National Environmental Management Second Amendment Bill: deliberations; Department of Water Affairs 2013 Annual Performance Plan & Budget

Water and Sanitation

27 March 2013
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Meeting Summary

The Department of Environmental Affairs (DEA) interacted with the Committee on the latest draft of the National Environmental Management Laws Second Amendment Bill )[B-2013B] (NEMLA). It noted changes to the Long Title, to provide guidelines on the development, content, and use of voluntary organisations and sector-based instruments and their consideration and endorsement. Some consequential amendments were made for consistency of wording. The Chairperson noted a new definition in relation to activities, but wanted it reworded to be more specific. The Committee also noted technical changes to clauses 2 to 5. There was  
considerable discussion on clause 6, which made provision for an application to the Minister, if the MEC failed to take a decision on an application within the time periods prescribed by the Act. The Chairperson felt that the Constitution gave power to the provinces and felt that any additional clauses must impact minimally on the powers of an MEC. The DEA proposed further changes. In relation to clause 9, the Chairperson commended the DEA for capturing all the Committee's issues and drafting a much more structured and nuanced Clause. The Chairperson asked the DEA to check, under clause 14, whether an offence was needed under the new section 30A. The Chairperson asked if the DEA had discussed civil action or damages in relation to clause 15). DEA had reworded clause 20, which related to the National Prosecuting Authority (NPA) taking a matter to the high court rather than to the magistrate's court. The Committee's previous concerns with clause 21 had been addressed. The changes were noted to clause 25, and the new sub-paragraph (b) of the new section 49A(1), and it was noted that the DEA must consider a defence. DEA had updated clause 26 references. All offences now appeared in one area of the Bill, and consequential amendments to cater for the changes were contained in Schedule 3, as well as the Table of the principal Act

The Chairperson read the Committee's draft Resolution, and commended the DEA on its excellent work. However, there were many remaining technical matters on which Members needed mandates from their parties. It was proposed, and agreed, that on 16 April DEA must produce a complete listing of all amendments, before Members met with their party caucuses to get their mandates, which would be presented at a subsequent meeting. It was important for the DEA to confer with the Minister now that the deliberations were nearing finality.

The Department of Water Affairs (DWA) briefed Members on its Annual Performance Plan (APP) and budget for 2013/14 to 2015/16. An executive summary was given to explain the alignment of the APP to various programmes. The DWA demonstrated, programme by programme, linkages to other national plans and policies. It was ensuring that by 2015 it would have full capacity to deal properly with the R15 billion budget by 2015/16. The major increases were noted in the Regional Implementation and Support Programme, largely as a result of the new Municipal Water Infrastructure Grant (MWIG). It would receive 59% of the total budget of R10.187 billion in 2013/14. whilst other large budget items related to the Regional Bulk Infrastructure Grant (RBIG). This indicated a focus on municipal activities. International water co-operation (Programme 6), had quite a small budget of R25 million, but this would rise to R32 million and it was highlighted as an important activity. A large portion of the budget went into the payment for capital assets. The alignment of the Annual Performance Plan (APP) to human and financial resources, per programme and sub-programme, was also explained. The Water Trading Entity (WTE) formed part of the overall Estimates of National Expenditure (ENE), because there were fund transfers from the main account into the WTE, although it was audited separately.

DWA then explained all the main account indicators and targets. The Chairperson asked that the water pricing strategy, which was being prepared under Programme 2, must be brought to the Committee before it was gazetted. The Committee also wanted to see the plans for the realignment of the water boards, and questioned if the Department of Water Affairs (DWA) would need special legislation to help align processes around water permits and environmental management assessments. Under Programme 5 it was noted that DWA targeted more water treatment systems than it actually owned, because it was responsible also for private facilities. The Chairperson requested a written report on how many mines were without water licences and suggested that they be named and shamed. Programme 4’s key priority was creating regional bulk, and it aimed to assist resource-poor farmers, by providing subsidies and putting up infrastructure, which in turn created jobs. There were serious budget constraints and DWA recognised its shortcomings in this programme and was trying to improve not only domestic, but agricultural and business consumption. A brief update was given on Acid Mine Drainage, for which short-term funding had been awarded, and this was on track. However, the DWA cautioned that there were potentially serious and urgent problems in Mpumalanga where there was decanting from coal-mining activities. Programme 1 had ambitious targets for reduction of debt by 50% from its current R5 billion level. The Committee requested more detail on the figures, with a breakdown of who owed the money. More allocations had been made by National Treasury, but the DWA’s Water Trading Entity (WTE) was expected also to generate its own revenue to replace ageing infrastructure. Members expressed their concern abut hotspot areas and effluent flowing into rivers, as well as the filthy state of many rivers and canals. They raised particular concerns with North West municipalities and villages that had not had access to water for some eighteen months, asked how DWA intended to assist poor farmers, and to claim from the wealthier farmers and the Water Use Authorities, with the Chairperson suggesting that their water should be cut off if unpaid. Members were insistent that wherever dams were constructed, the residents must get water. They asked about the toll-free number and fixing of leaks, expressed concern that DWA should not allow the debts to prescribe, queried the process of infrastructure management in Mpumalanga, and job creation. 

The budget was then presented, with full details of the percentage and rand breakdown, breakdowns by economic classification and by programme. The total budget for 2013/14 was R10.187 billion. The  Committee requested full details and a breakdown of the Municipal infrastructure Grant, the Municipal Water infrastructure Grant, and the equitable share, what each could be used for and the consequences of not complying. The Chairperson suggested that there was some degree of mismatch between large increases of grants, but little extra capacity, and said that at the end of the day he thought that the responsibilities would probably be cast against on DWA if the municipalities could not perform as expected. The Committee was concerned about the doubling of amounts for consultants, because this was not properly motivated. Members were also very concerned that  DWA was still considering the establishment of an economic regulator, despite strong opposition from the Committee, based on the experience that independent regulators elsewhere were problematic. Another summary report was requested giving full details of how the Water Trading Entity was funded and what it had written off. Members questioned the mine drainage and suggested that DMR should be addressing problems proactively in other areas.

Meeting report


Chairperson’s opening remarks
The Chairperson welcomed Mr François Rogers (DA), who was replacing Mr Gareth Morgan (DA).

He reminded Members of the programme and agenda, noting that the Committee intended to adopt the National Environmental Management Laws Second Amendment Bill (NEMLA) after the constituency period, and that the budget debate for Department of Water Affairs (DWA) was scheduled for 21 April. 17 and 18 April were scheduled for discussions with the water boards.

National Environmental Management Laws Second Amendment Bill (NEMLA) latest draft: deliberations with the Department of Environmental Affairs (DEA)
The Department of Environmental Affairs (DEA) interacted with the Committee on the latest draft of the National Environmental Management Laws Second Amendment Bill (NEMLA).

The Chairperson said that all the things on which the Committee had agreed should now be incorporated into the Bill. The changes marked in yellow were those made after the last discussion.

Long Title
The Chairperson said that the first change was to do with the new flexible guidelines that the Minister wanted to use when people had their own environmental plans outside the Act. These guidelines were now included in the Long Title.

Mr Alfred Wills, Deputy Director-General: Environmental Advisory Services, DEA, confirmed that this was correct.

The Chairperson asked if any Members had any comments or if they wanted to discuss the guidelines. They were intended to cover the development, content, and use of voluntary organisation and sector-based instruments, and the consideration and endorsement. This seemed to be quite straightforward.

Mr Wills referred the Chairperson to Section 23A. To be more accurate, it should read ‘voluntary organisation or sector-based instruments’.

The Chairperson was satisfied that this had been added, and said that the Long Title should change in line with this phrase.

Adv Linda Garlipp, Chief Director: Law Reform and Appeals, DEA, said that she had made some consequential amendments to ensure consistency of wording.

Clause 1 - Definitions
The Chairperson noted that there were new definitions, and asked the DEA to take the Committee through them.

Adv Garlipp said that in the National Environmental Management Act (NEMA), ‘activity’ was defined as also a plan or programme but the definition of ‘commence’ did not talk to that and was not wide enough, because  the DEA intended in future to list the plan as an activity.  DEA therefore added ‘or the implementation of a plan, policy or programme or process’.

The Chairperson said this was not a new definition. He questioned the words ‘means the start of any physical activity’ and asked how ‘activity’ was defined.

Mr Wills acknowledged that the DEA should look at the practicalities. The Act defined an ‘activity’, as used in Chapter 5, to mean policies, programmes, plans or projects, and, in the context of Chapter 5, it referred to the list of activities. At the commencement of a development, it contained both listed and unlisted activities.

Mr Wills added that the ‘activity’ part would apply only to listed activities. For instance, in a mine development, the road might be a listed activity, together with the tanks for the fuel, but not the hole in the ground, as this would be a listed activity in terms of the Mineral and Petroleum Resources Development Act (MPRDA).

Mr Wills noted that the pack handed to Members contained three documents, and the third referred to the whole Act and the amendments being made by the Bill. The DEA listed activities in Chapter 5.

The Chairperson interjected that Members should consider the amendments marked in blue.

Mr Wills said that, according to Section 24, the Minister or the Member of the Executive Council (MEC) could list in terms of the notice.

The Chairperson asked the DEA, after a short debate, to reword the definition to be more specific and less open-ended.

The Chairperson suggested excluding the word 'activity' from the reference to 'commencement'.

Mr Wills replied that 'a listed activity' referred only to those activities for which an environmental impact assessment (EIA) was applicable. One of the objectives of this exercise was to expand 'that set of tools' if an environmental impact assessment was required.

The Chairperson said that his focus was rather on the technical, legal side. It was necessary to make the definition of 'activity' clear, and perhaps an ‘activity’ should not depend on a ‘plan’ or ‘policy’. He wanted more discussion on the principle and pointed out that the legislation must be clear to the layman.

Clause 2
The Chairperson noted that the DEA had taken the word 'and' and added with 'or  review an environmental assessment package'  to widen the scope. There was no other comment from Members.

Clause 3
The Chairperson noted a small, technical change with the addition of 'evaluation, adoption of', which broadened the scope of what the Minister might prescribe.

Clause 4
The Chairperson noted that the heading for the new Section 23A had changed, to 'mainstreaming environmental management'.

Mr Wills explained that the DEA was trying resolve the confusion apparent in the previous meeting about the word 'comprehensive'. The whole chapter, not just this section, dealt with the integrated, comprehensive, holistic approach. DEA had thus sought to provide some clarity on what section 23 actually enabled the Minister to do. It actually provided the objectives for integrated, comprehensive environmental management, whilst section 24 dealt with authorisations. However, it must be remembered that other sector departments and sectors of the economy were in fact integrating their environmental considerations into their normal management practices. The Minister could now promote that process of mainstreaming or integration in other sectors. The DEA wanted to be clear on the content and use of voluntary instruments, and to emphasise that those instruments applied at both an organisational level, in a company such as Eskom or Sasol, or at the level of the whole energy or manufacturing sector.

The Chairperson noted that these changes were an improvement but wanted the Minister to have discretion where the plan contained something objectionable.

Mr Wills conceded the need perhaps to add the words 'where appropriate' at the end of (c). 

The Chairperson said that even there the DEA should give scope for the Minister to indicate the particular aspects of the plan with which she might be unhappy, rather than just accept or reject the plan in its totality.

Other Members indicated their agreement and the DEA was asked to revise the wording.

Clause 5
The Chairperson asked if Members or delegates had any comment, and highlighted the further adjustments.

Mr Wills explained that these clauses provided the Minister or the MEC with flexibility to exclude certain developments from the requirement to obtain an authorisation. In the previous version, subparagraph (e) had talked to the exclusion from the requirement to obtain an authorisation. It was now made much clearer that, when implementing these three paragraphs, the Minister or MEC might exclude the activity or geographical area from the EIA requirements, on the basis of the spatial tools, the norms and standards, and 'another environmental management instrument'.

The Chairperson requested Mr Wills to explain the insertion on page 11, suggesting that the word ‘or’ implied that both activities were possible.

In further dialogue between the Chairperson and Mr Wills, Mr Wills provided further explanation on amendments to Sections 23 and 24.

Ms B Ferguson (COPE) referred back to (b) on page 9, and noted that the plural of ‘the Minister’ had actually been removed previously, so this was not a new amendment.

Mr Wills said that Ms Ferguson was correct.

The Chairperson referred to wording at the top of page 8, and the top of page 11, which reflected changes f ‘and’ to ‘or’. He noted that Members had no comment

The Chairperson noted that the DEA had apparently refused to include certain suggested changes. He noted that the wording of (a) was new.

Mr Wills explained that the DEA had tried to take the Chairperson's concerns into account, and said that the DEA was trying to provide clarity and had therefore inserted 'unless otherwise agreed' to relate to section 24C (3). The Chairperson's concern had been around taking away the power from the MEC without flexibility for engagement.

There was dialogue between the Chairperson and Mr Wills, in which the Chairperson sought further clarity, and Mr Wills referred to discussion in the previous meeting on the Bill, 26 February 2013.

The Chairperson said that his recommendation was still not acted on, and referred to ‘exclusion’ not ‘duplication’.

Mr Wills explained that the amendment provided basically that the Minister would be the competent authority, with certain exceptions, for protecting the natural environment.

Mr Wills explained modifications to the wording to improve clarity. He noted that page 13 had deleted subsection 2(b). The previous (a) and (b) were combined, and he read out that the new wording had implications for international commitments or relations. Where identified by the Minister in the Government Gazette, and where the activity took place in an area protected by certain international instruments, the MEC would continue to be the competent authority in this list of activities'.

The Chairperson explained to Members that the DEA had essentially combined (a) and (b). There was no change to the principles. He thought the clause read better and summarised the changes.

Dr S Huang (ANC) made an inaudible suggestion on page 12, section 24.

The Chairperson clarified that the Department would make a correction.

The Chairperson referred to the new subparagraph (d). He had previously expressed concerns about taking away powers from the provinces, and the DEA had tried to meet his concern. This Clause would apply only where a competent authority other than the Minister existed. It was necessary to be quite clear where it was necessary to centralise power. He suggested some possible better wording. 

Adv Garlipp referred to the competent authority for the Renewable Energy project, and authorities for land care as examples.

Mr Wills said in relation to (a), that as far as renewable energy was concerned, the Minister would be the competent authority for the actual wind-tower site, but not for the road that would lead to the site, or the clearing of the land on that site. 

The Chairperson said that once the Cabinet had declared the Minister the competent authority, it had to be asked if he or she did not have all the relevant powers.

Mr Wills replied that the Minister would not necessarily have the relevant powers over all matters connected with the construction of any mast. When Cabinet said that renewable energy was a national priority and required co-ordination and the building of special capacity to deal with those applications, the Minister must be the competent authority for the whole programme.  

The Chairperson said that when Cabinet made such a decision, there must be a notice in the Government Gazette to show that a decision had been taken.

The Chairperson commended DEA, saying that he had not expected something so elaborate, but it read well. He noted that the DEA must still add the requirement for the extra notice at the end.

Clause 6
The Chairperson noted that clause 6(c) provided for a new subsection (4) to be inserted into section 24C. If the MEC had failed to take a decision on an application within the time periods prescribed by the Act, the applicant could apply to the Minister to take the necessary decision. He felt that the Constitution very clearly gave the power to the provinces. It was therefore necessary to draft a Clause that impacted minimally on the powers of an MEC, even when the MEC failed to make a decision in time, and this was why the Committee had suggested a many-step clause. This was linked to the Constitutional requirements.

The Chairperson questioned the use of the word ‘its” into subsection (5), saying that whilst this was correct for a company or entity, it was not applicable to an applicant who was a natural person.

Mr Wills agreed to make a correction to achieve gender neutrality.

Adv Garlipp read out the Constitutional requirement that the national government should assist provinces to develop administrative capacity required for the effective exercise of their powers and performance of their functions. She had added the words 'if such assistance is requested by the MEC' because sometimes they may not want assistance.

The Chairperson roundly interjected that this phrase should be removed, and expressed the view that the provinces had already shown themselves incompetent to do the job, so they should not have the discretion whether to request assistance. The more important principle was to deal with what the Minister deemed necessary, and the use of ‘and’ was problematic. In principle, the first step would be to try to assist. However, the Minister might then have to direct what steps should be taken including directing the MEC to take a decision. The word ‘or’ should be included, to allow for a choice of steps to take.

Mr Wills proposed another change to simplify matters, suggesting that immediately prior to the new (7), the following should be inserted:  'Before taking a decision contemplated in subsection (4) the Minister must request the MEC to provide a report.' Another new requirement could also be added as follows: 'After having received the report referred to in paragraph (a), or in the event that no satisfactory response or co-operation is received from the MEC, the Minister..’ (and here the words ‘must’ or ‘may could be used)  ‘… (a) request the MEC to inform the applicant to assist the MEC in accordance with Section 125(3) and direct the MEC to take etc’.

The Chairperson said that this was fine, but that the DEA should still split the steps and the decisions into subparagraphs. In addition, the words ‘within the specified time period’ must be added to the phrase relating to the satisfactory response or co-operation from the MEC.

Mr Wills clarified that the officials processed the application but the Minister must take the decision. He agreed with the time frame addition.

The Chairperson now felt that clause 6 was much improved, and noted that Members were happier with it.

Clause 7
The Chairperson noted that there was nothing to discuss.

Clause 8
Mr Wills referred to a document reflecting the resolution by the Portfolio Committee, saying that the one part dealt with what was needed to bring this proposed Amendment Act into effect with a list of guidelines and regulations to be developed. The other part contained the short and long term steps that the Chairperson had requested the DEA to consider. This was a step in the process of the Committee's review of the longer term environmental management system.

The Chairperson agreed that this must be incorporated. 

Clause 9
The Chairperson noted some changes to the amended section 24G.

Mr Wills said that these changes had been at the Committee's request.

The Chairperson commended the more structured and nuanced clause that better captured the Minister's powers. 

Clauses 10 to 13
The Chairperson noted that there were no changes.

Clause 14
The Chairperson noted that here there had been major discussions on this clause.  

Mr Wills said that the Committee had commented that the new section 30A recognised that, in an emergency, the competent authority might not have complete information, but knew that if it failed to act, there could be loss of life. This clause was now to provide for flexibility of action.

The Chairperson asked Mr Wills to check if any offence existed or was needed to cater for the new clause.

Clause 15
The Chairperson asked if the DEA had discussed civil action or damages.

Ms Frances Craigie, Acting Chief Director: Enforcement, DEA, said that the power to seize was given in terms of reasonable suspicion.

Clauses 16 to 19
The Chairperson noted that there were no changes.

Clause 20
Ms Craigie said that the DEA had reworded the provision about approaching the National Prosecuting Authority (NPA) to take a matter to the high court rather than to the magistrate's court.

The Chairperson commented that this was a much better way of doing it.   

Clause 21
The Chairperson noted that the Committee's previous concern had been addressed.

Clauses 22 to 24
The Chairperson noted that there were no changes.

Clause 25
The Chairperson noted that there were many offences and that a new paragraph (b) had been inserted into the new section 49A(1). Members had already dealt with paragraph (d).

Mr Wills said that the new paragraph (b) referred to 'norm or standard', which linked to other subsections of section 24.

The Chairperson noted that the DEA had added the word 'contemplated’ into section 24(2), suggested that  DEA would have to consider possible defences, but noted that the penalties remained the same.

Clause 26
Adv Garlipp explained that the change related to the technical description of the Minister responsible for Environmental Affairs.

She also explained that because the DEA had moved all the offences to one portion of the Bill, the DEA had to make a consequential amendment to Schedule 3 to ensure that the Minister’s powers under section 34 were captured. It was also necessary to amend the Table of the principal Act.

Clause 27
This Clause was not discussed.

Committee Resolution
The Chairperson read out (although this was largely inaudible) the Committee’s draft Resolution, which referred to the elaborate clause on the Minister’s and MEC’s powers, which was intended to ensure that all possible other actions were taken before the ultimate step of the Minister taking over what was essentially the MEC’s function.

He noted that DEA wanted to add something on where the guidelines and regulations needed to be put in place, in order to give effect to these amendments. 

Mr Wills referred to the fact that this amendment was part of the Committee's long term programme or objective for a comprehensive review of the entire environmental management system for South Africa. It might be useful for the Committee to note this and suggest that more comprehensive amendments would still be forthcoming.

The Chairperson interrupted to say that this should be linked back to the relevant sections.

Mr Wills confirmed that the DEA had guidelines and regulations already, and read out the sections to which these applied, being sections 23A, 24(5)(b)(A) and (B), section 44(1)(a), section 44A(c), the section 24G and the new sections. There was also something to deal with determination of the administrative fines, and development of regulations related to the oral requests in terms of section 30A, as well as guidelines for adopting norms and standards in terms of section 10 of the Act. 

The Chairperson agreed but suggested that DEA should specify all of this and note that it would be able to develop this within six months.

Mr Wills cautioned that the six months period might be a problem.

The Chairperson said that this was exactly why he was raising the matter. Once this was specified in the Act, an amendment would be needed to change it, and he had suggested already that the Act must come into effect six months after the date of its publication in the Government Gazette.

Mr Wills replied that it was an oversight.

The Chairperson said that the change was just to give clarity, and the President arranged for publication in the Gazette.

The Chairperson summarised that the DEA had done some excellent work, but there were still some technical issues to be fixed up. Members could not yet get mandates from their parties, so he proposed that on 16 April the Committee and DEA must review all the latest technical amendments, so that Members could then take the matter to their caucuses. The principles seemed to be sorted out, and he thanked the officials from DEA. He said it was necessary for them also to confer with the Minister now that the deliberations were nearing finality.

Department of Water Affairs Annual Performance Plan (APP) and budget 2013/14 to 2015/16
Chairperson’s opening remarks

The Chairperson said that the Auditor-General of South Africa (AGSA) and National Treasury would have an opportunity to comment on the budget and plan at the time of the budget presentation.

The Chairperson was highly impressed with the DWA's methodology and criteria used to decide on the performance targets and indicators, as reflected in its Strategic Plan and Annual Performance Plan (APP), as referred to on 27 February 2013.

The Chairperson asked Mr Trevor Balzer, Acting Director-General, Department of Water Affairs, when the review of the National Water Resource Strategy (NWRS) would be completed.

Mr Helgaard Muller, Deputy Director General, Department of Water Affairs, noted that the Department of Water Affairs (DWA or the Department) had finished its consultations and received substantial input on the NWRS. The team was currently redrafting the strategy and restructuring the document to make it easier to read. It was hoped to complete this in April and to have discussions with the Minister in May.

The Chairperson said that he would call on the DWA to give a preliminary briefing on the document in May.

The Chairperson emphasised to Mr Balzer that he was still patiently waiting for a summary of all the suggestions that the Committee had made.

Mr Balzer replied that ultimately he had to accept responsibility for the delay.

The Chairperson wanted to hear exactly where the changes would be, and to check that all concerns were covered. He was not trying to catch anyone out, nor were there changes to policy being suggested.

The Chairperson noted the scheduled attendance of the two water boards on 17 and 18 April. He noted that there would not be time to hear from the Catchment Management Areas (CMAs), the Irrigation Board, the Water Research Commission and the Trans Caledon Tunnel Authority on the following day, and their presentations would take place on 16 April.

Presentation by DWA of Annual Performance Plan and budget
Mr Balzer explained the structure of the presentation.

The Chairperson asked if the DWA would give an input on linkage between the infrastructure work and the Presidential Infrastructure Co-ordinating Commission (PICC). 

Mr Balzer replied that DWA would be able to identify the projects which fell within the strategic infrastructure plans.

The Chairperson said that he had already engaged with Minister Patel, and felt that the Committee should get an explanation on how water fitted into the whole infrastructure plan.

Mr Balzer began the briefing to Members on the Department's Annual Performance Plan (APP) and budget for 2013/14 to 2015/16, and said that he would, as requested by the Chairperson, also deal with the Water Tribunal, and how DWA was implementing the Promotion of Administrative Justice Act (PAJA) and the Promotion of Access to Information Act (PAIA). DWA would focus on the infrastructure programme on the following day.

Part 1: Executive Summary of the APP and budget
Mr Balzer explained that the alignment of the APP to various programmes was illustrated on slides 4 and 5, the Table and slides 6 to 9 (see attached presentation).

Under Programme 1: Administration, the key cross-cutting issues were those emerging from the Industrial Policy Action Plan (IPAP), and Government Outcome 12 in particular. The DWA engaged with National Treasury and the Department of Public Service and Administration (DPSA). Finance fell this Programme 1 (see slide 4, column 1).

Programme 2: Water Sector Management, highlighted Millennium Development Goals (MDGs), Outcome 6, the National Development Plan (NDP), the Strategic Infrastructure Projects (SIPs) and the Industrial Policy Action Plan (IPAP). DWA dealt with Water Research Commission (WRC), and the Department of Environmental Affairs (DEA) under this programme (see slide 4, column 2)

Programme 3: Infrastructure engaged mainly with Government Outcomes 4 and 6, the NDP and the SIPs,and the New Growth Path (NGP). DWA engaged with the Departments of Agriculture, Forestry and Fisheries (DAFF), Mineral Resources (DMR), Co-operative Governance and Traditional Affairs (CoGTA), and Energy (see slide 4, column 3)

Programme 4: Regions expanded in the operational areas. This also engaged with the MDGs, Government Outcomes 4, 6 , 7, 9 and 10, the NDP, the SIPs, and the IPAP. The institutions engaged with included the Catchment Management Agencies (CMAs), the irrigation boards and water users associations, and water boards insofar as they acted as implementation agents for the Department. The Departments with whom there was engagement included the Departments of Health, Human Settlements, DAFF, DMR, CoGTA, the Department of Energy, DEA, and the Department of Rural Development and Land Reform (see slide 5, column 1)

Programme 5: Regulation was explained in column 2 of slide 5.

Programme 6: International Water Co-operation, was linked to Government Outcome 11. It had the Department's smallest budget allocation, and principally engaged with the Department of International Co-operation and Development (DIRCO) and the international commissions (see slide 5, column 3)

Mr Balzer stressed that all these linkages illustrated that DWA was not operating in isolation. Programme 1 was the one in which all the support activities were conducted, including the Ministry, human resources (HR), accommodation requirements, and finance.

Mr Balzer explained that the Programme Performance Indicators (PPIs) gave reference numbers, which matched those in the APP.

Budget overview
Mr Balzer set out the budget overview (see attached presentation, slides 10 to 12). He noted that the budget was set to increase substantially. DWA would ensure that it did indeed have the capacity to deal with a R15 billion budget by 2015/16. The Department was developing its human resources (HR) to make the best use of the DWA's own resources. The major increase was in the Regional Implementation and Support programme, largely as a result of the new Municipal Water Infrastructure Grant (MWIG). The other large budget item was the Regional Bulk Infrastructure Grant (RWIG). This indicated a focus on municipal activities.

Mr Balzer also noted that although International Water Cooperation was important, it had quite a small budget of R25 million, rising to R32 million. International water co-operation was supported to a large extent by the DWA's line managers, who participated as Commissioners in the various Commissions on the shared watercourse management arrangements. Their salaries and travel arrangements for engagement on those structures sat within their line functions. He said that the budget would be explained in more detail later.

The Chairperson noted that the DWA’s budget would almost double and stressed the need to create capacity to deal with this increase.

Mr Balzer said that DWA would indicate its current resourcing, and staff for each programme. He agreed that a significant increase was needed.

Mr Balzer noted that a big portion of the budget went into the payment for capital assets. All the figures were consistent with those which appeared in the Estimates of National Expenditure (ENE). 

APP Alignment with human and financial resources, per programme and sub-programme
Mr Balzer said that the alignment was set out in the attached table, slides 14 to 22.

He outlined the staff numbers in each programme. There were 15 PPIs in Programme 1 and a staff complement of 1 256. The allocation for office accommodation would no longer be ring-fenced from 2014/15, and would fall in the Corporate Services domain, under sub-programme 4.

He noted that the Water Trading Entity (WTE) formed part of the overall Estimates of National Expenditure (ENE) because there were fund transfers from the main account into the WTE but it was audited separately. Programme 3 would be dealt with as part of the presentation on the WTE as all the budget of Programme 3 went as a transfer to the WTE.

The Chairperson asked if all staff salaries were reflected under Programme 1: Administration.

Mr Balzer replied that under each programme, there was an allocation for compensation for employment (COE). Unfortunately the staffing numbers for the COE had not increased at the same rate as the budget allocation for new programmes such as the MWIG. Therefore, as a stop-gap measure, some “top slicing” took place on the regional bulk infrastructure programme for project and programme management. However, DWA was identifying the gaps.

A prime example was mine water management. He noted that it was difficult to run this programme when the only available suitable staff member had to be taken from a regulatory function to run a very focused programme, and this was one example of a serious resource gaps. The Deputy Director Generals tended to “haggle” with each other around resources. The COE budget had been capped because there was a limit to the number of staff that DWA could appoint, and over the last couple of years, National Treasury had tightened up on the overall COE budget. This led to what might be viewed as an excessive use of other agencies to do some of the DWA's work, but this gap too would need to be closed.

Programme 6, on international water co-operation, had a staff complement of 33, which was close to the full complement.

Programme 1(See slides 24 to 38 for details).

Mr Squire Mahlangu, Acting Deputy Director General, Department of Water Affairs, explained the indicators, 2013/14 targets, and rationale, reading through the slides setting out the objectives and indicators. For Programme 1, these included improving and increasing the skills pool and building competencies within the sector. The DWA aimed for an effective and efficient internal control environment. In particular, it sught full compliance with all statutory reporting prescripts. It sought to improve water use efficiency, through public awareness campaigns and stakeholder engagement initiatives to promote sustainable use of water, and aimed to reach 5 000 schools with water awareness programmes.

Programme 2
Mr Trevor Balzer wanted to put on record that the processes for the filling of the Deputy Director General posts were under way, and briefly outlined what posts were to be filled. The interviews had taken place and the processes would proceed with the Minister.

Mr Helgaard Muller, Deputy Director General, Department of Water Affairs, noted that Programme 2 exercised institutional oversight over the catchment management agencies (CMAs) and entities. Reconfigured figures would be placed before the Committee on some points, as outlined earlier.

He noted that planning had identified a number of reconciliation strategies to reconcile demand and supply in the catchments, as well as plans being drawn for feasibility studies for two dams.  The water pricing figures must be read with slide 31.

The Chairperson interrupted to ask if the water pricing strategy had come to the Committee, and stressed that this was to be done before it was gazetted.

Mr Muller said that this was an ongoing project, looking at different funding and pricing models.

The Chairperson stressed that the Committee would want to engage on this, as it was vital to its work.

Mr Muller then moved on to the realignment of the water boards.

The Chairperson interjected again to say that the Committee needed to see the plans for this. He said that an agreement had been reached with Department of Mineral Resources (DMR) to align all the processes around water permits and environmental management assessments (EIAs). He asked if the Department of Water Affairs (DWA) would also need special  legislation to give effect to those agreements.

Mr Muller noted that he could not answer this question immediately but would revert on it.

The Chairperson made the point that it was a high priority.

Mr Muller said that part of the drafting was being done to integrate with other departments.

The Chairperson said he knew that, but this was something more specific.

Mr Trevor Balzer, Acting Director General, DWA, said that the Department was part of that process, with the Departments of Environmental Affairs (DEA) and DMR. DWA covered the water licence aspects and the necessary “tweaking” around those would be dealt with by amendments to the National Water Act and the Water Services Amendment Act, at the appropriate stages when that legislation was being rectified.

Mr Muller continued with the presentation, noting that there was a draft climate change strategy for the water sector. Water Information Management involved monitoring of ground water sites, reports on the state of water and eco-systems.

The Chairperson also wanted to be told when that was ready, as the Committee would want a briefing.

Mr Muller explained that in respect of river quality, there was not a single standard, but objectives for each and every category.

Programme 5
Mr Muller moved on to note the targets and objectives for Programme 5. It covered regulations. The objective to improve equity and efficiency in water allocations was done through water use authorisations to emerging farmers. The targets for DWA’s mandate to ensure compliance on drinking water and waster water service was briefly mentioned, but he said that more detail would be provided when dealing with the River and Green Drop reports. Economic and social regulations were to be established to deal with tariffs and the format of economic regulation and these would be presented when the study was completed.

Resource regulation covered the number of dams under the National Water Act, and he stressed that this applied to all dams, not only those falling under the direct control of the DWA. The Drinking Water Quality tested effluent standards.

The Chairperson noted that 960 water treatments systems were targeted, and he asked how many DWA had in the country.

Mr Muller explained that there were around 800. The reason for the difference was that DWA also covered systems that were held in private hands, as well as those that were created specifically for institutions such as prisons or hospitals and others under the Department of Public Works (DPW). He added that many municipalities, especially for new golf estates, could not extend the municipal systems and they had required that the estates put in their own sewage systems, which the DWA then also monitored.

Mr Muller noted the targets for compliance monitoring and the mines.

The Chairperson asked where the mines without water licences were dealt with.

Mr Muller explained that they fell under “compliance with all standards”.

The Chairperson asked if there had been a report by DWA to say which licences were provided to which mines.

Mr Muller said that it, and in fact several reports had been provided, and the Chairperson took issue with this, saying that it had not been tabled to the Committee.

Mr Balzer said that this may not have come through as a separate report to this Committee, but the reports were provided in response to questions from the House asking for details.

The Chairperson noted that the last time there were hearings, there were many concerns expressed about this. He requested that, before 16 April, the Committee be provided with a list of mines that did not have water licences, as he wished to name and shame the mines that were acting without authorisation.

Mr Balzer added that there was reference to the agreement with DEA and DMR. There would be attempts to ensure that the compliance monitoring was done by all three at the same time, so that was part of the alignment dealing with engagements between the three departments.

Programme 4
Ms Thandeka Mbassa, Deputy Director General: Regions, DWA, started at slide 32 of the attached presentation. She noted that the key priority for this programme was creating regional bulk. The creation of jobs was also particularly important. In 2012/2013, 2 694 jobs were created. The other point to be stressed related to the institutional establishments, and here, the programmed aimed to support resource-poor farmers, through provision of subsidies helping them with operations, with maintenance of infrastructure, and through interventions.

The Chairperson thought that the figures were rather low.

Ms Mbassa agreed but said that there were serious constraints with the budget and the DWA was due to discuss the issues with National Treasury (NT).

The Chairperson asked if the purpose of the subsidies was to enable the engagement of more staff.

Ms Mbassa said that this was part of it, but it must also be remembered that DWA was providing infrastructure and funding that, and in the course of providing the infrastructure it was creating jobs to build it up.

Ms Mbassa explained that the original intention of the rain water harvesting programme was to support food security. However, because of challenges with access to drinking water, a lot of the funding went to providing tanks, but in the future the DWA did want to focus more on harvesting of rain water.

The Chairperson asked what jobs were being created.

Ms Mbassa explained that there were some programmes being run, whereby communities were being trained in basic water management courses, and they attended to cleaning of the rivers. They did some rudimentary water quality testing but overall the programmes had a very high impact. She noted the Adopt a River programme, in which there was not a high investment of money, but the benefits were substantial.

The Chairperson agreed that this was vital. Many rivers running through townships, and even the canals running through the wealthier suburbs in Cape Town, were filthy and he was concerned to see children playing in and drinking the water. This created substantial opportunities for social and environmental improvements.

He wondered if it was not possible also to link with the DEA, who ran a number of Expanded Public Works Programmes (EPWP) which offered substantial opportunities for clean-up operations. He believed that huge expansion of this would be quite possible, without costing too much.

Ms Mbassa continued that another project was the War on Leaks programme, which aimed to train a few people in basic planning and they could then go around to their neighborhood and fix leaks.

She noted that the strategic objective 2 also related to regional bulk. The number of bulk infrastructure schemes seemed low in relation to the budget but it must be remembered that they were huge projects implemented over about three years. The Minister of Water Affairs had asked the Department to look at shortening the time period, to focus on a few schemes only and try to finish those as soon as possible. There was linkage on this with the National Development Plan (NDP), amongst others. Ms Mbassa confirmed, in answer to a question from the Chairperson, that this was the grant spoken about earlier. There were currently 12 schemes listed in the presentation, but a number of others were planned or running.

Ms Mbassa noted that the institutional establishment objectives were concerned with the numbers of poor farmers getting water. The DWA had not moved as fast it could have, to reform water. However, there were targets to ensure, through the improvements to the licensing process that the number of resource-poor farmers who applied for water would be prioritised.

The Chairperson asked that Ms Mbassa not deal with every one of the targets.

Ms Mbassa said that the Water Services Projects would be covered by her colleague. She moved to the objective to improve water sufficiency, which was referenced in the 2011 State of the Nation Address. There was an intention to try to save water, across all the sectors. The DWA had been mostly addressing domestic water use but it realised that it must also address agriculture, the biggest user, and industry.

Water Sector Support targets looked to bulk refurbishment and a number of other matters. She noted that the DWA would be focusing on supporting water service authorities with cumulative risk ratings. Government was investing heavily in infrastructure. However, water contributions should be an integral part of water provision, including operations and maintenance. There was very little funding available and the targets were low, and it must be remembered that only 28% of municipalities were implementing this. The DWA needed to ensure regulation and was trying to gain buy-in from the municipalities.

She noted that the Accelerated Infrastructure Programme was put in place to deal with failures. The budget was around R227 million for the whole country, which was very small. She also noted the targets for interventions to prevent water supply infections and effluence incidents. She said that she would go into more detail when she dealt with the “Hotspots” report.

Ms Mbassa noted the number of households provided with interim water supply in the 24 priority districts. There had been spending of  R660 million this year to deal with communities who had no access to water, for various complex reasons. There was an intention to address the issues.

The Chairperson noted that many of the objectives under strategic priority 3.2 were intended to avoid the “hotspot” difficulties.

Ms Mbassa then moved on to highlight the water resources sustainability, and noted that there was a target in the forthcoming year to have  nine waste water treatment points, which she conceded was low, in relation to the challenges.

The Chairperson asked if the Vaal river problems, where effluent had flowed into the river from the municipality, had been dealt with.

Ms Mbassa said that this was being dealt with.

Mr Balzer added that it would be covered under infrastructure, which was assembling waste water schemes.

Ms Mbassa noted also that DWA was seeking to extend the river health programme. Under the targets for regional bulk, DWA would be doing refurbishment for the municipality ASIP programmes.

Mr Balzer noted that mine water management and acid mine drainage (AMD) had been addressed in many previous presentations to this Committee. He noted that the figures here reflected the short-term interventions by DWA. As previously reported, the work in the Western Basin had been completed, and 25 megalitres of effluent a day were being treated. No mine water was returning to the systems untreated. DWA was now busy with construction on the Central Basin, inserting the deep-well pumps, and that was in progress, with the contractors on site, the pumps secured and partially paid-for, and surface preparation for installation had been done, as also the preparations for the sludge plant.

Ms Mbassa added that there were other concerns in this area, where there were serious warning signals. The National Planning Commission (NPC) had highlighted potential problems in Mpumalanga, in relation to coal mining activities that were starting to decant, in the highlands area. There was a need for DWA and other departments to come up with a strategy to address this as a matter of urgency.

Programme 6
The Chairperson indicated that there was no need to address Programme 6 specifically at this stage as it was speaking to the capacity.

Programme 1 as related to Water Trading Entity
Mr Faizel Ismael, Acting Chief Financial Officer, Water Trading Entity, DWA,  said that he wanted to take the Committee through some of the indicators.

He noted that the DWA was unqualified in respect of several aspects of the last audit and it wanted to maintain that and improve. In relation to asset registers, the DWA had not had any qualifications and it was aiming for completeness of the asset register. It was also aiming for a reduction in irregular expenditure, down to nil, to ensure that there was a culture of no tolerance in the Department to such matters.

DWA was also planning that the planned billing and actual billing were completely in line. He noted that DWA was hoping for a clean audit in the 2013/14 financial year.

The Chairperson quipped that he hoped the Auditor-General would be saying good things about this financial year that would be ending in this week. He asked on what aspects there had been problems in the previous year.

Mr Ismael confirmed that there was no problem with the asset register, but there had been qualifications on the irregular expenditure and on the revenue, which was essentially the billing. However, he was confident that there had been progress made. The DWA had faced a lot of historical challenges. It was now in the process of implementing a SAP accounting system, and this would hopefully address a number of the billing difficulties, so that the benefits of the new system would soon be seen. At the moment, DWA was augmenting the system with manual processes, but some efficiencies should be seen shortly with the new system.

The Chairperson asked if Mr Ismael had applied for a permanent position and Mr Balzer said that he had applied and was interviewed.

Mr Ismael then moved to the debtors. There was a target to reduce the debtor’s book by 50%. The way in which DWA planned to do this was to look firstly at the top customers, in terms of value. There was currently R5 billion of outstanding debt and DWA was trying to reduce this. New systems were in place to ensure that all processes were defined.

The Chairperson asked if this figure was an actual or estimate.

Mr Ismael said it was a known figure.

He then moved on to the revenue, and said that the target was that DWA should be generating revenue each year to fund the refurbishment programme. DWA had been asked to provide R850 million, in targeted projects over the next financial year, with a focus on debt collection, collection of amounts billed currently, and he explained that he would later explain the difference between collected funds and own-generated funds.

The Chairperson asked for more detail on the figure as matters currently stood.

Mr Ismael said that the DWA would recover on operations and maintenance, depreciation and there was a return-for-assets element for the refurbishments. The target, ultimately, was to ensure that ageing infrastructure would be replaced. He explained that at the moment about half of the projected figure was being collected as new cash flow, and that was specifically targeted to the refurbishment programme. Income from operations and maintenance would be used for other purposes. At the moment National Treasury was giving about R2 billion, and this would increase.

Programme 3
Ms Zandile Mathe, Acting Deputy Director General: Infrastructure, DWA, noted that Programme 3 dealt with Water Infrastructure Management and the prime objective was to ensure development by DWA of new infrastructure and maintenance. This would include matters dealt with by the Trans-Caledon Tunnel Authority (TCTA).

She set out a schedule of the schemes and said, at the outset, by way of introduction, that the infrastructure division would take control of projects from phase 5 onwards. She asked Members to refer to the diagram on page 44 (see attached presentation).

She then explained that this slide broke down what had been described in an earlier presentation, with descriptors on each phase. The first phase, reconnaissance, was basically used to identify a need for water and during this phase the possible interventions would be identified. Phase 2, pre-feasibility, would investigate some of the options. These would be studied over a three-to-five year period, to try to establish, for instance, patterns of river flows, likely rainfall and river behaviour. During this phase the best options would be identified. Phase 3, the feasibility stage, looked into the technical, environmental and funding options, looking, for instance, at who would benefit from the dam, and what other benefits might be derived apart from the human consumption. All the data would be drawn into this process, and consideration would be given to how funding could be obtained. The financial and economic issues would be investigated. Possible design options to be put on the ground would also be discussed. The design would have long-term operations and maintenance.

Phase 4, the decision making stage, would start when there was already a business case on the table. The matter would be gazetted and comments would be sought from that area. This was regulated more from the NEMA side, and there would be a Record of Implementation issued. Phase 5 usually concentrated on construction but sometimes design and construction would be run in parallel, although it was not always desirable. Where there were internal contractors, DWA would wait for the final design before engagement with the contractors.

Ms J Manganye (ANC) asked how long each phase would last.

Ms Mathe said that she was trying to benchmark this, but it depended largely on the attitude of the engineer. DWA was also trying to treat its construction teams as a normal contractor, establishing service level agreements (SLAs), paying then on performance certification and generally trying to instill the right culture.

She noted that a problem that had been quite apparent in the past was that a dam would be constructed, but because no bulk system had been put in place to take outlet pipes from the dam to the municipality, the dams had not provided water to the people of the area. The Minister had met with the municipalities and in North West there were specific agreements made that the dams would benefit the whole area and this would be a joint project. Similar arrangements were now being made for other dams that were not fully reticulated. These included Mbembe, Mopane, Ndoni and Bushbuckridge.

The Mokolo River Augmentation was targeted for 95% completion by the end of the next financial year. Komati Water Supply Project was at 90% and a project had been launched on the previous week with the NT. For Hazelmere dam the tender was closing and it was hoped that this dam would be 85% complete by the end of the current financial year. Similar improvements were shown with Clanwilliam, where the design was almost finished, and there would be work done on construction and site establishment, with more work to be done in the 2013/14 year. The Mgeni Scheme was at around 90%cmplete and the Greater Lataba River project should be at design stage, although there was no record of the implementation of the design. She also outlined progress on the other dams mentioned in the presentation.

The Chairperson summarised that then four projects were close to completion and four were in the initial stages.

Ms Mathe agreed but said that the bulk distribution system was somewhere in the mid-phases. There would be commencement of construction on phase 2D in the next year.

The Chairperson asked for the location of the project in the former Transkei.

Ms Mathe replied that it was in uMzimvubu, but this one had not moved to the DWA.

She added that DWA had closed out a joint project with Eskom, the major users taking water from bulk to Standerton. It was experiencing some problems with capacity and was trying to build up this capacity to operate and maintain the system in Vrysap. Sophisticated skills were needed for the advanced design and technology that had been used.

She then moved on to the Operations and Maintenance projects of this programme. Firstly, underspending was noted on the dam safety rehabilitation project. The allocation from National Treasury was based on the 2006 Dam Safety report, and DWA was lagging behind. The Chief Financial Officer had managed to get some funds brought back and extra capacity was brought in to assist. It was hoped that there would be improvements. The figures would be updated.

In relation to Operations and Maintenance, she noted that there would be a focus, as outlined earlier by Mr Ismael, on the debt collections project. DWA wanted to target rehabilitation and backlogs. More could be done if the application for funding was successful. The current target had been based on the ability to recover revenue shown in the past. There was now capacity, and DWA would revise the targets if it received more funding.

Ms Manganye said that she lived in the Moses Kotane Municipality, which had not been able to get access to water for the last eighteen months. She pleaded with the DWA to do something to address the problem.

The Chairperson asked that this concern also be raised again during the “hotspot” presentation.

Mr J Skosana (ANC) agreed that there would have to be something done urgently in cases such as this.

Ms Mbassa said that she was working on the unique problems of water supply in the North West. In many instances, the best that the DWA could do to address the issues was to try to diagnose the problems and it would send out specialists to find out what had to be done to regulate supply. Many of the problems were related to the functionality of the infrastructure, and DWA itself regrettably did not have capacity to solve problems of infrastructure. Many parts of North West relied on ground water and it was unreliable because they to lacked the right capacity to properly manage the supply. She noted that two water boards were supporting the municipalities with water, and were in a critical state. The Magalies Water Board was owed massive amounts by the municipalities.

Ms Manganye stressed that her municipality was supposed to receive water from the Magalies Water Board. Her municipality was one of the best payers, had been paying all this time yet the majority of the population was not getting water because it was going to the mines, and not to the broader community in the 52 surrounding villages.

Ms Mbassa thought that this might be covered in the hotspots report, but it could be an original water supply issue, and the Chairperson asked her to speak to Ms Manganye and check whether the issues were addressed. 

Mr Skosana said that he wanted to hear more about how the strategic plan tied in with the Municipal Water Infrastructure Grant (MWIG). The Committee was concerned that the grants did not always seem to be used properly and asked if anything could be done to link this to specific actions.

Mr Skosana also spoke to the water pricing strategy, and wanted to hear more about the municipalities who may still be owing money. He asked what specific plans were in place to address the concerns.

Mr Skosana noted that the DWA aimed to assist farmers and he pointed out that there were many wealthy farmers who were probably using water all the time but not paying for it. Some had dams and others had boreholes and he wanted to know if the DWA was aware of the numbers and locations.

Mr Ismael said that there were a number of inhibitors to pricing on the agricultural side. At the moment, there was a capping on the ability of DWA to charge the agricultural sector. Presently, there was no payment for return on assets and he agreed that a subsidy needed to be put in place to address this. DWA was proposing that there was a need to look at targeted subsidies reflecting a true cost of operations.

He also expanded on the farmers “owning” structure and said that a number of farmers had formed Water Use Agreements and irrigation boards, which were essentially water use authorities (WUAs). The DWA would deal with the WUAs, who in turn would deal with their (largely) farmer members. Part of the R5 billion debt was tied in with the farmers, and he would send the numbers through. There were some problems with collections, and he said that this was part of the work being done to ensure that the relationships and work were clearly defined. Essentially, DWA supplied water to the WUAs, and they would then bill their members.

The Chairperson understood that in a municipality, if it failed to pay and the water supply was cut off, it was actually individuals who would suffer, through no fault of their own. However the position of the WUAs was quite different. They were essentially running and business, and if they failed to pay, he urged that the DWA should use good business practices in return and stop providing the water.

Mr Skosana also urged that there must be a strategy to ensure that people around the dam were getting water.

Ms M Wenger (DA) said that she had heard that municipalities were not responding to leaks, despite the War on Leaks programme. During  a radio broadcast recently that she had heard there was mention of the toll-free number  0800 200 200, which she had not previously known about, and she asked who owned that number, and what the DWA would do when leaks were not being fixed.

Mr Balzer responded that this was a DWA toll-free number. The DWA encouraged people to report, in the first line, to the municipality, but this number was seen as the second line of defence and the DWA, on receiving information from the toll-free line, would then raise the issue with the municipality.

Ms Wenger noted the high amount of the debt uncollected and asked if DWA was aware whether it was current or was prescribed; if the latter, it may have to write it off.

Mr Ismael said that DWA recognised that the debt collection on the revenue side was not aggressive enough and was making a plan to address this.

The Chairperson took up the point about prescription. If DWA failed to take steps now it may be precluded from doing so if the debts prescribed. He wondered why the DWA was being so lenient with its debtors.

Ms Zandile added that the revenue side was linked to efficiencies, and there had been a court case in KwaZulu Natal dealing with some of the issues.

The Chairperson noted that the DWA had a target to improve its debt collection efficiency by 50%, and said that the DWA had tried to do this before; he wondered if the situation had improved to the point when DWA would now succeed. He asked if DWA was aware of who owed the money.

Mr Balzer confirmed that it was.

The Chairperson then requested that the Committee be provided with a list of all amounts owed, broken down into categories such as WUAs, farmers, municipalities, and the Committee would try to follow up on these. This situation of huge unpaid debt could not continue. He had chaired this Committee for two years and knew that some of the problems were historical ones, but said that it could be very useful to try to coerce the debtors into paying now, rather than run the risk that the debt might prescribe while legal processes were followed. He believed that human nature was such that only if DWA made examples of people would they be willing to pay. He asserted that DWA would never sort out the revenue problems unless it took very strong actions now, and he suggested that it should attempt to isolate the strongest cases and pursue them vigorously.

A Member suggested that the debtors analysis be done on an age basis also.

The Chairperson agreed, and asked that this be made available prior to 16 April.

Ms Wenger noted the progress of infrastructure management and queried what was happening to Mpumalanga, where there had been breakdowns, particularly in Ermelo and Carolina.

Mr Balzer said that the Department, in relation to Mpumalanga, would be focusing on Bushbuckridge, Ermelo, Carolina and the Pipeline taking water through to Delmas, and the province would also be focusing on the Mbombela and Komazi areas.

Ms Wenger said that it seemed that the DWA may not have participated in or anticipated the Management Capability Maturity Model which was initiated by National Treasury (NT) and linked to the Public Finance Management Act (PFMA), and she asked for the reasons.

Ms Thabiseng Fundakubi, Chief Financial Officer, DWA, said that she would make a follow-up with NT on this point.

Dr S Huang (ANC) noted the creation of jobs, but asked if they would be permanent or temporary, and whether it was linked to the EPWP.

Mr Balzer said that the jobs created in the programmes, as presented here, were for the most part created in the construction phase of the DWA projects. DWA, however, did not actually use any tools to determine how many jobs were created as a result f the public infrastructure, as this was something done by the Departments of Trade and Industry (dti) and Economic Development (EDD). However, it was able to make some assessments. The inputs into Outcome 4, running from now until 2014, assumed that DWA would contribute to creation of around 26 000 jobs. Not all of them were full time as some might be for certain hours a day and others for a month or two. Those calculations were then converted to Full Time Work Equivalents for the purposes of the statistics.

Dr Huang questioned the figures on the amounts still outstanding and noted that the DWA was trying to target that those numbers should reduce, by 2017. However, this seemed not to take into account that the debt was not static and would be increasing all the time. He wondered how the target would be attained.

Dr Huang asked for more detail on the Lesotho Highlands Water Project Phase 2, to which there had been substantial allocations, and asked how many jobs were being created for South Africans.

Mr Balzer said that construction skills would mostly be brought in from South Africa but most of the unskilled worker jobs were taken by Lesotho nationals.

Dr Huang wanted more detail on water supplies to the municipalities.

Mr Balzer answered that the DWA was focusing on the 24 most stressed municipalities, which were found in Eastern Cape, KwaZulu Natal, Limpopo and Mpumalanga. Some of the District municipalities were also in North West. It had done an assessment on the database, one-on-one engagements and checked also the databases of the Department of Cooperative Governance and Traditional Affairs (COGTA). About 30 000 households were identified with no access to water supply. He suggested that it might be useful if the DWA could give a presentation on the MWIG, with a breakdown per municipality. This municipal grant was budgeted, from 1 July 2013, as a Schedule 6 grant, which meant it was a direct grant to local government.

Mr Skosana asked who was in charge, at the National Department, of the projects in Mpumalanga as it may be possible to manage water problems in conjunction with the community.

Ms Zandile said that she was and provided her contact details to Mr Skosana. She also noted that the Memorandum of Agreement between the Minister and Premier covered the Bushbuckridge area. The projects were under construction and two pipes were to be laid between the two dams, with emergency pipes to pump from other dams. That should be finalised by the following month.

Detailed Budget presentation: Department of Water Affairs
Ms Thabiseng Fundakubi, Chief Financial Officer, Department of Water Affairs, tabled the budget allocation for 2013/14, indicating the allocations to the branches (see attached presentation). Programme 1 received about 10% of the budget, at 978.6 million. Programme 2: Water Sector Management, received around 25%, with R2.56 billion. Programme 3: Regional Implementation and Support received 59% of the budget, at R5.98 billion. Programme 5: water Sector Regulation, received 1%, or R25 million, and International Water Cooperation also received this amount The total budget was R10.187 billion. She also indicated the budget breakdown by economic classification. Employee compensating accounted for R1.2 billion (about 3%), with goods and services at 14%. Transfers to municipalities made up 38.45% of the budget.

The Chairperson interjected to ask if DWA was given an allocation and simply transferred it all, or if it provided services. He asked what would be done with the additional amounts that National Treasury provided, and whether the municipalities could use the money as they wanted.

Mr Balzer said that the MWIG was different to the Refurbishment of Bulk Infrastructure Grant (RBIG). With the latter, DWA was able to elect who should do the job, and it could be either DWA or the municipality. However, the MWIG was a schedule 6 grant and the money was transferred to the municipality, but must be spent in line with a set framework, and if this was not followed, then NT and DWA could stop the allocations. The MWIG was intended specifically to address areas not presently serviced, but also could cover infrastructure. Some of the areas where it was paid were within Water Board area. The Division of Revenue Act covered the DWA’s use of water boards, to assist municipalities within limitations.

The Chairperson asked if, under the equitable share, municipalities would receive money for infrastructure or if there would be completely new grants.

Ms Marissa Moore, Chief Director: Public Finance, National Treasury, said that the equitable share did not exclude anything, so municipalities could spend it on infrastructure if they wished. However, 90% of the grants were specifically earmarked for infrastructure and they could not spend it on anything else.

The Chairperson said that in previous years, the funding that should have gone to infrastructure had been given under the equitable share, and municipalities spent it on other things, resulting in a R6 billion deficit. The Chairperson had engaged with the Minister on this point. He wondered if all the money for infrastructure was now placed under the grant, or if there was still money for infrastructure contemplated also in the equitable share.

Ms Moore said that the free basic services were included in the equitable share, but because of the independence of local government, National Treasury was reviewing that. There would be a review of the total Local Government Conditional Grant framework, and the perverse incentives for maintenance could be addressed.

The Chairperson had no problem with the inclusion of free basic services, which were services, but some time the Committee would have to get more clarity on this.

Mr Balzer added that there was still also a water component in the Municipal Infrastructure Grant (MIG). He repeated that MWIG was a focused intervention to deal with areas that did not currently have access, and did not replace MIG.

The Chairperson suggested the need to prepare a report saying what included in each type of funding, what it should be used for, and, if it was not used, what the consequences would be. He wanted to get a breakdown of all the funding that went to local government. 

The Chairperson noted that the compensation of employees was relatively small, and the money to build capacity remained relatively static, by comparison with the budget growth.

Ms Fundakubi said that the bulk of the budget went to conditional grants and earmarked funding. There was a lag in capacity building that the DWA needed to close.

The Chairperson understood the rationale – that because the funding was to be transferred, it was not necessary to build capacity to spend that money. However, he had some doubts on this point. Although the bulk of the allocation did relate to conditional grants, he was quite certain that a few years down the line, NT would realize that the municipalities could not do the work, would take back large sums and ask DWA to do the work. Capacity could therefore be an issue later. He wanted to talk to NT on this point. He cited an example where a municipality was awarded funding for infrastructure, but it had asked another entity to do the work. He said that it was highly unlikely that the areas would have capacity, and he had no doubt that most of the money would be spent on consultants. He was not attempting to be unduly critical but was speaking from experience. Either DWA must build up capacity itself, or the capacity within the municipalities must be critically analyzed.

Ms Fundakubi tabled the earmarked and unarmored budget allocation showing that 70% was being spent, of which only 27% was not earmarked.

The Chairperson said that it was accepted that transfers and grants were one way to get the work done, but asked whether the work was being done. If the figures were correct, then 73%, or R602 million, was not being spent by DWA, and this would rise in the following years to R1 billion and then R2.6 billion. This totalled R5 million over three years, and he noted the need to ensure that it was spent, saying that he would engage NT on this point.

Ms Fundakubi tabled another slide to show how the 73% earmarked funding was allocated between programmes. She repeated that DWA had received additional funding. Due to the savings and reprioritisation some money was taken from the normal operating budget, and came back as infrastructure funding. The regional bulk and compensation of employees supported the organisational structure. Magalies Water had received R200 million. R20 million was set aside for improved conditions o f services to employees, AMD received R150 million and the De Hoop Dam 171 million. The total of R10 billion had been made up of amounts added to the baseline. Some funding had been moved to Department of Agriculture, Forestry and Fisheries (DAFF). She detailed the amounts of the reprioritisation.

Ms Fundakubi then set out details of the allocation per programme (see attached presentation) and the economic breakdown, describing the focus areas for each programme. In programme 2, the focus areas were development of reconciliation strategies and feasiblity studies particularly on AMD, the Umzimbuvu Project, Foxwood and Vloolsdrift (the two new plans), the review of the legislation.

The Chairperson asked where the initial four phases of construction would be reflected .

Mr Balzer indicated that this would be under the feasibility studies on Programme 2.

The Chairperson said that the indicators had not been reported, because they were not in the first four phases.

Mr Balzer referred him to page 30, and said it was only AMD and Umzimvubu that existed at the moment. 

The Chairperson then noted that for this programme, there was a figure of R67.9 million shown for use of consultants, rising to R156.8 million in 2015/16. He noted the reason given as lack of skills, especially in the integrated planning sub-programme. Whilst he was not suggesting that consultancy services were necessarily bad, he was very concerned that this figure was set to double, without any good reason being given. This was for one programme only, and did not even touch on the others. He asked who would be employed.

Ms Fundakubi said that this projection was based on the current utilisation. As soon as the DWA had built capacity, the consultancy fees would come down.

The Chairperson said this still did not answer his question why it would be necessary to double it in two years. He asked if DWA had prepared the input on the consultancy fees yet, covering the period for 2008 to 2011, as he had not seen it. He said that “a major flag” should be put against this item.

Ms Fundakubi set out the focus of Programme 3 on two particular projects and the reduction of the debt from R5.6 billion down to R1.6 billion. She also set out the programmes included in Programme 4, which took up the bulk of the budget, of which a major part in turn related to transfers and capital (asset base). There was a focus on completion of 14 schemes of rainwater harvesting, support to resource poor farmers, and refurbishment of schemes, the River Health programme and water licences. This programme also dealt with the transfer of officials from the Water Trading Entity (WTE) to the Main Account, in respect of Integration of Catchment Management.

She then summarised that Programme 5: Water Sector Regulation had a budget of T118 million. The various sub-programmes were described. There were no transfers in this programme, but capital was R1.4 million. The focus areas included revision of pricing strategy, the establishment of the economic regulator, water services regulation and compliance monitoring.

The Chairperson asked what was contemplated by the establishment of an economic regulator.

Mr Muller said it was coupled with the study on the tariffs and funding. The base water tariff was fixed by the DWA but was also adjudicated.

The Chairperson was extremely upset and asked why DWA was “still messing around with this”. He had been, and remained totally opposed to the idea that a regulator be created, particularly in view of the experiences with electricity.

Mr Muller said that funds had been earmarked for this by NT.

The Chairperson responded that he did not care; he remained convinced that this would merely be throwing money at something that would not work. Electricity was in a huge mess, and his concern was that when a department did not want to accept responsibility for setting tariffs, which could be fraught with difficulty, it would simply create a regulator outside the department. The regulator had no political accountability, and would also taking political responsibility away from the department, providing it with a perfect excuse if something went wrong, whilst the regulator was not obliged to account for its decisions. He simply could not understand why government continued to make the same mistakes, and someone should be telling the NT that this would not work. Currently, the DWA would have to engage with NT to get funding to subsidise the poor, but under a regulator regime, this would not happen. The problem with water was that it was hugely fragmented already and even he was unable to tell how the infrastructure was funded. Most of the time, responsibility for infrastructure was simply being passed on the poor, and they were essentially punished by the water boards by expecting the community to bear costs. He said that he had yet to hear any cogent reasons why such a regulator should be created, and he was very concerned that Parliament could not engage with the Regulator on policy. He was highly irked that the DWA had not realised, for itself, that such a structure could not work and that it was still being pursued.

Mr Muller said that the DWA had never said it wanted an independent regulator. It was looking at merely something that would regulate municipalities.

The Chairperson said it was possible to create a specialised unit in the DWA but, for that, it was not necessary to use a consultant.

Mr Skosana fully supported the Chairperson in his opposition to the regulator.

Ms Fundakubi proceeded to describe Programme 6’s two programmes and set out the last slides with details of earmarked funding.

Mr Ismael returned to programme 3, from page 65, and noted that there was a transfer from the Main Account to the WTE. He corrected the figures in the presentation; the amount was R188 million, rising to R204. 2 million in 2015, and not R3.4 billion. That last amount was the amount transferred to the WTE for infrastructure development, and it went to redemption of loans and interest. The infrastructure would be discussed in more detail on the following day. It addition to these transfers, the WTE generated own revenue, which was broken down.

The Chairperson questioned what WTE collected.

Mr Ismael explained that slide 77 related to what the DWA invoiced. There were still operations and maintenance costs. The R800 million was capital and R6 billion was for operations and maintenance.

The Chairperson asked for a summary report on the WTE, setting out exactly how much it received, how much it billed, and what its arrears were. This information was scattered across other places in the report.

Mr Ismael said that the own revenue for 2013/14 was budgeted at over R8.5 million in total, and was projected to grow to R11.5 million in 2015/16. Its expenditure was set out in the following slides. The DWA had followed the Generally Recognised Accounting Principles to incorporate the TCTA assets and revenue generated, in order to pay the loans. This meant that there must be a restatement of the figures. In the next year, the WTE would receive an allocation from NT for capital expenditure, but it still had to generate R800 million. This was not reflected as an expense for accounting purposes. Assets and growth were shown on the balance sheet, and depreciation, and the top line showed the funds used for capital expenditure, of R3.5 billion, with capital value at R94 billion.

The Chairperson said that essentially the Unit ran R100 billion of assets, with two members in the unit but covering staff of 4 500. He asked now for a statement setting out clearly how the accounts worked, with a clear distinction between arrears and write-offs. He said that the WTE books suggested that half was being written off.

Mr Ismael said that this was an accounting convention and it was not a write-off in the usual sense. Prior to 2008 not all the assets were recorded, but after doing an asset verification it had been paid, and this, in recognition of the investment, was treated in a way similar to owner’s equity – or a surplus. Of the R94 million of assets, government owned R64 million and TCTA had long term loans on R31 million, along with finance leases and trade and other numbers. There was provision for rehabilitation.

Mr Rogers asked about the R5.4 billion that was outstanding, of which R2.3 billion was predicted to return, and asked why it was not reflected as income.

Mr Ismael said he would explain this in the written analysis.

The Chairperson reiterated his concerns about the consultants for programme 2, noted that Mr Muller was in charge of that programme, and said the concerns would be reflected in the Committee’s report.

Mr Muller stressed that Programme 2 provided planning for Programme 5, and any increase in infrastructure involved a concomitant need for more planning.

The Chairperson reiterated that MWIG amounts were a straight transfer and would not, in theory, require staff capacity but repeated that he needed reasons why in the short term the consultancy would double. He said in passing that he believed that the Auditor-General should draw a distinction between contracts for service delivery, and someone hired because of lack of capacity.

Mr Mgangisini Nepfumbada, Acting Deputy Director General: Policy and Reform, DWA, said that this represented about 5% of the budget allocation to that programme.

The Chairperson still thought that the Chief Financial Officer had concerns on it.

Dr Huang questioned the figure for mine and water maintenance.

Ms Fundakubi reminded him that NT had not made provision for the outer years for AMD, but only for the short term.

The Chairperson reminded Dr Huang that DWA had come up with a short-term solution but was still waiting for the long-term solution. He asked the deadline for the longer term plans.

Mr Nepfumbada said it should be ready by July and confirmed it would be brought to the Committee.

The Chairperson wondered why the DMR was not addressing the problem now, as it had received extra funding. The same problems should not occur here because the mines were operating and those in charge should be accepting responsibility.

Mr Balzer added that the budget of the DWA for AMD was not adequate to finish the work, but there had been engagement at Director-General level between the two departments.

Dr Huang asked what was included in “other revenue”.

Mr Ismael noted that there was an internal construction unit that was primarily responsible for the WTE infrastructure. If this, for instance, rendered services to the main municipality this was regarded as income generated. This figure also included disposal of assets such as construction equipment, and some interest charges levied on an outstanding debt.

The meeting was adjourned.



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