Water Research Commission (WRC), Trans Caledon Tunnel Authority (TCTA), Komati Basin Water Authority (KOBWA) briefings on capacity

Water and Sanitation

14 February 2011
Chairperson: Mr J. De Lange (ANC)
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Meeting Summary

Given that the infrastructure budget had doubled in the new financial year, the Committee felt it fitting to invite the three entities to see what kind of capacity existed to implement projects that would operate utilising large funds. The Water Research Commission presented its infrastructure to manage, fund and coordinate research projects and repackage and disseminate knowledge. The Trans Caledon Tunnel Authority impressed the Committee with its ability to run large scale projects utilising huge funds as well as its innovative funding mechanisms and socio economic empowerment leverage. The Komati Basin Water Authority entity updated the Members on its operation between South Africa and Swaziland in managing the Komati Basin water resources.

Issues of management of project lists, schedules, patents were discussed. The Committee requested the WRC to submit to the Committee a report containing a list of projects it funded and the criteria for selection, as well as the list of projects approved each year and the criteria for their selection and funding. The impact of research was questioned and WRC responded that an outside entity conducted impact studies but in the end WRC could provide research reports but could not force people to use them. There were queries about acid drainage in mining and the Commission informed the Committee that new research revealed that a bug could be placed in the water to prevent the problem.

The end-user-pays model of TCTA impressed Members as a best practice that could be duplicated elsewhere. Members asked why negotiations with Lesotho were taking so long considering phase one of the project had just ended. The TCTA and the Department replied that there were several issues that were in the process of being resolved and that a series of meetings with the Ministers of Water and Energy were in progress to move matters forward. Members were intrigued by the ability of the TCTA to handle large projects and were informed by the TCTA Board Chairperson and the staff members that it had the skills and knowledge to handle projects worth billions of rands. TCTA also highlighted its resolve to use its mandate of handling large funds as a leverage for social change by using the BEE scorecard to reward big companies for mentoring new emerging black companies in the tendering process.

In the Komati River Basin Project, Members queried the water quality between the two countries which the Authority assured was not an issue. Concern was also raised about the number of applications being processed for mining licences and prospecting in the Mpumalanga area.

The Chairperson concluded that there was a fragmented approach in management of water resources and that this issue needed to be discussed further. 


Meeting report

Chairperson’s opening remarks
Mr J De Lange (ANC) informed members that the meeting would hear from three organisations instead of four as Buyisa e-Bag had sent their apologies. He remarked that there were not yet items for the Agenda for the coming week and he would like to start on the green paper on scientific matters for climate change: What would we be talking about in South Africa? Has the sea risen by how much? Has the temperature gone up and what would be the implications? What would be the social impact of climate change? He had been in the process of engaging with scientists from the University of Cape Town and he would like them to appear before the Committee the following week. He informed members that the President had announced that the elections would be before May.

Water Research Commission (WRC) presentation
Prof Janine Adams, Chairperson of the Board of Directors of WRC and Dr Rivka Kfir, WRC CEO, delivered the presentation. Prof Adams briefed the Committee about the information package they had prepared for the Members as part of their mandate to promote, communicate and coordinate information about water issues. The WRC promoted coordination, cooperation, and communication in the area of water research and development. It dealt with the Water Cycle and the Knowledge Cycle mainly in the repackaging and distribution of new knowledge, supporting the mission of the organisation to be a dynamic hub for water centred knowledge, innovation and intellectual capital. The organisation had 52 permanent staff members and 63% were black employees. South Africa required knowledge in order to manage its water and need to understand the tripartite relationship between quality, quantity and accessibility. Land use and water use needed to be harmonised to allow for long-term sustainable growth.  The Commission worked in four Key Strategic Areas (KSAs): Water Resource Management, Water Linked Ecosystems, Water Use and Waste Management, and Water Utilisation in Agriculture. The allocation of resources for research was equally distributed amongst the four KSAs. Dr Kfir emphasized that WRC did not carry out research of its own, but rather coordinated and facilitated the work of researchers which were usually universities and other university institutions. The WRC ensured three quarters of the funds was spent on research projects and this ratio presented a challenge as knowledge dissemination was equally important. Dr Kfir reported that the Commission ran over 300 projects per year. The WRC provided services for in fund management, steering committee management, management of research delivery, and management of students who wanted to do PhD and Masters studies. WRC had also started to support NEPAD initiatives in building research capacity in Africa.

Discussion
The Chairperson requested clarity on who owned research products when funds had been disbursed to research projects and what would  happen to the information and how did it benefit the country?

Dr Kfir replied that WRC did not own the research. If it was not fully funded by private bodies, then the intellectual property belonged to WRC where the Commission would ensure it was used for the good of the country. What WRC provided in the country was not only the technical result but the knowledge of people who served as advisers and consultants to the water sector as research did not necessarily solve the problem until someone took it and made use of it.

She repeated that WRC did not do research. The impact studies were also conducted by an external body. The breakdown of the research and allocation of funds was in the Annual Report. WRC was a non partisan entity in the sense that it did not carry out research that benefited only the funding agency. WRC gave funds to third parties for them to conduct research.

Mr H Huang (ANC) asked how much the WRC got from the European Union (EU), if WRC used consultants and how WRC provided the technology and knowledge.

Dr Kfir responded that WRC received only a levy from the Department of Water Affairs and also for any activities done together. Foreign money did come through the department and channelled through the Commission such as funds from the EU and Belgium in which case the WRC reported to the Department. WRC did not really hire consultants but rather dealt with research firms.

Dr S Kalyan (DA) queried who was implementing the Capillary Ultra Filtration (CUF) Project and where the money went to, who administered the Ventilated Improved Pit (VIP) toilets project, and who owned the Nanotech. What level students was the WRC supporting?

Dr Kfir explained that WRC owned the intellectual property for the CUF system. It was developed by the University of Stellenbosch and the Durban Institute of Technology and WRC licensed it out. The Nanovac and the Gobbler were simple technologies that were being tested in a pilot in the Mbekweni area favoured for its location in the margins of the rural and urban areas.

Mr G Morgan (DA) asked if WRC just used research as is, or did it review it;  how the WRC assessed the impact of its work, and if it was actively monitoring if the work it produced was actually used. He also asked if WRC had Dams on its agenda in researching the sedimentary quality especially the actual support in offering a remediation programme at Hartebeespoort Dam. After ten years of rolling out the antiretroviral programme, what was the viral load in the water systems. Who was running Ms Moolman’s programme after she was dismissed in September 2010? What was WRC’s policy on paying out invoices time-wise?

Dr Kfir indicated that WRC wanted to make an impact in the four areas of health, environment, social issues and economic areas. The WRC had conducted impact studies in the nature of cost benefit analysis, and case studies measuring current impact and future potential. She added that measuring impact was a complex exercise as research provided guidance but would not force anyone to use it. She assured the Members that the HIV virus could not survive in the outside environment and therefore should not be a cause for concern. There was more of a concern on the impact of drinking water on the people living with HIV/AIDS as they did not have the immune system to withstand water bugs. Ms Moolman’s projects had been assigned to a different manager until a new one was appointed in March. WRC paid out within 30 days upon approval of deliverables.

Mr J Skosana (ANC) requested clarity on the recruitment policy and strategy and the capacity building programme of WRC. How many people had been capacitated in the year 2009/10? What areas were problematic for the country in terms of water sustainability and municipal waste water? How many previously disadvantaged students were supported from each province? Where did the funds come from and how did WRC account for them? Did the department have funds for the food security programme? What was done about VIP toilets being difficult to clean?

Dr Kfir reminded members that research created jobs, not WRC. An example was the Sanitation project in the Eastern Cape trying to franchise sanitation that if it worked, would create a lot of jobs. The main capacity building activities were for students doing Masters and PhD level studies. WRC had manual guides in field and rain harvesting, an approach needing to be used in South Africa. She also spoke about eco-sanitation, a system successfully used overseas that could be looked at in South Africa. On food security, she spoke of harvesting rain as something that really needed to be done in South Africa as it would greatly improve the size of the crops. WRC had attempted to get it into the cropland but needed permission from traditional people and from the local government.

Ms H Ndude (COPE) asked to have a breakdown of the projects and the geographic locations. She also asked how successful the river health programme was, how did WRC work in relation to the Department if there were overlaps, and what advice it offered in terms of acid mine drainage and sewerage contamination.

The Chairperson also asked WRC what research it had funded on acid mine drainage.

Dr Kfir explained that there was a multi-task team who had done a lot of research into solving the problem. New research indicated that there was a type of bug that could be put into the water to prevent the condition. WRC enjoyed a good relationship with the Department and it oversees the work of the WRC. The Department also sat on the steering committee.

Mr De Lange thanked the WRC, saying that he had learnt a lot and it was good to have good scientists running the WRC. He still needed to hear about the chain of research and how it took place and how important areas needing research were identified. He requested the WRC to draft a Memo to the Committee to explain how the chain of research worked, list the criteria for topics, and its criteria on what to fund.

The WRC was also requested to provide a list of the patents that have been registered, list of all projects that have been funded in last two years, how much, what the product was, status of progress and patent. The schedule would be updated every quarter.

A request was also placed to WRC for a two monthly report to the Committee on what work had been finalized in the two months. A report would also need to be handed to the Committee of the projects that were approved for funding every year – stating which projects would be funded, for how much and why.

The Chairperson remarked that WRC could help the Department with their billing system in order to ensure that a good resource was being used in the right way and that the right people were interacting. The Chairperson thanked WRC for their contribution.

Trans Caledon Tunnel Authority (TCTA) presentation
The Chairperson explained that the TCTA was called in to make a presentation because through dealings with the department, it was noticed that the budget for infrastructure had doubled in the new financial year. The Committee needed to have a feel of the capacity that existed to implement large projects. The Committee needed to look at the legal basis, projects, mandate, finances, capacity and possibility of increasing capacity in TCTA.

Dr Snowy Khoza, Chairperson of the TCTA Board, introduced TCTA as a special purpose vehicle that went out into the market to raise capital in the capital market and the money market for each project thus ring fencing each them. The Authority organised the whole value chain. Given such responsibility, there was no balance sheet as TCTA was a not for profit organisation and the funding model had it that each project was implemented at cost. No funding from the fiscus came to TCTA. TCTA was established for two reasons: So that cost of infrastructure would be paid for by the end user; and to reduce government requirements. TCTA had started twenty five years ago and operated in the Lesotho Highlands only. Since the Authority handled billions of rand, it was asked in 2001 to assist Umgeni to restructure its balance sheet and liability management. Then came the Berg Water Project. The Department of Water Affairs usually identified infrastructure requirements in the country. Most projects funded and implemented supported the economic arm of the country in terms of commercial users. TCTA focussed on projects with end user benefits and paid for by them. The operating model was: a mandate would be given from the  Minister, due diligence would be performed in terms of design, how it would be funded, time frame, cost implications then work would be decided and funding determined depending on the approach taken. Sometimes it might have taken up to a year between project conception and finalisation of planning; hence plans would be revisited, reviewed and updated as needed. TCTA also would look at ways to save costs. Once all the planning would be completed, TCTA sought funding locally and internationally. Once secured, the call for proposals would issued for contractors in SA and abroad. TCTA followed SA procurement policies and it also looked at BBBEE criteria, skills transfer, enterprise development, local products and contractor development.

Mr James Ndlovu, Chief Executive Officer of TCTA, referred to the importance of agreements being done up front so that by the time the project would be implemented, the funds would be available. Tariffs set out to repay infrastructure would be discussed with off takers, the department through the Minister, Treasury and municipalities. Tariffs were usually sensitive to socio-economic impact, macroeconomic swings, and TCTA was always sensitive to what South Africans could afford. Projects focussed on water for economic growth. Some of them were beginning to show a social element and not just commercial. The strategic objective for TCTA was to leverage for social  change and used the big money it deals with as a force for social change. An example would be, how a big company would assist new strong emerging black companies to tender for business.

Ms Halima Nazeer, TCTA Chief Financial Officer, covered the financial aspects of the presentation. She confirmed that funding was off balance sheet. Money would come in from fiscus for social purposes. Funding relied on guarantee and TCTA had explicit Government guarantee for projects outside of the country and implicit guarantee for those within. Each project was reported on as a segment and debt repayment was over 20 years. The cost of infrastructure would be reflected on the balance sheet. After 20 years, the asset would be transferred back to the department, de-recognize the asset against the revenue, the two would net off then it would be removed from the balance sheet. TCTA worked on full cost recovery. Deficit was usually reflected in first year as cost of funding was usually higher then, due to income being received after the project had already started. TCTA had unqualified audit reports and financial statements. In terms of revenue collection, tariffs were received in full at the end of every period, collected from the municipality, water board and the Department.

Mr Johann Claassens, Executive Manager: Projects, guided the Committee through the list of projects TCTA was involved in, as detailed in the presentation.

Discussion
The Chairperson commented that the end user pays model could be used for anything. He asked TCTA what capacity they had to increase what they were doing.

Ms Ndude asked why negotiations with Lesotho were taking so long.

Ms J Maganye (ANC) asked if there was a way the Department could tap into the skills TCTA was developing.

Mr Huang asked what was required in paying the debt in 20 years and if the tender process was open to the public.

Dr Khoza replied that TCTA had the capacity to do more as it had started with 20 people and staff had increased to about 100, managing projects worth billions of rands. She expressed confidence that with the skills level and knowledge in TCTA, it could manage. The projects were usually re-scoped to ensure reduction of costs. In terms of capacity, there was an exchange programme in order to share commercial approach.

Mr Claassens explained that a number of issues were identified in the negotiations with Lesotho such as how the project would be taxed, how Lesotho would benefit from power generation, and Lesotho  also wanted to expand the power generation capacity. These were the issues in discussion that were holding up the process.

Dr C Ruiters,
Deputy Director General: National Water Resource Infrastructure in the Department of Water Affairs and leader of negotiations, explained that the project had changed since the proposals stages as the Department of Energy had raised concern about buying hydropower from Lesotho. A series of Ministerial meetings were taking place to help resolve the issues.

Ms Nazeer explained that the Tender process was open to all. The tariff model operated in a way that once budgeting was done, all inputs would be captured into a model to calculate what increase needed to be put in place for each year for each project. Such information would be used in tariff negotiations.

The Chairperson thanked the TCTA for the presentation and discussion.

Komati Basin Water Authority (KOBWA) presentation
Mr Fanyana Mntambo, Regional Head: Mpumalanga, delivered the presentation about the operations of the KOBWA. A Treaty was s
igned in 1992 between South Africa and Swaziland setting up the Joint Water Commission (JWC). The Treaty on the Development and Utilisation of Water Resources of the  Komati Basin provided in principle for the joint development of the water resources of the Komati River by South Africa and Swaziland. This led to the establishment of  KOBWA to implement phase one. Funding for projects came from project loans from banks and funders. SA owned 60% of debt and Swaziland 40%. The Authority faced challenges in land claims as some of the people were relocated to land subjected to land claims.

Mr Morgan asked if there were concerns about the maintenance of acceptable water quality in the two countries and if there were concerns about the number of mining applications in the Mpumalanga area.

Mr Huang asked if Swaziland who owned 40% of the debt could pay the loan considering they are a poor country and queried how beneficiation worked in Mozambique.

Mr Mntambo explained that there were a couple of projects where South Africa paid 100% and Swaziland nil. There were 75 mining applications in the pipeline, 50 of which were for mining licences. The Department had reinstated treatment of mining effluent before it was released into water. There were mitigation efforts being put in place. Mozambique beneficiations rested on a tripartite permanent committee dealing with the rivers going into various countries.

Dr Ruiters added that at the upper reaches of Komati River, there was no water quality problem and that all entities had contact with the Department.

The Chairperson requested Dr Ruiters to put together an information package for the Committee so that they could understand the relationship better. He also reminded Dr Ruiters about the tasks given to him in previous meeting for follow up.

The Chairperson asked what was the institutional arrangement in place in relation to infrastructure as the model was fragmented. The Government must be able to account to the people of South Africa about water but there is a fragmented approach and such a discussion must still be held.

The Chairperson thanked the Authority for giving the Committee a clear picture of how things were.

He informed the Members that the Deputy Minister of Economic Development would be making a presentation at the meeting the next day about the New Economic Growth Path Plan.

The Meeting was adjourned.



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