Department of Water Affairs and Forestry Annual Report 2008/09

Agriculture, Forestry and Fisheries

13 October 2009
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

Poor funding and lack of infrastructural investments were highlighted as a key challenge by the Department. The state of municipal infrastructure was a concern for the Department and regulatory obligations would be fulfilled. Measures were in place in order to address the issue of skills shortage. Capacity had to be intensified to reduce over-reliance on consultants. Delays in the De Hoop dam project resulted in delays concerning the expenditure of donor funds and under expenditure. Although the Department had received a clean audit report, the Auditor General had identified key issues that had to be dealt with. The process of licences and water delivery had been key focus areas during the previous year. The implementation of projects usually took a year as they were on a large-scale basis. The Department’s infrastructural development focused on Limpopo, the Eastern Cape, KwaZulu Natal and Mpumalanga. Re-settlement projects were problematic and were linked to land restitution. Forestry had exports amounting to R14 billion during the previous financial year.

The Committee was extremely concerned about the quality of water in the country. The authorisation of water treatment plants was also of concern. The Department had to concede that it was struggling to provide clean water to all South Africans. The Committee had singled out the currently low tariffs as a future concern that might spike a tariff hike of the magnitude of Eskom’s recent electricity tariff hikes. The over reliance on consultants, lack of implementation and lack of an established relationship between the Department and the water boards were strongly condemned by the Committee. The Department conceded that some municipalities were given responsibilities they should never have been given.


Meeting report

Overview of Department of Water Affairs and Forestry Annual Report 2008/09
Ms Nobubele Ngele, Acting Director General for the Department of Water Affairs provided an overview of the highlights, challenges and available options for Water and Forestry sectors. She informed the Committee that the million tree programme had already planted 1.5 million trees. The Department had a register for movable and immovable assets which ran into the billions. The key challenges were highlighted as comprising inadequate investment and funding for water resource infrastructure. The Department had set up a Committee that would re-examine the funding and implementation model for water infrastructure. Water conservation demanded proper management. This was difficult due to the behavior of people. The state of municipal infrastructure was a concern for the Department. It had been decided that the regulatory function would be consolidated. More enforcement officers would be employed in order to enforce the correct standards of quality drinking water. The capacity was currently not enough. However the Department was planning to ensure that it would be by the end of the year. The Department had aimed at reducing forest fires. The key challenges regarding providing support to municipalities included balancing the support to municipalities whilst executing the regulatory obligations. The delay in finalising the transfer of infrastructure to municipalities was also a concern. The Department was participating in a committee that was established by the Department of Cooperative Governance and Traditional Affairs (COGTA) in order to formulate a turnaround strategy.

The Department was addressing the issue of skills shortage and it was getting tangible results concerning this. The challenge for the implementation of water reform was being addressed; the Minister had set up a task team consisting of special advisors to come up with measurable actions that needed to be implemented. The Department was currently working with the Department of Rural Development to ensure that there was an integrated approach concerning the water and land allocation reform. The Minister had already set up a task team to look into the financial viability of water management institutions. It would report to the minister on how to re-align and accelerate delivery. There was a need for aligning systems and processes.

The options that were available to the Department for ensuring delivery included the implementation of the water for growth and development framework. The Department acknowledged that there was a need to consolidate and re-package the way in which its work had been done. The Department would work with other departments concerning the current framework. It would also work with COGTA to ensure that issues on the ground were being dealt with. The learning academy was an intervention aimed at building capacity. Capacity had to be intensified to ensure that there was no over-reliance on consultants. The institutional realignment project was aimed at ensuring that the Department optimised the strengths and capacity within the sector.

It was important for the Department to be visible within the other programmes of government. Building leadership and management would also be a key focus. The Department had received a clean audit report. The Auditor General identified issues which if not dealt with would result in regress. The Department was working around the clock to ensure that these issues would be dealt with.

Finance Performance Presentation
Mr Onesmus Ayaya, Chief Financial Officer for the Department of Water Affairs informed the Committee that out of a total budget received of R7 billion, R6.5 billion had been spent. Most of programmes had spent 100% of their allocation. Overall expenditure had slightly improved. The reasons for the increase in expenditure was due to the additional funds granted for the backlog in sanitation at schools, clinics, for regional bulk, Working for Water and Working on Fire.

The Department had embarked on an aggressive arrangement to fill vacancies. The revenue that was generated by the Department from charging water users was not enough to build new infrastructure. The funds voted for in Parliament were then used for the development of bulk water infrastructure. A further reason for under expenditure was as a result of the De Hoop Dam project. The disbursements of funds for the project could not proceed as anticipated mainly due to the delays in the conclusion of negotiations to finalise the memorandum of agreement with the 23 different mines. Donor funds were received in order to implement the Community Water Supply and Sanitation Programme. The funds were used for the support of the implementation of water and sanitation infrastructure projects; local government capacity building and knowledge sharing as well as the improvement of financial management. Due to delays from the De Hoop dam project, there were also delays in the expenditure of donor funds. The achievements in the transfers for operating subsidies were that the allocated budget was transferred, there was no under expenditure on schedule 7, all municipalities had approved Rapid Planning Processes (RPPs) and addendums and staff were transferred to municipalities. There were challenges however, these were that the staff transfer had not been finalised, the allocated budget was not adequate and some municipalities were not reporting on the funds that were transferred to them.

R180 million had been transferred during the 2008/09 financial year to the Komati Basin Water Authorities (KOBWA). The challenges were: the Relocation Action Plan for compensating the communities affected by the construction of the Driekoppies Dam had not been finalised. Due to the land claims, the beneficiaries had been unable to fully exploit the potential of the properties and expand their operations by taking up the development opportunities that had been on offer at the time of receiving their compensation. Three of the four senior managers in KOBWA were newly appointed and had to find their feet.

The key highlights from the Auditor General’s report on the 2008/09 financial year were that financial statements were subjected to material amendments resulting from the audit. The internal audit function did not substantially fulfill its responsibilities for the year as set out in TR 3.2/27.2. There were significant deficiencies in the design and implementation of internal control in respect of compliance with applicable laws and regulations. There was no strategic plan document for Water Trading Entity (WTE). There were unallocated receipts from customers which had been deducted from the carrying amount of trade receivables. WTE had not implemented adequate measures to clear the suspense account at year end. The review of the debtor’s age analysis indicated that debtors were outstanding for periods longer than 366 days. The corresponding figures for 31 March 2008 had been restated as a result of an error discovered during the current year in the financial statements of the Water Trading Entity for the year ended 31 March 2008.

Questions from the Committee
Ms M Mabuza (ANC) reminded the Committee that during the last presentation the issue of the quality of water in the Limpopo province came up. The blame for the poor quality of the water was shifted to Zimbabwe. In the current report, mines and poor infrastructure were being blamed for the poor quality of the water. What was the Department doing to fix this problem? The Blue Drop status was questionable, especially in Limpopo and the Eastern Cape. The Water Research Commission’s study estimated that 30% of revenue from water was lost through municipalities, leaking pipes, poor billing systems and illegal connections. What was the Department doing to assist municipalities to correct this? What was the Department’s relationship with the water boards? Why were the water and sanitation projects transferred to the Department of Health?

Ms B Dlulane (ANC) expressed concern about the over emphasis by the Department on task teams. Why was there a reliance on consultants, whereas available funds were not being spent? If the situation was this bad for the Department, how much more so, for the municipalities?

Ms A Lovemore (DA) referred to page 64 of the Annual Report under the heading Water Allocation Reform and asked why only 10% of the budget was utilised to assist poor farmers. The issue of attachment management agencies required clarity, how much was allocated, how much was spent and allocated to the payment of salaries. What were the Departments view’s about the fact that water was under-priced? The Albany Water Board was facing closure; emails had been doing the rounds for at least six months regarding the need for money and yet nothing had been done, why?

Mr P Mathebe (ANC) said that it was unacceptable that in the presentation one of the challenges cited was that newly appointed officials were still finding their feet. What was the reason behind the increase in legal fees by 2%. What were the current and future plans for the treatment of small water treatment plants. What collaborative programmes had the Department developed about long term management plans. The issue of consultants was worrying. Was there any person who had previously worked for the Department and returned as a consultant, how many had done so and how long was it before they returned? How was the Department supporting the community? What mechanisms had been put in place to ensure that funds allocated to municipalities did not dwindle.

Ms C Zikalala (IFP) expressed concern about the purity levels of water in the rural areas. Why was this case, were there any improvements in this regard? The work that the Department had done concerning dams was complimentary. What happened to municipalities that did not report on funds transferred to them?

Response
Mr Sizwe Mkhize, Deputy Director General: Policy and Regulation, Department of Water and Environmental Affairs, explained to the Committee that a lack of Blue Drop status was not reflective of problems facing the Department. Admittedly, most water boards were facing sustainability issues. The Minister had deployed task teams to resolve this issue. The relationship between water boards and the Department was that their business plans had to correlate with that of the Departments. The budget had been spent. Support for poor farmers had been expanded but 90% of the budget was used to provide water harvesting tanks for poor communities instead. There were 19 catchment management agencies; this could be reduced to 9 if allocations were done according to the provinces. The Albany Coast water board needed R2.4 million, its
tariffs suggested that it was unable to recover the operating costs. The water board was losing R50 000 a month. The management within the Department would make a decision regarding this.

Performance against Targets: Water (Third Presentation)
Reconciliation strategies were initiated for the Vaal River system, the eThekwini metro and surrounding areas, the Algoa River system and the Crocodile West system.

Dr Mkhize explained that a discussion paper would be developed regarding a climate change response strategy by the end of the year. The processing of licences and delivery of water had been key focus areas during the previous year. Admittedly it had been a slow process but the framework had already been developed. The illegal storage of water project had to be discontinued due to a lack of capacity. Municipalities would be supported regarding the Water Use Efficiency programme, 27 out of a set target of 28 had been supported. The quality of water was being monitored on all sights.

The Department had ensured that the water boards compiled their financial reports and statements which were tabled before parliament. The governance issue regarding water management institutions was up to date. The Department would ensure that land reform projects would be given water usage licences. The Department aimed to save 40 cubic meters of water across the country. There was still a licensing backlog but the Department aimed at eradicating the problem by 30%.  The Vaal, Berg, Umgeni and Algoa systems were top priorities in order to balance the demand for water.

Performance against Targets: Water in the Regions (Fourth Presentation)
Ms Thandeka Mbassa, Deputy Director General: Regions in the Department of Water Affairs said that the Department had
realised that it had to develop bulk regional infrastructure. Twenty two out of a set target of 32 projects were implemented. The implementation of projects would be over a year. The provision of water and sanitation in schools was the responsibility of the Departments of Health and Education. The Departments had struggled and the Department of Water Affairs took this function over. Admittedly not enough progress had been made in order to ensure that water was provided, there were still communities that were not receiving water. The issue was complex and there were problems such as capacity, leadership, economic growth and rural-urban migration. The Department had in fact been making progress. The Department could only do so much with what it was given. Drinking water quality management was an ongoing challenge. The Department had realised that some municipalities were given responsibilities they should never have been given. Sector performance management had several weaknesses. There was no proper investigation regarding operations and management. There were still problems regarding the transfer of staff. In the instance that municipalities failed to submit reports, their funds were halted. There was still a licensing backlog but the Department aimed at eradicating the problem by 30%.

Natural Water Resources Infrastructure (Fifth Presentation)
Mr Cornelius Ruiters, Deputy Director General: Natural Water Resources Infrastructure, Department of Water Affairs said that the Inyaka treatment works was a key highlight and Phase 1 had already been completed. The Department’s infrastructural development focused on Limpopo, the Eastern Cape, KwaZulu Natal and Mpumalanga. The Berg water project had been completed. Municipalities also had a responsibility to ensure that the water infrastructure was in a good condition. The Nyondoni treatment works had been completed, 95 out of a target of 96 was achieved. The Department’s goals were that De Hoop would be at 41% and Nyaka at 99% of completion. The Mokolo and Komati projects would commence soon.

Forestry (Sixth Presentation)
Dr Moshibudi Rampedi, Deputy Director General: Forestry for the Department of Agriculture, Forestry and Fisheries said that post settlement support was a challenge. Post settlement support was linked to land reform and restitution. Dukuduku forest in KZN posed a number of problems; these were linked to other social issues. A long term view for forestry had been developed. More than a million trees had been planted during the last financial year. Forestry had exported R14 billion worth of goods during the last financial year. R46 million worth of revenue had been collected because the tariffs for timber were followed on an annual basis. The Department relied on municipalities regarding the management of fire.

Discussion
Mr G Morgan (DA) commented that there were quite a few notices that were issued against mines. Was the Department in compliance with the National Water Act? Why were there few directives issued against mines. Water was under-priced in South Africa, was the Department planning to spring a major price hike.

Mr Mathebe (ANC) said that the Committee was still awaiting responses to written questions that it had posed to the Department from the previous meeting.

Ms H Ndude (COPE) said that the Department was far from providing water as a constitutional right to the majority of South African citizens. The report did not have figures of beneficiaries from water tanks. Water and sanitation facilities were only being provided to schools in the urban areas and not the rural areas. The major problem was a lack of implementation and not policies and regulations. To Mr Ruiters, how many dams were there in the Eastern Cape, more specifically the old Transkei?

Mr P Pretorius (DA) asked why targets were not being met. 10 000 hectares had not been planted and between 2005-2009 there was a deficit of 13%. What was the Department doing to rectify this looming crisis?

Ms Lovemore (DA) commented that it was amazing that a target of 12 months for an application had been set. This surely encouraged the use of water by illegal means as well as under development. There was no mention of the chemical contamination of water in the annual report. There were a number of water treatments that had not been authorised. It was alarming to see a target of 10% being set and achieved for the authorisation of treatment plants.

Mr L Bosman (DA) noted there were quite a number of non-compliances with legislation in the financial report. There were no
timeous collections of money due to the entity. The effective safe guarding of assets was lacking. There were still some outstanding issues despite a clean audit. The number of applications for water licence transferring had to be furnished as well as well as the reasons for non-transfer.

The Chairperson asked if there had been a revision of tariff prices and to what extent was the Department ready to supply water.

Ms Ngele conceded that the department had not furnished responses to questions posed from the last meeting. The responses would be issued on 26 October. The fact that policies and regulations were still being developed as opposed to implementations was a problem for the Department.

Mr Ayaya said that the Department had been active regarding the issues raised by the Auditor General. Issues of revenue surfaced in 2007/08. An action plan was formulated after every report from the Auditor General. The Department had recently identified shortcomings in the pricing strategy, it had taken this long due to the poor financial management history of the Department. When the problem was discovered, Treasury was informed immediately. A working group had been set up to review this matter.

The Chairperson interjected and explained that time constraints were a problem for the meeting. The issues would be dealt with at another session for both Committees in order to deal with these issues.

The meeting was adjourned.

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