Eastern Cape issues: follow up from National & Provincial departments of Basic Education, Energy, Treasury, Health

Standing Committee on Appropriations

19 October 2010
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Standing Committee on Appropriations had been on an oversight visit, in August 2010, to the Eastern Cape, to see the extent to which the water, sanitation and electrification of schools and clinics had been achieved. The Committee found that there was a huge backlog in the province, and that conditional grants had been discontinued. Departments were therefore asked to report back to the Committee on the issues and to explain whether provinces were capacitated to address the problems.

The National Department of Basic Education (DBE) reported on the water projects and sanitation projects implemented from 2007, but admitted that spiraling costs resulted in a cutback that then led to backlogs, which now could only be addressed with further funding. The Accelerated School Infrastructure Delivery Initiative (ASIDI) set different planning periods within which specific goals must be met, with the aim of providing schools with water, sanitation, electricity and fencing, and eradicating mud schools, by 2014. R75 billion in Eastern Cape and R4 billion in KwaZulu Natal was needed to address mud schools, whilst R4 billion was needed to address inappropriate structures.

The Financial and Fiscal Commission (FFC) noted that different estimates were provided according to the costing models, failure to quantify the maintenance backlogs and use of other delivery agents by departments. The DBE had systems that highlighted the backlogs but the Department of Health did not, and the expected deficit in Department of Health would compromise maintenance and infrastructure delivery. 60% of the education backlogs were in Eastern Cape, where funding must be increased. FFC suggested that expenditure must be tied to targets, that the economic consequences of ASIDI must be questioned, and that labour intensive projects should be used. Because various conditional grants overlapped, and some were not properly coordinated, FFC suggested they be consolidated into a broader Human Settlement grant.

The Department of Energy (DoE) was mandated with eradicating electrification backlogs of households, schools built after 2001, and clinics, by 2014. Clinic electrification was completed in 2007/08, and schools were currently being converted from non-grid to grid electricity or solar panels, and this project was due for completion in October 2010. The DBE had been unable to find schools that met the criteria for electrification. Schools were responsible for cleaning and maintaining the solar panels. Electrification of some mud schools was to be included. Prepaid meters were to be provided to schools.

The Department of Human Settlements said that it was unclear how much provincial DBE departments contributed to the eradication of the water and sanitation backlogs. DBE failed to provide information to other departments, with the result that some schools were making their own applications for grants.

National Treasury stated that there was uncertainty about which department was responsible for what services, and the conditional grant was put in place for three years to deal with the uncertainty and backlogs. National Treasury was advised that the objective of these grants had been met, which was clearly incorrect. The grants paid to provinces were enumerated. National Treasury agreed that there was a need for a new consolidated plan to deal with backlogs, and for co-ordination between the projects, implemented by DBE.

Eastern Cape Department of Education agreed that urgent intervention was needed. There had been fluctuation in expenditure. Priority lists were compiled by school governing bodies and agreed with the circuit managers, who would then send them through to the DBE and try to obtain funding. Eastern Cape Provincial Treasury recognised the shortcomings in planning, but outlined concerns around cost, implementation, responsibility and quality of the implementation of the programmes. Monitoring remained a problem.

Members suggested that district officers needed to play a more active role in schools’ applications, and more data was required. They questioned whether funding was properly used, and commented that if Treasuries were not monitoring there could be no clear expectations. Members asked about maintenance of solar systems, the effects of discontinuation of services, why more funding was being requested when there had been under spending, and what had happened to the funds provided to Machansholo School. Members questioned the contradiction between information given by districts during the oversight visit, and the information from different provincial and national departments. Members thought Provincial Treasury was attempting to shift the blame and there was insufficient accountability, questioned whether departments worked together, whether there was value for money, and whether prepaid meters were viable. The Committee would appeal for reintroduction of conditional grants. DBE needed to cooperate with other departments.


Meeting report

Eastern Cape issues: follow up on matters arising from Committee’s visit in August 2010
Opening remarks
The Chairperson thanked the Chairperson of the Portfolio Committee on Basic Education, Ms Fatima Chohan, for her attendance. He stated that the objective of the meeting was to table a report on the oversight visit to the Eastern Cape. Two grants had been terminated, one for the electrification of schools and clinics, and one for extension of sanitation to schools and clinics. The Committee was unhappy about this as it felt that there was still a need for those grants, as not all service delivery needs had been addressed, as shown clearly by the backlogs.

Ms F Chohan (ANC) informed the Committee that other representatives from her Committee were unable to attend as they were busy with other meetings or tablings of reports. She thanked this Committee for inviting her and for ensuring that there was cohesion between this and other committees.

Ms R Mashigo (ANC) informed the delegation that the Committee was expecting to be given an account of who was responsible and accountable for service delivery issues around water, sanitation, and electricity in clinics and schools, in the Eastern Cape.

The Chairperson noted that copies of the Committee report on its oversight visit had been distributed. He noted the apologies. He said that the Committee found the situation in Eastern Cape poor. The termination of the grants meant that rural communities would be deprived of a range of services. The three main findings of the oversight visit were that clinics in some areas operated as hospitals, the use of the solar panel systems was not considered sufficient for services besides lighting, and, nationally, there was no special dispensation for charging in schools and clinics. The Chairperson believed that all these factors would widen the disparity between the poor and the wealthy in South Africa. Although not every school or clinic might be able to have access to water, they should have access to sanitation.

Ms Chohan stated that it was a priority of government to eradicate mud schools and pit latrines and there therefore had been a consistent allocation for school infrastructure. However, based on the funding, it was unsure to what extent provinces were actually capacitated to use the funding to effectively deal with infrastructure backlogs. There were further disparities between the provinces, so the question was not always whether new schools were being built, but whether existing structures were maintained. This meant that maintenance audits were required, as well as categorising the infrastructure backlogs in each province,  and categorisation of primary functioning units, to decide what constituted a school, and the Department of Basic Education was working on the last point. This meeting would be important as lack of water, sanitation and electricity affected the core service delivery. The accelerated infrastructure grant being considered by government was trying to bring forward the type of infrastructure capability that had addressed the World Cup, to address backlogs. Much international interest had been generated around education, since the World Cup.

National Department of Basic Education (DBE) briefing
Mr Ramasedi Mafoko, Director of Planning, Department of Basic Education, highlighted how the Department of Basic Education (DBE) approached the challenges relating to infrastructure as a whole, both nationally and in Eastern Cape. Since the inception of the Department of Water Affairs’ Schools Water and Sanitation Programme in 2007, 1 022 water projects and 1 077 sanitation projects had been completed nationwide. The programme was unable to achieve its final targets, owing to spiraling costs and the general escalation of price of materials within the built environment. Since the budgetary needs did not allow for all school needs to be met, the number of schools who had to benefit from the grant was reduced, which then created the need for additional funding to address the backlogs.

Mr Mafoko set out how the DBE’s Accelerated School Infrastructure Delivery Initiative (ASIDI) was created. Three different strategic planning periods were set, from 2010 to 2014, 2015 to 2019 and 2020 to 2025. Different goals for schools, for water, sanitation and electricity, would be met during those time periods. By 2014, for instance, all schools should have been provided with water, sanitation, electricity and fencing, mud schools would be eradicated, overcrowding would be addressed and critical learning and teaching space would be provided. In 2015 to 2020, critical learning and teaching space would be expanded, and would reach best practice level in 2020 to 2025.

Mr Mafoko explained the gradation systems for functionality of schools. These included schools being classified as having basic functionality, minimum functionality and optimum functionality. Different dates, in keeping with the strategic planning period, were also set for schools to meet the different functionality areas.

Mr Mafoko noted that the majority of mud school structures were found in the Eastern Cape and Kwazulu Natal (KZN) and an amount of R75 billion for the Eastern Cape and R4 billion for Kwazulu Natal would be needed to deal with them. A further R6 billion would be needed to deal with schools which were built with inappropriate structures. The Department had submitted a bid to the National Treasury (NT) and had also engaged with the various provinces to verify their data.  The ASIDI programme would be implemented nationally, with DBE taking control of the programme together with the provincial departments, through National and Provincial steering committees. This initiative would be put into place once the required funding and capacity had been obtained. It would run in parallel with the current programmes in place in the provinces, fast tracking the provision of facilities to schools.

Financial and Fiscal Commission (FFC)
Mr Tebogo Makube, Manager of Fiscal Policy, Financial and Fiscal Commission, set out the FFC’s findings  on the challenges facing infrastructure delivery in the Eastern Cape. Differing estimates of the health and education infrastructure backlogs were produced, for three reasons. Sometimes, different costing models used, sometimes the extent of the infrastructure maintenance backlogs was  not being quantified and sometimes provinces were using other delivery agents to deal with the challenges.

He stated that the Department of Education had invested money in the development of education infrastructure information systems, and this enabled the FFC to see the extent of the backlogs. This was in contrast to National Department of Health, which lacked infrastructure information systems, making it difficult to assess the backlog.

The Department of Health had reported to the FFC that it projected it would have a budget deficit of R1.7 billion. FFC believed this deficit would compromise maintenance and infrastructure delivery in the department, and would then create backlogs.

Mr Makube informed the Committee that around 60% of education backlogs were currently in the Eastern Cape. This created the need not only for funding allocations to be increased, but also the need to focus on provincial priorities, so that health and education were not sacrificed to meet other needs.

FFC had, in relation to infrastructure-related conditional grants, recommended that, because infrastructure was tenable, the grants should have targets that were verifiable. Expenditure should be related to the targets, so that an assessment of the deliverables and targets could be made prior to these grants being discontinued or folded into the equitable share.

Mr Makube expressed the concerns of the FFC on implementation of new initiatives for eradication of backlogs, such as ASIDI, and questioned what the economic costs of such initiatives would be, whether they were to be financed from public finance or borrowing money from development institutions. FFC also expressed concern about the discontinuation of conditional grants and the resultant economic costs.

Mr Makube stated that, in the 2010 Annual Submission on the Division of Revenue, the Commission had suggested that in light of the economic recession it would make economic sense to target labour-intensive infrastructure projects. These would create employment and reduce poverty. It was believed that the conditional grants project met this requirement.

Mr Makube said that there were challenges in the delivery models used to implement projects. There was an overlap in the scope of infrastructure-related conditional grants, such as the Municipal Infrastructure Grant (MIG), the Infrastructure Grant to Provinces (IGP), the Extended Public Works Programme (EPWP) Incentive Grant and the Water, Electrification and Sanitation Grants (WES). Whilst all were aimed at enhancing infrastructure delivery, some were not properly co-ordinated. There was a need to consolidate them into broader human settlements grants to eradicate the backlog.

The Chairperson stated that whilst the presentation of the FFC was appreciated, it was hoped that a broad analysis of the situation nationwide would have been given.
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National Department of Energy (DOE) briefing
Mr Serame Moeketsi, Acting Senior Manager of Electrification, Department of Energy, stated that the mandate of the Department of Energy (DOE) was to eradicate electrification backlogs of households, schools and clinics by 2014. In terms of an understanding between Departments of Health, Basic Education and Energy, schools built after 2001 must be electrified by the Department of Energy.

In 2007/08, the clinic electrification backlogs were completed. A process of converting schools/clinics from non-grid to grid electricity was still under way in 2009/10. Schools that were far away from the grid networks were electrified using solar panel systems. By August 2010, 704 schools had been electrified, and by the end of October 2010, when the project would end, 805 schools would have been electrified.

Mr Moeketsi stated that the reason for not meeting the targets set of electrifying schools was that the Department could not find schools that met the criteria for electrification. In schools, I Kilowatt was provided, which was believed to be sufficient for lighting classrooms, administration computers, TVs and satellites.  However, thermal equipment of stoves and kettles could not be used. In clinics, 2 Kw was provided, and this was sufficient for connecting administration computers, electrifying nurses’ rooms and for vaccine fridges.

Mr Moeketsi stated that where solar panel systems had been installed, schools had been told to do the basic maintenance, such as cleaning and the checking of the voltage system, and thereafter the National Department must ensure that maintenance plans were in place. External service providers should have been approached to ensure that non-grid systems were maintained. DoE believed that there was adequate security to limit vandalism of solar panels. Maintenance was not a problem, as faulty systems could be reports.

DoE had planned for, and would have completed, all known electrification backlogs, by end 2010. Electrification of mud structure schools would also be incorporated into the DBE’s strategy for the eradication of mud structures. DoE was committed to working with the education and health departments to finalise any outstanding matters.

The Chairperson thanked Mr Moeketsi for his presentation but noted that no specific targets were mentioned against which the Department could be held accountable. The plan was not very clear, as only general intentions were stated.

Eskom briefing
Mr Isaac Sokopo, Corporate Specialist, Eskom, noted that Eskom was the implementing agent for the Department of Energy for the electrification of schools and clinics. DoE provided the funding and identified the schools and clinics, and Eskom electrified them. In some provinces, Department of Education and Health also provided funding for this process.

From 1991 to March 2010, 11 617 schools had been electrified nationally, and 11 049 of these were in rural areas. 704 schools and 359 clinics had been electrified in the 2009/10 financial year. Most clinic electrifications had been electrified by the Department of Health itself, through a normal connection by Eskom, and not as part of the electrification programme. In respect of schools and clinics mentioned in the Committee’s report, Mr Sokopo said that measures were under way to provide them with the necessary electricity, through upgrades or the installation of prepayment meters.

The Department of Human Settlements briefing
Ms Nomathamsanqa Mpotulo, Chief Director, Department of Human Settlements, stated that the water, sanitation and electrification of schools and clinics programme were implemented on behalf of the Department of Health and the Department of Basic Education.

She stated that there was not a clear picture of how much the provincial departments of Basic Education contributed towards the eradication of the water and sanitation backlogs. Figures of how much had been done were also not provided, so there was no clear picture for the departments to work on.

The Chairperson stated that during the Committee’s oversight visit, it was found that the Eastern Cape Department of Education did not provide information to other departments, and this was often a source of frustration for those other departments. Some schools made their own individual applications for conditional grants, as the provincial Department of Education was not doing it for them.

National Treasury briefing
Ms Wendy Fanoe, Chief Director, Department of National Treasury, stated that there was uncertainty about which department was responsible for what, in terms of water, sanitation and electricity for schools and clinics. Thus the conditional grant was put into place for three years to deal with this uncertainty and the backlogs.

Ms Fanoe stated that it was reported to National Treasury that the conditional grants were abolished, as the objectives of the grants had been met, despite evidence that now suggested otherwise. She stated that there were concerns as to how to deal effectively with these three issues, and whether to reintroduce the old grants or introduce a new holistic approach to addressing backlogs. The latter option was being explored currently. There was a need for a decent survey of schools to be done.

Ms Fanoe added that National Treasury provided assistance to provinces to run infrastructure in a coherent way and to appropriately plan for it. Infrastructure grants given to provincial education and health departments were R7.2 billion for the 2008/9 financial year, R9.2 billion for the 2009/10 financial year and R11.3 billion for the 2010/11 financial year. In the Eastern Cape, in 2008, 91% of the grant had been spent, and in 2009, 92.8% of the grant had been spent, whilst in 2010, 90.6% of the grant had been spent. Any additional funding needed was provided through the province’s own sources. Eastern Cape and KZN showed the highest numbers of projects for schools and clinics.

Mr Spencer Janari, Education Budget Analyst, National Treasury, agreed that there was a need for a new consolidated plan to deal with backlogs, instead of reintroducing conditional grants, so that schools would be brought to a level of basic functionality. There was also a need for co-ordination between the projects which run concurrently. Communication between the various elements needed to be strengthened so that greater ownership for projects, as well as for maintenance, could be obtained in provinces.

National Treasury believed that it was the responsibility of the Department of Basic Education to implement electrification and sanitation at schools, and to use a consolidated approach to achieve this.

He noted that Department of Health had underspent on its budget. Management problems were also contributing, because many of the provincial Departments of Health did not decentralise their basic maintenance functions to the facility level. The National Department of Health was found to not have a good database on the state of clinics, nor strong norms and standards of facilities needed.

Eastern Cape Department of Education
Mr Eldred Fray, Acting Chief Director: Facilities Management, Eastern Cape Department of Education, stated that there were many mud-structure schools in the province that needed urgent intervention. There were also attempts from the Eastern Cape government to obtain additional funding to deal with inappropriate structures in a shorter period.

Mr Fray noted that there had been fluctuations to expenditure, and particularly noted the under-expenditure for 2009/10 in respect of equitable share (R33 million) and the conditional grant (R77 million). This under-spending had affected the programme as the Department then had difficulty in stabilising the programme.
He also stated that the Department was aware of the prioritisation of schools and the changing of such lists yearly, as well as the effect that these changes had on the people who were expecting the provision of the service. The prioritisation of schools lists were compiled by the school governing body, circuit manager of the area and the districts, identifying the infrastructure needs of the schools. These lists were then given to the Head Office who would put the programme into place once the necessary funding had been obtained.

Eastern Cape Provincial Treasury
Ms Mendo Dukada, Senior General Manager, Eastern Cape Provincial Treasury, recognised that the province fell short in terms of planning. She stated that the concerns of the Provincial Treasury lay around the cost, timeliness of implementation, responsibility and quality of the implementation of the programme.

Particular challenges pertained to the monitoring of projects implemented, and she asked that the National Treasury and Development Bank of Southern Africa (DBSA) would be brought in to assist.

She stated that money was taken out of infrastructure because it was not being used. Additional funds for projects were still being pursued.

Discussion
Ms Chohan said that district officers needed to play a more active role in the applications of schools to be on the priority lists. This was not a task for the principals. There was also a need to have more specific data that would take into account the status of structures, and the estimated time that it would take to improve the structures. This would also make it easier for Parliament to see where progress was made to the functionality of schools. She therefore requested that the provincial priority lists should be consolidated and categorised properly

Ms Chohan also questioned whether sources of funding were properly used. If there was no knowledge as to how Treasuries were monitoring, and what its stance was on delivery, then there could be no clear expectations as to what the provinces should be doing.

Ms Chohan thanked the Chairperson for giving her the opportunity to attend the meeting. Her Committee would be looking into some of the issues discussed.

Mr J Gelderblom (ANC) asked how solar systems were put into place, and what maintenance programs were in place for them. He also enquired about the number of tanks that were functioning effectively.

Mr Gelderblom asked Mr Fray what the Department intended to do about educators who were not arriving at schools timeously
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Mr M Swart (DA) asked whether the discontinuation of services by the contractors laid off in the Eastern Cape would attract legal consequences for the Eastern Cape. He asked Eastern Cape Provincial Treasury why additional funding was being requested, when the funding that was provided had not been spent. He asked specifically what happened to R100 000 funds given to Machansholo School for the break down and replacement of a mud school. He expressed concern about the huge capacity and planning problems in the Eastern Cape, and urged that it was necessary to check regularly if programmes were being followed.

Ms R Mashigo (ANC) asked why there was a contradiction between the information given by districts during the Committee’s oversight visit, and the information presented by the different provincial and national departments.  She also questioned why Machansholo School was removed from the priority lists from 2007 to date.

Ms Mashigo expressed dissatisfaction with the presentation from the Eastern Cape Provincial Treasury, as she felt there was too much shifting of the blame and no accountability.

Ms Mashigo asked the Department of Human Settlements delegation for further information regarding the use of an enzyme tablet to deal with the water and sanitation needs of the country.

Ms Mashigo asked DBE how the backlogs could be best be dealt with, before implementation of ASIDI.

Ms Mashigo wanted a report back from the Department of Energy in January 2011, to see whether it had indeed electrified all schools and clinics as stated in the presentation.

Ms B Ngcobo (ANC) enquired if the Departments of Education and Health worked together in addressing issues, and whether they too could look into the use of the enzyme tablet for sanitation so that pit latrines could be abolished. She also asked the Treasury delegation whether, based on the budget given, there was value for money within the Department.

Ms Ngcobo asked the Department of Energy delegation whether a new maintenance plan could be introduced for solar panel systems, as the current maintenance system was not working, as seen during the  oversight visit, and as gas was used in addition to solar, as the solar system was not reliable.

Ms Ngcobo asked the Department of Human Settlements whether it had not been exploiting the Extended Public Works Programme in the Eastern Cape.
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The Chairperson agreed that the use of solar systems was problematic, and that the energy provided fell short of what was needed by the clinics and schools, despite the contradictory information presented by Eskom and the Department of Energy. He further asked for clarification on the electrification of clinics as households. The Chairperson questioned the use of prepaid electricity meters which were being given to some schools, noting that no budget had been given, so communities had to donate money to the schools for electricity.

Ms Nelisiwe Magubane, Director General, Department of Energy stated that it was not in the mandate of the Department of Energy to provide for the operating costs of the prepaid metering, but only for installation and infrastructure She noted that, according to the Memorandum of Understanding between the departments, electricity should form part of the infrastructure requirements when a new school or clinic was built, to ensure that, from the beginning, the building was equipped with the necessary infrastructure. She also expressed concern about renewable energy not being reliable, and said that back up and proper installation was needed.

Mr Lufuno Madzhie, Manager: Electrification, Department of Energy added that the DoE had purchased more solar panels for electrified clinics, and once these were installed gas would not be required.

The Chairperson was not pleased with this response, and stated that the Committee would follow up and investigate. He further queried what would be done in the meantime, for those schools and clinics that had no electricity. There seemed to be some confusion as to what was being done by the DoE and what was done by Eskom. The Committee did not want to be misled. The Chairperson also asked whether, since installing the solar panels four years ago, there had been any evaluation of their effectiveness or state of maintenance.

Mr Ompi Aphane, Acting Deputy Director General, Department of Energy, said that in Eastern Cape there were serious problems around the geographic spread of the solar installations, some of which were in very remote areas, and it had been difficult to maintain them, so there were indeed some maintenance issues. He conceded that the DoE needed to go back to the areas where installations were made. It would now do so.

The Chairperson accepted this explanation.

The Chairperson said that National Treasury was not playing its role by enforcing compliance and monitoring the use of budgets, as it was expected to do under the Public Finance Management Act (PFMA) and the Constitution.

The Chairperson asked what the Department of Health was going to do about electrification of schools and clinics. He also queried why officials of the Eastern Cape Department of Education did not co-operate and make themselves available to other departments who wanted to help.

Mr Fray said that the Eastern Cape Department of Education, through the social needs cluster, did try to work together with other departments. He would welcome additional resources and input to enhance the provision of services.
 
Ms Nelisiwe Ngubane apologised that DoE had been unable to join the Committee during its oversight visit to the Eastern Cape, but said that the DoE would assess maintenance levels and give a report back.

The Chairperson stated that the Department of Energy was welcome to present their findings at the upcoming Budget meeting.

Mr Sokopo stated that Eskom and the DoE would agreed timeframes for giving of point of supply and service connections. He explained that clinics and schools would be asked to pay household tariffs, not commercial tariffs, for their electricity. According to the directive given to Eskom by DBE, only Section 21 schools were to be given an electricity meter, whilst other schools should get prepaid meters. The difficulty was that vending points were situated far away from the schools.

Mr Sokopo also stated that according to the directive Eskom was given by the Department of Education, only Section 21 schools should be given an electricity meter, whereas other schools were to have prepayment meters. Unfortunately vending points were often far away from the schools and clinics using the system. The DBE should be providing the schools with electricity tokens but this was not yet being done. He felt that prepaid meters defeated the object of electrification, as they would also be vandalised and pose a safety risk, and there would be no electricity if schools had no money to pay.

Ms Fanoe said that National Treasury was monitoring performance through the Provincial Treasury.

Ms Mpotulo asked whether the conditional grants programme could be extended for another three years, to enable the remaining challenges to be addressed. She explained why the use of enzyme tablets in public toilets should be discouraged.

The Chairperson stated that Department of Human Settlements should use whichever product was effective for sanitation problems.

The Chairperson said that the Committee was appealing for reintroduction of conditional grants unless it could be shown that there was no need for the grants. This would be discussed during the next meeting on the Division of Revenue.

The Chairperson appealed again to the Eastern Cape Department of Education for its co-operation with other departments.

The meeting was adjourned.



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