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Necsa REPORT TO MINERALS AND ENERGY

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  • 1. Necsa REPORT TO MINERALS AND ENERGY PORTFOLIO COMMITTEE 4 NOVEMBER 2005 Presented by: Schalk de Waal: Interim CEO Ms Nomfuyo Galeni: CFO
  • 2. ACKNOWLEDGEMENT – ANNUAL REPORT 2004/05
    • Mr Senti Thobejane was the Chief Executive Officer during the reporting period. He resigned on 31 March 2005.
    • The CFO of Necsa, Ms Nomfuyo Galeni was the Acting CEO from 1 April 2005 until 24 October 2005.
  • 3.
    • [PMG note: graphic not included, please info@pmg.org.za]
  • 4. Vision and Mission
    • Necsa’s long term growth strategy, Vision 2010, seeks “to pursue nuclear technology excellence for sustained social and economic development”.
    • Its mission is to develop, utilize and manage nuclear technology for national and regional socio-economic development.
    • Values that are strived for:
    • - Partnership
    • - Life enhancement
    • - Entrepreneurship
    • - Excellence
    • - Leadership; and
    • - responsibility
  • 5. NECSA’s INTERIM ORGANISATIONAL STRUCTURE Nuclear Security Internal Audit Corporate Planning SHEQ Nuclear Safeguards S de Waal Interim Chief Executive Officer Nuclear Services & Technology (NS & NT) Corporate Services (CS ) Financial Services (FS) Facilities Management (FM) High Technology Products (HTP) Nuclear Technology Products (NTP)
  • 6. CHAIRMAN’S REPORT
    • Necsa has to position itself to be a serious player in nuclear matters in terms of:
    • - active involvement in the international nuclear arena.
    • - establishing Necsa as a recognized centre of excellence in nuclear technology and related fields.
    • - becoming a major contributor towards the national agenda of developing people of South Africa.
  • 7. CHAIRMAN’S REPORT HIGHLIGHTS AND CHALLENGES
    • SAFARI-1 reactor achieved 40 years of safe and successful operation.
    • Necsa continued to experience a negative impact from the strengthening of the rand which resulted in net operating loss of R29m
    • To reverse the financial challenge, a Recovery Plan was launched in consultation with labour.
    • Reduced discretionary spending through the implementation of strict austerity measures.
    • Necsa experts continued to play a pivotal role in the International Atomic Energy Agency/African Regional Co-operative Agreement for Research, Development and Training Related to Nuclear Science and Technology collaborative research, development and training programmes.
  • 8. CHAIRMAN’S REPORT: LOOKING AHEAD
    • Need to empower and re-organize Board of Directors
    • Board intends to take SA’s nuclear science and technology to new highs of development and invention
    • Necsa to be established as a centre of excellence
    • Necsa needs additional funding support to:
    • - remove balance sheet encumbarances
    • - recapitalise and turn Necsa around
  • 9. MANAGEMENT REPORT: HIGHLIGHTS
    • Necsa experienced a turbulent time during 2004/05 but maintained its positive image and remained balanced.
    • Management and staff remained committed to safe and secured nuclear operations.
    • Group revenue increased by 2,2% from previous year.
    • Made good progress to curb the escalating cost of post-retirement medical aid liability.
    • Success in improving gender equity quota
    • - woman now 23% in 3 critical categories
    • Continue
  • 10. MANAGEMENT REPORT: HIGHLIGHTS
    • A woman was appointed as CFO of Necsa and acted as CEO from April to October 2005.
    • Target that 40% of workforce will be women by 2010.
    • Provide products regularly and reliably to 50 countries mainly through NTP Radioisotopes (Pty) Ltd (a fully Necsa owned subsidiary).
    • Implemented a staff retention strategy to protect core skills.
    • Necsa has numerous collaborative research projects with the high education sector including universities and research institutions.
    • Necsa engaged in various awareness and public relations programmes to educate stakeholders on nuclear matters.
  • 11. SAFARI-1 1965-2005
  • 12. SAFARI-1 (SA FUNDAMENTAL ATOMIC REACTOR INSTALLATION)
    • SAFARI-1 is the mainstay of Necsa’s nuclear programme and will render at least a further 20 years service to the country .
    • Research reactor also utilized for production of medical radioisotopes mainly during last 10 years.
    • Annually ~60 000 SA and 2,3 million patients across the world benefit from isotopes originating from SAFARI-1.
    • Experimental beam line facilities are used extensively for research and training.
    • ISO9001 and ISO14001 accredited (this is an exceptional achievement which only a few reactors in the world received)
    • SAFARI-1 currently one of most efficiently operated and best utilized reactors in the world.
    • The Government has approved that the reactor be converted to utilize low enriched uranium together with dedicated funding for this purpose (R12m/a for 3 years).
  • 13. PRODUCTS AND SERVICES
    • Major products and services:
    • Radiopharmaceuticals used in nuclear medicine
    • Radiochemicals used for medical and agricultural purposes
    • Radioactive sources used in industry
    • Irradiation services and radiation technology products
    • Fluorine-based chemical products and services
    • Specialised engineering products and services
    • Operation of SAFARI-1 nuclear reactor
    • Management of the institutional obligations on behalf of the State such as decommissioning, decontamination, storage and disposal of radioactive waste
    • Management of the State’s programme of safeguarding nuclear material to prevent proliferation of nuclear weapons
    • Provision of a support structure for African Regional Co-operative Agreement for Research, Development and Training
    • Development of nuclear fuel production technology for PBMR
    • Radiation and reactor theory; research and services to Necsa and the PBMR Programme
    • Radiochemistry and radioanalytical services for Necsa
    • Utilisation of existing infrastructure and buildings
    • Research collaboration with SA and international universities and research institutions
  • 14. ECONOMIC PERFORMANCE INDICATORS
    • Approximately 14,8 per cent suppliers listed as black suppliers
    • 33% of Necsa’s budget was spent on black suppliers
    • 42% of Necsa’s expenditure comprised personnel expenses
    • 69,6% of our workforce comprises designated employees
    • Due to a moratorium on appointments, we lost 235 employees who was replaced with 168 new appointees
  • 15. SKILLS DEVELOPMENT
    • Strong alliance with the Chemical Industries’ Education and Training Authority SETA.
    • About 70 learnerships were trained in various occupations such as engineering, chemistry, apprenticeships.
    • Though the Necsa bursary scheme, 24 previous disadvantaged students are being sponsored for their studies in science and technology.
    • A total of 1409 employees received training, some of whom attend more than one course in various disciplines, including leadership development, health and safety and technical training.
    • ARECSA is a joint venture between five SA companies, namely, Eskom, Necsa, PBMR, NNR, Koeberg and Areva (France) for the training of especially previously disadvantaged individuals in the much sought-after nuclear and related skills.
  • 16. Necsa: CURRENT SITUATION
    • Salient issues
    • Deficit recorded for 2004/05 – R29,8m - cumulative R95,6m
    • Vacancy of key personnel - 183
    • Austerity measures due to cash constraints
    • HSE & security risk profile deteriorated
    • Management systems inadequate
    • Contributing factors
    • Declining market conditions
    • Economy of scale problems and operational inefficiencies
    • Volatility of exchange rates
    • Limited funding of institutional obligations by shareholder
  • 17. LOOKING TO THE FUTURE
    • Necsa received an additional allocation of R56m for the current year to implement urgent HSE-related projects and to meet its commitments.
    • Possible DST financial support for specific R&D projects.
    • Additional funding envisaged from 2006/07 financial year onwards.
    • Turnaround Plan submitted to Government.
  • 18. TURNAROUND PLAN
    • Projects to focus on:
      • Nuclear technology R&D expansion and upgrading.
      • Restructuring and recapitalisation of commercial activities.
      • Human capital development programmes.
      • Infrastructure and HSE upgrading.
      • High Temperature Reactor/PBMR Advance Fuel Development.
      • Continue
  • 19. Necsa TURNAROUND PROGRAMME
    • The Turnaround Plan to run over 5 years.
    • Necsa will prioritise projects within available funding allocations.
    • The plan will be aimed at the renewal of Necsa to take advantage of the re-emerging nuclear market.
    • The plan will require significant commitment from Necsa, the Board and Government.
    • Necsa is confident that the implementation of the plan will yield the desired results to ensure that Necsa could fulfill its mandate and be looked upon as a centre of excellence for the nuclear industry.