Minister and Department of Water Affairs strategic plan, audit plans, MDG and business review process briefings

Water and Sanitation

18 April 2012
Chairperson: Mr J De Lange (ANC)
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Meeting Summary

The Department of Water Affairs (DWA) continued with the second part of its presentation on the annual budget and Strategic Plan 2012-2013, highlighting the various ongoing projects, and giving updates on budgetary demands. The dam to be built in the Transkei Region, as ,promised in the State of the Nation Address, was highlighted. The funding requests made to National Treasury were also outlined, and National Treasury was also present to give input. The DWA also was asked to report on the progress in improving its financial affairs, and the progress in addressing audit qualifications of the previous financial year, and preventing their recurrence. A large part of the presentation was devoted to explaining the accounting challenges and risks. The Office of the Auditor-General then outlined the challenges that this office faced in the reporting of the DWA’s main and Water Trading Accounts. During the presentations by the branch and infrastructure units, emphasis was placed on the current vacancy rate of 24%. The Head of Human Resources mentioned that the reason for this was that more posts that had to be reinstated. Shortage of technical and financial skills was a huge problem in the Department, and it had several apparently “untrainable” financial staff. The Auditor General’s office also confirmed the staff as ineffective and problematic, but confirmed that there had been some improvements, as a result of the work of the Chief Financial Officer to try to ensure more financial soundness. Details were given in respect of the qualifications, and attempts to improve the performance, on both the main account of the DWA and the Water Trading Entity.

Members asked why the incompetent staff were still in their positions, and also sought clarity on the number of employees within the Department that could not be accounted for. Concerns were expressed about the under-spending. The DWA was asked for an analysis of the budget so that the Committee could understand exactly where the problems were, as well as a list of the challenges. Members noted that several of the issues raised were not new. The Department was asked to notify the Committee if there were changes to major projects in-year or difficulties on contracts. Members asked why the Department did not appoint staff in-house, asked about the vacant posts, and questioned the progress on the Transkei Dam project. Members were particularly concerned, in relation to the accounting presentations, to hear of the shortage of risk management and compliance personnel, asked for an age analysis of the debtors’ list, and details of assets. Members questioned the status of various projects, with particular emphasis on the Lesotho Highlands Water Project, staff employed, labour provisions and recruitment processes.

Meeting report

Department of Water and Environmental Affairs: Continuation of briefing on budget 2012-13 Ms Nthabiseng Fundakubi, Chief Financial Officer, Department of Water and Environmental Affairs, continued the presentation on the 2012/13 budget. She started by highlighting what the Department (DWA) had requested from National Treasury, and compared this to what had been received. The Department had, firstly, requested R4.8 billion for Phase 2 of the Olifants River project, and for the Clanwilliam Dam had requested R78 million. The Mbogolo and Crocodile River requests amounted to R661 million. Money for the Water River Development Project was also requested and money for the Zimkulu project would only be requested for the 2013/14 financial year. For the regional bulk implementation, R3.2 billion was requested from Treasury. About R45 million was requested for the Water Use Authority Project, R40 million for the Water Information Project, and R664 million for the integrated planning. An amount of R150 million was allocated initially for this project, but rollovers of R208 million were also allowed.

One of the issues raised in the meeting on the previous day was the increased funding for office accommodation for the offices that the Department occupies. She detailed that Head Office occupied six buildings, but it was necessary to remember other functions that had moved outside the Department. R219 million rand was allocated for accommodation, but the reprioritisation increased by R107 million, which was taken from other clusters.

A slide was shown, of the various savings and cuts in the DWA. DWA had under-spent in relation to the compensation of employees. The overall expenditure for the 2011/2012 financial year was at 92%. Only one of the line item spending had reached the 100% expenditure target. The programmes for Administration spent 90%, Water Management spent 72%, Water Infrastructure spent 100%, Regional Implementation spent 93% and Water Sector Implementation spent 81%. The bulk of the underspending was in relation to compensation of employees, but this also had an effect on the expenditure on goods and services, which showed expenditure of 84%. Transfer expenditure was at 95%, payment of financial services at 100% and the capital budget assets expenditure at 85%. The unfilled vacancies would be addressed by the line manager.

The Chairperson asked for the DWA to give an analysis of the budget so that the Committee could understand exactly where the problems were. He needed an analysis of the problems and challenges. Everything presented, other than the Transkei project, had been detailed in the past. The Chairperson also had a problem with the Acid Mine Drainage (AMD) expenditure, asking what had been over or under spent.

Ms Fundakubi responded that there had been a delay in the processing of invoices for the AMD, but before the end of the financial year, about R33 million would have been processed.

Mr P Mathebe (ANC) was concerned about the under-spending, and asked for full details on what had been spent in reality, and not what was expected to be spent at a later stage.

Mrs M Zandile, Acting Deputy Director General: National Water Resources Infrastructure, Department of Water and Environmental Affairs, indicated that 100% would be spent by Trans Caledon Tunnel Authority (TCTA) as it had received a directive from Water Affairs to fund the Blue Drop System (BDS), by approaching the capital markets, from 2008. However, there was a disagreement between the Department and the mining houses on tariffs, which resulted in the initial agreement signed between TCTA and the mining houses being repudiated by the mining houses, which resulted in TCTA being unable to get funding from the capital markets.

The Chairperson called for a breakdown of the projects and an analysis, as well as a listing of the major projects during the year, and also noted that if there were major issues in the DWA, or major decisions that were subject to change, the Committee must also be informed.

Mr G Morgan (DA) raised issues with the wish list for funding, saying that it was titled “additional funds requested”, and therefore asked if this reflected what had and had not been received, or represented the maximum request.

Ms Fundakubi noted that the funding indicated in this list was additional to the funding that was already allocated.

Ms J Manganye (ANC) raised concerns with the fact that the Department had not implemented what the Committee was led to believe it had done – including the installation of water in communities. She wanted to know why the Department was not making use of its own quality control staff, or duly qualified people at TCTA, to assist on the pipe projects, as opposed to using third parties.

Ms Zandile indicated that the fact that a dam was completed did not mean that the community would automatically be getting water at the homes. The dam would do nothing for the community, until the whole process of installing piping and connecting the communities was also done. A high degree of skills was required to fulfil this job, which could not be sourced in-house. They were not normal quality assurance skills required for this job, as these skills existed on the operations side, whereas technical assessment skills were required for the pipes. TCTA itself also had to outsource this kind of skill.

Dr S Huang (ANC) wanted to know how many vacant posts there were in the Department. He also sought clarity on the year of the Estimates of National Expenditure (ENE) document.

Ms Fundakubi said the ENE presentation was talking to the ENE document itself and not the appointment. The HR manager would cover the HR related questions.

The Chairperson wanted to know where, in the budget, the Department made provision for the Transkei Dam Project that the President promised in the State of the Nation Address.

Mr Maxwell Sirenya, Director General, Department of Water Affairs, struggled to account for this. He said that the President spoke about this on 9 February 2012 and that DWA was championing it. Some funding would be off budget.

Mr Petrus Matji, Director of Public Finance, National Treasury, interjected to explain that there was a budget of between R15 million and R20 million for a feasibility study.

The Chairperson then pointed out that Mr Morgan had handed him a statement made by the Minister of Water Affairs, in response to questions on the Transkei Dam project. This statement indicated that a detailed feasibility study for the Umzimboko Dam started in January 2012, but this was in addition to a feasibility study done by teams some years ago. This statement estimated that construction would take place, at the earliest, in the 2013 financial year, and the project was anticipated to be completed in 2016/2017, with a preliminary cost estimated at R20 billion. The Chairperson said that the Department of Water Affairs must get its facts right, as this statement indicated that the project was quite advanced and not merely at the start of a feasibility study.

National Treasury input on the DWA budget
Mr Petrus Matji, Director of Public Finance, National Treasury, indicated that the National Treasury (NT) was now building a sound relationship with the DWA and was working closely with the Director General. All projects had a base line. The NT, on receiving a funding request, would check the Department’s spending and also the long term financial implications. NT would look at the overall business case of a specific business project. For instance, the mining companies’ interest in various projects could be ignored and would be taken into account. The current budget responded to 21 key districts prioritised by Cabinet. For instance, in Mthatha, there was infrastructure, but no water. The budget therefore prioritised the amount of R595 million, for the district municipality to DWA with the issues. In relation to addressing infrastructure capacity, NT had designed an infrastructure skills programme, to produce engineers and scientists at municipal level. This would target the unemployed graduates in science and engineering, and ensure that they helped to address lack of technical capacity at local government level.

The Chairperson wanted to know what had been put in place to make sure that municipalities spent the budgeted amounts on water matters.

Mr Matji explained that the money was still in the DWA budget and it was the responsibility of the Department to take leadership to ensure that the money was spent on water

Financial Statements: Main Account presentation
Ms Fundakubi stated that the Standing Committee on Public Accounts (SCOPA) had raised two issues in relation to the DWA financial statements in the previous year - namely its performance on assets, and on goods and services. The DWA had made progress on these. The asset register was now completed, and DWA had categorised movable and immovable assets separately. The Department also did verifications on a monthly basis. The reconciliation was now done, both in relation to reports and asset register.

She noted that DWA had worked together with the finance, asset and regional implementation unit, to deal with the audit qualifications received on assets, and had resolved the issues. The parties identified the classification in the Department’s budget. As from 2012/2013 the budgeting would be done correctly. The other qualifications received were in relation to revenue generated through the Department’s training centre. Several issues still had to be resolved, but this was something being discussed with National Treasury.

Ms Fundakubi said that the vacant posts were a challenge for the Department, but that it was trying to resolve this through a project team to assist with additional resources. An action plan was developed and stringent measures were in place. DWA had introduced a trial balance meeting to look at the misclassifications, and determine if what had been disclosed in the financial statements was correct. The financial statements for 2011/12 were ready. Input had been given from different units, and her team was busy with the consolidation. The intention was to draft the consolidated financial statements on 16 may, and an internal quality assurance audit would be done on 18 May. The final statement should be done by 22 May to enable tabling to the financial audit committee by 24 May. The Director General would have to sign it off, with the Annual Report, on 29 May and submit it to the Auditor General on 31 May.

Financial Statements for Water Trading Entity
Mr Vincent Pillay, Acting Chief Financial Officer: Water Trading Entity, DWA, outlined the difference between the ordinary financial statement, and the Water Trading Entity (WTE) account, since WTE was linked to the infrastructure side, and reported to the branch. WTE attended to debt collection; billing, charges relating to water resource management, and similar issues, and also attended to management accounts and asset management. It had R147 million worth of infrastructure assets. The complexity of accounting for these assets was linked to the fact that some assets were used in the production of other assets, so the extent was very broad.

The WTE had an income of R8.1 billion projected for the financial year. This compromised income of R1.1 billion from National Treasury, whilst TCTA’s revenue was R3.7 billion, and other income was primarily related to construction income. WTE had two sources of income on water resource management, being R142 million from National Treasury, and own sales of r313 million. This meant that WTE had a sizeable business, and the finance division provided the financial support for that business. At the moment, there was an Acting Chief Financial Officer, but a new structure was under discussion. There was a fairly flat organisational structure. Previously, the Chief Directorate of Finance Management was responsible for all finance streams. Mr Pillay said that he had been holding the interim Chief Financial Officer position since December 2011. The Department did need certain skills and experience. One director was looking at Revenue Management as there were some problems. The proposed structure was to have a Director of Billing and a Director of Management Accounting, similar to what would be found in other sectors and in similar size organisations. It was necessary to ensure that billing was correct.

The target was to achieve a clean audit, and an unqualified opinion by 2014. Mr Pillay highlighted the problems with limited skilled staff in financial support to deal with finance, and the challenges that were therefore experienced. He mentioned the complexities in meeting compliance standards, which changed constantly.

In order to achieve an unqualified audit the WTE had a turnaround plan. This comprised a pricing strategy, project management and ongoing analyses of accounts. Governance should be streamlined. Again, he noted the size of the business, and said that although the WTE did receive some support from the main Finance Account staff, there were still unique skills required in finance and engineering. The Business Process Engineering Committee was working with the DWA to try to find the correct structure for the Department. It was working very closely with Operations, something that had not been done in the past.

The processes and policies were very important for this Department, due to the size and various clusters in which it was involved. The Head Office would be monitoring and exercising oversight. The WTE wanted to automate its systems, had received a new system, and had people to assist with the implementation, as well as working closely with the software vendor. In terms of remedial action, 2010/11 had presented a huge learning curve as the WTE received audit qualifications in all areas. It had developed plans to address all areas for this current year. In regard to supply chain management, the main issues related to fruitless and wasteful expenditure. In the last year, there was a problem with the completeness of accounts. Systems had been put in place to address these, and they were being monitored, and would be better defined by the new systems. In the past, reconciliation had not been done on the age analysis. The Inventory and Warehouse Systems plan for construction still had to be put in place, and the Auditor-General (AG) input was invited, and WTE had done stock counts to see what inventory had not gone into the books. Final results on this were awaited.

There were also huge challenges on the revenue side due to shortage of financial skills in this Department. However, there were attempts to address it, through proper ageing and discounting of debtors. In relation to the suspense accounts, WTEA was trying to build relations with the big customers so that clients would give details on all deposits, so that large amounts would not sit, unallocated, in suspense accounts. Some old receipts went back to inter-departmental transactions between the WTE and other government departments from 2006, when the system was implemented, but these unknown amounts had been reduced from R400 million down to R18.5 million. The rehabilitation provisions referred to dam safety, for which provision must be made, since the failure to do so was one reason for the qualification in the past year.

Mr Pillay highlighted the technical opinion from TCTA. TCTA constructed assets on behalf of the Department, and these were on the books of the Department, although TCTA held possession for twenty years or so. These assets amounted to R21 billion. In the current year, these assets must be brought into the books. BPR was assisting the Department on capacity and technical advice, but the AG must still express an opinion on that.

Mr Pillay summarised by highlighting processes to ensure that there was quality review of management and mentioned that there had been some progress.

Challenges in financial reporting for WTE and DWA: Auditor-General’s presentation
Mr Willem Jansen van Rensburg, Senior Manager, Auditor General South Africa (AGSA), highlighted the root cause of the qualifications the Department had received on the WTE Account. These were lack of leadership, the need for review of policy procedures, non-compliance with laws and regulations, and poor performance reporting. He said that the review of most policies and processes had been delayed for a long time. Although there were structures in place for IT governance, the Department needed a formally approved plan. Formal risk assessments were ongoing, although these were not in place in the previous year. The overall WTE turnaround strategy had been approved. However, it would be crucial for the DWA to set up proper performance monitoring around the accuracy of financial data.

These concerns were linked to leadership and skills concerns. There was no structure at the WTE and nobody was taking up the compliance responsibility, a particularly important factor since there were constant changes in legislation in the financial sector. There were no formal plans to do this. Policies and procedures were linked to IT systems, this and there was a move away from Excel to automated systems. In relation to governance, the impact of the internal audit was simply not felt. A number of audit committee members had resigned. The WTE had not been called to SCOPA to answer for the last year’s report. Although, in the last financial year, a number of qualifications were received, WTE was working on addressing these. In order for the WTE to aim for a clean audit in the 2013 year, DWA must focus on key areas such as human resources, which meant attracting people from the private sector. It must also drive policies and procedures, IT design implementation and supply chain management. There was also a need to clean up qualifications on opening balances.

Mr J Aguma, Senior Manager, AGSA then detailed the AGSA comments on the main DWA account. He noted that there had been some improvements, partly because the Chief Financial Officer had gone to the regions. Leadership had visibly grown, to cope with issues. The BPR findings were about 40% better. In the previous financial year, there were 156 findings but for this year only 96 findings. However, he was concerned that there had been little movement on the human resources side, and noted that it was vital to have the Chief Directorate positions filled in the finance directorate.

The financial performance management record keeping had improved, and this could be ascribed to the involvement at regional level, and also to the briefing by the Auditor-General. H noted that the reconciling controls and reporting were not adequate for quarterly reporting. Misclassifications also still existed, but were improving. The quality of staff must be looked into, as they were still not very capable. The Department had to do training on compliance. The policies and processes also need to be addressed. 

AGSA’s concerns around governance for the DWA and WTE accounts were directly linked to strategic planning in the Department. There were shortcomings in risk management. The Department had gone through a risk assessment process, but had only one risk official in the Department, and this was an ineffective process. If this was dealt with, the Department would have a better audit. In addition, cleaner administration would be achieved by having a better-structured DWA, with alignment of intra-Departments. If this was not done, it would impact on performance management and policy implementation, with a knock-on effect on the financial side.

In relation to human resources (HR), the AGSA would like to see adequate skills being put in place, with the measures clearly understood by everyone in the Department. Although there was a plan to have a separate monitoring and evaluation unit, but an independent person was needed, to determine what was currently correct and what was currently wrong. In respect of supply chain management, the Department must put in place a methodology of reporting. He noted fewer instances of irregular expenditure on big contracts.

The Chairperson was concerned to hear about the lack of risk and compliance personnel in the Department.

Mr Pillay agreed that this was a problem, and said that the Department needed to have a compliance official, with expertise on finance laws, which changed constantly. However, it also need someone to look at the overall, general compliance of the Department, and particularly someone in the WTE environment.

Ms M Wenger (DA) was concerned about the comment made by the AG on the Main Account, noting that despite training, the quality of staff to perform the function was still an issue. She asked if the staff members had been retained in the same positions, and, if so, why they were still holding these positions. She also wanted to know why the Department did not have capable people performing those functions, to rectify the problems.

Ms Wenger wanted to see an age analysis of the debtors’ list of R5.5 billion rand, and to receive assurances that the reconciliations were done on a regular basis.

Mr Pillay said most of the debtors were very old, and the Department was trying to cultivate debtors and improve the payment processing. New strategies were being formulated. Although not every single account had been reconciled, the DWA was looking at prioritising, and making sure the bigger accounts were reconciled and reviewed. He recognised that this was a challenge. However, plans were in place.

Ms Fundakubi said that after the financial statements were finalised, details would be provided on the asset register. She reported, in relation to the skills of those finance staff who were “non-trainable”, DWA had done an analysis to determine why the people were apparently not trainable and was engaging with the HR division to re-direct them to other areas.

Mr J Skosana (ANC) wanted to know how far the Department was in stock- taking of assets, and if there was any indication of how much was held in assets.

Mr R Pillay noted that the asset register had not been finalised. DWA was bringing in project management experts to deal with this issue.

Ms C Zikalala (IFP) wanted to know about the relationship between the Department and SCOPA.

The Director General said that DWA had made a courtesy call on the Chairperson, Mr Themba Godi, to discuss these issues.

Human Resources division presentation
Mr T Ntabeni, Director: Human Resources, DWA, noted that the Department had filled the posts of two senior managers. The finance division would be assisted by the Department bringing in 20 BComm graduates. They would then be trained, to ensure that the finance division could deploy them in various positions. Management was aware that the HR division would be prioritising some posts because of the budget cuts, and would fill those posts that would have an immediate impact on the Department. The total number of vacancies had increased, because there had been requests to reinstate some positions. The vacancy rate was currently at 24%.

DWA was looking at using graduate trainees, and also looking at having candidate engineer posts to enable these people to be trained. A career planning process was being implemented for them.

He outlined that in respect of disciplinary matters, one was still at arbitration and there were two appeals. There were 268 grievances three weeks ago, but those had since been reduced to 67, and hopefully, in the next month, all would have been resolved.

The Chairperson asked the Director General to try to ensure that the vacancy rate fell to 5%.

Mr Ntabeni again said that the reason for the increase in the vacancy rate was due to the reinstatement of posts, which increased that rate.

Mr Mathebe wanted to know if there had been instances where a post was advertised yet the right candidate was not found.

Mr Ntabeni said he had not had experience of that, although there was one instance where only one candidate had expressed interest, but the Minister had wanted there to be at least three candidates for the post.

Mr Sirenya said that in the past, there had been some instances where there were no suitable applicants.

Infrastructure component report
Ms Zandile gave an overview of the Infrastructure Branch. She said that her division had an Infrastructure component, as well as a Water Resource Management component. The branch dealt not only with the provision of water, but also with the quality, protection and use of water. The finance side was Mr Pillay’s responsibility. This branch was also responsible for the rehabilitation and maintenance of existing infrastructure, including rivers and dams. The objective of this branch was to meet the socio -economic objectives to provide water to South Africans and also to develop new infrastructure. It was busy with various projects throughout the country, including Olifants, Goede Hoop, and Water Bank projects. The Vaal River project took water to the eastern part of Mpumalanga. Parts of the Olifants River project were implemented through a partnership.

She presented the various projects and their estimated expenditure (see attached presentation). On the Olifants River project, the projected cost to complete was R12.9 billion. This was done through TCTA who were responsible for the design and implementation. There had been limited progress with the Clanwilliam Dam Project, of only 1%, because of the delays in establishing the site. South African National Roads Agency Limited (SANRAL) indicated that a road had to be removed. There had been a delay in signing the Memorandum of Understanding (MOU) between the Department and SANRAL. The Moya Ngeni project had progressed to 26%. The projected date of completion was January 2015. The Greater Ntaba River / NAMIDWA Dam construction had experienced delays in the Environment Impact Assessment. The Department had arranged meetings with the Department of Environmental Affairs to discuss the issues. The raising of the Tzaneen Dam was also experiencing some issues that were to be addressed by that department, with removal of some conditions necessary. She also highlighted the Mompani emergency work in Tzaneen, and Phase 2 of the Lesotho Highlands Water Project.

Ms Zandile said that the risk assessment was quite a challenge. There had been under-achievement (only 52%) on the maintenance and infrastructure projects, because of the shortage of technical staff and the delay in appointing maintenance contractors. The branch had a plan to deal with this, including bringing in technical students and retired engineers to mentor the students. It was also looking to change the procurement process. The Department would now pre-qualify contractors and put out tenders once every three years.
Mr Mathebe wanted to know about the status of the Lesotho Highlands Water Project. In the previous year, DWA had indicated that the funders were reluctant to fund the project because of the reinstatement of someone who was convicted of a crime and jailed for several years. Secondly, there was a labour provision if someone was on contract for more than six years, that person should be regarded as a permanent employee, and he asked how this affected the project. Thirdly, he enquired the meaning of “installation of radial gates to increase the capacity of the dam”.

Mr Trevor Balzer, Chief Operating Officer, DWA said that an agreement to proceed with the Lesotho Highlands Project was signed in August 2011. There was an issue with the appointment of a certain individual, highlighted in the media. The Department had raised these concerns with the Government of Lesotho and took advice from the State Law Advisor. The matter was being dealt with through diplomatic channels, in terms of the Protocol. In fact, no funders had raised this issue directly with the Department.

Ms Zandile added that the recruitment was based on the relationship the DWA had with municipalities, which was regulated by law. Municipalities identified contractors or individuals within a 30 kilometre radius and they signed a MOU with the municipalities. These people would then come in to attend to specific projects. The nature of those jobs was not permanent, and therefore there were no instances where people had been working on the project, for DWA, for more than six years.

Ms Zandile explained that the radial gates were part of the design, and they were mechanical, rather than electrical, and their construction had to do with the extension of the dam wall.

Mr Skosana wanted to know the number of people employed in the Department. He also wanted an indication of a priority list of the projects in the Department

The Chairperson asked the Department to prepare a list, and report back on the amount of employees in the Department.

Ms Zandile said the role of the infrastructure branch had to do with contracts, and suggested that the information in relation to the priority list would rather need to be requested from the Planning division.

Ms Wenger asked for an indication of what was involved in the emergency in the Mopani Works, and also asked what progress there had been, noting that in 2011/12 the progress was listed as 0%, and the target for 2013 was only 17%.

Ms Zandile explained that the project had two aspects; the first involved the rehabilitation of the infrastructure (which was the emergency work) and the second involved the construction of the rising new development. The main priority this year was the rehabilitation. She noted that the 17% figure was a conservative figure, because of the way in which DWA had dealt with this project.

Mr Mathebe what aspects had managed to achieve 100% spending of the budget.

Mr Pillay mentioned that in actual fact the spending was only 99%, but there was a provision of R12.9 million for accruals, because invoices had been received, but these had not been made by the end of March.

Mr Mathebe said that there was an area in Lesotho that had beautiful roads, in comparison to the rest of Lesotho, and it was claimed that these had been built by South Africa.

Mr Balzer noted that the roads leading up to the Gotze and Mogale Dam were built as part of the Lesotho Highlands Project. There was off-budget finance to fund the project, which would be paid for through the sale of water. Roads had to be built to get huge construction vehicles up and down to the dam.

Regions Branch report
Ms Thandeka Mbassa, Deputy Director General: Regions, DWA, explained that this branch was the main implementation unit of the Department. Implementation cut across all units, and included support. Although her branch had lost some capacity, it had to make sure, where there were failures, that it would step in to assist. Although it suffered from lack of funding, the branch still tried to plan and structure its work to cover all necessary aspects.

This branch had nine Chief Directors; one for each province. Head office also had a Chief Directorate for the co-ordination. She highlighted the various vacant posts (see attached presentation). She explained that there was a high staff turnover in the Department because young people were highly in demand in other service delivery areas. Another factor was the Occupation Specific Dispensation (OSD) posts. The recruitment processes were highly centralised. There were various processes now in place, because of some irregular dealings in the past. However, the centralisation of recruitment had resulted in delays. If a position became vacant, the Regional Office made a submission to her to fill the vacant post, and she would then need to approve the request, and indicate if there was funding. A request was sent to head office to advertise the post. Sometimes regional offices complained that it took six months before the post was advertised. The recruitment process in the Department was highly problematic. The panel to conduct the interviews also had to be approved by the Minister, along with the shortlist and the final appointment. There were serious inefficiencies in the process.

Ms Mbassa mentioned that the regional bulk infrastructure programmes were the key budget driver in the branch. There had been improvement in this programme, and the branch was working closely with National Treasury on the programmes. The Department was also trying to build a Programme for Management Support. Requests made to National Treasury for these projects were usually met. She was concerned that National Treasury was more positive about investing on infrastructure but would not always appreciate the importance of other sustainability projects that would ensure that the infrastructure was well run, and therefore became sustainable. She commented that this might include budget requests relating to water demand management, water conservation, operations and maintenance of the infrastructure.

She highlighted the Departments’ bulk projects, and noted her concern on how the DWA would be raising funds for the KZN project. The need was high across all provinces, despite her limited budget She also mentioned problems of misalignments. There were challenges, furthermore, in the ability of the municipalities to operate the infrastructure, and this begged the question whether the Department should continue to transfer infrastructure to municipalities, given these challenges. She felt that this was a point on which careful consideration was needed, when the Department reviewed its legislation. However, the DWA was working with National Treasury to sort out the misalignment.

Another of her main responsibilities, in addition to providing water for domestic use, was to support rural development. DWA had a programme where it was harvesting water for food production.

Ms Mbassa maintained that the funding for core programmes of the Department was very low. There were not enough funds to monitor ground water, as another source that could be exploited. The Accelerated Community Programme (ACP) had spent 99 % of its funding and had dealt with Cholera outbreak in Limpopo and Mpumalanga. The ACP illustrated what the Department could do with little money such as R 206 million, but its impact was widespread.  The infrastructure replacement value was estimated to be about R 433 billion, while water sales was valued at R33 billion. The current infrastructure was not built to accommodate the majority of South Africans. More could be done to prevent further damage of the existing infrastructure. Only 14 % per cent of the country’s infrastructure was in good working condition.

The Chairperson paged through the presentation rapidly due to time constraints and asked for clarity around the definition of poor infrastructure.  Treasury needed specifics. He asked Ms Mbasa to skip the slides dealing with “hotspots”.

Ms Mbassa replied that the Infrastructure investment plan was meant to address such issues, the Department was looking at refurbishment and upgrading of existing infrastructure. The National treasury and Development Bank of Southern Africa were working together to raise funds for Infrastructure investment and it amounted to R 573 billion over a ten-year period. The Department would be looking at interim alternatives to provide water in areas where there was no infrastructure.

The Chairperson commented that Treasury looked favourably on the well thought out plans. Thereafter he asked for clarity on the Rapid Response Unit.

Ms Mbassa explained that the Rapid Response Unit was developed to deal with crises such as the destruction of wastewater treatments where water leaked to rivers.

The Chairperson asked about the role of Water Boards.

Ms Mbassa replied that the Water Boards were assisting municipalities in managing water resources.

Ms Mbassa reported that Gauteng and the Western Cape had the most stable water supplies.  The 2011 Green drop Water Systems were meant to identify the areas that had functional waste water systems. The Western Cape and KwaZulu Natal were the only provinces that attained the Green Drop award while Limpopo and the Free State were the worst performers.

The Chairperson then asked the Committee for any clarity, he said that the Committee would also look at the programmes in July.

The Chairperson suggested that the Department should have two main streams; one would be on infrastructure and another on equity of the water sector. Equity should look at how water was allocated; otherwise the policy would be highly fragmented. He expressed concern about the creation of agencies- these agencies tended to develop a life of their own. The people who filled the positions in these agencies tend to forget their mandate. He commended the Treasury Officials for their presence in the meeting because they would gain insight into the challenges faced by the Department. If it were for him the Department would not increase allocation at all because of the qualified audit. One could not pour money down the drain on a Department that could not account for its money. He then jokingly said that Treasury had been pouring more funds into the Police even though it could not account properly. The Chairperson commended the improvements within the Department.

Mr Morgan said that he was impressed that presentation was honest and forthright hoped that the Department could be able to fulfil all its plans. In his eight-year experience he had seen presentations that were prepared hastily. The Departmental presentation had been carefully worked through.

The Chairperson mentioned that other submissions would be heard at a later stage. 

The meeting was adjourned.

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