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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

34

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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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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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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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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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

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ANNUAL FINANCIAL

STATEMENTS

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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.

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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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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

SANERI ANNUAL REPORT 2009

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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

SANERI ANNUAL REPORT 2009

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(48)

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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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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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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

72

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

77

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

SANERI ANNUAL REPORT 2009  

SANERI ANNUAL REPORT 2009 DESIGNED BY IWW LATERAL APPLICATIONS