Giyani Water infrastructure projects: DWS update & SIU briefing; with Deputy Minister

Meeting report

Opening remarks

The Acting Chairperson welcomed everyone present and announced that the Chairperson of the Committee forwarded an apology for his absence, as he could not get a flight due to commitments that exceeded the scheduled time.

The Acting Chairperson outlined that the Committee had undertaken an oversight visit to the Giyani Water Treatment Works which revealed numerous positive outcomes, in that things are moving in the right direction, as well as negative outcomes. He stated that the Minister and his team were busy with the area and making amends to a long-time problematic scenario which has resulted in a lack of water, poor standards, and a value proposition of the state investment. This he highlighted as being questionable.

He said that the Director-General accompanied Committee Members during their visit and they were able to see the old water infrastructure on the open line, which is currently under construction. Members also met with service providers, municipalities, and other stakeholders. In this regard, it was noticed that there was animosity between service providers, notwithstanding the progress made so far.

He stated that there was a proclaimed demand for the transfer of powers between the authority and provision during the municipal discussions and mentioned that such demands should be backed by capacity and the will to see things happening.

The Acting Chairperson said that the Standing Committee on Public Accounts (SCOPA) made some recommendations upon departure of the visit, which should have been implemented, and stated that an update was expected in the current meeting. He said that the Committee was going to prepare a report that will be tabled to the National Assembly.

He noted that at the time the Committee made an oversight visit, the scheme was servicing 27 villages and in the current meeting, the expectation was that an update about the status of the project would be shared. He commented that the Committee follows the money and must see value for money in any expenditure on the ground.

The Acting Chairperson said that the outcome of the investigations made by other institutions in the area came up with alarming outcomes. The South African Human Rights Commission also published its outcomes and he was perplexed by those outcomes and contacted the chairperson of the Water Board to ascertain the state of the report.

Deputy Minister’s Remarks

Mr David Mahlobo, Deputy Minister of Water and Sanitation, commended SCOPA for taking the time to visit and see the work that was being done on the ground. He reaffirmed to Members that the communities of Mopani District Municipality, Giyane, Malamulele, and Vhembe District Municipality were pleased with the progress made, as the project was back online. He stated that the journey has not been easy as there were several challenges on the ground including maladministration, malfeasance, corruption, and dissatisfaction of the communities with government which resulted in the project being halted. This was because the government had not kept to its commitments, especially in the Vhembe area, where communities were relocated. When these communities were relocated, government never completed the issues of compensation and land and the communities refused for government to proceed until these matters were attended to.

He mentioned that he was assigned to the communities in 2021 and was pleased to inform Members that more than 99% of the issues around the dams and other salient matters were resolved. What was still left to be done were smaller details.

He indicated that one of the issues that needed to be addressed was that the Vhembe community protested that water could not move from Vhembe to Councillor Pule Chai without the surrounding areas first having access to it. The resolve was that the Department had to ensure that the said villages needed to have access to water, which was achieved. He added that the President had been very clear that no one should be left behind.

He mentioned that communities in Mopani District Municipality refused to have the investment in their community without their participation. As such, the mayor had to chair a stakeholder steering committee that involved businesses, traditional leaders, and communities. Occasionally, disturbances were encountered that were caused by the communities, and these were based on opportunities that they believed were due to them. He indicated that all the issues that held up the project had been addressed and certain villages had access to water. A plan has been devised with the municipality to accelerate the project because communities have been denied access to water for a long time. He added that the ministry was satisfied that there was a comprehensive plan looking beyond the 55 villages and that there was also a plan for growth.

Deputy Minister Mahlobo said that the Department’s implementing agent had challenges in the past where corruption, lawlessness, and flouted internal controls were allowed. He was pleased to say that the new board of Lepelle Northern Water (LNW) came in decisively, and acted on matters of discipline, as previously, everything was loose and could not be managed. He stated that things have stabilised in the Water Board and improvements were evident in the audit outcomes and financial performance and risk mitigation and managing capacity are always at the centre of everything.

During the oversight visit, he mentioned that Members observed that the water treatment plant was poorly executed and collapsed in a short period, resulting in people being denied access to water. However, the executive mayor put in place effective systems, and a new municipal manager was appointed along with technical directors who have been given opportunities to become implementing agents themselves. The established group has been entrusted with many reticulation projects and is currently managing around 30 contracts on reticulation and to avoid similar lapses in the future, support has been provided. He added that the ministry was pleased to report that there have been no issues of corruption, malfeasance, or non-performance and the rooting out of such is of critical and crucial importance. He mentioned that the Department is working closely with the Special Investigating Unit (SIU) and there has been significant progress. In this regard, Deputy Minister Mahlobo indicated that the Water Board would report on several officials who have been held accountable, some who have been dismissed, and stated that some of the matters have been referred to law enforcement agencies for prosecution. Although such cases take time, he emphasised that implicated personnel within the Department have been dealt with and the ministry is pleased with the progress. He said that proper investigations had been conducted and the hope was that recommendations would be implemented shortly.

Briefing by the Department of Water and Sanitation regarding Giyani Water Infrastructure projects after the Committee oversight visit

Dr Sean Phillips, Director General, DWS, took Members through the presentation on the Giyani Water Project and the Deputy Minister provided a background of the project and the issues that pertain to the components to be covered. The presentation spoke on the current progress such as the Nandoni Pipeline which the Committee visited in March and the Nandoni Water Treatment Works and Giyani Water Treatment Works (WTW) where Members saw a dysfunctional additional ten megalitre treatment works. The Giyani Bulk Water Services which is the pipeline that carries clean water from the Giyani Water Treatment Works to 55 villages, and the phase one (24 villages) of the 55 villages and consequence management.

[See the presentation for details]

Briefing by Lepelle Northern Water on legal actions instituted by the SIU

Dr Nndweleni Mphephu, Board Chairperson, Lepelle Northern Water (LNW), outlined the status of the SIU investigations and the appointment of the executive management.

[See the presentation for details]

Briefing by the Special Investigating Unit

Ms Gina Pretorius, Programme Manager, SIU, took Members through the presentation which covered various proclamations including Proclamation No R54 of 2012: Various allegations at the Department of Water Affairs and Proclamation No R22 of 2016: The awarding of contracts to LTE Consulting by the Lepelle Northern Water.

LTE Consulting was initially appointed on an emergency basis on 20 August 2014 for the repair and refurbishment of the water and wastewater works for the value of R90 150 000. The appointment dated 20 August 2014 was informed by a directive issued by the Minister on 25 August 2014 requesting LNW to intervene in an emergency with regard to the water challenges in Giyani. The Minister indicated that Giyani Water Treatment Works should be completed by no later than 30 September 2014.

On 25 September 2014, LNW appointed LTE Consulting for non-emergency works to the value of R2.2 billion excluding tax. It should be noted that no procurement processes were followed when the project was extended from R90 150 000 to R2.2 billion. It must further be noted that the directive issued by the Minister on 25 August 2014 was not extended to include non-emergency projects. LNW thus extended the project to include non-emergency works increasing the amount from R90 150,000 to R2.2 billion without authorisation from the Department as there was no extension to the directive issued on 25 August 2014.

The SIU is of the view that if a new directive was issued to include the non–emergency works, LNW would have been required to go out on a competitive bid.

In terms of allegations, there was a reason to believe that the award was made to LTE Consulting without any competitive bidding or Supply Chain Management (SCM) process having been followed and LTE Consulting is a professional services engineering firm that rendered consultancy services to its clients and did not have the capacity or experience to execute or manage a “turnkey project”.

The investigation further uncovered that LNW paid an amount of approximately R4.1 billion to the service provider, which far exceeds the contract value of R2.2 billion.

[See the presentation for details]

The Chairperson welcomed and thanked the delegates for the presentations and commented that the reports were extensive and well-contextualised, which indicates how accountability should be pitched between the agencies, service providers, executive authorities, and implementing agents for the projects they are liable for. He stated that on 22 November, SCOPA will receive various reports from several agencies involved in these kinds of projects and several referrals have been cited by such agencies.

Discussion

Ms A Beukes (ANC) noted that there were minor improvements, although these are difficult to quantify. She stated that the fact that communities in Vhembe District Municipality were not pleased with government reflects how the government often scores its own goals. When the Committee visited the Vhembe community, the people raised many issues, and the lack of communication by the government created a myriad of challenges. She asked when the Department last engaged the community, the mode of communication used, and an update on the status of the project.

She asked about the establishment of the board and the chairperson's comments regarding potential changes. She also inquired about the appointment of the implementing agent and how previous challenges were addressed. Additionally, she expressed concern about the lack of water for the people and asked if the new implementing agent was successfully addressing these issues.

She inquired whether anyone else was appointed in the infrastructure unit besides the new municipal manager, and if there was capacity for the appointed personnel to tackle the challenges. She mentioned that presently, Giyani does not have clean water, although it was indicated that the project is at 99.8% until completion, and asked when the community would get water.

On delays in procuring special materials and poor planning when the project was initiated, she asked if procurement is still ongoing and if there is revised planning for the project. She highlighted that it had been discovered that some major components were defective and asked what the plan was regarding the pipeline not being suitable for the project.

She asked for confirmation on whether the project would be completed by the end of the year and inquired about the measures Deputy Minister Mahlobo put in place to ensure that the timelines were adhered to.

Responses

Deputy Minister Mahlobo replied that some of the issues raised were old matters about institutional capability hence he remarked and emphasised capable implementing agents. Admittedly, in the past, too many problems led to irregularities, including the flouting of legislation, which is why the SIU made the highlighted findings. He stated that in the process, some people decided to change the scope, and when this is done, in terms of the diameter of the pipeline, the designers need to be involved as everything changes. This was the resulting effect of the loss of time due to poor planning and capacity.

He mentioned that there were also issues around contract management and for more than 20 years, people’s problems had not been attended to. However, he oversaw the process to ensure that the government kept its promise and that the losses people incurred around their assets and livelihoods were restored.

He stated that in the bid or built environment, there is something called the escalation of costs as a consequence of poor planning and management. When the Department decided to get the project back on track, it had to deal with legacy issues and these included examples such as pipes being installed on someone’s land.

He indicated that the Department created a stakeholder forum in Mopani and Vhembe District Municipality which included business people, traditional leaders, and community leaders and this has improved communication. Deputy Minister Mahlobo said he was deployed to the province and travelled across the province conducting water engagements where all councillors and other stakeholders were called. This has already been done more than twice in Mopani District Municipality.

In engineering, he explained that there is something called practical completion and final completion, and the former is for testing the system to identify any faulty issues. There was a water pipeline that had been installed and this is extremely sensitive; small diversions could even lead to leaks. He said that the appointed team checked and tested the pipes with water before sealing them. Additionally, there was a point where a river had to be crossed, which was not a simple exercise. He highlighted that one of the problems in the water treatment plant was the existence of cracks, as was also noted by Committee Members, and he further explained that building pipelines underwater in terms of geotechnical assessment is a difficult task.

Deputy Minister Mahlobo said that the Department oversees the work weekly through the mayor’s office and added that they should have insisted that the team finish one village at a time to measure progress properly as it is difficult to measure progress when the work is done simultaneously. In the revised plan, certain villages have been prioritised, and these are expected to have water by the end of December. He said that the identified villages are being monitored and for them to have access to water immediately, it needs to be treated. Unfortunately, as it stands, the water treatment plant is not treating water to an optimal level in terms of the current volume. The identified 27 villages are expected to have access to water by March of next year, but there are also those that are priority areas. He indicated that the Department is content. The number of contractors on the ground doing reticulation is moving at a high speed hence, some villages currently have access to water. However, others were slow and as such, an acceleration plan was devised.

He stated that the Department supports the district development model and does not appoint without checks and balances, and with regard to the administration he said that stability had been reached and critical positions were filled.

Referencing stealing and vandalism, he highlighted that this is a big problem and more money was being spent on security services to protect materials from theft. In Gauteng at Emfuleni, thieves stripped the entire water treatment plant and materials 30 meters below ground were also being dug up. He said this goes hand in hand with people abusing the opportunity to support Small, Medium, and Micro Enterprises (SMMEs). He mentioned that these business people demand 30% upfront without working or initiating projects and contractors are coerced into paying protection fees. He added that projects get stalled by such criminal individuals who make unreasonable demands.

He mentioned that the chairperson of the board is enthusiastic and has been in office for more than two years. He further elaborated that the board was appointed by the Cabinet in August 2021, as an interim board and is working toward resolving pending challenges and is in collaboration with with law enforcement agencies. This partnership has resulted in notable improvements and the Department has also deployed some of its people to ensure that things are done properly.

Dr Phillips added that municipalities submit business plans when applying for funding from the Department through the Water Services Infrastructure Grant (WSIG). Of the 55 villages, Mopane District Municipality took the honours to ensure that it appointed its own service providers who would help prepare its business plan, design, and everything else and submit them to the Department. Once approved, a budget is attached for every project and submitted to the Chief Financial Officer. When the Department is pleased and makes allocations, it chooses the model of appointment, which is crucial, and the money is sent directly to the municipality. In such a case, the municipality is appointed as the implementing agent according to Schedule 6B and as the municipality implements the said plans, the Department takes on monitoring duties. He added that this is how the reticulation of the 24 villages was done.

He stated that the refurbishment and optimisation of the Giyani Water Treatment Works is expected to be completed by December. By the end of the same month, it will be at full operating capacity. However, some villages are nearing completion on the reticulation of the 24 villages and will receive water by December at the latest. He added that other villages will be completed beyond December as the work unfolds.

Mr Pule Shayi, Executive Mayor, Mopani District Municipality, said that looking back five years ago, the working relationship between DWS, Mopane Water Treatment Authority, and Lepelle-Nkumpi Local Municipality has seen much improvement in collaborations given the conditions that existed at that time. He stated that the number of interventions in disputes has been progressive and all issues that arise from the project were resolved in collaboration with all the stakeholders. He indicated that the journey has not been as smooth sailing as it sounds in the Giyani community; the only advantage is that the municipality is able to move and work with the community to avoid disruptions. He mentioned that some SMMEs want their fair share of opportunities, and stakeholders also make such demands.

He said that the municipality had one senior manager responsible for water, infrastructure, and sanitation, and another senior responsible for infrastructure had later been appointed. Such incumbents complement the work done on the ground. He indicated that members of the mayoral committee were deployed to local radio stations to communicate with the community on the ongoing interventions. On 28 September, there was an Imbizo where the status of all projects was presented. On 29 November, members will be going to Rustenburg to report on the status of the projects, and on Thursday, members have a multi-stakeholder forum which is a monthly engagement with all the stakeholders in Giyani.

He clarified that all projects would be completed in the following year, but there are isolated projects that will provide water even before the treatment plant is completed.

Ms T Siweya (ANC) felt the present engagement was better than the previous one as a lot of progress had been made. She said that during the oversight visit, Members were told about project costs that amounted to R42 million and she requested a breakdown of the cost management.

She also felt that there was not enough communication done on the ground to the people. She said that the broader communities are not necessarily engaged because the mediums used do not reach the people on the ground.

Deputy Minister Mahlobo admitted that the progress made over the years was not impressive and indicated that the Minister's attitude is to take up the problem head-on. He said the Department is making progress, although there are still communities without water. He indicated that communication will be expanded and interactions with communities will be enhanced as it can be agreed that more can be done.

He said that the issue of the treatment plant is a pump station as, from a structural engineering perspective, it cannot work. The pump station is on the base of the river and if it is done from scratch, it will be like building a bridge across the river or a refinery on the sea. He stated that the decision taken by the ministry was to optimise a treatment plant operating under capacity to treat more water. He added that the team is expanding the plant, although a proper one needs to be built and increased by an additional ten mega litres.

Referring to the treatment plant in Nandoni, he indicated that it is behind schedule and must still be moved from 60 mega litres to 120 mega litres. As the municipality has been able to complete its investigation, the Department hopes to get money back as it is needed for treatment plants.

He expressed his hope that contractors would be dealt with by National Treasury and if proper designs are not provided, in terms of the geotechnical assessments, contractors should be held liable.

Dr Phillips said the R42 million project mentioned by the Member was probably on the Giyani Water Treatment Works and the information was outlined in the presentation in detail.

A municipal official said the leaks were part of the scope of work of the construction and a contractor was working to resolve the issue. Different mechanisms were explored to address the leaks, and an alternative plan was developed to seal them while providing water. The official added that if Giyani were to be shut down for seven days, it would be disastrous.

Regarding the building that cannot be utilised, the official said that three things are followed when the municipality conducts an investigation. Firstly, the process followed to appoint a contractor is considered. Secondly, to determine the value for money and asses the work done versus what is required to be constructed. Engineers are then appointed to review the structure to assist in determining the value. If the process is not followed and no value for money is achieved, the process is taken to the tribunal to recover the money paid by the government. Lastly, the municipality follows the money and where the last cent was paid.

The official said that the treatment plant falls within the mandate in terms of the proclamation, and the matter had been investigated and is part of the civil action instituted at the Polokwane High Court for a claim of R4.1 billion. The services of a quantity surveyor have also been procured to assess the building and its value for money.

The Acting Chairperson said that during the visit, a gentleman was said to be working in the legal office at the municipal building but could not provide Members with answers at the time. Although the individual was dubbed as responsible for legal processes, Members were disturbed by his lack of expertise.

He said that he recently learned that in the Eastern Cape, farmers are in a commercial business and have huge investments for their own produce and would export their products. He indicated that there is a battle between the farmers and the municipality on the usage of water as can be seen in the Sundays River Valley area. Farmers in the area withhold money that must be paid to the municipality because of disputes on the standard of water in the area and such scenarios are going to be found in areas where there is an organised farming community. He added that the balance of the usage of water in these areas needs to be assessed closely as there was a recent situation where farmers blocked progress on one project which became an issue to the fiscus because such blockages come with very high costs. He asked what the plan was to safeguard against such challenges.

He said that in some areas, traditional leaders do not know about ongoing projects while pipelines flow in their communities and land thus engagements with people become essential.

The Acting Chairperson stated that water availability and access are becoming increasingly concerning, especially water efficiency. He noted several implementing agents, including the Water Board, municipality, and the Development Bank of Southern Africa (DBSA), among others. He asked if there is a way of ensuring that teams properly coordinate to reach the desired outcomes within the prescribed period. He added that solid management is required at the point of issuance.

Deputy Minister Mahlobo said that there are many historical issues that the Department is dealing with. A number of farmers, in terms of the National Water Act under the previous Department of Irrigation, have existing water entitlements. The Department has not moved with speed to ensure that such entitlements are revisited with compulsory licensing. He continued to state that there is a team led by Mr Sikhosana that is looking at any breaches in license conditions. The Department has also started in various water management areas that are highly stressed with a high demand for more water. He noted that compulsory licensing is important and will help. The Constitution and the Act also made it clear that the right to access water for human needs is non-negotiable. The Act has a reserve for human consumption and there is also water that must be set aside for the ecosystem and international obligations. Verification, validation, and registration of all the users will allow the Department to go to the water management areas and enforce water compulsory licensing to revisit the issue of reallocation.

In the region of the mayor which Deputy Minister Mahlobo visits, he said that close to 80% of the water goes to agriculture, and the farmers in the region are the biggest in the country for exports but there are instances of illegal use where water is extracted illegally. He mentioned that the farmers go as far as creating dams and the enforcement team has done destructions of such dams to release water. He stated that this is a priority matter in the ministry and indicated that although the Department wants to support farmers, the same farmers must not take advantage. Deputy Minister Mahlobo said that a significant number of farmers are in irrigation boards and the Department is working to transform these boards into a water usage association. He emphasised that it is unacceptable for 80% of the water in Mopane District Municipality to be used for agriculture. He stated that as per apartheid arrangements, water and electricity are cheaper for businesses but expensive for people.

Referring to price setting and tariffs, he said that an independent regulator was appointed after discussions with National Treasury and the South African Local Government Association (SALGA), as was advised by experts.

He highlighted that the matter of water access is emotive as there are cases of children who go to school without water access. The Human Rights Commission partnered with the Department to look at the reports from KwaZulu-Natal, Limpopo, Eastern Cape, Mpumalanga, and Gauteng, where the entities have become the voice of the voiceless.

He mentioned that the Census 2022 report demonstrates the advances made, however, the reality is that there are targets that have not been reached hence the Department's efforts are to ensure that no one is left behind. He stated that there is a problem when the management of water or infrastructure has not reached the desired levels and when there are people with taps in their homes but there is an infrastructure failure. He indicated that more than 90% of South Africans have access to water but not on a daily basis and in some instances, it has dropped to 67% or below.

Working with the Public Protector and Human Rights Commission, the Department has intervened in various areas where municipalities are failing. In the City of Tshwane, the Department intervened in Hammanskraal and Rooi Vaal, and a water board was formed. The water treatment plant will be increased to 40 mega litres from the work accomplished. Also, the Department has over 178 interventions based on the reports, and from these, what is left is the Eastern Cape and Limpopo, which are the main areas of focus.

Deputy Minister Mahlobo said that if the Department does not do what it is supposed to, it will give rise to unscrupulous business people who want to benefit from its resources. A new phenomenon on the ground is that the infrastructure gets destroyed and the interference of this is because of the collusion between private water tankers and municipal officials. Hence, the policy position for non-approval of water tinkering. He indicated that municipalities have been instructed to provide water in emergency conditions with their own tankers and as such, they are required to purchase their own tankers. He said that if these measures are not implemented, the individuals involved in sabotaging water plants break valves and immediately get a water tanker to counter the problem they caused. These tankers carry water that is not paid for and cannot be billed because it does not come from the tap. In addition, private trucks come and steal water. He stated that many other social ills are presented by such practices that pose a risk to women and mothers.

Dr Philips noted that the Department treats each case differently. On the reticulation of the 55 villages, one of the reasons why Mopani District Municipality remains the implementing agent is because the Department has no intention to take away the function of the municipality. It also intends to capacitate it through the process so that when the Department has left, the municipality has acquired the proper skills to run the projects itself. Once the bulk infrastructure is done, the Department relies on the Water Board for operation and maintenance, hence it becomes easier to have them as part of the implementing agents.

He indicated that there were issues with capacity in the past in Lepelle-Nkumpi Local Municipality, but an executive team has since stabilised it.

He said that the project plan for the 31 villages can be provided along with the details of the R42 million project.
 
The Chairperson noted the responses and indicated that these matters needed to be laid to rest urgently so that people could begin enjoying the services that government promised. He thanked the delegation for the interaction with the Committee.

[The meeting was adjourned.]