Water Boards Annual Reports 2007/08: Botshelo, Amatola, Bushbuckridge, Namakwa, Randburg, Nhlathuze and Umgeni

Water and Sanitation

06 July 2009
Chairperson: Ms M Sotyu (ANC)
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Meeting Summary

The Committee heard reports from Botshelo, Amatola, Bushbuckridge, Namakwa, Randburg, Nhlathuze and Umgeni Water Boards. The Committee expressed concern about infrastructure problems and qualified audit reports from Boards.

Members debated the need for extensive oversight visits to assist the water boards to address their challenges. The employment of inexperienced financial officers was debated and the Committee was relieved at action taken to address this matter.

Meeting report

Botshelo Water Board Annual Report 2007/08
Mr Solly Bokaba, CEO, provided an overview of the operations of the Botshelo Water Board. It operated and maintained water treatment in Ngaka Modiri Molema and Dr Ruth S Mmpati District Municipalities in the North West Province in terms of Water Services Provider Agreements. Mr Bokaba provided the qualified audit opinion by the Auditor General and information on the current intervention to turnaround the situation at Botshelo Water. Mr Bokaba concluded by stating that there had been 10 years of mismanagement in the area, but continual oversight by the Department of Water and Environmental Affairs would assist Botshelo Water to return to viability (see document).

Amatola Water Board Annual Report 2007/08
Ms Nothemba Mlonzi, Chairperson of the Board, outlined the operational background of Amatola Water and provided a review of the past ten years of its existence. The aim of Amatola Water was to become a bulk water service provider to the area. A financial report was provided to the Committee (see document).

Bushbuckridge Water Board Annual Report 2007/08
Ms Thokozani Nyakane-Maluka, Chairperson of the Board, provided the background to operations at Bushbuckridge, and outlined the management structure of the Board. The qualified audit report was explained and the forensic audit report was provided to the Committee (see document).

Sedipeng Water Board Annual Report 2007/08
Mr Makumu Ubisi, Acting Chief Executive Officer, briefed the Committee on the Area of Supply, Corporate Governance and the Infrastructure of the organisation. The major achievements and challenges were presented to the Committee, including details of the unqualified audit report (see document).

Mr B Holomisa (UDM) asked if the Department was satisfied with the reports presented in this meeting. He asked all Board members and the Department of Water and Environmental Affairs in which areas they would like to see amendments made to the legislation to improve service delivery.

Ms Nyakane-Maluka (Bushbuckridge Water Board) recommended that an amendment be made to the legislation to resolve the contradiction between Section 36(c) of the Water Services Act and Section 78 of the Municipal Structures Act. The Committee could assist in this regard.

Mr Bokaba (Botshelo Water Board) said that the Municipal Systems Act was encouraging municipalities to engage with Section 78 of the Act which allowed a municipality requiring services to first attend to their own internal capacity. Given that water services was a primary service, this created challenges for water boards like Botshelo, because the new water boards claimed that they did not need Botshelo and did not know how it was created. The Municipal Systems Act did however allow for the provision by a municipality of its own water and this had also created problems.

Mr P Mathebe (ANC) said that Botshelo had received a qualified audit report in that systems in the area were not talking to each other, and in some instances there were no supporting documents. He asked if Botshelo Water Board had managed to employ a Chief Financial Officer who met the criteria for the position.

Mr Bokaba replied that the Botshelo Board had found that the person appointed in the financial directorate did not pass the performance evaluation so he was not confirmed in the post.

Mr Mathebe said that Botshelo Water Board had not reported on skills development, and asked them to do so.

Mr Bokaba said that the Board was now looking at employees who required skills. The challenges were being addressed through the turnaround strategy at Botshelo Water Board.

Mr J Skosana (ANC) asked for an explanation from the Botshelo Water Board about the 10% revenue decrease and the operating expenditure increase of 30%.

Mr M Dikoko, A Board Member from Botshelo Water Board, said that for the year under review, 2007/08, it had compared its consumption and found a 10% decrease in the revenue, and investigated this issue and found that there was an improvement in the infrastructure of one of the clients in their municipality. It was found that this reduced underground activity. The 30% operating expenditure increase in the year under review brought to light what was considered a disastrous matter.  It revealed a 10 year period of mismanagement, a CEO who was paying himself a salary of R2 million per annum, and giving himself a R2 million bonus.

Mr Skosana said that the report from the Bushbuckridge Water Board was different to the report the Committee had received the previous week. There were many problems in that report, but the report received today was clear and clean, with accounts of Members of the Board working together smoothly.

Ms Nyakane-Maluka replied that the report submitted the previous week attempted to brief the Committee on the current activities of the Board itself, but the report submitted today differed in that it was the Annual Report of 2007/08 and there have been developments since then.

Mr Skosana asked if all the board members were still with the Board, and if not then a dissolution of the Board should be proposed.

Ms Nyakalane-Maluka replied that resignations from the board of the Bushbuckridge Water Board were due to board members being business people as well and needing to leave to take care of their businesses

Ms Nyakane-Maluka said that the previous Minister had found no reason to dissolve the Board as the Water Board had been established to address past imbalances. A report had been tabled with the Minister about this and provided reasons for making improvements in the area. One might even find that Bushbuckridge Water was covering other areas as well.

Ms Nyakane-Maluka also explained that the Chief Financial Officer was acting as the CEO, and was suspended due to the mismanagement of assets of the institution. This had been reported as a problem the previous week.

Ms Nyakne-Maluka said that in terms of the 2007/08 financial year, there were no resignations, but the briefing last week indicated that Board members were still to resign.

The Chairperson asked for clarity regarding these resignations.

Ms Nyakane-Maluka explained that during 2007/08 Bushbuckridge had eight board members, but currently board members had resigned and this would be reflected in the next annual report.

Ms A Lovemore (DA) said that the report from Botshelo Water Board mentioned competition amongst water service authorities. She asked from where the competition came.

Ms Lovemore said that matters mentioned in the Performance Review were not mentioned in the Annual Report, and asked for an explanation for this.

Mr Bokaba of the Botshelo Water Board said that a performance review was conducted and a turnaround strategy developed. After consultations with the Department, the challenges around financial management, operational issues and human resources (HR) had been addressed. With regard to HR, immediately after the board was appointed it realised that there were many gaps in the 2007 strategic plan. The organisational design at the time did not speak to this matter. The organisation was re-designed to the extent that it looked at employees who required skills. Major gaps were found in the financial directorate.

Mr Bokaba said that one of the challenges that the Water Board was facing was that of billing. The Operations division was not communicating adequately with the Finance Department. With the turnaround strategy, this situation has improved - to the extent that the Water Board was up to date with its billing.

Ms Lovemore asked why infrastructural matters were not addressed in the Botshelo Water Board report.

Mr Dikoko said that regarding employee costs, an analysis found that people were not always appointment based on advertisements, but on family connections with Board members. People were also paid high salaries and stock losses were high. There were 500 boreholes in the area and people were buying diesel oil and selling it.

Ms Lovemore said that water quality was a concern in the Sedibeng Annual Report as it cited that 60-70% or the water came from ground water. They also operated waste water treatment works and a statement was made that waste water treatment works could not deal with nitrates. That meant high levels of nitrates were being discharged into the environment. A statement was also made that the ground water that was being extracted had high levels of nitrates which was potentially lethal, especially for babies. The report also stated that most of the time Sedibeng produced Class 2 water, which was not safe to drink, year after year. Ms Lovemore asked if the Boards were taking action regarding water quality.

Ms C Zikalala (IFP) asked about the learnership programmes offered by the Amatola Water Board. She asked how the Sedibeng Water Board conducted their Adult-Based Education and Training (ABET) programmes. She indicated that the Committee should visit these Water Boards.

The Chairperson said that it was the intention of the Portfolio Committee to visit the Water Boards to reinforce and empower the Boards that were struggling. Municipalities had a lot to do with the failures of the Boards. The Sedibeng Water Board Annual Report was not clear about whether their audit report was unqualified or qualified, and the Portfolio Committee needed clarity on this matter.

Ms Ndude (COPE) said that the Bushbuckridge Water Board report was not all negative as they were able to report on women’s appointments and other improvements were noted in the Annual Report.

The Chairperson asked if the Botshelo Water Board had raised their challenges with the legislation with the former Portfolio Committee. If the legislation needed to be amended, there would not be any challenges from the Committee because service delivery had to be facilitated at all costs.

Ms Ndude said that the Botshelo Water Board had not raised some of the items that were raised as challenges by others. She named as examples: consulting and professional fees, repairs and maintenance, employing staff without expertise, and the issue of improving performance. Ms Ndude asked how the Botshelo Water Board was going to improve the situation.

Mr Mathebe noted that the Botshelo Water Board had been able to explain the mess they found themselves in, but were not able to explain the specifics. For example, they had said that skills development had been taken care of, but did not explain to the Committee how they were doing this. The high salary level had also not been explained.

Mr Skosana commented that the Botshelo Water Board report had opened more loopholes. The legislative obstacles to service delivery should be exposed and dealt with.

Rand Water Board Annual Report 2007/08
Ms Jean Ngubane, the Chairperson of the Board, explained the area of supply within the provincial framework, showing the original area of supply and the extended area of supply. The achievements and challenges of Rand Water were outlined and it was noted that Rand Water had never received a qualified audit report (see document).

Namakwa Water Board Annual Report 2007/08
Mr Christiaan Carstens, Acting Chief Executive Officer, provided a background to the situation in Namakwa saying that currently the Board was not solvent, and not much could be done to improve the situation because there were only two administrative staff members in the office. Mr Carstens emphasised that the Municipality did not have the capacity to take over the Board, but consultants had been temporarily appointed to perform managerial functions to assist the Board (see document).

Mhlathuze Water Board Annual Report 2007/08
Mr Silas Mbedzi, the Chief Executive Officer, outlined the operating areas and services provided by the Board. The Board had remained financially sound and complied with all applicable legislation. He reported that the Board had received an unqualified audit report for 2007/08 (see document).

Umgeni Water Board Annual Report 2007/08
Mr Mzimkulu Msiwa, the Chief Executive Officer, outlined the operational achievements of the Board and explained the Board’s intervention at OR Tambo District Municipality. Bulk water interventions were presented to the Committee, accompanied by extensive financial reporting around this kind of water supply (see document).

The Chairperson said that due to time constraints, it would not possible to answer their questions, but the meeting with Water Boards would continue the following day.

The meeting was adjourned.

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