Water Boards Strategic Plans & budgets 2011: Continuation of briefings
Meeting Summary
The Portfolio Committee on Water and Environmental Affairs were presented with the strategic plans and budgets of five water boards – namely, Pelladrift, Lepelle, Namakwa, Botshelo and Bushbuckridge.
The Namakwa Water Board, highlighted that challenges facing this Board included the high costs of pumping of water from the Orange River, rising Eskom tariffs, a declining consumer base, and an aged and labour-intensive infrastructure. The Board had managed to continue delivering water and had contained costs, although it had a net loss for some years, which was cumulatively now R15.8 million. There was doubt as to whether the entity would continue. Members noted that it would be handed over to
Lepelle Northern Water Board gave a substantial list of its achievements to date, and outlined the progress on the objectives, in particular, for the previous financial year. The budget was monitored and controlled through ongoing monthly and quarterly reviews. The challenges included ageing infrastructure, deteriorating raw water quality and lack of effective cost recovery, water conservation and demand management. Similar to other Boards, there was outstanding debt by the municipalities and default payment by consumers. Illegal connections were also a challenge. Acknowledgments of debt were signed by three municipalities. The Board had achieved an unqualified audit. Members questioned the staff costs of 32%, feeling that these were too high. They also felt that some of the plans needed to be prioritised, and questioned timeframes agreed upon for repayment of debt. They further questioned why staff bonuses were paid, since there was not only a large deficit, but nothing over the ordinary had been achieved by the staff. The Committee requested that a written salary breakdown and bonus listing be provided, and that all the plans be presented in June.
Botshelo Water Board outlined some of its achievements and challenges, noting that a revised tariff had been implemented. Three municipalities had delayed their payments and although it had invited them to provide revised tariff proposals, they had not done so. Members felt that the presentation had not been properly prepared. They were dismayed that no proper answers could be provided on why audit disclaimers had been noted for two consecutive years. The Committee therefore dismissed the Board and asked that it should forward written business and turnaround plans, with timeframes, a breakdown of staff salaries and bonuses paid, and copies of contracts with municipalities.
Bushbuckridge Water Board noted that it was in debt to the tune of R186 million, although it did not have any Capital Expenditure (Capex) projects. It noted further problems in debt recovery, lack of long-term service level agreements, aged and inadequate infrastructure, and risk of technical insolvency. Members pointed out that the Board had failed to address illegal water connections over the last three years. They further indicated that the Department of Water Affairs had, in the previous year, been asked to monitor the position, and insisted that it, and the Board, must report as to when a solution would be reached. They felt that the Department was not paying serious enough attention to issues of service delivery and that there was no point in continuing to engage with the Board. It was ordered to return in June with a thoroughly prepared business plan, a practical turnaround strategy, possible solutions, and timeframes.
Pelladrift noted that it was a small board, established to supply water to the Black Mountain Mine and surrounding areas. 5% of the budget went to the staff and the Board was accumulating cash reserves. The Board would fund R19 million capital refurbishments, and was expecting to achieve accounting break-even, and retain positive cash flow by 2012. It had received 30 unqualified reports in a row. Members were satisfied and asked no questions.
Meeting report
Namakwa Water Board Strategic plan and budget 2011
Mr Rob Blake, Chairperson: Namakwa Water Board, indicated that the pumping of water from the Orange River was one of the exercises that cost the Board dearly, because of the distance and elevation to be pumped. Other main challenges facing his Board were the Eskom tariffs, a declining consumer base, and an aged and labour-intensive infrastructure. However, the Board had succeeded in delivering water to its communities and had also managed to contain costs notwithstanding Eskom tariff hikes. It had achieved a decrease in operating losses.
This Board received a qualified audit. It incurred a net loss for the year ended 30 June 2010 of R6 million. However, this must be compared to the R15 million loss it had made in 2009. Debtors increased by R0 8 million to R2,5 million, and creditors increased by R0,4 million to R2,2 million. The accumulated loss of the Board currently was R15, 8 million, and there doubts as to whether the entity was going to be able to continue. It would be handed over to the
(For further details, see attached graphs).
Discussion
The Chairperson wanted to know about the timeframes of the handover of Namakwa to Sedibeng, noting that the Board was about to be dissolved.
Mr Blake said a six-month period was envisaged.
Mr G Morgan (DA) asked who conducted the purchases between Namakwa, Sedibeng and the municipality.
Mr Blake noted that Namakwa Water Board consulted with Sedibeng and the municipality directly, and the other partner was De Beer Mines.
Lepelle Northern Water Board strategic plan and budget 2011
Mr Labano Leballo, Chief Executive Officer, Lepelle Northern Water Board, emphasised that for the year 2011/12 the Lepelle Water Board would be focusing its energies on financial sustainability and viability, infrastructure rehabilitation and refurbishment, extension and expansion of operation services, and skills development and retention. He highlighted achievements of the Board to date. These included the provision of billing and meter reading support for the Greater Tubatse Local Municipality. The Board had also achieved free basic water service provision and cost recovery in
He also mentioned progress made so far regarding the 2009/10 objectives (see attached presentation for full details). These included matters such as appointment of service providers, finalization of studies, commencement of some bulk pipeline replacement and achieving full functionality of the laboratories, in preparation for SANAS accreditation. In addition, a feasibility study had been conducted on the Waste Water laboratory in Tubatse. Implemention of health and safety programmes was ongoing on all the plants. A Dam Safety Assessment service provider had been appointed to undertake the assessment in Ebenezer and Phalaborwa. All plants had been graded according to the NOSA system. There was continuous implementation of climate surveys previously conducted.
He further reported that the budget was being monitored and controlled through ongoing monthly and quarterly reviews
Mr Leballo noted that there were service delivery challenges. These included ageing infrastructure, deteriorating raw water quality and lack of effective cost recovery, water conservation and demand management. Similar to other Boards, there was outstanding debt by the municipalities and default payment by consumers. Illegal connections were also a challenge.
Mr Leballo then expanded on the financial matters. He stated that three municipalities owed substantial amounts, but acknowledgment of debts and agreements to pay had been signed by the municipalities. 32% of the budget went to staff costs. Between 2005 and 2010, the Board had received an unqualified audit.
Mr Leballo noted that the Board would be focusing on capacity building, retention of skills and succession plan. It wished to intensify technical support to municipalities through provincial departments, and to support municipalities on cost recovery and water conservation and demand management strategies. It would undertake further rehabilitation and maintenance of infrastructure.
Discussion
Mr J Skosana (ANC) wanted clarity on why 3% of the budget was spent on chemicals and 32% on staff salaries. He said the 32% spent on staff was too high.
Mr Leballo replied that the 3% and 32% were related to revenues generated by the organisation. It was difficult to relate the two because there was energy involved in the cleaning of water, not chemicals only. However, he noted the concerns of the Committee regarding the staff costs.
Ms H Ndude (COPE) commented that Lepelle needed to re-prioritise its plans. She wanted to know why the
Mr Leballo explained that the Board had not received a commitment from the
Mr S Huang (ANC) enquired if staff bonuses were paid.
Mr Leballo agreed they were paid.
The Chairperson commented that it was completely incorrect that a Board pay bonuses when there was a huge deficit. If the Board had done something unusual, in a positive way, then the Committee would not object to bonus payments. However, simply carrying on “business as usual” did not justify the payment of bonuses.
The Chairperson then requested that the Board must send through the salary breakdown of staff and bonuses paid, and to report back in June with all the plans.
Botshelo Water Board strategic plan and budget 2011
Mr Solly Mokaba, Chairperson, Botshelo Water Board, did not table a strategic plan as such, but only outlined the achievements of his entity and challenges it faced. He stated that despite all the problems in the past, Botshelo Water had been able to continue to function and avoid dis-establishment. It had implemented a revised 2010/2011 tariff of R3.80 (excluding VAT), and budgets were modified accordingly. The proposed tariff of R4.48 (excl VAT) would enable Botshelo to fulfill its functions, obligations and duties, and ensure that there was sustainable security of all the plants and water resources.
Mr Mokaba noted, in regard to the challenges, that Botshelo was experiencing delayed payments from three municipalities for water services. As a result, it invited the three municipalities (
Discussion
At this point, Members interjected to ask questions. The comment was made that there seemed to be a lack of preparation.
Members asked why the Botshelo Water Board had received two audit disclaimers for two consecutive years.
The Board was unable to answer this question to the Committee’s satisfaction.
The Chairperson dismissed the Board and asked it to forward its written business and turnaround strategy plans, with timeframes.
Ms Ndude agreed with this request, but also added that the Board should submit breakdown of staff salaries and bonuses paid. In addition, she asked that it forward to the Committee all the contracts it had with the municipality.
Bushbuckridge Water Board strategic plan and budget 2011
Mr Nkateko Mashele, Head, Bushbuckridge Water Board, set out that this Board was in debt to the tune of R186 million, although it did not have any Capital Expenditure (Capex) projects. He outlined that the entity was experiencing problems in debt recovery, lack of long-term service level agreements, aged and inadequate infrastructure, and risk of technical insolvency.
Discussion
At this point the Members interjected to ask questions.
Members asked why it had failed to correct metering problems. They pointed out also that the Board did not disconnect illegal water connections that had been in existence for three years.
Mr Mashele explained that Bushbuckridge Water Board had asked Rand Water Board to help it identify the problem, and that
The Chairperson insisted that the Committee wanted to know when the Board would arrive at a solution or advise when it would start working on the problem.
Mr Skosana wanted to find out if the Department of Water Affairs could furnish the Committee with a progress report. In the previous year, it had been asked to monitor the Bushbuckridge Water Board with the help of Rand Water Board.
Ms J Manganye (ANC) suggested the Board should be dismissed, as it was a waste of time for Members to engage further with it.
Ms Ndude agreed that the Department needed to answer on the issue and the Minister should be alerted about the matter. The Department was not paying serious attention to issues of service delivery. She agreed also that there was no point in continuing to discuss matters with the Board.
Mr Morgan commented that it was frustrating to learn that problems highlighted over the past three years had not been corrected. He suggested the de-establishment of the Board, if it was not performing.
The Chairperson stated it was unthinkable and irresponsible for the Board and municipality to allow illegal connections to continue for years.
The Chairperson told the Board that no further discussions would be held today. Instead, the Board should return in June with a thoroughly prepared business plan, a practical turnaround strategy, possible solutions, and timeframes.
Pelladrift Presentation
Mr Nathan Williams, Chairperson, Pelladrift Water Board, noted that this Board was established to supply water to the Black Mountain Mine and surrounding areas. The Board was serving a population of 8 500 people. 5% of the budget went to the staff and the Board was accumulating cash reserves. The Board was not intending to borrow money because it felt that revenue would increase with new tariffs.
He said the Board would fund R19 million capital refurbishments, and was expecting to achieve accounting break-even, and retain positive cash flow by 2012.
He further noted that this Board had received an unqualified report for the 30th time.
Members were satisfied with this presentation and did not need to ask any questions.
The meeting was adjourned.
Documents
- Magalies Water presentation
- Botshelo Water Tariff adjustments presentation
- Botshelo Water 2009/2010 Annual Report presentation
- Pelladrift Water Board presentation
- Namakwa Water Board presentation
- Lepelle Northern Water Strat Plan, Annual Report & Bulk Water Tariffs presentation
- Bushbuckridge Water Annual Report for 2009/10 Tariff 2011/12 & Strategy 2011/12 presentation
Present
- We don't have attendance info for this committee meeting
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