and Technology
aim of the platform is to create awareness through
(DST). SANERI is also hosting the Hydrogen
newsletters and real-life use of fuel cells.
and Fuel Cell Technologies (HYSA) Public Awareness Platform under the Green Transport Programme. Regarding
the
Green
Transport
To date, five areas have been identified for the
Programme,
2010 and beyond Green Transport Demonstration
SANERI’s role is to facilitate demonstration of vehicles
and
based
on
liquefied natural
demonstration
alternatives, petroleum
gas
(CNG),
refuelling
green
gas
fuels
(LPG),
biofuels
Programme. These focus areas are listed below, in
stations such
order of priority, viz (i) Demonstration of Compressed
as
Natural Gas powered buses and vehicles, (ii)
compressed
(biodiesel
Demonstration of electric vehicles, (iii) Demonstration
and
of Biofuels powered vehicles, (iv) Demonstration of
bioethanol), electricity (via batteries), fuel cells and
Liquefied Petroleum Gas (LPG) powered vehicles, and
hydrogen. The demonstration infrastructure should
(v) Demonstration of vehicles powered by hydrogen.
be in place for the 2010 Soccer World Cup. SANERI is
Feasibility studies have been conducted and detailed
responsible for the conceptualisation, development,
demonstration plans developed and costed. This was
project management and implementation facilitation
done in collaboration and partnership with industry.
of the demonstration of alternative transport fuels
A number of private companies have committed
and vehicles. Regarding HYSA Public Awareness
SANERI ANNUAL REPORT 2009
29
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
Figure 4: Green Transport Programme
ENERGY HYBRID
STATIONS
SYSTEMS
UTILITY
ELECTROMOTIVE
CORSA
CARS &
STORAGE
B140
BUSES
DRIVE
BANTAM
SERVICES CITY
ENERGY
KNP
FLEET
BEYOND 2010
EVs KOMBIS
EV RENTALS
SYSTEMS
eBIKES
TRI 2
ENERGY STATIONS
TRI 1
SERVICES
GAME
2009/2010
VIEWING
HYBRIDS
MOTORS
to
co-funding
associated
(through exhibitions and installation of fuel cells in public places) and communication (through newsletters and
include the following: (i) CNG demonstration station in
publication of articles). A monthly monitor is aimed at
Johannesburg, (ii) Electric charging station in Midrand,
providing a critical source of information on the hydrogen
(iii) Biodiesel refuelling demonstration stations in
fuel cells and alternatives relevant to researchers in
Pretoria
in
universities, public sector research institutes, business
Johannesburg and Cape Town, (v) Mobile hydrogen
across a wide range of sectors, the general public and
station, possibly based in Pretoria.
policy makers in developing countries. This is being
Cape
Town,
(iv)
and
RETROFITS
demonstration infrastructure. Demonstration plans
and
demonstrations
BATTERIES
LPG
station
implemented in partnership with UNU-MERIT (United Regarding the hydrogen and fuel cell technologies
Nations University in Maastricht). Recently, SANERI
platform, the focus has been on education (development
participated in the annual SciFest Exhibition held in
of a Masters programme and use of educational toolkits
Grahamstown as part of Hydrogen Fuel Cells public
targeting high school pupils), public engagement
awareness and education.
SANERI ANNUAL REPORT 2009
30
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
Beyond 2010, the centre will be used to:
•
Educate
transportation technologies.
and
promote
energy
efficient
•
Provide information to policy developers.
• Test, evaluate and demonstrate the use of
•
Demonstrate how clean fuels and efficient
transport technologies could benefit millions of
people: (Health benefits, economic benefits, and
sustainability.)
•
Verify and demonstrate quality of fuels, reliability
of supply, safety, operating costs, etc.
•
Provide an opportunity for practical skills and
human resource development in clean transport
technologies.
•
Create awareness, visibility and acceptance
• Test, evaluate and demonstrate alternative vehicles
under controlled conditions.
alternative fuels under controlled conditions.
•
Initiate
maintenance services to developers of alternative
future
development,
support
and
vehicles/fuels and the public.
•
Convert petrol/diesel engines to alternative fuel
engines.
•
Test
performance of alternative vehicles.
the
quality
of
alternative
fuels
and
•
Coordinate green transport projects beyond
amongst the public, entrepreneurs and key
2010.
decision makers in South Africa regarding the
operability, safety, high performance and low
•
Host training and workshops for government
emissions of clean transportation technologies.
officials
(mechanics), engineers, scientists, municipal
•
Develop
officials, etc.
and internationally, regarding clean transportation
technologies for both skills and IP transfer.
(policy
makers),
students,
artisans
SANERI ANNUAL REPORT 2009
31
collaborative
partnerships,
ENERGY INNOVATION FOR LIFE
locally
RESEARCH HIGHLIGHTS
A number of private companies have pledged their
•
Alternative Energy sources.
the 2010 demonstrations. Car manufacturers have also
•
Energy Efficiency and Demand Side
pledged support and interest in working with South
Management.
•
Cleaner Fossil Fuel Use.
rollout opportunities.
•
Renewable Energy.
Successful implementation of the Green Transport
•
Use of Energy to Stimulate
Programme in South Africa could lead to a number
Socioeconomic Development.
•
Impact of Energy Use on the Environment.
support (both labour and monetary) to participate in
Africa. However, car manufacturers have pointed out that the policy environment should be favourable for long-term sustainability of the demonstration and
of
benefits
major fold,
in
benefits viz:
of
economic,
sustainability. savings
the
long-term. the
purchases
envisaged
Programme
environmental,
Economic
on
The
benefits of
are
four-
health
and
could
energy
include
SANERI LEADING THE WAY IN DISCLOSING, OFFSETTING AND REDUCING GREENHOUSE GAS EMISSIONS
carriers,
greater energy efficiency, employment opportunities, skills
development
and
intellectual
property
development and exploitation. Environmental benefits could include reductions in greenhouse gas emissions and reductions in emissions of particulates. Health
South Africa has committed itself to long-term
benefits could include lower incidences of respiratory
transition to a low-carbon economy based on the Long
diseases such as tuberculosis (TB) and lower
Term Mitigation Scenarios for Climate Change (LTMS)
incidences of lung cancer. Sustainability development
adopted by Cabinet late in 2008. This sent a very strong
could include reduction in use of conventional fossil
signal to the business community that unsustainable,
fuels, greater energy efficiency and potentially cheaper
environmentally
public transport.
need to change drastically as South Africa was on a
green
path
unfriendly to
business
sustainable
practices economic
Among the nine (9) SANERI thematic areas, the Green
development. The carbon disclosure project, led by
Transport Programme links mostly with the following:
the National Business Initiative (NBI), entered its
SANERI ANNUAL REPORT 2009
32
ENERGY INNOVATION FOR LIFE
RESEARCH HIGHLIGHTS
second year in 2008, increasing its participation from
The company has no direct scope 1 emissions with a
74% of JSE’s Top 40 companies to about 60% of the
large portion of its emissions being indirect scope 3
JSE Top 100.
emissions. Emissions from other company wastes (e.g. catering) and road travel from hired cars have not been
The South African Disclosure Project indicates that
included. The emissions estimate from employee travel
77% of the companies participating in this initiative
is a very crude estimate from “an average medium sized
disclose their greenhouse gas emissions. Companies
petrol car” and the factor probably uses a different fuel
participating in this exercise include both high carbon
specification from the South African one. The above
emitters such as Eskom and Sasol,and low carbon
inventory was not audited.
emitters like banks and retail companies. SANERI did not participate in the carbon disclosure project
Even though SANERI is a low-carbon company
but has taken the decision to disclose its greenhouse
with no direct emissions, the company will make a
gas emissions and offsetting our carbon footprint, by
donation to the SOS Children’s Village ‘greening’
investing in local social or environmental programmes.
initiative. SANERI will partly sponsor the golf day
Importantly the 2008/09 emissions will be used as the
event for raising funding for the village’s energy efficient
base year emissions for monitoring progress of our
equipment.
carbon reduction strategies. SANERI will in 2009/10 put in place strategies to lower The greenhouse gas emission inventory was done
this base year carbon footprint.
according to the Greenhouse Gas Protocol developed by the World Resource Institute (WRI) and the World Business Council for Sustainable Development. SANERI CO2 FOOTPRINT FOR THE YEAR 2008/2009 Activities
Total Units for 1st Half of
Emission
Total CO2
the Year
Factor kg CO2/
Emission kg CO2
unit activity
from activity
Quantity Printing
137.25
Methodology
Units Reams
8.4
1,152.93 Pages printed from printer counter (1 Ream = 500 sheets), Emission factor from USA industry, SA uses 2.5.
200,022.00
km
0.22
44,004.84 0.22kg CO2 factor from IPCC default of medium sized petrol car, fuel spec might be different from SA.
Short Flights
10,344.00
km
0.18
1,861.92 Travel reconciliations for all trips, distance in km from SA & int’l electronic distance calculators, CO2 emitted per kilometre from PWC Carbon calculator.
Medium
46,628.00
km
0.13
6,061.64 Travel reconciliations for all trips, distance in km from SA & int’l electronic distance calculators, CO2 emitted per kilometre from PWC Carbon calculator.
1,391,464.00
km
0.11
153,061.04 Travel reconciliations for all trips, distance in km from SA & int’l electronic distance calculators, CO2 emitted per kilometre from PWC Carbon calculator.
1
30,760.00 Use Eskom data of CO2/kWh, than used electrity bill from SANERI to estimate kWh use for half year.
Road Travel (to-from Office)
Flights
Long Flights
Electricity
30,768.00
kWh
Consumption TOTAL
236,910.37 SANERI ANNUAL REPORT 2009
33
ENERGY INNOVATION FOR LIFE
HUMAN CAPITAL
DEVELOPMENT
I
n order to fulfil SANERI’s objectives, human capital
coordinate a postgraduate, master’s and doctoral
development is one of the key programmes of
programme with associated research projects, in
SANERI’s operational strategies.
order to achieve a step change in the knowledge base on these subjects in South Africa.
HUB AND SPOKE TYPE POSTGRADUATE SUPPORT PROGRAMME
Within just a few months of operation, some of the highlights worth mentioning are:
The objective of the Hubs and Spokes Programme
•
The Hub has been successful with their efforts
is to assist South Africa in building on existing
in ensuring that the postgraduate programmes
strengths to achieve the critical mass required for
and short course training programmes were in
major research and human capital development in
place to start at the beginning of 2009.
acquired in these centres will then help accelerate
•
Their advertisements have been well received
the sustainable deployment of appropriate renewable
resulting in keen interest being shown by South
energy technologies in the country. The model for
African and foreign students, through the number
this programme is that research in a certain topic
of enquiries received.
and later the research is strengthened by appointing
•
Numerous projects have been initiated and partial
research centres for complimentary topics in what is
results have been obtained e.g.: the Control
known as the Spokes.
System
andparticularly the Model Predictive Control
approach to a class of resource programming
problem, which provide new insights in the energy
and control fields
impact in both fields.
Demand Side Management Hub was successfully
•
One senior lecturer was appointed and funded
launched on 10 June 2008 at the University of
by the University of Pretoria. Three post doctoral
Pretoria. This initiative is expected to enhance
researchers and three research assistants were
national capacity in energy efficiency including fuel
recruited.
switching to renewable technologies and demand side
•
26 bursaries were awarded to diverse groups of
management in support of accelerated and shared
students.
social and economic sustainability. The Hub will build
•
There are 16 postgraduate students in the EEDSM
human resources capacity, deepen knowledge and
programme.
energy efficiency and demand side management.
•
10 subject related seminars were held thus far.
In addition to the above, the University is expected to
•
28 research papers were completed of which 9
establish , develop and manage the national Hub and
journal papers are published and 8 conference
its spokes for the postgraduate programme which
papers
would steer postgraduate teaching
publication.
renewable energy sources. The expertise built and
is coordinated at an institution appointed as a Hub
THE ENERGY EFFICIENCY AND DEMAND SIDE MANAGEMENT HUB
approach
to
energy
optimisation
and will have far reaching
The South African National Energy Efficiency and
economic growth within the bounds of environmental,
stimulate innovation and enterprise in the field of
and research
are
published
or
accepted
of these topics in the country. It will establish and
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
for
HUMAN CAPITAL DEVELOPMENT
•
6 short courses on energy efficiency and demand
side management topics were
engineers, managers, administrators, etc.
•
Core energy efficiency and demand side
management modules have received particular
interest from postgraduates: 19 students selected
the new module Energy optimization ENO
732 while 17 students selected the module Energy
Management EES 732.
opened to all
BURSARY SUPPORT PROGRAMME
The excellence of South African energy research as well as the ability to compete on an international level, are
The Bursary Support Programme is one of the key
dependent on fostering research training and career
activities of human capital development, which is
opportunities for the brightest and best researchers
a significant factor for a developing country. The
within the energy sector. SANERI’s bursary support
purpose of the bursary support programme is to
programme plays an integral role in achieving this.
encourage research in the energy sector by providing assistance to students wishing to undertake a
The bursaries that are awarded for Masters level of
Masters or Doctoral level of studies in a related
studies have been increased from R50 000 per year to
energy field. Preference is given to students who
R80 000 per year on a full-time basis over a period of
wish to undertake research in line with the 9 thematic
two years. Part time students will receive an amount of
areas and to research driven projects rather than
R48 000.00 per year over a period of three years. The
course work dominated studies. Preference is also
amount awarded for PhD level of studies has been
given, where necessary, to previously disadvantaged
increased from R65 000 per year to R100 000 per year
individuals and women. Annually, an amount of
on a full time basis for a period of three years. Part time
R1.5 million is available for this key activity.
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HUMAN CAPITAL DEVELOPMENT
doctoral students receive an amount of R62 000 per
the appropriate skills where there are scarcities, for
year over a four year period. Postdoctoral students
instance in fossil fuels.
receive R150 000 per year over a two year period on a full time basis.
In the 2008/9 financial year, bursaries were awarded to 18 Masters students, 7 PhD students and 2
The bursary amounts were increased after a
postdoctoral students. Race and gender of applicants
benchmarking exercise was carried out, to establish
are some of the criteria that were used to evaluate the
what the appropriate market related amounts for
applications.
the bursaries should be. In comparison to the private sector, the amount that SANERI offered was
The candidates and their topics of expertise are
unattractive and it was therefore difficult to draw
summarized on the following page:
Figure 5: Bursaries awarded to students by gender and race group
Males 76%
Females 23%
Coloureds 15%
Whites 58%
Blacks 27%
Figure 6: Bursaries awarded to Master’s students by race and gender group
White 61%
Black 22,5%
Females 28%
Males 72%
Coloured 16,5%
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HUMAN CAPITAL DEVELOPMENT
Table 2: Master’s students CANDIDATE
INSTITUTION
AREA OF RESEARCH
Bode, Chistiaan (Mr)
Wits University
A techno- economic feasibility study on the use of concentrating solar power generation in urban and industrial environments in Gauteng
Botha, Alwyn Francois (Mr)
University of Stellenbosch
An investigation into nano – structured photovoltaic cells
Breet, Cornelius Francios (Mr)
University of Stellenbosch
Digital Control of a solid state control
Greyling, Guillaume Hermanus (Mr)
University of Stellenbosch
Investigation into the adsorption properties of crystals – Negative Thermal Expansion (NTE)
Lombard, Adrian Cornelius Johannes (Mr)
University of Stellenbosch
Design , implementation and testing of a low cost grid connected sub 10 Kw Micro Hydro Power System
Madima, Takalani (Ms)
University of Stellenbosch
Optimisation of pre-treatment processes for the enzymatic hydrolysis and fermentation of lignocellulose feedstocks in Southern Africa
Mert, Marlin John (Mr)
University of Stellenbosch
Construction of an S cerevisiae strain capable of growth on xylan as sole carbon source
Mhlongo, Makhosazane Princes (Ms)
University of Kwazulu Natal
Investigation of market opportunities for small scale farmers producing for bio- fuels
Ngqongwa, Lundi Vincent (Mr)
University of Western Cape
Development of microchannel reactors for the steam reforming of natural gas
Njokweni, Anathi Perserverence (Ms)
University of Stellenbosch
Construction of an S cerevisiae strain capable of growth on xylan as sole carbon source
Omardien, Soraya (Ms)
University of Stellenbosch
Bioprospecting for B-glucosidase and B–xylosidase for bioethanol production
Schietekat, Louis Magnus (Mr)
University of Stellenbosch
Digital control of a sold state transformer
Schmulian, Rael (Mr)
Wits University
Linear synchronous generator for wave energy harvesting
Van Tonder, Jacomina Francina (Ms)
Tshwane Univeristy of Technology
Sustainable Urban Living
Van Wijk, Johannes Hendrik (Mr)
University of Stellenbosch
Electrical and Mechanical design of direct drive 300 Kw PM wind generator
Van Wyk, Ashwill Louis (Mr)
University of Cape Town
Comparison of standard and high efficiency motors
Vermaak, Rieghard (Mr)
University of Stellenbosch
Linear Wave Energy Converter Systems
Viktor, Marko Johann (Mr)
University of Stellenbosch
Bioprospecting to support the development of an industrial raw starch–degrading yeast
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ENERGY INNOVATION FOR LIFE
HUMAN CAPITAL DEVELOPMENT
Figure 7: Bursaries awarded to Phd students by race and gender group
W h 34 ite %
M a 10 les 0% Bl a 49 c k % Co
lo 17 ured %
Table 3: Phd students CANDIDATE
INSTITUTION
AREA OF RESEARCH
Bredenkamp, Tyler Morgan (Mr)
University of Johannesburg
The synthesis of organic framework that satisfy conditions for assisted acidity of both Bronsted acids and Lewis acids to be used instead of simple acids
Davids, Moegamat Wafeeq (Mr)
University of Western Cape
Advanced Ti based AB and AB2 Hydride Forming Materials
Hampton, Gary Brent (Mr)
University of Cape Town
Determining the success of management contracts in electricity distribution in sub – Saharan Africa
Makgato, Seshibe Stanford (Mr)
University of Stellenbosch
Optimisation of pre- treatment processes for enzymatic hydrolysis and fermentation of lignocellulose feedstocks in Southern Africa
Mfenyana, Ciko (Mr)
University of Stellenbosch
Optimisation of pre- treatment processes for enzymatic hydrolysis and fermentation of lignocellulose feedstocks in Southern Africa
Sibanyoni, Johannes Mlandu (Mr)
University of Western Cape
Nano – structured light weight hydrogen storage materials
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ENERGY INNOVATION FOR LIFE
HUMAN CAPITAL DEVELOPMENT
Figure 8: Bursaries awarded to Post-doctoral students by race and gender group
Males 50%
Females 50%
White 100%
Table 4: Post-doctoral students: CANDIDATE
INSTITUTION
AREA OF RESEARCH
Fluri, Thomas Peter (Mr)
University of Stellenbosch
Solar Thermal Power Generation
Radue, Chantelle (Ms)
Nelson Mandela Metropolitan University
Analysis of degradation in thin forms photovoltaic modules
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL
STATEMENTS
SANERI ANNUAL REPORT 2009
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ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
INDEX The reports and statements set out below comprise the annual report presented to the shareholder:
Page
Report of the Independent Auditors
42 - 46
Statement on corporate governance
47 - 49
Performance against objectives
50 - 52
Report of the board audit and risk management committee
53 - 54
Directors’ Report
55 - 59
Materiality and significant framework
60
Balance Sheet
61
Income Statement
62
Statement of Changes in Equity
63
Cash Flow Statement
64
Accounting Policies
65 - 73
Notes to the Annual Financial Statements
74 - 85
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REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE FINANCIAL STATEMENTS AND PERFORMANCE INFORMATION OF THE SOUTH AFRICAN NATIONAL ENERGY RESEARCH INSTITUTE (PROPRIETARY) LIMITED FOR THE YEAR ENDED 31 MARCH 2009 Report on the financial statements Introduction 1.
I have audited the accompanying financial statements of The South African National Energy Research
Institute (Proprietary) Limited which comprise the balance sheet as at 31 March 2009, and the income statement, statement of changes in equity and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 55 to 85.
The accounting authority’s responsibility for the financial statements 2.
The accounting authority is responsible for the preparation and fair presentation of these financial statements
in accordance with South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the manner required by the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) and the Companies Act of South Africa and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
The Auditor-General’s responsibility 3.
As required by section 188 of the Constitution of the Republic of South Africa, 1996 read with section 4 of
the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA) and section 300 of the Companies Act of South Africa my responsibility is to express an opinion on these financial statements based on my audit. 4.
I conducted my audit in accordance with the International Standards on Auditing read with General Notice
616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 5.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 6.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit
opinion.
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Report on the financial statements (continued) Opinion 7.
In my opinion the financial statements present fairly, in all material respects, the financial position of The
South African National Energy Research Institute (Pty) Ltd as at 31 March 2009 and its financial performance and its cash flows for the year then ended, in accordance with the South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the manner required by the PFMA and the Companies Act of South Africa.
Other matters Without qualifying my opinion, I draw attention to the following matter that relates to my responsibilities in the audit of the financial statements:
Governance framework 8.
The governance principles that impact the auditor’s opinion on the financial statements are related to the
responsibilities and practices exercised by the accounting authority and executive management and are reflected in the key governance responsibilities addressed below:
Key governance responsibilities 9.
The PFMA tasks the accounting authority with a number of responsibilities concerning financial and risk
management and internal control. Fundamental to achieving this is the implementation of key governance responsibilities, which I have assessed as follows:
No.
Matter
Y
Clear trail of supporting documentation that is easily available and provided in a timely manner 1.
No significant difficulties were experienced during the audit concerning delays or the availability of requested information.
3
Quality of financial statements and related management information 2.
The financial statements were not subject to any material amendments resulting from the audit.
3
3.
The annual report was submitted for consideration prior to the tabling of the auditor’s report.
3
Timeliness of financial statements and management information 4.
The annual financial statements were submitted for auditing as per the legislated deadlines as set out in section 55 of the PFMA.
3
Availability of key officials during audit 5.
Key officials were available throughout the audit process.
SANERI ANNUAL REPORT 2009
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3
ENERGY INNOVATION FOR LIFE
N
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
Report on the financial statements (continued) No.
Matter
Y
N
Development and compliance with risk management, effective internal control and governance practices 6.
Audit committee • •
The company had an audit committee in operation throughout the financial year.
3
The audit committee operates in accordance with approved, written terms of reference.
3
• The audit committee substantially fulfilled its responsibilities for the year, as set out in section 77 of the PFMA and Treasury Regulation 27.1.8. 7.
3
Internal audit •
The company had an internal audit function in operation throughout the financial year.
3
•
The internal audit function operates in terms of an approved internal audit plan.
3
• The internal audit function substantially fulfilled its responsibilities for the year, as set out in Treasury Regulation 27.2.
3
8.
There are no significant deficiencies in the design and implementation of internal control in respect of financial and risk management.
3
9.
There are no significant deficiencies in the design and implementation of internal control in respect of compliance with applicable laws and regulations.
3
10.
The information systems were appropriate to facilitate the preparation of the financial statements.
3
11.
A risk assessment was conducted on a regular basis and a risk management strategy, which includes a fraud prevention plan, is documented and used as set out in Treasury Regulation 27.2.
3
12.
Powers and duties have been assigned as set out in section 56 of the PFMA.
3
Follow-up of audit findings 13.
The prior year audit findings have been substantially addressed.
3
Issues relating to the reporting of performance information 14.
The information systems were appropriate to facilitate the preparation of a performance report that is accurate and complete.
3
15.
Adequate control processes and procedures are designed and implemented to ensure the accuracy and completeness of reported performance information.
3
16.
A corporate plan was prepared and approved for the financial year under review for purposes of monitoring the performance in relation to the budget and delivery by The South African National Energy Research Institute (Pty) Ltd against its mandate, predetermined objectives, outputs, indicators and targets as set out in Treasury Regulation 29.1.
3
17.
There is a functioning performance management system and performance bonuses are only paid after proper assessment and approval by those charged with governance.
3
10. South African National Energy Research Institute (Proprietary) Limited has maintained satisfactory levels of compliance with the relevant legislation relating to governance and continued to comply with good practice principles. The result of this discipline is acceptable levels of financial and internal control management. These practices have resulted in an unqualified audit report for the company for the financial year reviewed.
Report on other legal and regulatory requirements Report on performance information 11. I have reviewed the performance information as set out on pages 50 to 52.
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Report on other legal and regulatory requirements (continued) The accounting authority’s responsibility for the performance information 12. The accounting authority has additional responsibilities as required by section 55(2)(a) of the PFMA to ensure that the annual report and audited financial statements fairly present the performance against predetermined objectives of the public entity.
The Auditor-General’s responsibility 13. I conducted my engagement in accordance with section 13 of the PAA read with General Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008. 14. In terms of the foregoing my engagement included performing procedures of an audit nature to obtain sufficient appropriate evidence about the performance information and related systems, processes and procedures. The procedures selected depend on the auditor’s judgement. 15. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for the findings reported below.
Usefulness and reliability of reported performance information 16. The following criteria were used to assess the usefulness and reliability of the information on the entity’s performance with respect to the objectives in its corporate plan: •
Consistency: Has the entity reported on its performance with regard to its objectives, indicators and targets
in its approved corporate plan?
•
Relevance: Is the performance information as reflected in the indicators and targets clearly linked to the
predetermined objectives and mandate. Is this specific and measurable, and is the time period or deadline
for delivery specified?
•
Reliability: Can the reported performance information be traced back to the source data or documentation
and is the reported performance information accurate and complete in relation to the source data or
documentation?
The following audit findings relate to the above criteria:
Reported performance information not relevant 17. The targets with regard to Energy Research & Development Agenda and Hydrogen Economy and Green Transport Programme objective were not: •
specific in clearly identifying the nature and the required level of performance; and
•
measurable in identifying the required performance.
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Report on other legal and regulatory requirements (continued) 18. This is illustrated by the target “Comprehensive data on stand-by generators” and “Consultations with Department of Transport, Department of Minerals and Energy and Department of Science and Technology” is general in nature and does not adequately define the nature and the required level of performance therefore the actual level of performance cannot be assessed.
Reported performance information not reliable
Source information not accurate and complete 19. The evidence provided to support the reported performance information with regard to the Administration of the Institute objective did not adequately support the accuracy and completeness of the facts. 20. This is illustrated by the indicator was “Staffing of Institute” and the target was “>75% approved/budgeted post for 2008/09 filled”. Of the seven vacancies identified in the Corporate Plan only one vacancy has been filled for the year.
Appreciation 21. The assistance rendered by the staff of The South African National Energy Research Institute (Pty) Ltd during the audit is sincerely appreciated.
Pretoria 31 July 2009
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ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
STATEMENT ON CORPORATE GOVERNANCE 1. Introduction South African National Energy Research Institute (Proprietary) Limited (SANERI) ensures that its processes and practices are reviewed on an ongoing basis in order to ensure adherence to good corporate governance practices, which are continually benchmarked against best market practices. The board of directors believe that the entity has substantially applied and complied with the principles incorporated in the Code of Corporate Practices and Conduct as set out in the King Report on Corporate Governance for South Africa 2002 (King II) and has endeavoured to comply with the principles incorporated in the Code of Corporate Practices and Conduct.
2. Governing bodies Board of directors SANERI has a unitary board structure made up of executive and non executive directors, appointed by the shareholder. The board of directors (the board) meets at least once every quarter, and executive managers attend by invitation. The board charges executive management with regard to the day to day running of business, with the board addressing a range of key issues to ensure that it retains the strategic direction of, and proper control over, the entity. The non executive directors are appointed on a three year cycle and reappointment is not automatic. The offices of chairperson and chief executive officer are separated. In accordance with the Public Finance Management Act (Act No 1 of 1999) the board is the accounting authority of the entity. In keeping with the recommendations of the King Report, the board adopted a board charter which sets out the role of the board as follows. The Board’s primary responsibilities include the appointment of the CEO, determining the entity’s objectives and values and giving strategic direction to the entity, taking effective and appropriate steps to ensure that key risk areas and key performance indicators of the entity’s business are identified, monitoring the performance of the entity against agreed objectives, advising on significant financial matters and reviewing the performance of executive management against defined objectives and applicable industry standards, as well as: 3
Approving key policies, investments, risk management and relevant transactions that exceed managements’
levels of authority;
3
Reviewing and approving the entityís strategy, objectives, and plans;
3
Considering and approving annual financial statements and submissions to the shareholder;
3
Ensuring adherence to good corporate governance and ethics;
3
Monitoring and directing triple bottom line performance; and
3
Reviewing effectiveness of controls.
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Company secretary The company secretary provides the board of directors with guidance and advice on matters of business ethics and good governance, as well as on the nature and extent of their duties and responsibilities and how such duties and responsibilities should be properly discharged. Each of the Directors has unrestricted access to the advise and services of the Company Secretary, entity information, and is entitled to seek independent professional advice, at the entity’s expense in pursuance of their duties as a director.
Board audit and risk management committee The board audit and risk management committee consists of non executive members appointed by the board of directors. This committee meets at least four times per year and is chaired by an independent non executive member who is not the chairperson of the board. The Auditor General, and Chief Audit Executive have unrestricted access to the committee and attend board audit and risk management committee meetings. Appropriate executive managers, including those responsible for finance and internal audit attend these meetings by invitation. The board audit and risk management committee reviews the adequacy and effectiveness of internal controls of the entity with special reference to the findings of both internal and external auditors. Other areas covered include the review of important accounting and control issues, material pending litigation, specific disclosures in the annual financial statements, and a review of the performance of the Internal Audit function.
3. Materiality and significant framework A materiality and significant framework is in place. Its purpose is to regulate disclosure of material facts to the Minister of Minerals and Energy, disclosure in the entity annual financial statements and approval from the Minister of Minerals and Energy for participation in certain transactions.
4. Directors’ responsibility for the annual financial statements The directors of the entity are responsible for the entity’s annual financial statements and other information presented in the annual financial statements. The Auditor General is responsible for performing an independent audit of the annual financial statements. The annual financial statements and notes thereto are prepared in accordance with South African Statements of Generally Accepted Accounting Practice (GAAP). Accounting policies are consistently applied except where otherwise stated, in which case full disclosure of changes is made. The directors believe that the entity will continue as a going concern in the year ahead.
5. Internal audit South African National Energy Research Institute (Proprietary) Limited use the service of the Group internal audit function that has the support and cooperation of both the board and management. The internal audit function
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has a written terms of reference, approved by the board of directors annually. The internal audit function is under the control and direction of the board audit and risk management committee. The internal audit function carries out its work in terms of a work plan based on the risk framework. The annual work plan is approved by the board audit and risk management committee. The head of the internal audit function has full access to the chairpersons of the board of directors and of the board audit and risk management committee. The objective of the Internal Audit function is to determine whether the organisation’s network of risk management, control and governance processes, as designed and represented by management, are adequate and functioning in a manner to ensure that: 3
Risks are appropriately identified and managed;
3
Good corporate governance is achieved;
3
Significant financial, managerial and operating information is accurate, reliable and timely;
3
Employees’ actions are in compliance with policies, standards, procedures and applicable laws and
regulations;
3
Resources are acquired economically, used efficiently and adequately protected; and
3
Programmes, plans and objectives are achieved.
The Internal Audit function adopted a quality assessment review program that includes a day to day quality review by supervisors, periodic internal quality assessments and periodic external quality assessments. The purpose for the quality assessment program is to ensure that the internal audit function conforms with the definition of Internal Auditing, the code of ethics and furthermore that the internal audit functions operate in accordance with the terms of reference, plans, policies, procedures, practices and applicable legislation and regulatory requirements. The Internal Audit function was reviewed by an external reviewer (every 5 years) and received the highest level of compliance, namely General Conformance on two occasions.
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PERFORMANCE AGAINST OBJECTIVES Note 1.
2.
Objective
Target
Administration of the Institute
Weight
Achieved
30.0
27.0
Percentage overheads / administration out of total budget
A maximum of 20% spent on overheads
10.0
7.0
Percentage spent( committed or disbursed)
>90% committed or disbursed
10.0
10.0
Staffing of Institute
>75% approved/budgeted post for 2008/9 filled
5.0
5.0
Percentage BEE procurement (capital equipment) consumables and non university research contractors)
Minimum of 25% of non research services, consumables budget spent on entities with greater than or equal to 75% BBBEE status.
5.0
5.0
Energy Research & Development Agenda
A prototype low cost commercial electro mechanical battery
1.0
1.0
Contribution of SANERI's flagship projects to knowledge in the energy sector
50% of carbon storage atlas developed
1.0
0.7
25.0
20.5
A prototype low cost commercial electro mechanical battery
1.0
1.0
50% of carbon storage atlas
1.0
1.0
Operationalisation of high pressure fuel injector
1.0
1.0
50% of wind atlas developed
1.0
0.7
A prototype of a modular mobile mini hybrid RE generator developed
1.0
1.0
A multi feedstock reactor for biofuels designed and constructed
1.0
1.0
75% energy data and modelling system form JHB, Ekurhuleni and Tshwane developed
1.0
0.9
High integrity electrical machine (motor) developed
1.0
0.9
50% of integrated mass transit solution for SA developed
1.0
1.0
Comprehensive data on stand by generators
1.0
1.0
SANERI funded research projects findings delivered at two local and two international conferences
5.0
5.0
Four Publications of SANERI funded projects in international peer reviewed academic journals
5.0
3.5
SANERI’s information and knowledge management system operational
5.0
2.5
Energy Research & Development Agenda Contribution of SANERI’s flagship projects to knowledge in the energy sector
developed
Increase in South Africa’s research outputs
Knowledge repository for energy research
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PERFORMANCE AGAINST OBJECTIVES (continued) Note 3.
Objective
Target
Hydrogen Economy and Green Transport Programme Facilitation and coordination of the demonstration for SA’s Hydrogen and Green Transport
4.
Weight
Achieved
10.0
8.20
Prepare and present LPG refuelling station proposals to three potential investors
2.0
1.8
Consultations with Dept of Transport, Dept of Minerals and Energy and Dept of Science and Technology
2.0
1.6
Prepare and present Electric vehicles charging station and demonstration proposals to three potential partners
2.0
1.6
Prepare and present Bio fuels re fuelling station proposals to three potential investors
2.0
1.4
Prepare and present re fuelling Hydrogen station proposals to three potential investors
2.0
1.8
20.0
20.0
Human Capital Development Number of new MOU’s established for Chairs/Centres/Hubs
3 MOU’s completed
10.0
10.0
Bursaries awarded
>75% of budget for bursaries
10.0
10.0
15.0
15.0
5.0
5.0
10.0
10.0
100.0
100.0
allocated 5.
Corporate Research Activities New Strategic Alliances forged with internationally recognised Public Interest Energy Research and Development centres
At least 2 MOU’s in place an internationally recognised agency/ institute
Jointly funded research project with industry or international organisations.
At least R2 R4 million external funding for SANERI flagship projects from industry or international organisations
Total
Reasons for variances: 1. Target: A maximum of 20% spent on overheads SANERI spent 23% because the budget allocation was increased only by 5% yet all expenditure increased by CPIX.
2. Target: 50% of Wind atlas developed Due to the number of institutions involved, the signing of the contracts took longer than anticipated.
- Target: 75% of Energy data and modelling system for JHB , Ekurhuleni and Tshwane
The target was achieved (3) as per KPA measurement but since the model was 100% complete (instead of the 75% target), the score given was therefore higher than 3 but not a full 5 score since the data was not fully collected, hence the 4 score.
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PERFORMANCE AGAINST OBJECTIVES (continued)
- Target : High integrity electrical machine (motor) developed
The final testing still needs to be done as the battery pack exploded and caused delays in the testing; the project was therefore deemed 90% complete pending the finalisation of test on receipt of a replacement battery.
- Target: 4 Publications of SANERI funded projects in international peer reviewed academic journals
The publications are submitted to local journals first and then for international peer review. The process of submitting first to local journals for review is time consuming. This time lag impacts on the international submission as this can only be done when the local approval and recommendation is received. Even though the publications were submitted in the 08/09 financial year, the approvals were only received after year end.
- Target: SANERI’s information and knowledge management system operational
The contractor who was appointed underestimated the scope and failed to deliver. With the enactment of the Energy Act (Nov. 2008), which makes provision for the establishment of SANEDI, the scope and the requirements for the system changed and it was best to put it on hold until further clarity about operationalisation of SANEDI was obtained from the DoE.
3. Target : Prepare and present LPG refuelling station proposals to 3 potential investors The target was to prepare and present LPG refuelling station proposals to 3 potential investors. Although the submission of proposals to the investors was delayed, the target was reached within the financial year. It was anticipated to exceed the target and the reason for the underscore is that the target was not exceeded.
- Target: Consultations with Dept of Transport , Dept of Minerals and Energy and Dept of Science and
Technology Consultations with the Department of Transport, Department of Minerals and Energy and Department of Science and Technology took place as expected. Due to the fact that this target was not exceeded hence the score of 1.6.
- Prepare and present Electric vehicles charging station and demonstration proposals to 3 potential
partners The target was to prepare and present electric vehicles charging station and demonstration proposals to 3 potential investors. Although the proposal to the investors was delayed, the target was reached within the financial year. It was anticipated to exceed the target .The reason for the underscore is that the target was not exceeded.
- Prepare and present Bio-fuels re fuelling proposals to 3 potential investors
The target was to prepare and present biofuels re fuelling proposals to 3 potential investors. Although the submission of proposal to the investors was delayed, the target was reached within the financial year. It was anticipated to exceed the target and the reason for the underscore is that the target was not exceeded.
- Prepare and present re fuelling Hydrogen station proposals to 3 potential investors
The target was to prepare and present re fuelling hydrogen station proposals to 3 potential investors. Although the proposal presentations to the investors were delayed, the target was reached within the financial year. It was anticipated to exceed the target .The reason for the underscore is that the target was not exceeded.
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REPORT OF THE BOARD AUDIT AND RISK MANAGEMENT COMMITTEE We are pleased to present our report for the financial year ended 31 March 2009.
1. Audit committee responsibility The audit committee has complied with its responsibilities arising from Section 51(1)(a) of the Public Finance Management Act and Section 27 of Treasury Regulations. The audit committee has adopted a formal terms of reference and complied with its charter, and has discharged its responsibilities as contained therein. Committee has adopted appropriate formal terms of reference, which have been confirmed by the board, and has performed its responsibilities as set out in the terms of reference.
2. The effectiveness of internal control During the year under review internal audit performed certain assignments. Reports presented to management highlighted that the internal control systems were partially adequate and partially effective. Management acknowledged the findings and continues to implement the recommendations made in an attempt to enhance the internal control environment. The internal audit function operates within a formal charter and performs its function within the standards of the Institiute of Internal auditors. The audit committee is satisfied that the internal audit function operated effectively and efficiently during the year under review
3. Governance Risk Management An annual risk review was undertaken and approved risk management strategy and fraud prevention plan in place and is being implemented.
4. Submission of in year management and monthly/quarterly reports in terms of the PFMA and the Division of Revenue Act We have been presented with the In Year Monitoring reports for the period under review. It is to be noted that internal audit performed reviews on the format, content and quality of these submissions. Accordingly, these reports substantially complied with the requirements of the PFMA and the Treasury Regulations.
5. Evaluation of annual financial statements The audit committee concurs and accepts the Auditor General’s conclusions on the annual financial statements and is of the opinion that the audited annual financial statements be accepted and read together with the report of the Auditor General.
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REPORT OF THE BOARD AUDIT AND RISK MANAGEMENT COMMITTEE (continued) The committee expresses its sincere appreciation to the management, staff and the Auditor General.
Mr VG Magan Chairperson 30 June 2009 Board audit committee members: Mr D Hensman Ms M Nyathi Ms A Thomani
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ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
DIRECTORS’ REPORT The directors present their annual financial statement that forms part of the audited annual financial statements for the entity for the year ended 31 March 2009. South African National Energy Research Institute (Proprietary) Limited is incorporated as a private entity in South Africa in terms of the Companies Act, 1973, as amended, and is listed as a national public entity in schedule 2 of the Public Finance Management Act, 1999, as amended. The board of directors acts as the accounting authority in terms of the PFMA.
1. Directors The directors of the company during the year and to the date of this report are as follows: Name
Appointed
Mr MB Damane
1 April 2006
Ms N Magubane
1 April 2006
Dr C Cooper
1 April 2006
Mr J Marriott
1 April 2006
Ms M Pyoos
1 April 2006
Mr K Nassiep
1 April 2006
Mr I Patel (Alternate to Ms M Pyoos)
25 October 2006
Mr S Tyatya (Alternate to Ms N Magubane)
18 April 2006
Ms N Mlonzi
1 April 2006
Attendance at meetings: Name
23/04/2008
27/06/2008
21/10/2008
03/02/2009
Mr MB Damane
Y
Y
Y
Y
Ms N Magubane
N
N
N
N
Dr C Cooper
Y
N
N
Y
Ms N Mlonzi
Y
Y
Y
N
Mr J Marriot
N
N
Y
Y
Ms M Pyoos
N
N
N
N
Mr K Nassiep
Y
Y
Y
Y
Mr I Patel (Alternate to Ms M Pyoos)
N
N
N
N
Mr S Tyatya (Alternate to Ms N Magubane)
N
N
N
N
Y
= Attended meeting
N
= Apology received
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DIRECTORS’ REPORT (continued) Board audit and risk management committee The sub committee consists of the following non executive members: Name
Appointed
Mr VG Magan
Non executive Chairperson
1 January 2008
Mr D Hensman
Non executive
1 January 2008
Ms A Thomani
Non executive
1 January 2008
Ms M Nyathi
Non executive
1 January 2008
Name
22/04/2008
25/06/2008
14/10/2008
27/01/2009
Mr VG Magan
Y
Y
Y
Y
Mr D Hensman
Y
Y
Y
Y
Ms A Thomani
Y
Y
N
Y
Ms M Nyathi
Y
Y
Y
N
Y
= Attended meeting
N
= Did not attend meeting
All of these members are independent non executive members. The board audit and risk management committee meets on a minimum of four occasions per annum. The Chief Audit Executive, the external auditors and such members of management as are deemed necessary also attend these meetings. The board audit and risk management committee is responsible for the internal controls and risk management of the entity delegated to it by the board of directors. In order to meet its requirements it reviews the findings of both internal and external auditors. In addition it reviews important accounting issues, material pending litigation if applicable, entity insurance, risk management and disclosure requirements in the annual financial statements. The responsibilities of this sub committee of the board of directors are set out in the report of the board audit and risk management committee which forms part of these annual financial statements.
2. Company Secretary The secretary of the company is CEF (Proprietary) Limited and the business and postal addresses are as follows: Business Address CEF House, Block C, Upper Grayston Office Park, 152 Ann Crescent, Strathavon, Sandton, 2031. Johannesburg.
SANERI ANNUAL REPORT 2009
Postal Address P O Box 786141 Sandton 2146
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DIRECTORS’ REPORT (continued) 3. Nature of business Main business and operations The current and future business of SANERI is to accomplish the following through research and development: •
cost effective and efficient energy generation, transformation, transport, end use and decision support
technologies and;
•
energy technology innovation;
•
sustainable energy development and utilisation of energy resources;
•
improvement of the quality of life of the people of South Africa;
•
promotion of knowledge development and training of researchers and
•
commercialisation of energy technologies resulting from its research, development and innovation
programmes.
Principal activities of the entity The principal activity of SANERI are as outlined below: •
undertake research and technology development;
•
register patents and intellectual property in its name resulting from its activities;
•
issue licenses to other persons to use its patents and intellectual property;
•
utilise its technological expertise in its possession or make such expertise specifically or generally
available
•
provide bursaries and educational loans for the development of knowledge in the energy sector;
•
commission energy related research, development and innovation programmes in any other research
institutions;
•
establish facilities for the collection and dissemination of information in connection with research, development
and innovation;
•
establish and control facilities in those fields of research that the Board may from time to time approve;
•
promote cooperation between South Africa and other countries in matters relating to energy research,
development and innovation;
•
undertake any other technology development related activity as directed by the Minister of Minerals and
Energy in concurrence with the Minister of Science and Technology.
4. Review of financial position The entity’s business and operations and the results thereof are clearly reflected in the attached financial statements. No material fact or circumstance has occurred between the accounting date and the date of this report. The was no major change in the nature of the business.
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DIRECTORS’ REPORT (continued) 5. Authorised and issued share capital There were no changes in the authorised or issued share capital of the entity during the year under review.
6. Significant changes in assets/investments There was no significant increase in property, plant and equipment during the financial year ended 31 March 2009.
7. Dividends No dividends were declared or paid to the shareholder during the year.
8. Going concern The directors believe that the entity will continue as a going concern in the year ahead.
9. Review of operations SANERI has five main research and human capital development programmes being: •
The SANERI Bursary Programme
•
The SANERI Energy Research Programme
•
The Hub and Spokes Programme
•
The Chairs of Energy Research Programme
•
The Green Transport Programme
Under these programmes, the highlights are: •
In 2008/2009, SANERI awarded 17 Master’s bursaries, 6 PhD bursaries and 2 post doctoral bursaries. The
bursary amount for Masters students were increased from R50 000 per year to R80 000 per year. The amount
allocated to PhD students also increased from R65 000 per year to R100 000 per year. The increase in the
bursary levels were carried after a benchmarking exercise was done and tabled at the SANERI Board. It
was the first time bursaries were awarded to post doctoral students. Post doctoral students received a
bursary of R150 000 per year.
•
In June 2008, the SANERI Board approved the establishment of a Centre for Carbon Capture and Storage.
SANERI sees carbon capture and storage research as a priority for clean coal technologies. The establishment
of the Centre is aimed at reducing South Africa’s greenhouse gas emissions. Several parties including the
Norwegian Government have pledged support to the research and development that will be conducted by
the Centre for the next five years. The signing ceremony of the Charter took place on 27th March 2009 at the
CEF (Proprietary) Limited offices in Sandton and was attended by the Minister of Minerals and Energy,
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DIRECTORS’ REPORT (continued)
officials from the Norwegian Government as well as industry. Partners who signed the Charter were SANERI,
Sasol, Eskom, the British High Commission, AngloCoal, Exxaro, Xstrata Coal, Schlumberger and the
Norwegian Government.
•
The Renewable Energy and Energy Efficiency Partnership (REEEP) is an international NGO with an objective
to reduce policy, regulatory and financial barriers for the uptake of renewable energy and energy efficiency
technologies. The REEEP head office is in Vienna. REEEP objectives and programmes are run through
networks coordinated by the international office together with eight regional secretariats and two local focal
points. In September 2008, SANERI was awarded the bid to host the South African Regional Office with effect
from 1 October 2008 to 31 March 2009. The award maybe renewed for a full year thereafter. The host function
entailed that SANERI coordinate the REEEP activities in South Africa, Botswana, Lesotho, Malawi,
Mozambique, Swaziland and Angola. REEEP provided 35 000 euros for the regional REEEP activities.
•
SANERI identified energy efficiency and demand side management as a key research and development
theme for South Africa. The University of Pretoria was awarded the bid to host the Hub of Energy Efficiency
and Demand Side Management. The Hub was successfully launched on 10th June 2008. The responsibility
of the Hub is to develop and enhance national capacity in energy efficiency, including fuel switching
to renewable technologies and demand side management . The Hub will build human resources capacity,
deepen knowledge and stimulate innovation and enterprise in the field of energy efficiency and demand side
management.
10. Post balance sheet events The directors are not aware of any matters or circumstances arising since the end of the financial year, not otherwise dealt with in the annual financial statements which significantly affect the financial position of the entity or the results of the operations.
11. Shareholder The entity is a wholly owned subsidiary of CEF (Proprietary) Limited. The annual report set out on pages 55 to 85, which have been prepared on the going concern basis, were approved by the board of directors on 30 June 2009 and were signed on its behalf by:
Mr MB Damane
Dr C Cooper
Sandton 30 June 2009
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MATERIALITY AND SIGNIFICANT FRAMEWORK For purposes of materiality (as per PFMA sections 50(1) and 55 (2)) and significant (as per PFMA sections 54(2)) framework) the following acceptable levels were agreed with the Executive Authority in consultation with the Auditor General: •
Section 50(1) Material facts to be disclosed to the Minister of Minerals and Energy are considered to be facts
that may influence the decisions or actions of the Stakeholders of the Public Entity or the Group of
companies.
•
Section 55(2) Disclosure of material losses in the annual financial statements will be for all losses through
criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during
the year.
•
Section 54(2) The criteria to determine the level of significance was based upon the guiding principles
as set out in the “Practice Note on applications under Section 54 of the PFMA no.1 of 1999 (as amended)
by Public Entities” as published by National Treasury during 2006 subject to adjustments for any Section
54(4) exemptions.
The significant Rand level was determined as being 2% of Total Assets as follows:
APPROVAL LEVELS IN TERMS OF SECTION 54 SANERI’s board approval levels
< R1 million
Approval level of the CEF Board in terms of subsidiary companies
> R1 million and < R500 million
Obtain DME approval and inform National Treasury via the top most holding company
> R500 million
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ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
BALANCE SHEET AS AT 31 MARCH 2009 Note(s)
2009
2008
R ‘000
R ‘000
Assets Non Current Assets Property, plant and equipment
2
296
785
Intangible assets
3
310
582
Deferred tax
201
-
807
1 367
Current Assets Current tax receivable
4
579
-
Trade and other receivables
5
2 202
36
Cash and cash equivalents
Total Assets
6
29 952
21 561
32 733
21 597
33 540
22 964
Equity and Liabilities
Equity
-
-
Share capital
2 660
2 659
7
2 660
2 659
Third party funds
8
16 472
-
Current tax payable
4
-
657
Trade and other payables
9
13 265
17 837
10
1 143
1 811
Retained income Liabilities Current Liabilities
Deferred income
Total Equity and Liabilities
SANERI ANNUAL REPORT 2009
61
30 880
20 305
33 540
22 964
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2009 Note(s)
Other income
2008 R ‘000
50 187
Operating expenses
43 188
(52 748)
Operating loss
11
Investment revenue
13
Finance costs
14
Profit before taxation Taxation Profit for the year
2009 R ‘000
4
(43 236)
(2 561)
2 847
1 668
1 620
(285)
1
-
(898)
1
722
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(48)
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2009
Balance at 01 April 2007
Share
Retained
capital
income
Equity
R ‘000
R ‘000
R ‘000
Total
-
1 937
1 937
-
722
722
Changes in equity Profit for the year
-
Total changes
722
722
-
2 659
2 659
-
1
1
Total changes
-
1
1
Balance at 31 March 2009
-
2 660
2 660
Balance at 01 April 2008 Changes in equity Profit for the year
7
Note(s)
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ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2009 Note(s)
Cash flows from operating activities Cash receipts from customers
16
Cash paid to suppliers and employees
17
2009
2008
R ‘000
R ‘000
47 749
43 170
(56 822)
(78 036)
(9 073)
Cash used in operations
18
Interest income
2 847
Finance costs Tax paid
(34 866)
19
1 668
(285)
(1 437)
(7 948)
(33 198)
Net cash from operating activities Cash flows from investing activities Purchase of property, plant and equipment
2
(86)
(58)
Sale of property, plant and equipment
2
16
-
Purchase of other intangible assets
3
(63)
(612)
(133)
(670)
Net cash from investing activities Cash flows from financing activities External funding received
16 472
-
Net cash from financing activities
16 472
-
Total cash movement for the year
Cash at the beginning of the year Total cash at end of the year
SANERI ANNUAL REPORT 2009
6
64
8 391
(33 868)
21 561
55 429
29 952
21 561
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
ACCOUNTING POLICIES 1. Presentation of Annual Report 1.1. Basis of preparation Accounting Framework The annual financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice, and the Companies Act of South Africa. The annual report is prepared on the historical cost basis. These annual report are presented in South African Rands. Rounding is to the nearest Rand in Thousands.
1.2. Property, plant and equipment Property, plant and equipment represents tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used during more than one period.
Carrying amounts All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment.
Impairment The carrying amounts of property, plant and equipment are reviewed annually for impairment. If such indication exists and where the carrying amount exceeds the estimated recoverable amount, the assets are written down to their recoverable amount. Impairment losses are recognised in the profit and loss. The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell or value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the asset belongs. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount under another standard, in which case the reversal of the impairment loss is treated as a revaluation increase under that other standard.
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ACCOUNTING POLICIES (CONTINUED) 1.2. Property, plant and equipment (continued) Disposals Gains or losses on disposal of property, plant and equipment are determined as the difference between sale proceeds and the carrying amount of the asset, and is recognised in profit and loss.
Depreciation Depreciation is charged so as to write off the depreciable amount of the assets, other than land, over their estimated useful lives to estimated residual values, using the straight line method to write off the cost of each asset that reflects the pattern in which the assetâ&#x20AC;&#x2122;s future economic benefits are expected to be consumed by the entity. The method of depreciation, useful lives and residual values are reviewed annually. The following methods and rates were used during the year to depreciate property, plant and equipment to estimated residual values:
Item
Average useful life
Furniture, fittings and communication equipment
5 - 10 years
1.3. Comparative figures Comparative figures are restated in the event of a change in accounting policy or prior period error.
1.4. Intangible assets The amortisation period and the amortisation method for intangible assets are reviewed annually. An intangible asset is an identifiable non monetary asset without physical substance. Intangible assets are initially recognised at cost if acquired separately or internally generated or at fair value if acquired as part of a business combination. If assessed as having an indefinite useful life, the intangible asset is not amortised but tested for impairment annually and impaired if necessary. If assessed as having a finite useful life, it is amortised over its useful life using a straight line basis and tested for impairment if there is an indication that it may be impaired. Research costs are recognised in profit or loss when incurred. Development costs are capitalised only if they result in an asset that can be identified, it is probable that the asset will generate future economic benefits and the development cost can be reliably measured. Otherwise it is recognised in profit or loss.
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ACCOUNTING POLICIES (CONTINUED) 1.4. Intangible assets (continued) Amortisation shall begin when the asset is available for use and shall cease at the earlier of the date that the asset is classified as held for sale or the date that the asset is derecognised. An intangible asset shall be derecognised: •
On disposal; or
•
When no future economic benefits are expected from its use or disposal.
The gain or loss arising from derecognition from an intangible asset shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset. It shall be recognised in profit or loss when the asset is derecognised. Gains shall not be classified as revenue. Amortisation is recognised in profit and loss, on a straight line basis, to their residual values as follows: Item
Useful life
Computer software
2 years
1.5. Post balance sheet events Recognised amounts in the annual financial statements are adjusted to reflect events arising after the balance sheet date that provide evidence of conditions that existed at the balance sheet date. Events after the balance sheet that are indicative of conditions that arose after the balance sheet date are dealt with by way of a note.
1.6. Leases Classification Leases are classified as operating leases at the inception of the lease. The entity does not have any finance leases. Operating lease Operating lease payments are recognised in profit or loss on a straight line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern of the user’s benefit. Contingent rentals are recognised in profit or loss as they accrue.
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ACCOUNTING POLICIES (CONTINUED) 1.7. Tax Current tax assets and liabilities The charge for current tax is based on the results for the year as adjusted for income that is exempt and expenses that are not deductible using tax rates that are applicable to the taxable income. Deferred tax is recognised for all temporary differences, unless specifically exempt, at the tax rates that have been enacted or substantially enacted at the balance sheet date.
1.8. Financial instruments Categories of financial assets and financial liabilities The carrying amounts of each of the following categories presented either on the face of the balance sheet or in the notes: •
Financial assets at fair value through profit or loss
•
Loans and receivables
•
Financial liabilities measured at amortised cost
Recognition Derivatives are entered into for the primary purpose of reducing exposure to fluctuations in foreign exchange rates. Financial instruments recognised on the balance sheet include cash and cash equivalents, trade receivables, investments, trade payables. These instruments are recognised at fair value.
Financial instruments at fair value through profit or loss The entity and entity have designated financial assets and liabilities at fair value through profit or loss when either: •
the assets or liabilities are managed, evaluated and reported internally on a fair value basis;
•
the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise;
or
•
the assets or liabilities contain an embedded derivative that significantly modifies the cash flows that would
otherwise be required under the contract and has to be separately disclosed and fair valued through profit
or loss.
All of the entity’s financial instruments designated as fair value through profit or loss were designated as such, as it is believed that the designation significantly reduces an accounting mismatch which would otherwise arise. Financial assets and financial liabilities are recognised on the entity’s balance sheet when the entity becomes a party to the contractual provisions of the instrument. Financial assets and liabilities as a result of firm commitments are only recognised when one of the parties has performed under the contract.
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ACCOUNTING POLICIES (CONTINUED) 1.8. Financial instruments (continued) Financial instruments recognised on the balance sheet include cash and cash equivalents, trade receivables, investments, trade payables, and borrowings.
Measurement Financial assets and liabilities are initially measured at fair value, plus transaction costs. However transaction costs of financial assets and liabilities classified as fair value through profit or loss are expensed. Subsequent measurement will depend on the classification of the financial instrument as detailed below.
Financial assets The entityâ&#x20AC;&#x2122;s principal financial assets are investments, accounts receivable and cash and cash equivalents.
Trade and other receivables Trade and other receivables, are classified as receivables and are subsequently measured at amortised cost less provision for doubtful debts. Write down of these assets are expensed in profit or loss. Trade and other receivables are classified as loans and receivables and are subsequently measured at amortised cost, less an allowance for any uncollectable amounts. An estimate for impairment is made when objective evidence is available that indicates the collection of any amount outstanding is no longer probable.Bad debts are written off when identified.
Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise of cash on hand, deposits held on call, and investments in money market instruments, net of bank overdrafts, all of which are available for use by entity unless otherwise stated. The carrying amount of these assets approximate their fair value. For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts, all of which are available for use by the entity unless otherwise stated. Cash and cash equivalents comprise cash at bank and on hand and instruments which are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value.
Financial liabilities The companyâ&#x20AC;&#x2122;s principal financial liabilities are interest bearing borrowings and accounts payable.
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ACCOUNTING POLICIES (CONTINUED) 1.8. Financial instruments (continued) Trade and other payables All financial liabilities are measured at amortised cost, comprising original debt less principal payments and amortisationâ&#x20AC;&#x2122;s. Impairment and uncollectability of financial assets An assessment is made at each balance sheet date to determine whether there is objective evidence that a financial asset or entity of financial assets may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined and an impairment loss is recognised for the difference between the recoverable amount and the carrying amount as follows: For financial assets held at either cost or amortised cost
the carrying amount of the asset is reduced to its
undiscounted estimated recoverable amount either directly or through the use of an allowance account and the amount of the loss is recognised in the income statement for the period; and For financial assets at fair value where a loss has been recognised directly in equity as a result of the write down of the asset to recoverable amount, the cumulative net loss recognised in equity is transferred to the income statement for the period. Derecognition Financial assets or parts thereof are derecognised when the contractual rights to receive cash flows have been transferred or have expired or if substantially all the risks and rewards of ownership have passed. Where all the risks and rewards of ownership have not been transferred or retained, the financial assets are derecognised if they are no longer controlled. However, if control in this situation is retained, the financial assets are recognised only to the extent of the continuing involvement in those assets. All other assets are derecognised on disposal or when no future economic benefits are expected from their use or on disposal. Financial liabilities are derecognised when the relevant obligation has either been discharged or cancelled, or has expired. On derecognition, the difference between the carrying amount of the financial liability, including related unamortised costs, and the amount paid for it is included in net profit or loss for the period. A financial asset or part thereof is derecognised when the entity realises the contractual rights to the benefits specified in the contract, the rights expire, the entity surrenders those rights or otherwise loses control of the contractual rights that comprise the financial asset. On derecognition, the difference between the carrying amount of the financial asset and the sum of the proceeds receivable and any prior adjustment to reflect the fair value of the asset that had been reported in equity is included in net profit or loss for the period. A financial liability or a part thereof is derecognised when the obligation specified in the contract is discharged, cancelled, or expires. On derecognition, the difference between the carrying amount of the financial liability, including related unamortised costs, and the amount paid for it is included in net profit or loss for the period.
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ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
ACCOUNTING POLICIES (CONTINUED) 1.8. Financial instruments (continued) Fair value considerations The fair values at which financial instruments are carried at the balance sheet date have been determined using available market prices. Where market values are not available, fair values have been calculated by discounting expected future cash flows at prevailing interest rates. The fair values have been estimated using available market information and appropriate valuation methodologies. The carrying amounts of financial assets and financial liabilities with a maturity of less than one year are assumed to approximate their fair values due to the short term trading cycle of these items. Offsetting Financial assets and financial liabilities are offset if there is an intention to either net the asset and liability or to realise the asset and settle the liability simultaneously and a legally enforceable right to set off exists.
1.9. Post employment benefit costs Defined contribution costs Contributions to a defined contribution plan in respect of service in a particular period are recognised as an expense in that period. The entity contributes to a defined contribution benefit plan for its staff.
1.10. Government grants When the conditions attaching to government grants have been met and have been received, they are recognised in profit or loss on a systematic basis over the periods necessary to match them with the related costs. When they are for expenses or losses already incurred, they are recognised in profit or loss immediately. The unrecognised portion at the balance sheet date is presented as deferred income. No value is recognised for government assistance.
1.11. Irregular and fruitless and wasteful expenditure Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicable legislation, including 3
the PFMA, or
3
Any provisional legislation providing for procurement procedures in that provincial government.
Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonable care been exercised. Any irregular and fruitless and wasteful expenditure is charged against income in the period in which it is incurred.
SANERI ANNUAL REPORT 2009
71
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
ACCOUNTING POLICIES (CONTINUED) 1.12. Key assumptions made by management in applying accounting policies The following key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year if the assumption or estimation changes significantly: Going concern Management considers key financial metrics and loan covenant compliance in its approved medium term budgets, together with its existing term facilities, to conclude that the going concern assumption used in the compiling of its annual financial statements, is relevant.
1.13. Adoption of South African Standards Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the entity. IAS 1 (Revised). Presentation of annual financial statements (effective from financial year beginning 1 January 2009). The revised standard will prohibit the presentation of items of income and expenses (that is, ‘non owner changes in equity’) in the statement of changes in equity, requiring ‘non owner changes in equity’ to be presentation separately from owner changes in equity. All non owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comprehensive information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. It is likely that both the income statement and statement of comprehensive income will be presented as performance statements. IAS 23 Borrowing costs (effective from financial year beginning 1 January 2009) The amendment requires the entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The entity will apply IAS 23 retrospectively from 1 January 2009 but is currently not applicable to the company as there are no qualifying assets. IAS 36 (Amendment), ‘Impairment of assets’ (effective from financial year beginning 1 January 2009) The amendment is part of the IASB’s annual improvements projects published in May 2008. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value in use calculations should be made. The entity will apply the IAS 36 (Amendment) and provide the required disclosure where applicable for impairment tests from 1 January 2009. IAS 38 (Amendment), ‘Intangible assets’ (effective from financial year beginning 1 January 2009) The amendment is part of the IASB’s annual improvement project published in May 2008. A prepayment may only be recognised in the event that the payment has been made in advance of obtaining right if access to goods or receipts of services. The entity will apply IAS 38 (Amendment) from 1 January 2009.
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
ACCOUNTING POLICIES (CONTINUED) 1.13. Adoption of South African Standards (continued) IAS 39 (Amendment), ‘Financial instruments: Recognition and measurement’ (effective from financial year beginning 1 January 2009) The amendment is part of the IASB’s annual improvements project published in May 2008. This amendment clarifies that it is possible for there to be movements into and out of the fair value through profit or loss category where a derivative commences or ceases to qualify as a hedging instrument in cash flow or net investment hedge. When remeasuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge accounting ceases) is used.
SANERI ANNUAL REPORT 2009
73
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
2.
Cost /
2009 Accumulated
Carrying
Valuation
depreciation
value
2008 Accumulated
Cost /
value
Property, plant and equipment
Carrying
Valuation depreciation
Furniture and fixtures
291
(133)
158
827
(268)
559
388
(250)
138
360
(134)
226
679
(383)
296
1 187
(402)
785
IT equipment
Total
Reconciliation of property, plant and equipment – 2009 Opening Balance
Total
Depreciation
Disposals
Additions
Furniture and fixtures
559
33
(159)
158
IT equipment
226
53
(13)
(128)
138
785
86
(288)
(287)
296
(275)
Reconciliation of property, plant and equipment – 2008 Opening Balance Additions Depreciation
Total
Furniture and fixtures
IT equipment
292
992
3.
(158)
559
41
(107)
226
58
(265)
785
17
700
Cost /
2009 Accumulated
Carrying
Cost /
2008 Accumulated
Carrying
Valuation
depreciation
value
Valuation
depreciation
value
Intangible assets
725
Software
Reconciliation of intangible assets – 2009
(415)
310
661
(79)
582
Opening Balance Additions Amortisation
Total
Software
Reconciliation of intangible assets – 2008
582
63
(335)
310
Opening Balance Additions Amortisation
Total
Software
SANERI ANNUAL REPORT 2009
74
49
612
(79)
ENERGY INNOVATION FOR LIFE
582
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
4.
Taxation
Major components of the tax expense
Current
Local income tax - current period
Deferred
Originating and reversing temporary differences
2009
2008
R ‘000
R ‘000
201
(201)
-
898
-
898
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense.
1
Accounting profit
-
470
Tax at the applicable tax rate of 28% (2008: 29%)
Tax effect of adjustments on taxable income
-
428
Prior year underprovision
-
898
SARS for income tax
Opening balance
657
(241)
Income tax for the year
-
Adjustment
-
Payment made
Balance due to/(from) SARS
5.
Trade and other receivables
Trade receivables
2 136
-
Prepayments
66
35
Sundry receivables
-
1
2 202
36
6.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balances
with banks and investments in money market instruments. Cash
and cash equivalents included in the balance sheet comprise
the following:
Short term investments in money market and cash on hand
SANERI ANNUAL REPORT 2009
75
1 620
397
501
(1 236)
-
(579)
657
29 952
21 561
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
7.
Share capital
Authorised
1000 Ordinary par value shares of R1 each
Issued
100 Ordinary par value shares of R 1 each
8.
Third party funds
Total
2009
2008
R ‘000
R ‘000
1
1
-
-
16 472
-
16 472
-
3 167
12 939
Funding: received in respect of the following projects:
- REEEP
- SA Carbon Capture and Storage
-
Wind Resource Mapping
-
Centre of Energy Systems Analysis & Research
-
NEEA
This money can only be used for the specific projects, once the
project has been commissioned.
Current liabilities
Projects
9.
Trade and other payables
Trade payables
Other payables
10 098
4 898
13 265
17 837
10. Deferred income
Opening balance
Costs incurred during the year
Costs incurred during the year that relates to Green Transport
Grant received from the Department of Science and Technology
Grant for Green transport
76
-
(44 745)
(41 522)
(5 192)
(1 667)
44 269
SANERI ANNUAL REPORT 2009
1 811
45 000
5 000
-
1 143
1 811
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
11. Operating loss
Income
Grants received
Operating lease charges
Premises
•
Equipment
•
2009
2008
R ‘000
R ‘000
49 937
Contractual amounts
Contractual amounts
43 188
249
112
101
361
286
272
-
185
Loss on sale of property, plant and equipment
Amortisation on intangible assets
336
79
Depreciation on property, plant and equipment
287
265
Employee costs
11 324
6 273
Research and development
30 369
32 941
151
107
12. Auditors’ remuneration
Fees
13. Investment revenue
Interest revenue
Bank
1
Interest from funds held by holding company
2 846
1 668
2 847
1 668
285
-
-
14. Finance costs
Other interest paid
15. Employee benefits
It is the policy of the entity to provide retirement benefits for all
of its eligible permanent employees.
SANERI ANNUAL REPORT 2009
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ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2009
2008
R ‘000
R ‘000
16. Cash receipts from customers
Other revenue
Profit and loss on sale of assets and liabilities
Movement in trade and other receivables
50 187
43 188
(272)
-
(2 166)
(18)
47 749
43 170
17. Cash paid to suppliers and employees
Operating costs
Movement in trade and other payables
Non cash items
52 476
43 236
4 572
36 953
(226)
(2 153)
56 822
78 036
1
1 620
287
272
18. Cash used in operations
Profit before taxation
Adjustments for:
Depreciation and amortisation
Loss on sale of assets
Interest received
Finance costs
285
-
Impairment loss
336
79
Other non cash items
Changes in working capital:
Deferred income
265 -
(2 847)
(1 668)
(1)
Trade and other receivables
(2 166)
Trade and other payables
(4 572)
(668)
(2) (18) (36 953)
(9 073)
1 811 (34 866)
19. Tax paid
Balance at beginning of the year
Current tax for the year recognised in income statement
Balance at end of the year
(657)
241
(201)
(898)
(579)
657
(1 437)
-
SANERI ANNUAL REPORT 2009
78
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS 20. Directorsâ&#x20AC;&#x2122; emoluments SANERI Year ended 31 March 2009
Salary/Fee
Bonuses Salary/Fee
Bonuses Other con- Expense
and per-
and per-
formance payments -
70
ances
-
-
-
-
-
Mr J Marriot
70
-
-
-
-
Ms N Mlonzi
49
-
-
-
-
Dr C Cooper*
-
-
-
-
-
Ms N Magubane
-
-
-
-
-
Ms M Pyoos
189
Total
Total*
allow-
Directors: Mr MB Damane
formance payments
Non-Executive
tributions
Other
-
-
-
-
- - - -
-
- -
-
-
-
-
- -
70
- -
49
- -
70 189
Board audit & risk management committee:
27
Mr D Hensman
33
-
-
-
-
-
- -
Mr VG Magan
16
-
-
-
-
Ms A Thomani
16
-
-
-
-
Ms N Nyathi
92
Total
Executive Members: Mr K Nassiep
-
-
-
1 048
-
-
-
-
- -
- -
33
- -
16
-
92
30
1 333
16
-
255
-
-
* Relates to the 2009 financial year.
SANERI ANNUAL REPORT 2009
27
79
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS 20. Directorsâ&#x20AC;&#x2122; emoluments (continued) SANERI Year ended 31 March 2008
Salary/Fee
Bonuses Salary/Fee
Bonuses Other con- Expense
and per-
and per-
formance
formance
payments
payments
Non-Executive
tributions
ances
Directors:
-
Mr MB Damane
62
-
-
-
-
Mr J Marriot
50
-
-
-
-
Ms N Mlonzi
92
-
-
-
-
Dr C Cooper*
-
-
-
-
-
Ms N Magubane
-
-
-
-
-
Ms M Pyoos
204
-
-
-
-
Total*
allow-
Total
Other
-
-
- 3
- -
54 -
- -
104
- -
-
-
- -
57
-
261
-
65 92 -
Board audit & risk management committee:
8
Mr D Hensman*
11
-
-
-
-
-
-
-
- -
- -
- -
- -
-
-
Mr VG Magan*
5
-
-
-
-
Ms A Thomani*
5
-
-
-
-
Ms N Nyathi*
29
Total
Executive Members: Mr K Nassiep
-
-
-
1 023
-
-
-
-
11 5 5 29
-
68
-
* Not for a full year
SANERI ANNUAL REPORT 2009
8
80
ENERGY INNOVATION FOR LIFE
1 091
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
21. Related parties
2009
2008
R ‘000
R ‘000
Related party transactions
CEF (Pty) Ltd
Interest received
Amounts owed by related parties
Services rendered from related parties
850
433
Amounts owed to related parties
183
87
Department of Science and Technology
Grants / interest received
2 846
29 952
1 668 21 561
45 000
42 000
Key management personnel refer to note 20. The above transactions were carried out on commercial terms and conditions. 22. Financial instruments Risk profile The entity has a risk management and a treasury department in CEF (Proprietary) Limited, that manages the financial risks relating to the entity’s operations. The entity’s liquidity, credit, foreign exchange, and interest rate are monitored continually. Approved policies exist for managing these risks. In the course of the entity’s business operations it is exposed to liquidity, credit, foreign exchange and interest rate risk. The risk management policy of the entity relating to each of these risks is discussed below.
Risk management objectives and policies The entity’s objective in using financial instruments is to reduce the uncertainty over future cash flows arising from movements in foreign exchange and interest rates. Throughout the year under review it has been, and remains, the entity’s policy that no speculative trading in derivative instruments be undertaken.
Credit risk Financial assets, which potentially subject the entity to the risk of non performance by counterparties and thereby subject the entity to concentrations of credit risk, consist primarily of cash and cash equivalents, short term investments, trade receivables and derivatives. The entity’s cash equivalents and short term deposits are placed
SANERI ANNUAL REPORT 2009
81
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS 22. Financial instruments (continued) with high credit quality financial institutions. These institutions are reviewed by the CEF (Proprietary) Limited board of directors on a quarterly basis. The entity’s exposure and the credit ratings of its treasury counter parties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counter parties. The entity does not expect to incur any losses as a result of non performance by these counterparties. The carrying amounts of financial assets included in the balance sheet represent the entity’s exposure to credit risk in relation to these assets. The credit exposure of forward exchange contracts is represented by the net market value of the contracts as disclosed. Financial assets, which potentially subject the entity to concentrations of credit risk, pertain principally to trade receivables and investments in the South African money market. Trade receivables are presented net of the allowance for doubtful debts. The entity manages counter party exposures arising from money market and derivative instruments by only dealing with well established financial institutions of a high credit rating. Losses are not expected as a result of non performance by these counter parties. Credit limits with financial institutions are revised and approved by the board quarterly.
Fair value The entity’s financial instruments consist mainly of cash and cash equivalents, trade receivables, investments and trade payables. As at 31 March 2009 no financial asset was carried at an amount in excess of its fair value. The following methods and assumptions are used to determine the fair value of each class of financial instrument:
Cash and cash equivalents The carrying amounts of cash and cash equivalents approximates fair value due to the relatively short term maturity of these financial assets.
Trade receivables The carrying amounts of trade receivables net of provision for bad debt, approximates fair value due to the relatively short term maturity of this financial asset.
SANERI ANNUAL REPORT 2009
82
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS 22. Financial instruments (continued) Investments The carrying amounts of short term investments approximates fair value due to the relatively short term maturity of these assets. The fair values of other long term investments are not materially different from the carrying amounts.
Trade payables The carrying amounts of trade payables approximates fair value due to the relatively short term maturity of these liabilities.
Maturity profile At least half or more of long term finance, i.e. more than 3 years (or less in more volatile environments) should be at fixed rates of interest, even though such long term rates are usually higher than the short term rates ruling at the time that the long term rates are negotiated. In mitigating the volatility risk, therefore, at least half of term finance is raised at fixed rates and other commitments will, if strong volatility threatens, be mitigated by the use of forward rate agreements, futures, interest rate options, interest rate swaps, caps, floors and collars. The maturity profiles of financial assets and liabilities at balance sheet date are as follows: At 31 March 2009 Assets Less than
Between
Over 5
Non
1 year
1 and 5
years
interest
-
-
-
2 126
-
-
-
32 078
-
-
-
32 078
13 265
-
-
-
13 265
29 952
Cash Trade receivables
Total financial assets
bearing
years
Total
29 952 2 126
Liabilities Trade payables
SANERI ANNUAL REPORT 2009
83
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS 22. Financial instruments (continued) At 31 March 2008 Assets Less than
Between
1 year
1 and 5
Cash
Total
interest
years
bearing
years -
-
-
1
-
-
-
21 562
-
-
-
21 562
-
-
-
17 837
21 561
17 837
Trade receivables Total financial assets
Non
Over 5
21 561 1
Liabilities Trade payables
Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial instruments classified as fixed rate is fixed until maturity of the instrument. The other financial instruments of the entity that are not included in the above tables are non interest bearing and are therefore not subject to interest rate risk.
Liquidity risk The entity manages liquidity risk through proper management of working capital, capital expenditure and actual vs. forecasted cash flows. Adequate reserves and liquid resources are also maintained. The entity manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash resources are available to meet cash commitments.
Interest rate risk The entity is exposed to interest rate risk as entities in the entity borrow funds at fixed and floating interest rate. The risk is managed by the entity by maintaining an appropriate mix between fixed and floating rate borrowings, by the use of interest rate swaps contracts. Exposure to interest rate risk on liabilities and investments is monitored on a proactive basis. The financing of the entity is structured on a combination of floating and fixed interest rates. The following table sets out the carrying amount, by maturity, of the entityâ&#x20AC;&#x2122;s financial instruments that are exposed to interest rate risk and the effective interest rates applicable:
SANERI ANNUAL REPORT 2009
84
ENERGY INNOVATION FOR LIFE
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2009
2008
R ‘000
R ‘000
23. Commitments
Operating lease commitments Leases the office space at 158 Jan Smuts Avenue, 4th floor, office 22 23 & 28, 29 and 31 for a period of 4 years from Gensec Property Services Limited. The lease will expire on the 31 March 2010. Furthermore SANERI has another lease with Holding 16 properties that is used as a showroom for Green Transport, the lease is for three months starting from 1 March 2009 with options to renew it on a month to month basis. Future minimum rentals receivable under operating leases are as follows as of 31 March: Operating lease as lessee –
within one year
–
in second to fifth year inclusive
SANERI ANNUAL REPORT 2009
85
212
-
136
212
394
ENERGY INNOVATION FOR LIFE
258
ANNUAL REPORT
ACKNOWLEDGEMENTS
A
part from being very challenging, 2008/9 has
The Board of Directors, SANERI
indeed also been a very exciting year for the company. This excitement is largely due to
The Chairman and Committee Members of the Board
SANERI’s performance rating standing at between 90
Audit Committee
and 100 percent for the third successive year. The Acting General Operations Manager of NEEA: Research and technology accounts for a large portion
Mr Barry Bredenkamp
of a country’s economic growth and has a positive influence on the quality of life of all its citizens.
The supporting officials at the Departments of Science
The establishment of SANERI has resulted in an
and Technology; and Minerals and Energy as well as
increase in the number of bursars and researchers,
CEF (Pty) Ltd.
thus making a positive contribution to human capital development, which is directly linked to the
The researchers and students who have worked with
achievement of Government’s broader social and
us – thank you for your important contribution to
economic objectives.
research in South Africa, and therefore to a BETTER LIFE FOR ALL!
The following individuals are duly noted and thanked for their efforts in supporting and assisting SANERI in
The success of SANERI is undeniably due to the hard
our various operations:
work, dedication and loyalty of its donors, NGOs’, industry participants, and most importantly, the staff
The former Minister of Science and Technology:
at SANERI – THANK YOU – your contribution is truly
Mr Mosibudi Mangena
appreciated.
The former Minister of Minerals and Energy: Ms Sonjica Buyelwa Chairman of the Board of Directors of SANERI: Mr Mputumi Damane
SANERI ANNUAL REPORT 2009
86
ENERGY INNOVATION FOR LIFE
KEY TO
ABBREVIATIONS ABET
Adult Basic Education and Training
CEF
CEF group of companies formerly known as Central Energy Fund
CEO
Chief Executive Officer
CGS
Carbon Gas Storage
CNG
Compressed Natural Gas
CO2
Carbon Dioxide
CPIX
Consumer Price Index
CSIR
Council for Scientific Research
CSC
Community Steering Committee
DDGS Distillers Dried Grains with Solubles DEAT
Department of Environmental Affairs and Tourism
DME
Department of Minerals and Energy
DSM
Demand Side Management
DST
Department of Science and Technology
EDC
Energy Development Corporation
ETDE
Energy Technology Data Exchange
ERID
Eskomâ&#x20AC;&#x2122;s Research and Innovation Department
GDP
Gross Domestic Profit
Gt
Gigatonne
GWh
Gigawatt Hour
HySA
Hydrogen South Africa
IEA
International Energy Agency
IP
Internet Protocol
JSE
Johannesburg Stock Exchange
LNG
Liquefied Natural Gas
LPG
Liquefied Petroleum Gas
LTMS
Long Term Mitigation Scenarios for Climate Change
MW
Mega Watt
MP
Minister for Parliament
Mt
Megatonne
NAFU
National African Farmers Union
NBI
National Business Initiative
NEEA
National Energy Efficiency Agency
NWU
North West University
PDI
Previously Disadvantaged Individual
R&D
Research and Development
SANEDI South African National Energy Development Institute SANERI South African National Energy Research Institute UCT
University of Cape Town
UJ
University of Johannesburg
US
United States of America
UKZN University of Kwazulu Natal UNEP
United Nations Energy Planning
UNU
United Nations University
UP
University of Pretoria
UWC
University of the Western Cape
TB
Tuberculosis
TUT
Tshwane University of Technology
WRI
World Resource Institute
SANERI ANNUAL REPORT 2009
87
ENERGY INNOVATION FOR LIFE
{
vision
}
To be the pre-eminent world class energy research, development and demonstration institute
ENERGY INNOVATION FOR LIFE
SOUTH AFRICAN NATIONAL ENERGY RESEARCH INSTITUTE (PTY) LTD | ANNUAL REPORT 2008/09
0355
www.saneri.org.za
ANNUAL REPORT ANNUAL REPORT 2008/09