Overview of Strategic Plan and Budget 2010/11: Briefing by Department of Water Affairs

Water and Sanitation

23 February 2010
Chairperson: Ms M Sotyu (ANC)
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Meeting Summary

The Department of Water Affairs gave the Committee an overview of its Strategic Plan for 2010. They focused on their alignment with government priorities, the top five budget drivers, and the success drivers.

The Committee’s questions focused on regional waste water treatment works in many municipalities, the lack of strategy or policy on desalination and recycling, rain water harvesting, the need for better gutter systems for Reconstruction and Development Programme (RDP) houses, the costly removal of alien vegetation from farms, the National Water Research Strategy, water leakages from pipes, the Working for Water programme, the Department’s efforts to help communities surrounding the Jozini Dam, Ms Nobubele Ngele's position as Acting Director-General, and outstanding fees owed to the water boards by municipalities. Members also looked at the action taken against mines operating without water licenses, acid mine drainage and the action taken against it.

The Committee noted that the Department owned land in Hammarsdale. This land was heavily contaminated with mercury and the local, poor people were grazing their cattle on the land. Members had requested that the Department provide them with information about it. However, they refused to provide the data for the water quality of the land. This made Members very suspicious, as the Department seemed to be breaking the law. A Member, Ms A Lovemore stated that she had attended a conference hosted by the DWA and the Water Institute of Southern Africa (WISA) on skills and capacity development within the water sector. A representative from the DWA did a number of presentations and showed that in respect to water services provision in municipalities, 9% of municipalities were in a severe crisis. 38% of municipalities were most likely to reach the same crisis within eight months if there was no intervention. 42% of municipalities were at risk of reaching the same high risk profile if there was no intervention. The Department responded that they were not aware of the presentation made by the official at the conference. The Committee thought it was disturbing that some Departmental officials were attending conferences and saying things that were different to what the Department was saying now.
The Chairperson stated that the Departmental official that presented at the conference should come to the workshop to address the problems that Ms Lovemore mentioned.

Members stated that the Department had a constitutional obligation to ensure that the lower tiers of government provided water to the people, and to intervene if they did not. Many municipalities did not have the capacity to fulfill this service. The extent to which this has been provided in the past left much to be desired. The DWA had to look at how they could prioritise municipalities and what role the provincial government could play. The Committee asked about the criteria the DWA used for identifying poorly resourced farmers. They wanted to know how the Department would ensure that its assistance would reach farmers in deep rural areas.

The Department discussed its budget. The expenditure budget for the end of January 2010 showed that 71% of the 2009/10 budget had been spent. R2 254 695 000 of the budget was still available. The money was spent on administration, water resource management and water services. The budget would also be allocated to five Departmental programmes. The programmes include administration, water management, national water resources infrastructure, regional management and water sector regulation.

Members questioned the methodologies used for depreciation and asked if they were checked. They also wanted more information on the department’s use of a “suspense account”. The Committee thanked the Department for a refreshingly frank discussion on the finances and challenges they faced. Members said that they would need more time to come to grips with the figures and information contained in the budget presentation.

The Committee agreed that a meeting would be held after the DWA workshop to discuss certain issues and see where the Committee could be of assistance. The important thing now was to deliver clean water to the people.
It seemed that some of DWA's programmes were not working. Even the ten point plan in Minister Sicelo Shiceka's Local Government Turnaround strategy looked good on paper; however, there was a question of whether the DWA had the capacity to implement and deliver on them. Parliament now had the mandate to amend the Money Bill and Amendment Procedure and Related Matters Act. Members wondered if the Committee should recommend some of the issues experienced by the Department for discussion.

The Chairperson noted that there were many questions that were not responded to; however, DWA would discuss these issues in detail at the workshop with the Committee.

Meeting report

Briefing by Department
Section A: Overview of the Department
Ms Nobubele Ngele, Acting Director-General (AD-G): Department of Water Affairs (DWA), discussed the Department’s mandate, vision, mission and values. (See document)

Section B: Overview of the Strategic Plan of the Main Exchequer Account (MEA)
Ms Ngele discussed the Department’s alignment with government priorities. The DWA resolved to contribute to economic and social development, ensure equitable and sustainable water resource management, promote rural development, effectively support local government, improve its capacity to deliver services, and contribute to global relations.

The DWA would contribute to economic and social development by creating decent employment through infrastructure delivery, ensuring the provision of regional bulk water as well as bulk water infrastructure, ensuring strategies and feasibility plans exist to reconcile water requirements and availability, and by ensuring effective implementation of pricing strategy and funding models. The DWA would contribute to rural development by creating sustainable rural livelihoods. Regarding sustainable and equitable water resource management, the Department would improve equity in water services and management, ensure sustainable water use, and protect and improve water quality. The fourth strategic priority was to support local government by implementing the Local Government Turnaround Strategy (LGTS). The DWA would assist with global relations by being involved in strategic leadership and engagements of the department in multilateral forums, and forging strategic relationships with countries in Africa and the world. In order to improve its capacity to deliver services, the DWA would have to improve public understanding and appreciation of the value of water, and develop the appropriate skills to address the sector needs.

The top five budget drivers looked at infrastructure development and maintenance, regional bulk infrastructure, the Working for Water (WfW) campaign, maintenance of transferred water schemes, and integrated planning and water resource monitoring. The success drivers included strong business planning orientation, performance management, and building capabilities for the current and long term.


Discussion
Ms A Lovemore (DA) stated that Special Assignment had shown a programme showing waste water being put in to the Vaal River. The Department had stated that it would be looking at regional waste water treatment works in many municipalities. She wanted clarity on this. She was very disturbed by a lot of what was said in the presentation; specifically that there was no strategy or policy on desalination and recycling. This was a goal that was in the Growth and Development Framework for quite some time already. She wanted to know when this policy would be ready. She asked for clarity on the Reconciliation Strategy Study. The Minister had said that the study would be complete at the end of 2011, which was far too late. Ms Ngele mentioned that it would only be ready in 2013. This information was disturbing and needed to be clarified. It was said that rain water harvesting was mainly for food security reasons. The Committee was pushing for the use of this water for new housing settlements. She suggested that the Department talk to the Minister of Human Settlements about the suggestion, as he did not seem interested in it. The Department also needed to look at better gutter systems for Reconstruction and Development Programme (RDP) houses. Was all rain water harvesting tanks going to rural settlements, while none were being used for new housing developments within urban areas? She stated that her constituency, in the Eastern Cape, raised a lot of concerns about alien vegetation on farms. Farmers were expected to, by law, remove alien vegetation from their farms; however, it was very expensive to do so. The Department's strategy showed that it would support the farmers who were poorly resourced to remove alien vegetation. This would be done through the Working for Water (WfW) programme. What would happen with existing commercial farmers and why would they not be given support? The National Water Research Strategy should have been published in January. Why was the strategy not published and when would it be published? The Director-General of the Department of Environmental Affairs (DEA) had said at the previous meeting that there would be dedicated time in court for environmental issues instead of dedicated environmental courts. She asked the DWA to comment on this. She noted that the performance target for the number of cases to be addressed in 2010/11 was 45. The Member told the Committee that she had attended a conference hosted by the DWA and the Water Institute of Southern Africa (WISA) on skills and capacity development within the water sector. A representative from the DWA did a number of presentations and showed that in respect to water services provision in municipalities, 9% of municipalities were in a severe crisis. 38% of municipalities were most likely to reach the same crisis within eight months if there was no intervention. 42% of municipalities were at risk of reaching the same high risk profile if there was no intervention. Therefore, 45 cases was a very low number of cases to address in court and the Department could not just identify twenty municipalities that needed support. One of the priorities mentioned in the State of the Nation Address (SONA) was that the country would halve water loss through water leaks by 2014. The latest DWA study in Umtata showed that the amount of water that was lost due to leakage was over 70%. This was another area where municipalities needed serious intervention. In terms of international relations she found that the country was linked with countries such as Brazil. She asked why the country was not linking with similarly arid countries such as Israel and Australia. She was glad to hear that the DWA acknowledged that there was a need for coherent capacity and skills development. However, this was what the country needed a long time ago. The National Water Act made the Minister responsible for the water resources of the country. The WfW programme was given a major budget. Was this simply a job creation project and could the figures for whether the project was having a quantifiable effect on the country be presented to the Committee? There were a number of success drivers mentioned in the presentation; however, she did not see the Department's urgency to address any of the drivers. So many things that the Department hoped to achieve now should have been achieved years ago.

Ms Ngele replied that the Department was working on the desalination project and hoped to launch it this year.


She also addressed the question on the guttering system, stating that there was a project being led by the Minister for Human Settlements, Mr Tokyo Sexwale, that the DWA would be participating in. DWA would ensure that gutter issues are included in human settlement discussions.

Ms Ngele agreed that there needed to be a sense of urgency when focusing on the success drivers. This was a given, as there were timelines involved.

Ms C Zikalala (IFP) asked for clarity on what was happening with the Jozini Dam. It had been months already and she did not see anything happening with the dam. The community near Jozini Dam was not even being notified of what was happening. The Department spoke of promoting food security in rural areas. What about the poverty stricken communities and townships in urban areas?

Mr Cornelius Ruiters, Deputy Director-General: Natural Water Resources Infrastructure, stated that the DWA put through a request to the National Treasury for funds for dams. The money was not only for Jozini Dam. Some of the money was turned down; however, the issue was raised with the Minister and was taken to Cabinet level. DWA had a list of all the dams in South Africa that needed funds. The challenge was finding the money to deal with the issue comprehensively. His branch was dealing with those communities that had not yet been serviced with water from dams. The DWA was investing a lot of money in infrastructure for dams in these communities. Communities could not live next to a source of water without having access to that clean water. It would cost approximately R1 billion to service everyone in the Jozini area with clean water. Unfortunately, the Department did not have the funds for it as yet.

Ms Zikalala stated that Mr Ruiters answer made her doubt that anything would happen with the Jozini Dam. She wondered if the DWA would do anything to help the people in the Jozini area.

Mr G Morgan (DA) stated that at some point the Committee would need a status update on Ms Ngele's position as Acting D-G and why there was no D-G in the DWA. Was this position advertised yet and was the DWA getting any closer to having a D-G? He stated that she did not have to answer this question and could confer with her political superiors on the matter. He addressed the Department's efforts in conjunction with the National Treasury (NT) in order to force municipalities to pay outstanding monies to the water boards. As of the 31 July 2009 there was R1.1 billion owed to water boards in the country. The Water Boards told the Committee that they felt that they did not receive adequate support from the DWA regarding collection of payments from municipalities. He hoped that 2010 would be the year of action taken against mines operating without water licenses. He did not know how it could happen that there were over a hundred mines operating without water licenses. The Department's own Best Practices document tells mines what they should be doing before they even open. The Department had to be able to tell the mines they were breaking the law, using water illegally and discharging water that was polluted illegally. If this was happening, the Minister had to close the mines. He asked for an update on acid mine drainage, as millions of litres of water in the country was being affected by it. What action was taken and how were the negotiations with the Western Utilities Corporation going at the moment? Was the country able to use reverse osmosis to reduce the level of the acid mine drainage? It was important to keep it at a level below that of the City of Johannesburg before the city’s foundation started to melt as well. He noted that the Department owned land in Hammarsdale, which was a prominent area in KZN. This land was heavily contaminated with mercury and the local, poor people were grazing their cattle on the land. The land was not fenced and all the signs were written in English. It was sad that people were using the land and potentially putting themselves at risk. Besides this, the Department refused to provide the data for water quality for the land. This made the Member very suspicious. The Waste Act stated that if a person owned land, the land had to be secured and rehabilitated. The DWA was breaking the law and the Member was very close to pressing criminal charges against them unless they had a rehabilitation plan in place, as they were endangering lives.

Ms Ngele answered the question on the money owed to water boards. She stated that DWA was meeting with water boards and the National Treasury. Some of the issues were being resolved slowly. The speed at which the problems were being resolved could be an issue. Documents were being given to the Minister outlining the issues between the municipalities and the water boards.

Ms Ngele stated that there was a short term strategy to deal with the challenge of acid mine drainage that was approved. A long term strategy was also being discussed.

Mr Sizwe Mkhize, Deputy Director-General: Policy and Regulations, added that the DWA looked at the acid mine drainage strategy, both the short term and long term approach towards managing the problem. This was not a matter where the DWA could only intervene once; it was something that the country would need to deal with for the next few decades. The document detailing the strategy was already forwarded to the Minister. If the Minister approves the strategy to manage the problem, the document would be made available to the Committee. The DWA's work with the Western Utilities Corporation was contained in the strategy. In terms of immediate interventions, Ms Ngele allowed the DWA to invest a large sum of money towards stopping the acid leakage. The Minister would be announcing this soon.

Mr Morgan stated that the strategy sounded very encouraging. Mr Mkhize was right about the situation needing immediate and long term interventions. He assumed there was money available for the immediate intervention; however, long term interventions called for a lot more money. He asked if the DWA would approach the National Treasury to fund the strategy that would be used.

Mr Mkhize replied that the DWA would have to estimate the cost of the long term approach once the Minister approved the strategy. He was sure that the DWA would have to talk to the Treasury and ask for additional funds as the strategy would require more infrastructure.

Ms Ngele stated that the DWA would have to get back to the Committee about the land in Hammarsdale.

Dr Z Luyenge (ANC) commended the DWA for following the priorities of the government. He thought that the Committee should put pressure on the Department to do something about the matter concerning the D-G. The D-G could not be earning a large sum of money while sitting at home and not doing anything. This issue should not be prolonged. One of the countries priorities was water provision to poor communities. The Department had a constitutional obligation to ensure that the lower tiers of government provided water to the people, and to intervene if they did not. Many municipalities did not have the capacity to fulfill this service. The extent to which water has been provided in the past left much to be desired. The DWA had a constitutional obligation to solve this quagmire, as it was an ethical and moral issue. The DWA had to tell the Committee if they needed more resources and infrastructure. This was a problem that rendered politicians “useless”.

Ms Ngele replied that requests were put to National Treasury for funds and departments were then given a certain amount of money depending on what the Ministers and the Treasury thought was sufficient.

She stated that the challenges experienced with local government were already contained in a report that was made a public document. The report looked at the state of local government in South Africa. The next step was to implement the ten point plan in the turnaround strategy that was being developed by Minister Shiceka. There was a worry of how the Department would use its limited resources to support local government, especially with all the responsibility that the DWA had already.

Mr J Skosana (ANC) noted that the presentation touched on a number of important issues, specifically issues in rural areas. He worried that many of the problems resided at provincial level. If these problems were solved it could solve the water provision issues. The DWA had to look at how they could prioritise municipalities and what role the provincial government could play. He asked the DWA to elaborate on the Lesotho Highlands project in their two-day workshop that was to be held. In terms of Black Economic Empowerment (BEE), how many black people would be involved in the project? It was with good performance management that output goals could be reached. This was the area that the Department had to focus on. The country needed better service delivery when it came to the delivery of water.

Mr P Mathebe (ANC) asked what criteria the DWA used for identifying poorly resourced farmers. He wanted to know how the Department would ensure that its assistance would reach farmers in deep rural areas. The Department spoke of having R4.4 billion for infrastructure refurbishment and rehabilitation. He looked forward to the DWA workshop where the Committee would be told of areas that would benefit from the money. He asked how many municipalities had not yet been given Water Authority status.

Ms Ngele said that they did not have the criteria by which to identify poor farmers yet; however, they wished to discuss this topic at the workshop with the Committee. The DWA would also be looking at ways to accommodate commercial farmers.

The Chairperson stated that after listening to the Department's problems, specifically with the leakage of water, the issues were unbelievable. She said that she had suggested to the Minister that the Department deals directly with issues of infrastructure instead of giving the money directly to the municipalities as it was obvious that municipalities could not take the responsibility. The DWA also had to come up with a strategy to deal with some of the other responsibilities that municipalities had that they did not have the capacity to do. It was disturbing that some Departmental officials were attending conferences and saying things that were different to what the Department was saying now. This was not right. The DWA had to send the right information to Ms Lovemore. The Hammarsdale issue had to be investigated and the Department had to come back to the Committee to report on the matter. The “Acting D-G” matter did not have anything to do with Ms Ngele, as it was the Minister's responsibility. The Minister was the only person who could raise the matter with the Committee. On the issue of Nelson Mandela Bay Municipality, the Department spoke of trying to resolve the problem that they had regarding a shortage of clean water. She did not think anything was happening there and the municipality was worried that they would not have enough clean water for the 2010 FIFA World Cup. A short term solution was desperately needed for the water problems in the Eastern Cape. In terms of the money that was owed by municipalities to the water boards, a meeting would be held after the DWA workshop to discuss the issue and see where the Committee could be of assistance. The important thing now was to deliver clean water to the people.

Ms Ngele added that DWA was given a certain amount of funds to support municipalities with. She agreed that municipalities had a difficult time completing their functions. The Minister of Cooperative Governance and Traditional Affairs (COGTA) had the authority to oversee the relationship between local and national government. Cabinet adopted a turnaround strategy at the Cabinet Lekgotla. This strategy was presented by the Minister of COGTA, Mr Sicelo Shiceka, who was leading the Local Government Turnaround Strategy. DWA worked with the Department of COGTA to assist with local government. There was no centre for the coordination of resources and this delayed the turnaround strategy. DWA agreed that there should be a rapid turnaround strategy regarding water provision. The Minister for Water and Environmental Affairs, Ms Buyelwa Sonjica, was arranging a meeting with Minister Shiceka to find a way that the two sectors could work together. The Department worked on local government water service problems within a budget. The Minister had already stated that she wanted to “provincialise” water. However, it was better to work on the problems as a collective than for DWA to work on the water issues on its own. The Minister would be meeting with Minister Shiceka to establish provincial committees so that officials would be able to work using a collaborative approach to deal with local government issues. She acknowledged that the problems on the ground were severe. Minister Shiceka had already taken all of DWA's inputs concerning issues with water and included it in the turnaround strategy.

Ms Ngele stated that she was not aware of the presentation made by the official at the conference. In any circumstance, an official never attended a conference and made public statements without a Chief Executive being there. At the end of the day, the Department had to be consistent. DWA needed a system where they could manage what they said to the public. She did not know what was said in the presentation as she had not been consulted.

The Chairperson stated that it seemed that some of DWA's programmes were not working. Even the ten point plan in Minister Shiceka's turnaround strategy looked good on paper; however, there was a question of whether the DWA had the capacity to implement and deliver on them. Parliament now had the mandate to amend the Money Bill and Amendment Procedure and Related Matters Act. She wondered if the Committee should recommend some of the issues experienced by the Department for discussion.

Ms Lovemore stated that her questions on skills development were not answered. She was concerned that there was not enough emphasis on skills development in the strategic plan. The conference that she attended where the Departmental official presented was an official DWA event. In her closing presentation she said that in 2001 there was a high level oversight body called the Water Sector Leadership Group that was formed, as there was a need for alignment within the water sector with respect to skills development. Ultimately, it was recognised that the Minister had the responsibility to lead the Water Sector Leadership Group. One of the task teams in the Group focused on skills development. The official stated that DWA and the Group had met twice a year; however, no progress had been made thus far. She said that there was a critical need for sector skills intelligence capacity; the government needed to know what skills were needed in the country. The official said that the DWA would take the lead in developing this strategy. The Member stated that she thought her concern about urgency, which was mentioned in an earlier statement, was valid.

The Chairperson stated that the Departmental official that presented at the conference should come to the workshop and address the problems that Ms Lovemore mentioned. The Committee would not discuss the matter now. She stated that there were many questions that were not responded to. However, DWA would discuss these issues in detail at the workshop with the Committee.

Ms M Mabuza (ANC) stated that, at first, she did not have any intention of engaging with the presentation. She was a Member in this Committee from 1994 to 1999 and the same issues about water leakages were still being raised. The SONA stated that even though South Africa was not a water-rich country, we still lost a lot of water through leaking pipes and inadequate infrastructure. Measures would be put in place to reduce water losses by half in 2014. Up until now, nothing was being done. There were rumours that the quality of pipes in the purification station that was being built by the DWA was not of a good standard. She wanted to know how this mistake would be corrected. She stated that there were many people in Giyani that did not have access to clean water. The Committee had spoken about this problem for years and the DWA was not doing anything about it.

The Chairperson stated that she wanted to invite the Minister for COGTA so that he could see the problems experienced by the Department. Money was being given to municipalities and they were not doing anything with it. The Ministers had to come up with a solution to the problems, specifically regarding leakages as it was a serious matter. Communities needed to be involved so they could know who to contact when things go wrong.

The Chairperson noted that the Committee was running out of time. She suggested that the DWA present their finances now and that Section C: Overview of the Strategic Plan of the Water Trading Entity (WTE) would be discussed at the workshop.

Section D: Budget of the Department
Mr Onesmus Ayaya, Chief Financial Officer, discussed the funding streams for 2010/11 – 2012/13. He stated that the strategic plan would be funded from the main exchequer account, water use charges would be from water users, and other funds would be from donor funds. The expenditure budget for the end of 31 January 2010 showed that 71% of the 2009/10 budget had been spent. R2 254 695 000 of the budget was still available. The money was spent on administration, water resource management and water services. Other expenditure included compensation of employees, interest and rent of land, theft and losses, transfers and subsidies, and payments for capital assets.

The budget would also be allocated to five Departmental programmes. The programmes include administration, water management, national water resources infrastructure, regional management and water sector regulation. The bulk of the money would be spent on national water resources infrastructure and regional management. The DWA requested more money from the National Treasury for 2010/11. Most of the requests were denied. The DWA received additional finding for the Working for Water campaign, the Deputy Minister’s initiatives, regional bulk infrastructure and compensation of employees.

A process of reviewing the funding model and the pricing strategy was underway and various meetings were held with affected stakeholders during 2009 to obtain buy-in from this process. The capital budget was not enough to cover the existing backlogs on the maintenance of infrastructure assets and the Water Trading Entity (WTE) was unable to build reserves, which would build new infrastructure assets.

Discussion
Mr Morgan thanked the DWA for a refreshingly frank discussion on their finances and challenges they faced. He stated that the Committee was going to need more time to come to grips with the figures and information that was presented to them. Some of the information that he saw, such as the requests for additional funding, was critically important. However, they did not reflect the “looming crisis” and key challenges that the DWA faced. He understood that water conservation and demand management was important, it was just unfortunate that there was not enough money for it. The Committee needed learn how to work in the context of the new Money Bill framework. He suggested that Members request a special Committee meeting organised by a content advisor where Members can get taught how to use the Money Bill. He discussed the depreciation figure for the Water Trading Entity (WTE). He stated that the figure was significant and he knew that it was good accounting practice to depreciate assets. He noted that there were some substantial depreciations and asked the DWA if they could assure the Committee that the methodologies that were used for depreciation were checked. Sometimes depreciation figures were increased abnormally in order to create a deficit so that entities could argue for a pricing review.

Mr Ayaya replied that there was a policy in place that spoke to depreciation. The DWA would not have received the audit opinion that it did in the last financial year if they did not implement that policy. In 2007, the DWA embarked on a mission to verify all the assets that it owned. The Auditor-General also went as far as to bring in his own experts to evaluate whether the DWA's methodologies were sound. The Auditors found that the methodologies were “scientifically” sound.

The Chairperson stated that the Committee was supposed to do oversight over departments that did not have much money. It could be very frustrating, as there was nothing that they could do about it. She stated that Members may have to approach the National Treasury directly. She assured Members that the Committee would be receiving training on the Money Bill.

Dr Luyenge stated that he wanted the Department to elaborate on the use of a suspense account.

Mr Ayaya stated that the Department only used a suspense account when they did not know where to charge certain expenditure. The suspense account was used while the DWA was trying to locate where the expenditure should actually go. The account is cleared out at the end of the year.

The Chairperson thanked the Department for its presentation.

The meeting was adjourned.



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