The Department of Water Affairs had been asked to respond to a series of questions asked by the Committee on 22 May. The Department noted the steps taken to fill positions, but also said that internal promotions resulted in no overall change in the vacancy rate. The rate had come down, from 46% in the previous year, to 22.49% currently, and was also affected by creation of some new posts. The Department was trying to attract scarce skills, had adopted a
Questions in relation to the spike in spending in the fourth quarter were explained, and the Department said it had learnt lessons from the previous year and taken steps to boost municipal capacity, and was also insisting that procurement plans were in place prior to the start of each financial year. Some spending problems were related to bulk infrastructure projects, where there had been disputes with mining companies. Questions around the backlog in issuing of water licences revealed that although the backlog was at one stage reduced, it had risen again, with 591 licences awaiting approval. Members noted the comment on a delivery model, but remained concerned as to what mining houses were doing in the meantime, and pointed out that this could have very severe economic effects. They noted an assurance that R90 million allocated to
Questions about the current status of dam projects were answered with a description of the disputes, and models being investigated, and an assurance that the Department had confidence in the process. Incorrect pipes at Nandoni Dam was explained as a poor management issue, and it was noted that additional contractors had been appointed. Surrounding communities would get access to water from expansion of the project. The Committee noted that the Department had an internal construction company and was still assessing the comparative costs and benefits of this arrangement. Questions about the financial arrangements, self-funding of projects and repayment of loans relating to the Trans-Caledon Tunnel Authority were answered, although National Treasury corrected some of the figures. Some projects were captured in the Strategic Plan and others were still in the process of assessment.
The Chairperson urged the Committee Members to allow the new management of the Department some leeway to prove their commitment and competence, and urged that the Department be totally honest with the Committee. The Department was asked to respond, in writing on the economic impact of the backlogs, the costs of the dams, the assistance given to municipalities for new bulk infrastructure and maintenance, what was being done on the Jozini Dam, time frames for filling of posts, and cost of and progress on legal problems identified in 2011, as well as concerns that the contractors were handling their own budgets. They also enquired about employment conditions attached to internal training and bursaries, to retain staff. The Committee would shortly be attending oversight visits where it would check progress.
Department of Water Affairs: Responses to questions posed by the Committee on 22 May 2012
Human Resources matters
Mr Adam Bogoshi, Chief Director: Human Resource Management, Department of Water Affairs, started the response of Department of Water Affairs (DWA or the Department) to the questions posed by this Committee on 22 May 2012.
The Committee had asked what measures were being taken by the Department to ensure that vacant positions were filled. Mr Bogoshi stated that vacant, created and re-instated posts were evaluated on a monthly basis, prioritised, and then subsequently advertised and filled, in compliance with specific requirements. He noted that the vacancy rate was at 22.49% in the current financial year.
Mr Bogoshi identified the main flaw as the fact that most appointments resulted from internal promotions, and this had no real effect on the vacancy rate. He noted that there was training through the department’s
Mr Bogoshi moved on to answer a question on the specific measures being taken by the DWA to attract scarce skills in Occupation Specific Dispensation (OSD) posts. He noted that there were 1 349 OSD posts in the DWA. The Department was adopting a
Mr Bogoshi said that there was a challenge in the salaries being offered. Not only was there fierce competition from the private sector, which was able to offer better salaries, but also from the energy sector, and this made it difficult not only to attract, but also to retain scarce skills in the OSD posts. He noted that there were similar problems in attracting legal skills.
Question 11 from the Committee asked which skills were difficult to attract and what practical measures were being taken by the Department to counter this challenge. Mr Bogoshi responded that the skills of engineers and scientists were most needed by the DWA. The DWA had been collaborating with other departments, including the Department of Public Works, to make the requisite appointments. There was a special strategy for “Young Graduates and Professionals” in the Human Resources plan, and this was to take effect in the following financial year.
In response to questions around capacity for the National Water Resource Infrastructure (NWRI), Mr Bogoshi noted that 26 artisans, 43 engineers, and other engineering technologies and scientific technicians had been placed. There was a total of 129 OSD qualified employees who were directly-placed employees for the NWRI.
Mr M Swart (DA) interjected to voice his concern about the 22.4% vacancy rate. He wondered how the Department expecting to function effectively, since a quarter of its posts were not filled. He then wanted to know what the figures were in the previous year, and the current year.
Mr Bogoshi assured Members that effective steps were being taken to fill these posts. Over 70% of these vacancies were in fact being advertised. However, he repeated the problem with the internal movements of the personnel in the Department. In the 2009/10 financial year, the vacancy rate was 46.1%, and in 2010/11, this number had gone down to 15.4%, but the growth of the establishment had contributed to the greater number of unfilled posts, and the upward movement in vacancies.
Ms Thandeka Mbassa, Deputy Director General: Regions, Department of Water Affairs, pointed out again that the Department of Water Affairs had a difficult history over the last few years. A number of core positions had been vacant, including the Director-General’s post.
Ms Mbassa noted that the Committee, under question 4, had noted that the Department had spent has spent 46% of its budget in 9 months, and then managed to spend 45% in the 4th quarter, to bring the total spending in that year to 91%. The Department was asked to explain how exactly it had managed this dramatic increase in expenditure, as well as give specifics of the projects on which that spending was made.
Ms Mbassa noted that there were steps taken by the DWA to ensure that the infrastructure budget, in particular, had been spent, which was the case by the end of the financial year. Various entities were mobilised and their projects were evaluated, to identify the need for further reinvestment in those projects, and funds were moved accordingly to areas where spending would occur.
The Committee had asked whether the DWA had the capacity to spend the allocated budget. Ms Mbassa reported that many lessons had been learnt from the previous year, in which there was a lack of capacity to manage programmes properly. The capacity of the Department was being boosted, particularly in the infrastructure projects, and this capacity was to be boosted at municipal level as well, since municipalities were often the implementing agents. The DWA had engaged with community committees to ensure that they were equipped with monitoring capacity. She finally noted that plans were being implemented, in terms of which all nine provinces were being asked to finalise procurement before the end of one financial year, to ensure that they were able to carry on their projects from 1 April in the following financial year.
Ms Zandile Mathe, Acting Deputy Director General: NWRI, Department of Water Affairs, added to this response, by explaining that it was due to the bulk distribution system. In respect of a dam project, there had been some issues raised when the dam was close to completion, and there was an impasse between the Trans Caledon Tunnel Authority (TCTA) and the mining houses. The Minister had given a directive that investment was to be made in the bulk distribution system. TCTA already had contractors on site, and by the time the funds were made available in March, TCTA was committed to the project, to the value of R421 million.
Question 14 asked about the state of the backlog around issuing of Water Use Licenses. Ms Mbassa responded that the backlog had been reduced, and was now standing at 376. This figure, however, was now affected by the 908 new applications in the current financial year. There were currently 591 licenses that had not been finalised, and there was concern that many of these were mining licenses, and delay in these would have very adverse economic effects. This brought the total of the current backlog to 1 085. She noted that a delivery model was being devised, and this would require external expertise, to counter this problem.
Question 16 asked if the R90 million allocated to
Ms Zandile Mathe answered the question that the Committee had asked about the current status of the De Hoop Dam Project, and whether the parties were all on board. She said that this was a difficult issue. There had been engagement with the mining houses, in an attempt to resolve the disputes. There was initially a suggestion that the model that was being presented would offer drastic price cuts on costs of delivery. However, it was decided that the models must be tested, and independent reviewers were engaged. There was an agreement that the Department of Water Affairs would remain in control, no matter what model was finally adopted, in line with the legislative mandate. She linked her response to question 13, which asked for assurances on the process, and noted her optimism and confidence in the process, which then negating the need for a contingency plan.
Ms Mathe noted that question 12 asked if the R209 million reported as part of the under-expenditure was the direct result of ordering of the wrong pipes at the Nandoni dam. She responded that in one sense it did contribute to the under-expenditure, but on the other hand the pipes would still need to be replaced. Previously, the DWA had a policy of employing one contractor to build a pipeline. However, the DWA had later decided that, in order to speed up delivery, it would employ two other contractors for the same pipeline. The pipes were acquired by the Department. The services of third party quality assurers were being solicited. Basically, the R209 million under expenditure was due to poor planning on the part of the Department.
Outsourcing vs internal skills
Ms Mathe responded to questions 25 and 26 (see attachment for details), on whether it was preferable for this Department to use consultants. She noted that it was beneficial for the DWA to house an internal construction company, but there was still a need to test whether, overall, there were substantial cost benefits in hiring staff to do the work internally. She assured the Committee that the internal construction company was not lacking in capacity.
Questions relating to TCTA
Mr James Ndlovu, Chief Executive Officer, TCTA, responded to questions about the financial arrangements with TCTA. He noted that the debts would be serviced through cash flows, as well as through the state guarantee. In answer to question 6, he noted that the projects were self-funding and that TCTA would be financing its operational requirements, as well as implementing the projects and repaying its debts, through the resultant cash flow. He noted instances where the Department had handed over projects that had a social responsibility component to TCTA, where the necessary funding provision was made by the Department.
Ms Zodwa Mbele, Executive Manager, TCTA, noted that the total debt that had been raised by TCTA to date was R32 billion.
Status of projects
Mr L Mabuda, Chief Director, Integrated Water Resource Planning, Department of Water Affairs, responded to question 18 (see attachment) asking for specific details of projects. He noted that the projects had been captured in the Strategic Plan of the Department, and that some had been deemed feasible, and funding had been secured for their implementation. Some of the other projects were not anticipated for operation as yet. There were competing options, particularly in regard to the coastal projects.
Use of dams by communities
Mr Helgard Muller, Acting Deputy Director-General: Policy and Regulation, Department of Water Affairs, responded to question 17 (see attachment for details) and noted that the Water Services Planning Information Unit was the unit that provided information on water use. He noted that when some dams were incomplete, then the communities in the area were served by interim water supplies and boreholes or tanks, which often proved unreliable. He noted that the new water infrastructure comprised of not only the dam itself, but also the connection and distribution networks that were needed for full implementation. He said it was estimated that an extra one million people would be benefitting from these projects. He also noted that the Minister had also called for the utilisation of other dams that had initially been intended for other purposes.
National Treasury input
Mr Petrus Matji, Director of Public Finance, National Treasury, indicated that some correction was needed on some of the figures. The total debt for TCTA was R27 billion, which he described as an “official figure”, asking that this be used, as opposed to the figure of R32 billion quoted earlier, which was not a published figure. He also noted that the presentation made on 22 May had indicated that the TCTA’s revenue was R8.6 billion, but the published and official figure was R3.4 billion. He noted that, in future, the figure would reflect what had been collected on behalf of TCTA and what had actually been paid to that entity.
Mr Matji added, in respect of the DWA’s construction unit, that National Treasury was working with the Auditor-General to deal with the issues identified.
Mr Maxwell Sirenya, Director-General, Department of Water Affairs, extended his vote of thanks to the Committee and asked that it approve the budget. He assured the Committee that the presentation had attempted to deal honestly with the issues, and that trust issues had been addressed. He asked for the Committee to judge the Department on its future potential, and not on the mistakes of the past.
Mr G Snell (ANC) wanted to know how new contractors could be brought on to a job if an agreement had been reached for the full pipeline construction with only one contractor. He thought the Committee should conduct an oversight visit to the construction site at the dam, as there had been varying accounts given as to the capacity of the unit.
Ms Mathe noted that the Department of Water Affairs had an internal construction company, and that had allowed that negotiations occur smoothly.
Mr L Ramatlakane (COPE) wanted to know why it was said that the costs were being managed downwards when additional companies were being brought on board, as this surely must have resulted in a cost escalation.
Ms Mathe responded that the Department had weighed up the cost options and cost escalation. She noted that, despite the fact that the two companies were been brought in, the costs were actually lower than they would have been had the internal construction company continued to build the pipeline. She noted that the escalating prices were due to the design engineers needing more money for the additional work that they were going to do. A figure of R4 million was quoted for the additional work. However, the benefit of the people of Nandoni getting water, was judged as an urgent need, hence the justification for the two new contractors to be brought on board.
Mr N Singh (IFP) asked about the economic impact of the Water Use License backlog of 1 085 applications. He wondered if, while mining companies were waiting for approval of their applications, they were simply closing down production, or whether they were continuing to operate illegally.
Mr M Swart (DA) also voiced his concern on the issue of Water Use licenses and the increase in the backlogs. He noted that plants had been built but could not be operated, as the licenses had yet to be issued. He wanted to know what was going to be done in this regard.
Mr Singh noted that DWA was responsible for new bulk infrastructure, and wondered how the Department was assisting municipalities in the maintenance of the systems that were already in place.
Mr Singh asked what exactly was being done on the Jozini Dam.
Dr M Van Dyk (DA) noted his satisfaction with the fact that the Department seemed to have a handle on the quality control, and that this was being prioritised.
Ms L Yengeni (ANC) wanted to know what the time frames were, within which the Department would be ensuring that vacant posts were filled.
Ms Yengeni referred to question 12, relating to questions that had been raised during an oversight visit in September of 2011. She wanted to know if there had been any progress in the legal problems that were outlined at that time, and also wanted to know how much the legal processes cost. She was concerned that this allocation was taking funding away from the core business of the Department. She also wanted to know why it had taken so long to finalise the legal issue, pointing out that it had been identified in the previous year.
Ms Yengeni voiced concern at the information given that the contractors were keeping their own budgets and were paying themselves.
Ms Yengeni wanted to know what direction the Department would be taking on issues in the future.
Ms R Mashigo (ANC) wanted to know what employment conditions were attached to graduates who had been trained by the Department, to ensure that they were retained after they had qualified. She appealed to the Department to be honest and transparent to ensure that the Committee could provide assistance where a need was identified.
Mr J Gelderblom (ANC) noted that the Committee would be paying a visit to
The Chairperson noted his appreciation that the Department had been forthcoming in setting out what challenges it was experiencing.
The Chairperson asked the Director General to indicate how far he felt that the Department had progressed on the various issues, and requested Committee Members to accord the necessary space to new management, so that it could come to grips with and show that it was able to deal with the challenges. He assured the Department that the Committee would be tracking its progress.
The Committee finally requested the Department to ensure that the rest of the questions were responded to, in writing.
The meeting was adjourned.
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