The Committee had instructed Overberg Water to redo its report presented at an earlier meeting. The new report was critical of the Committee, and Members condemned the tone of the language used. They resolved that the water board must be called back before the Committee to explain its comments. The Department of Water Affairs had not had knowledge of the contents of the report. Members were also disappointed that the representatives from the Auditor-General were no longer available to present to the Committee due to some confusion, nor was the expected report available.
Catchment Management Agencies had been set up as Schedule 3A organisations in terms of the Public Finance Management Act. Their purpose was to protect the quality of water sources. Billing would be at a local level. They would also assist with water user licences with the long-term plan to decentralise the licensing system. Two Agencies had already been established and the remainder would be created by 2015. They were based on the predominant river systems. In time, the relevant functionality and staff would be transferred from the Department's regional offices to the Agencies. Members expressed concern over the high vacancy rate at the Department, which impacted on service delivery. Members felt that the proposed system lacked accountability and members of such bodies could act in their own interests. The Department was instructed to draw up a policy document, spelling out how the implementation of the policy would proceed. It also wanted a report on the impact of the vacancy rate.
The two agencies established to date were Inkomati and Breede. Both had received unqualified audit reports, but the delegation of functions was still incomplete. The Department wanted the boards to consist of experts, but Members cautioned that the members were often former politicians.
The Inkomati Catchment Management Agency was established in 2009. There had been a vacuum in management recently. It was experiencing challenges in transforming the irrigation boards, continued urbanisation putting pressure on resources and a lack of support from cash-strapped municipalities. It was praised by the Committee for practising discipline in salary and bonus payments. The Breede Catchment Management Agency was also experiencing challenges with the irrigation boards. The need to support emerging farmers was stressed.
Members found the situation very difficult in the absence of proper policy. The relationship between the Department, the agencies and the water boards was questioned. There was a particular concern over pollution and poor sanitation management. The impact of the vacancies had to be assessed. When regional office functions were handed over to the agencies, it would be imperative that issues such as billing and licensing had been cleaned up. The role of forums was crucial in creating a democratic approach to water management, but the Department would have to prove logistic and other support to ensure fair participation.
Water User Associations had been created in an Act of 1998 to replace the irrigation boards. They were voluntary organisations operating at a very local level. Their purpose was to ensure transformation in water allocation, but the pace of implementation was very slow and still far from complete. Their functions included maintaining watercourses and fair allocation of water. None were currently being funded by the Department although there was provision for budgets. They also faced capacity challenges. Members felt that water forums were the best way to ensure public participation. They requested more clarity on the roles of the Water User Associations, the Catchment Management Agencies and the water boards. There was a feeling that there was some overlap in functions. The Department was given one year to implement the legislation. Outstanding debt had to be settled even if it meant cutting off the supplies of profit-making companies. They were flabbergasted that so much time had passed without the Act being implemented.
The Trans-Caledon Tunnel Authority had started work on acid mine drainage in the central basin and had plans for the other two basins. Work had been delayed due to a land dispute. Work on the Lesotho Highlands 2 project had started, but more negotiations were needed between South Africa and Lesotho. The Komati station had been delivered on time and well under budget. The body was a fully going concern. Members were shocked to see the amount paid in salaries and bonuses. There was a rating system to qualify for bonuses, but Members could not believe that so many members of the organisation qualified. The system of balancing debts against tariffs was explained.
There was no time for Members to hear the presentation on infrastructure. Members were instructed to read the document and address any issues to the Department directly.
Mr F Rodgers (DA) read a report from Overberg Water. It had felt unfairly treated by the Committee, and that the Chairperson was intent on denying any discussion. He found the language used in this report unacceptable. It questioned the capability of the Chairperson and the Committee. He proposed that Overberg Water be called back to the Committee to explain itself.
The Chairperson said that Overberg Water had always been weak in delivering its reports. There was nothing on the financial statements in the report, and Members had been correct to take it to task. He did not often reject presentations on such grounds, but did so when necessary. There seemed to be an attitude problem. He agreed that it would be best to recall Overberg Water to explain itself in public before the Committee.
Mr J Skosana (ANC) felt that Overberg Water focussed its attentions on white areas. Blacks had been disadvantaged for many years and needed water. He was really concerned and condemned the language used in the report.
Ms J Manganye (ANC) agreed that Members must talk to the Board.
Mr Helgard Muller, Acting Deputy Director-General (DDG): Policy and Regulation, Department of Water Affairs (DWA), said that instructions had been given on the contents of the report. Overberg had not forwarded a copy of the report to DWA, and he was shocked to hear of its contents.
The Chairperson said that the Committee had always enjoyed a good relationship with the Auditor-General (AG). He had expected a report on the use of consultants. As AG was attending a meeting with the Standing Committee on Public Accounts (SCOPA) the previous day, he expected that the AG would present at this meeting. There seemed to be some confusion, as the ladies from the AG had told a different story the previous day after their meeting at SCOPA. He had told the ladies to attend this meeting. He had now received a letter complaining that the team had not been given an opportunity to present the previous day, and would not have the opportunity to present at this meeting due to other commitments. This was the third time that AG staff had reported that the report was not available, and in fact did not seem to have been compiled at all. This was really frustrating. The Committee gave all parties every opportunity to air their views, but it seemed that there was a strong disrespect to Parliament. The Committee was in fact trying to assist the AG.
The Chairperson said that the DG was attending SCOPA that morning, and had taken Ms Thandeka Mbassa, Deputy Director General: Regions, with him. The report on the infrastructure was also not available.
Mr Muller said that the Inkomati and Breede Catchment Management Agencies (CMA) also requested a chance to address the Committee.
The Chairperson said that it had not been the intention for the CMAs to present themselves. The DWA would have reported on their behalf. As they had already arrived, he would allow them to make a short presentation.
Catchment Management Agencies: DWA Report
Ms Thoko Sigwaza, DWA Chief Director: Institutional Oversight, said that the White Paper on Water and Sanitation of 1997 emphasised the need to manage water at a local level. This should ideally be done within the catchment areas. The catchment management agencies (CMA) were listed as Schedule 3A organisations in terms of the Public Finance Management Act (PFMA), and could therefore receive government grants. In terms of the National Development Plan (NDP), there were new targets of establishing CMAs by 2015.
Ms Sigwaza said that the primary function was water resource management at a local level. This came down to protecting the quality of water sources such as rivers. Water knew no boundaries. Their primary functions were dealing with monitoring pollution incidents at a local level, and they had to respond to incidents within 24 hours. Their other functions were planning a catchment management strategy. They had to determine how much water they controlled and who the users were.
Ms Sigwaza said that the billing system had not yet been delegated. This would be done in 2014/15. Currently the billing was at a national level. Best practice was to have billing at a local level so customers could interact with the billing authority.
The Chairperson said that there could be a possibility of corruption.
Ms Sigwaza said that the CMAs were supporting DWA with licence applications. The Minister would like to see the licensing function centralised for the next five years. Once the backlogs were cleared, the licensing function could be decentralised and DWA would play more of a policy-making role.
Ms Sigwaza said that the Inkomati CMA had 42 staff and Breede 28.
The Chairperson said that the plan for the short term was to expand to nine CMAs. He wanted to see a map of the areas to be covered.
Ms Sigwaza was about to reveal the information. It was contained in the presentation. The concept was applied internationally. She used Mexico as an example, where thirteen river basin organisations had been set up in a five year period. The target of three to five years was feasible.
The Chairperson still wanted to see that the Mexican model was working correctly before he would be convinced.
Ms Sigwaza presented a proposed map of the nine CMAs. These would cover the whole country. Water Management Areas had been gazetted the previous year as part of the water management strategy. Nineteen authorities would have to be merged in order to reduce the number of CMAs to nine.
Ms Sigwaza said that the time-lines were for all the CMAs. The management plans would also apply to three CMAs that would be established in May 2013.
The Chairperson asked why there were three different CMAs in the Mpumalanga / Limpopo area. In most cases the CMAs co-incided with provincial boundaries.
Mr Muller said that the Olifants CMA covered areas of Gauteng, Mpumalanga and Limpopo. They were mainly based on the principal rivers. There were some international implications.
Ms Sigwaza said that the process had started in 2011. She hoped that the proclamation would be gazetted in 2015. There were three phases. The critical areas were planning, establishment and operational.
Ms Sigwaza said that the budget for 2012/13 was R408 million. There would be billing to 60 000 customers. There were 600 staff members in the regional offices of DWA. Staff occupied with the work of CMAs for more than half their time would be transferred to the CMAs as they were established. There were 400 vacancies at present in the regional offices. At present there were 1 000 staff at the regional offices, but the vacancy rate was 40%.
The Chairperson was concerned.
Ms Sigwaza said that the main problems were with the lack of technical staff.
The Chairperson was extremely concerned. He requested a fuller briefing on the situation at a later date. The mere fact that regional offices were being disbanded to create CMAs questioned the existence of boards of directors. DWA should be running the CMAs. Staff members were being transferred to agencies falling under separate boards of directors. When agencies were created in government they were generally unsuccessful. He could not support this proposal, and urged DWA to consider this issue very carefully. Local formers would be sitting on the boards, but DWA would remain accountable to Parliament. The Water Trading Entity (WTE) would become irrelevant as billing was passed down to local level. He needed to be convinced that he was wrong. The boards at the existing CMAs were being expanded. This was not even raised as a policy item on the agenda. The legislation was being reviewed. He understood the need for localised implementing agencies, but DWA had to be held accountable. At present the boards were all reporting individually.
The Chairperson said that all Members appreciated the need for public participation. The structures to be promoted should be those run by ordinary people, not the interested parties. Government should act as a referee in the interests of all parties. The boards were not community people, but sat there due to their special interests, such as mines and farmers. There was a strong potential for conflicts of interest. DWA had to argue why they thought their proposal was the correct one. Every water board head had come to Parliament to justify its continued existence. The water boards were part time, and could not give problems their full attention.
Ms Sigwaza was hoping that there would be an increase of about 30% in the baseline, which was currently R500 million. This was needed for establishment costs.
Mr Muller said that these were based on estimates. As CMAs took over, the budgets for DWA regional offices should decline. What Ms Sigwaza was presenting was estimates and plans. The real figures would be worked out later.
Ms Sigwaza presented the vision of CMA governance. This was defined in legislation. CMAs would develop their own strategies and annual performance plans, and submit these to the Minister. Quarterly reports would go to the Minister and be reviewed by Treasury. The board and the Minister would draft key performance areas. The annual reports would go to Parliament.
The Chairperson found the presentation comprehensive and interesting, but wanted to see a short policy document. This would spell out the changes needed to make the CMA concept work. Exact wording of the delegation must be given. Billing was an example. This was in a mess at present. He could never agree with this going to a smaller structure in its present state. He wanted to see the proposals for the management structure.
Inkomati and Breede CMAs Performance: DWA briefing
Ms Sigwaza presented a scorecard on the Inkomati CMA.
The Chairperson said that the detail was not needed for this meeting, which was why the CMAs themselves had not been called.
Ms Sigwaza said that the first challenge was the incomplete delegations of function. The two CMAs had received unqualified reports to date, and had helped the functions of DWA enormously. The concept of representative boards was being changed to one of experts in finance, risk management and other skills.
The Chairperson said that the water boards were not representative. One of the Members had pointed out that the members of one of the water boards were all former politicians. This could hardly be termed a board of experts in water affairs. For a board of experts to work, the specific skills needed to be defined in the legislation. The DWA must provide the expertise. Often specialists appointed to boards represented their organisation rather then their field of expertise.
Inkomati CMA Presentation
Ms Nyakane-Mowka, Chairperson, Inkomati CMA, said that the biggest challenge was transforming the irrigation boards. This was proving difficult. She hoped that the amendment of the Water Act would help them to achieve this. There should be more representation of historically disadvantage individuals (HDIs). The CMA had been formed in 2009. For some time it had been run by managers after the chief executive officer (CEO) had left. The Minister had advised that the CMA wait until after the amalgamation before appointing a new CEO.
Ms Nyakane-Mowka said that most of the salaries had been capped in response to instructions from government. There had only been two bonuses paid to a staff of 42. The Committee had agreed that this was a fair ratio for bonus payments. There had been a forced restructuring. There were now only two executive managers. A chief operations officer (COO) had been appointed on 2 April 2013, and would act as CEO in the interim.
Mr Thomas Gyedu-Ababio, COO, Inkomati CMA, said that recommendations had been made where users drew from two or more different catchment areas. The decommissioning of a sewerage treatment works was a challenge. The problem was coming from the municipality, who cited financial constraints. People were moving from rural to peri-urban areas, putting strain on the current distribution system. Problems with the linkage between the CMA and the DWA were being addressed. A laboratory had been established to test water samples.
Breede CMA Presentation
Mr Phakamani Buthelezi, CEO, Breede CMA, said that there had been some support from municipalities. There needed to be finalisation on the delegation of functions.
The Chairperson warned that policy issues had to be sorted out first. There was no need for Mr Buthelezi to discuss the issue.
Mr Buthelezi appreciated this. There was another challenge in the transformation of the Irrigation Boards. Support was needed for emerging farmers. A comprehensive support system was needed, not just water supply. A co-ordinator was needed to look at water and all other issues. Another challenge was licensing. The CMA gave DWA its recommendations on applications, but the process was very long. Licensing was critical, especially for emerging farmers. Security was needed, which was difficult before the applications were approved.
Mr Buthelezi would like to have a say over water transfers. Recognition was needed. There was confusion over the role of the CMA and the DWA.
The Chairperson said that the issue of the Irrigation Boards had yet to be discussed. The other issues raised were all practicalities. He appreciated that the recommendations on salaries and bonuses had been taken to heart. Inkomati obviously had a system of rewarding excellence rather than expectation. DWA had not thought through things. He compared the situation at present to being ‘half-pregnant’. In reality such a situation could not exist. There was movement on a structure that was far from certain. The thinking was all based on the old system at present.
Mr Skosana wanted to check on the working relationship between CMAs, water boards and DWA. It seemed that they were not talking to each other. The DWA should be able to allocate water fairly. He was concerned on the responsibilities given to managers. Some were not linked to each other. He asked what factors had prompted the DWA to determine the areas as presented to the Committee. He asked what plans there were for catchment in the rural areas from smaller rivers. Only the Crocodile River contained any significant volume of water.
Ms C Zikalala (IFP) carried the Chairperson's metaphor forward. A woman could be fully pregnant, and then suffer a miscarriage. It had taken a number of years to discuss the issue of pollution affecting municipalities. Only the Olifants River had been discussed. Municipalities were also polluting rivers and would continue to do so. She suspected that engineers were not properly qualified. There must be something fishy. Pollution affected the communities. Pollutants ran straight into the river and made the water unusable. Some municipalities seemed to be more culpable than others. She wondered if corruption was allowing this practice to continue. The whole nation was affected. She asked what other measures could be taken to combat pollution.
Mr Rodgers had no qualification in obstetrics, and refrained from commenting on ‘half-pregnant’ women. However, he continued to hear about water contamination and the poor handling of sewerage at local and district levels. There was a lack of accountability, capacity and will. Perhaps what Members needed to do was call a joint meeting with Human Settlements. The longer this issue was left, the more it would impact on the Committee's core business of water affairs. This could lead to the demise of potable water and compromise communities.
The Chairperson said that a workshop in January 2013 had unfortunately been cancelled. The issue could not be left to rest. He understood that the matter had been discussed at the Human Settlements Committee.
Dr S Huang (ANC) noted the increase of 30%, and yet the vacancy rate was at 40%. Filling these vacancies would increase the costs dramatically. He asked why this increase was needed. The vacancy time frame was concerning. With so many vacancies it must be difficult to conduct its daily business. The reports of Inkomati and Breede were unqualified, but there were challenges. He asked how DWA could assist. There was a scorecard for the CMA. The Committee needed more clarity on how efficiently these bodies were operating.
Ms Manganye commented that DWA was still facing a challenge on how water was being supplied to the mines. One of the challenges experienced by CMAs was that which could not be solved by DWA. DWA should hand over authority to the CMAs in a clean condition.
Ms B Ferguson (COPE) needed to be convinced over the case for CMAs. She also found it hard to correlate the requested budget increase with the high vacancy rate. The presentation had been good otherwise.
Ms D Tsotetsi (ANC) asked what the plan was for short term interventions. The policy had been in place for some time. She asked if there was anything stopping government from acting against those resisting transformation.
Mr Muller thanked Members for their comments and inputs. He showed a detailed map of the Inkomati CMA. Both rural and urban areas were covered. Every drop of rain that fell into the area of the CMA was captured. DWA would supply such maps for each proposed CMA. The budget was a challenge. Many of the vacancies were in fact unfunded. He would check on that. He believed that the CMAs could perform some of the functions better than the Department. Sometimes small was better. They must work within current legislation, but Ms Sigwaza would soon be setting up a policy review team. The revision of the national water resource strategy might be one of these areas to be reviewed.
Ms Sigwaza said that the scorecards were a work in progress. Annual reports were tabled to the Speaker, but in future copies would also be sent to the Committee. On transformation, the main problem was that water had previously been linked to land. In issues of representivity, people without access to land could not be part of the structures. The new policy would address this. The Act dated back to 1956. She agreed that the issue of water allocation reform was critical to transformation. Sometimes the numbers were changed. Farm workers could be included on committees, but often did not have the debating skills to take their arguments forward.
Ms Sigwaza said that municipalities were required to report on the discharges they made into the water system. This was close to land and environment issues. Efficiency needed to be improved. There had been a trend of increasing over the previous three years.
Ms Eustathia Bofilatos, DWA Director: WMIG, outlined some of the reasons for drawing up the areas. Capacity was considered, although hydrological boundaries had been respected. There was an attempt to match the CMAs to provincial capacity. DWA was wary of simply handing over to CMAs. Systems should first be stable before water was allocated. An allocation plan would be followed for the different sectors. The systems first had to be in place. This was why the Minister did not want to delegate licensing at present. Waiting too long might also impact on sustainability.
The Chairperson said that those parts of the regional DWA offices that provided the services within the catchment areas should be transferred to the CMAs. This would be a better way of managing the situation. In order to avoid a 'half-pregnancy', policy areas that needed to be changed must be identified. He wanted to see specific issues that would be delegated, and the placement thereof could be debated later. He needed to see a specific implementation plan. This was the same debate as the expansion of the water boards. Once the policy had been sorted out the changes could be made. For example, plans were needed on how regional offices could be transformed into CMAs. The prototypes that were currently being created would test the policy. He was not happy talking about licensing at present, although he valued the advice that the CMAs would provide. This function should remain centralised. What should happen was that better information be provided from regional level? There was too much leeway for corruption if the function was delegated to local level. A specialised unit was needed. For each power to be delegated, there must be a clear discussion on how it would be achieved.
The Chairperson repeated that billing was a mess at present. There were huge outstanding debts. The capacity of offices, systems and staff had to be considered first. Some billing functions could be transferred, but measures must first be put into place. Again, decentralisation created more room for corruption. One kind of implementation plan existed, but the others had to be created from scratch. He asked if the regional staff knew how to perform the work that would be expected of them. He wanted this document by the end of May 2013. Overberg would be called on 14 May 2013, and he also wanted DWA to present on vacancies at that meeting.
The Chairperson said that catchment management forums needed to be considered. The law around catchment management must be reviewed. Huge improvements were needed. Forums had to be established in all parts of the country. Their functions needed to be improved, and a budget would be needed for this. Ordinary people would be involved. Transport and documentation would be needed, and some of the documents would need to be translated into the vernacular. They needed to fit into the CMAs.
The Chairperson said that forums were the way to democratise the sector, as was the Minister's wish, and not the water boards. A start needed to be made as improvements would be made in the future. He wanted a full report on the plan to address this.
Dr Huang said that there were already 60 000 customers of the current CMAs. He asked what income was being derived from these customers.
Mr Muller said that the DWA could provide the reports requested. There were water resource and water service functions, which fell under the municipalities.
The Chairperson said that CMAs would probably be accountable to the regional offices. The realities had to be ironed out first. A legal framework had to exist before transferring powers.
Mr Muller said that policy fell under another unit in DWA.
The Chairperson noted that there was a lot of pollution by the community as well. Even corpses were dumped into dams.
Water User Associations: DWA briefing
Ms Bofilatos sketched the legislative background to Water User Associations (WUAs). Irrigation boards had to be transformed into WUAs by the Act of 1998.
The Chairperson said that the target had been missed by about twelve years.
Ms Bofilatos said that these institutions managed water at a very local level. They were voluntary associations. The Minister approved their constitutions. The purpose was transformation so that all users had access to water. Membership of the WUA remained voluntary. The Minister oversaw the water boards, CMAs, 80 WUAs and 129 irrigation boards. The WUA had business plans. Some were given budgets by DWA and were then expected to submit annual reports. At the moment, none were receiving budgets and were paying off loans.
Ms Bofilatos said that there were initially 279 irrigation boards. About 59 had been transformed About 59 new WUA had been established. Another 129 irrigation boards still had to be transformed. There were various types of WUA. One was for small emerging farmers, often HDIs. These were transformed and worked effectively in terms of transformation. The irrigation boards managed their own schemes and canals, and these had to be transformed. There were two government water schemes.
Ms Bofilatos said that there was a schedule of functions in the Act. These centred on cleaning and control of watercourses and fair allocation of water. DWA would assess their business plans, but could not concentrate on all of them. There was minimum oversight. There was an institutional realignment project at present.
The Chairperson said that if the watercourses were being kept clean, the function would fall under the CMAs when established.
Ms Bofilatos said that the biggest challenge with irrigation boards was the transformation issue. The crux was changing allocations. DWA allocated water to the WUA, and to individual users. Illegal water use was an issue in the absence of metering.
The Chairperson asked what the rationale was for creating WUAs. The irrigation boards dated back to the apartheid area, and could have been disbanded if government no longer wanted them.
Mr Muller said that these organisations operated at a very local level. The current delay was due to the Minister's request for further discussion.
The Chairperson felt that the CMAs could assume the responsibilities of the WUAs.
Mr Muller said that the WUAs lessened the workload of allocation on DWA. CMAs could play a valuable role in assisting.
Ms Bofilatos said that another challenge was capacity. Voluntary membership did not work. The scale of operations had to be kept small, and that created the need to balance them against viability. DWA did not have appropriate oversight mechanisms. The support to emerging WUAs was based on about 35 associations. There was support in terms of organisation and training, there was no funding. There was often no office. The other challenge was regulation and oversight.
Ms Bofilatos said that the strategy needed to be revised in order to achieve transformation. The Act would have a one-year framework. Most did not want to transform.. There would now be a deadline. Water reform had to be fast-tracked. Financial requirements had to be secured. A stricter institutional framework was needed. Community forums were needed. A transformation scorecard would be devised and implemented. Structured support was needed for emerging WUAs.
Ms Bofilatos could not transform the schemes where there was no staff.
The Chairperson said that he could understand a group of farmers being given a communal supply. There was scope for trading. He did not like what he was hearing. It sounded like DWA was creating a monster. The irrigation boards were not working, and were owing a lot of money. If there was a need for such schemes, then a simple system was needed. No infrastructure was needed. Rules of oversight had to be created. More control was needed over allocations. Community forums should be the avenues for public participation.
Ms Tsotetsi noted the transformation scorecard, but questioned the substance of any such document.
The Chairperson said that the nature of voluntary associations would make it impossible to enforce transformation.
Dr Huang said that water allocations were controlled by DWA. He was concerned over the links to local municipalities, some of which owed the WTE a lot of money. He could not understand the purpose of WUAs and irrigation boards.
Ms Bofilatos replied that in a few cases, WUA could provide water to local government. In other cases, local government was only a member of the scheme.
Dr Huang asked about the relationship with the water boards.
Mr Muller took the Loskop government scheme as an example. This provided water to farms and to some surrounding areas. This was one of the reasons prompting the change in the name to WUA. The water boards operated in a different space, providing treated water to users.
Mr Trevor Balzer, DWA Acting DG, said that there was a WUA providing water to mines in Limpopo.
The Chairperson said that irrigation boards should transform themselves into WUAs within one year. Transitional arrangements might be needed. He thought that this was all that was needed. There was no need to transfer staff and offices. If not, government must provide these services directly. It was inconceivable that such big users were not paying their debts.
Mr Muller said that the only funding was to educate staff. Many of the big schemes had been created with public funds. There was concern over their assets.
The Chairperson said that finality must be reached. He suggested that the irrigation boards should be directed to transform to WUAs. If this was not in the Bill presented to the Committee, Members would insert these provisions.
Mr Skosana was tempted to ask some questions regarding payment for water. The Vaalharts and Groblersdal schemes were good examples, drawing their water from the Loskop dam via a canal system. He asked if DWA could enforce provisions, and metering. The water used was a huge volume. Farming went on all year round. He asked if there was any water for the public.
Mr Mpho Mofokeng, Acting Chief Financial Officer, WTE said that debts of the water associations would be pursued by legal means. They were saying that they would not pay because of a lack of agreement.
The Chairperson said that this was completely unacceptable for private citizens. Their water should be cut off immediately. It was unacceptable for anyone not to pay their debts, but had absolutely no sympathy for people making a profit. This issue was a huge embarrassment to the Department. He was speechless that so many years had been allowed to go past.
Trans-Caledon Tunnel Authority (TCTA) Presentation
Mr Lebohang Thotanyana, Director, Trans-Caledon Tunnel Authority (TCTA), introduced the presentation. The project was progressing well but there were still some challenges.
Ms Zodwa Mbele, Executive Manager: Project Finance, TCTA, said that there was a two pronged solution to acid mine drainage (AMD). The decant was being stopped, but there had been problems during some power failures. DWA had given TCTA the mandate to develop the plant. The short term solution was attending to the central basin. DWA had approved funding. Group 5 had won the contract. It had started the construction of a treatment plant. Various agreements had been reached in the area. A German company would provide the pumps.
Ms Mbele said that work would commence shortly in the eastern and western basins. Tenders would be issued before the end of the year. DWA had agreed on the implementation plan in principle. One of the mines had submitted a proposal on treating water in the western basin, and this was being considered. There was a challenge in that one of the property owners had won an interdict against further operations in the central basis. There had been an expropriation of privately owned land, and the owner had gone to court. The lawyers were due to meet the following day. She suspected it was simply a question of the price being offered.
Mr Thotanyana added that time lines were manageable. A long-range view would be taken on the land. It was important to build up a good relationship with the landowners.
Ms Mbele said that a security company owned the land in question. They were complaining over the servitude rights over their property, which was undeveloped at present. An expropriation notice had been issued.
Mr Thotanyana moved onto current mandates. All had been implemented positively. The biggest challenge was on Lesotho Highlands 2. Discussions were still needed between South Africa and Lesotho on agreements.
Mr Balzer said that issues had been raised at a meeting the previous week. The Lesotho government had ratified the agreement in December 2012, but had since withdrawn the ratification. The Prime Minister had met with President Zuma. South Africa had given Lesotho a four-week period to confirm acceptance, and would otherwise explore further options. A meeting had been set up for 14 May 2014.
Mr Thotanyana said that other projects were running as planned. The Komati station had been delivered on time and R500 million under budget of R1.2 billion.
Ms Mbele said that two delayed projects were the Olifants Bulk Distribution system due to problems with the supply of pipes. Nkola 1 would support the Medupi power station, and was still on time. Phase 2 of Nkola had an issue that was still being negotiated. The engineers were suggesting one big pipeline rather than the Eskom requirement for multiple smaller pipelines. Eskom could only commit to their requirements, and the shortfall in funding would have to be made up. A guarantee would have to be provided. The mines could not commit at present.
Mr Thotanyana impressed the need for a long-term vision.
The Chairperson asked why the mines could not contribute a share once they were established. Government could then cover the costs with the support of industry.
Mr Thotanyana said that this was the model they were trying to use. However, some bridging finance was needed at present.
The Chairperson said that the payment promise could be a condition of the licence.
Ms Mbele said that the mines were unwilling to make unknown commitments.
The Chairperson said that there were other factors involved that could prevent the award of a mining licence.
Ms Mbele said that the matter was under discussion. At Nkola they could proceed with the smaller pipe, but only Eskom and one other customer was prepared to commit.
Mr Balzer said that the Nkola funding would be discussed at a Presidential Infrastructure Committee Management Committee meeting the following week.
Mr Thotanyana said that TCTA was a fully going concern. There was a slight growth in water resources, amounting to R4 billion in the forthcoming years. This would enable TCTA to pay off its debts. He was hoping to pay off the debt on Lesotho Highlands slightly earlier, which would improve the cash flow position.
Ms Mbele said that the accounting policy had been changed. Physical structures were no longer indicated on the books, instead the amounts due from DWA were recorded. These assets would remain the property of DWA, but TCTA would receive an income.
Ms Mbele showed a graph of project surpluses. There was no debt surplus expected by 2022. Each project had a planned time to reach a zero position. TCTA had received an unqualified report despite changing their accounting policy. They worked closely with DWA, especially on projects.
Ms Mbele presented a layout of salaries and bonuses.
The Chairperson despaired that he was in the wrong job. He called on Members to consider a resolution that he should be appointed as CEO. The figures were open and transparent.
Ms Mbele said that TCTA was satisfied with the role that it was playing. Financial results for 2011/12 were satisfactory.
Dr Huang noted the big smiles on the faces of the TCTA delegation. The CEO earned twice as much as the President. There was little accountability. The CEO had received a bonus of R1.7 million despite one project being R400 million in arrears. TCTA was a big entity. He was not seeing attendance figures for board members. This was a financial statement and not an annual report. He was shocked to see what “fat cats” TCTA managers were.
Mr Rodgers felt that the salaries were obscene. He asked who determined them and what ceilings there were. The rich were getting richer in South Africa, and this was highlighted every day. If he did not ask the question, his constituency would take him to task in no uncertain terms.
The Chairperson hated a board where there was no accountability. One of the management team had not been awarded a bonus, a Mr Matibane.
Mr Thotanyana said that Mr Matibane had left before bonus considerations were made. Bonuses were paid according to guidelines for state owned enterprises (SOE) as determined by the Department of Public Enterprises (DPE). There was a presidential review at present.
The Chairperson was mindful that good people were needed to do the wonderful work that TCTA produced, but he would still find it hard to explain a R6.7 million salary that was in fact three times the President's salary.
Mr Thotanyana said that TCTA was mindful of this position, and was waiting for the results of the presidential review. This was looking at all SOEs and remuneration. At a previous meeting, at which the Minister had been present, the Committee had queried the rank structure.
The Chairperson said that salaries impacted on service delivery. The management at Overberg Water was about thirty times less and this might account for different attitudes.
Ms Tsotetsi asked why Mr Matibane had left.
Mr Thotanyana said that his contract had ended, and there were some financial irregularities. TCTA was now trying to recover any funds that might have been misappropriated. Bonuses could not be awarded where contracts were terminated or there were investigations.
Ms Mbele said that deficits were by design. Tariffs were low while interest was high. This ensured that projects would stay affordable. The ultimate goal of the model was to repay the debt in a period of twenty years. Tariff calculations were based on the long-term costs. Consultations were held every year, and costs were adjusted. The flip side was that debts could be paid in a shorter period, but much higher tariffs would be needed and would be a burden on consumers.
Mr Thotanyana said that the project was structured on consumers not having to pay overly high tariffs. In KwaZulu-Natal the water supplied by TCTA was cheaper than anywhere else in the country, but was still seen as expensive. A slightly adjusted tariff had been introduced. The deficit model was included in the model. Twenty years was the standard agreement.
The Chairperson noticed that the same percentage was used in awarding bonuses.
Mr Thotanyana said that a rating scale of one to five was used. Rewards were given for performances rated above three. The board allocated an envelope, and this figure was distributed amongst all staff. Lower paid members were not discriminated against.
Ms Mbele said that at the lowest level, those qualifying for a bonus were guaranteed at least one month's salary as a bonus.
The Chairperson concluded that every management member had achieved above a rating of three.
Mr Thotanyana said that the board determined how all executives had performed against their performance objectives. It was possible that all executives were producing excellent work. Stringent performance measures were in place.
The Chairperson could not believe that all persons were performing at the same level of excellence. There was no credibility in the bonus awards. He had run Departments and he had never seen such a situation in his experience. There must be a flaw in the system. Inflated ratings were given so no one felt left out. He would scrap the system if he could.
Mr Thotanyana said that auditors were used to confirm the ratings. This gave the board confidence in awarding bonuses.
The Chairperson was still sceptical. Inkomati had only felt that two persons had earned a bonus. There should rather be an incentive in the salary calculations. The bonus system was being undermined. The DPE guidelines did not apply to TCTA. At least some criteria had been used, but Mr Thotanyana must take this message back to the board. This was a black mark on TCTA. He could not defend TCTA in this regard.
Dr Huang questioned the bonus structure. The figures were escalating into the future. Even the company secretary had received R200 000.
Ms Mbele said that there was an error in the presentation. There should be a credit still in 2015.
Dr Huang was unhappy that such errors could be made by persons who produced the excellent standard of work to justify their bonuses.
Regional Bulk Infrastructure Grant and Municipal Water Infrastructure Grants reports: deferred
The Chairperson noted that there were reports on the Regional Bulk Infrastructure Grant and Municipal Water Infrastructure Grant. Members would read the reports and liase with Ms Mbassa directly. The time for the meeting had expired.
Chairperson's overview of budget hearings
The Chairperson said that this meeting concluded the budget hearings. Overall DWA was producing good work, but there were challenging areas. DWA had not gone far enough in certain areas. He was a practical person, particularly in government. He was not interested in words, but rather in the plan to implement the words. He wanted reassurance that all the implications of creating the CMAs had been thought through. The broad strokes were nice, but he wanted to see the detail. At this stage Members only had an impression of what DWA wanted to achieve. There had been real improvements. Licensing was an exception to this. That was an example of a lack of systematic thinking.
The Chairperson said that DWA was on an upward curve. It needed to retain staff. Systematic thinking over time would lead to an improvement. Concrete achievements should be the legacy as staff members eventually moved on to other things. Too much intellectual capacity was not passed on to the next generation of officials.
The Chairperson felt that a number of strong issues would be raised during the budget vote. Sanitation would be a major topic as the system was fragmented. If this could be done in one section of the department but not others, then it indicated a failing of management.
The Chairperson informed Members that there had been a change to the Committee's programme. The National Environmental Management Act Amendment Bill had been received and would be distributed to Members. He asked Members to study the programme and advise him of any problem areas.
The meeting was adjourned.
- DWA Status report on Water Users Associations in South Africa
- MWIG Latest Developments
- DWA Strategic Overview of CMAs and Inkomati and Breede CMAs performance 2011/12
- DWA Consolidated Report on performance of TCTA and WRC
- Komati Basin Water Authority Presentation (KOBWA) Presentation
- Inkomati Catchment Management Agency Annual Performance Plan 2012/14
- We don't have attendance info for this committee meeting
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