Amatola, Mhlatuze, Magalies, and Lepelle Water Boards on their 1st Quarter 2015/16 performance

Water and Sanitation

18 November 2015
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Department of Water and Sanitation (DWS) gave a brief introduction, and also assisted in answering questions related to the briefings which were given by the Amatola, Mhlatuze, Magalies and Lepelle Water Boards on their first quarter 2015/16 performance. It was noted that the Boards' financial year commenced in July, to align with municipalities, but some were also busy with projects for the Department of Water and Sanitation, whose financial year had started in April.

Mhlathuze Water Board described its areas of operation and noted that it primarily supplied bulk water and sanitation services to industries and water services authorities. The water quality standards were met in the previous year, and bulk water volumes increased by 21% mainly due to the increase in raw water volumes. Capital expenditure increased by 9% from the previous year. The three major projects that contributed to the increases were Nsezi Balancing Reservoir (20ML) that cost R17 million; City of uMhlathuze Pump upgrade that cost R56 million; and a re-route of a line that cost R12 million. Members asked for confirmation on the figures, asked why a private auditor was used, and asked whether this and other Water Boards were following the system used by Rand Water, of placing turbines in the pipes that generated energy as water flowed. One Member thought that the report was not accurate, noting that water leaks were a major concern in uMkhanyakude District Municipality, but the Water Board clarified that it was not responsible for this area, and the municipality had been made aware of the problem. Members also asked for an explanation of the Umfolozi River project design some years ago, problems of illegal boreholes in St Lucia and the drying up of the wetlands, illegal connections on pipes. They asked when the debts would b paid off, and requested that figures, not only percentages, be given in subsequent presentations, and asked how project would be completed. Further questions related to removal of water meters, pipes ordered but not installed, and corporate social investment, levels of water in the Goedertrouw Dam and whether backwash water was recycled, as also the cost of water treatment, as the Committee was concerned that consultants were over-charging the State.

Amatola Water Board highlighted its successes and challenges, had managed to meet water quality and assure supply at around 98%. It provided skills capacity building through training courses, learnerships and bursaries for 89 beneficiaries. Members asked if there was sufficient capacity to augment water supply and for plans for maintenance and further expansion of infrastructure, emphasised the importance of officials of all water boards actually visiting the areas, asked about plans to deal with water losses, said that performance figures needed to be matched with comparisons to targets, and stressed the need to address audit findings. They asked about water loss on bulk distribution and suggested that some of Jozini water that was used for recreation needed to be specifically targeted to the surrounding areas. Noting the high rainfall in the area, Members also asked if there were plans to re-direct to other municipalities. 

Magalies Water Board operated in North West, Limpopo and Gauteng, and noted that average plant and distribution losses were in excess of the target, due to the high losses experienced at the Klipdrift Plant through the non-recycling of backwash water, which would be addressed during plant upgrades. Projects were delayed mainly due to community unrest in the Walmannsthal area. The Projects Management and Supply Chain Management Units had been enhanced. Members asked if consideration was given by the Water Boards to training municipal officials when they trained their own staff, and asked what interventions were planned to augment capacity of reservoirs. They were interested in how the budget had been affected by the greater numbers of jobs provided, how the water shortage in Bela Bela was being handled, and when booster pumps would be put in place. They also highlighted the problems of sewerage being put into the Crocodile River. Although they appreciated the turnaround in the debt position, they commented that planning needed to improve, and enquired about the working relationship between this Board and Lonmin.

Lepelle Water Board concentrated on performance objectives such as management of avoidable water losses and the reliability of water supply. Some of the major challenges were debt owed to Lepelle Water that affected its sustainability, the high price of raw water and electricity. Members commented on the severe drought in North West, and the need to educate people into more efficient use of water. They were also worried about ongoing debt and stressed the important of financial discipline. Other questions to this Board concerned bulk agreement, pollution at source, laboratory services revenue, the extent of the bursaries.

General questions put to the Department included whether there had been any studies to look into administered regulated prices for water, whether the Boards were involved in discussions and whether there was any likelihood of an independent water economic regulator being appointed, and whether there were likely to be incentives for demand management, and discussions around cash management and subsidies for the poor. Members highlighted that those trained tended to be poached by the private sector, and asked if municipalities were requesting assistance from retired engineers. Members asked the Department about the new legislation that was to be presented to the Committee, and raised general concerns, with all municipalities, about the levels of debt, suggesting liaison between the Department and National Treasury.
 

Meeting report

Department of Water and Sanitation introductory remarks to Water Boards' 2015/16 First Quarterly Progress Reports
Mr Anil Singh,Deputy-Director General, Department of Water and Sanitation, opened the presentations as the overarching representative of the four Water Boards present at the Committee meeting. He noted that the first quarter 2015/16 performance results were to be presented by the Mhlathuze, Amatola, Magalies, and Lepelle Water Boards.

Mhlatuze Water Board on First Quarter 2015 Performance briefing
Mr Brian S Ndaba, Chief Financial Officer, Mhlathuze Water Board, noted that the Mhlathuze Water Board (Mhlathuze Water) area of supply covers 37 000km² stretching from Thukela (also spelt as Tugela) River in the south and up to East Coast to Mozambique and Swaziland borders, around Vryheid and back to the Thukela River. Mhlathuze Water supplies bulk water and sanitation services to industries and water services authorities. For 2014/15 the water quality standards were met. Bulk water volumes increased by 21% mainly due to the increase in raw water volumes. Capital expenditure increased by 9% from the previous year. The three major projects that contributed to the increases were Nsezi Balancing Reservoir (20ML) that cost R17 million; City of uMhlathuze Pump upgrade that cost R56 million; and a re-route of a line that cost R12 million.

Discussion
Mr L Basson (DA) asked if the figure of the expenditure of R142,7 million was still up until the end of September 2015. He asked if the updated figure was up until September.

Mr Ndaba said that for 2015, the budget was R290 million.

The Chairperson asked if this first report addressed developments from July. He asked why KPMG'. services were used instead of the Office of the Auditor-General South Africa (AGSA). He was aware that AGSA was overworked, but that office would do auditing within a certain time period and with a framework. He noted that generation of energy through the pumps was used. He said that Rand Water had an “energy mix” of infrastructure underlined, where traditional energy sources were augmented with renewable energy sources. He asked how other water boards would avoid the situation that Rand Water experienced. He referred to increased penalties for transgressors who had vandalised infrastructure.

Ms T Baker (DA) said that she was in KwaZulu-Natal (KZN) two weeks ago. The picture painted by the report was very different to what she had seen on the ground. It was difficult to understand the reference in the presentation to water leaks, when she stood in uMkhanyakude District Municipality seeing that people were loading their vans with water from the bulk lines, which came from reservoirs. There was not water supplied from the bulk lines to the community, but millions of litres of water would get lost from the bulk lines that ran “like a river” down a hill. The local media had covered the water losses in uMkhanyakude. It had been reported several times to the municipality, but no action was taken.

Ms Baker also asked what had been done about the Umfolozi River in KZN, where six to seven years ago about R71 million was spent. The construction did not yield the amount of water it was meant to, due to the dysfunctional design.

Ms Baker further asked what had been done about the 120 illegal hand-drill boreholes operated in the village of St. Lucia, KZN. She said that people in St. Lucia had not had water for weeks on end. She said that construction companies illegally extracted water from rivers, which had led to the rivers running dry. The wetlands in St. Lucia were a national heritage site, but it was drying up. There was no control over water in that area. In the Jozini area in uMkhanyakude, a ratepayers association had started to maintain the bulk water line and placed taps on the line yet the municipality was fully aware of this. She asked who should be responsible for Jozini’s bulk water line and asked who the water belonged to. She asked how much was owed by contractors to the Department of Water and Sanitation (DWS or the Department). She commented that the credibility of the current report was questionable.

Mr T Makondo (ANC) mentioned the issue of debt collection turnaround. He asked how much was owed and by when the debt would be paid off. He asked what the total percentage of water losses were that were attributed to infrastructure. He then mentioned the issue of a 24 hour turnaround due to water supply.

Mr D Mnguni (ANC) referred to pages 14 and 24 of the presentation, which indicated percentages of the Board's expenditure, and asked that the actual rand amount must also be shown, to enable the Committee to do follow up. He asked if the R290 million was budgeted from July up until September. He said that the expenditure indicated that there would not be enough money in the budget. He referred to page 27 of the presentation which said that bulk pipelines, reservoirs and pump stations in Jozini were 74% complete. He said that it looked as if Mhlathuze Water had a plan to source money, but now that there was no longer any money or approval he wanted to know how it would be ensured that the 70% would be achieved.

Ms M Khawula (EFF) said that there were instances where the unemployed and pensioners could not afford to pay for water. She questioned how someone could get their 300 litres of free water after a water meter had been removed. In uMkhanyakude people had had to walk kilometres to collect water. She asked who was responsible for instances where pipes were bought, but then dumped in a forest, and what legal action would be taken against the transgressors. She emphasised that the drought in KZN affected mainly black people and their livestock.

Ms H Kekana (ANC) said that Mhlathuze Water had exceeded its target, but in other places such as Rustenburg in North West Province, poor quality has led to people suffering from illnesses such as diarrhoea.

Ms J Maluleke (ANC) commended Mhlathuze Water on the good work it had done. She wanted clarity on what corporate social responsibilities were conducted. She appreciated the figures for job creation. She asked whether people who were trained were followed up, as some people were trained and then once their training was completed they stayed home.

The Chairperson asked who the owners of the water were, of Mhlathuze Water. He said the issue of water ownership spoke to the issue of stolen water. He asked what vision Mhlathuze Water had for the next five years.

Mr Singh explained how water allocation worked and how licensing worked. A licence would be given to individuals or companies to extract water, for instance, for mining. Allocations were based on the conditions of the licensing. The main customers from Mhlathuze Water area were the municipality and mining companies. The mining companies had obtained licences, environmental authorisations and permits from the Department of Mineral Resources.

Mr Singh responded to Ms Baker’s question on the wetlands in St. Lucia and said that the DWS had been made aware of the problem, due to the active Non-Governmental Organisation (NGO) community. There had been active engagement with customers and subsequent to illegal extractions, the DWS would take necessary legal actions. He then referred to the Chairperson's question on AGSA and agreed that t stricter reports would come from the AGSA. In relation to Rand Water, he noted that after a meeting with the Department of Justice and Constitutional Development, there had been high security for the protection of reservoirs. All entities have dealt with this from a security perspective, but the DWS had liaised with the National Prosecuting Authority (NPA) and the South African Police Service (SAPS), to institute prosecutions where there had been theft and vandalism, which had shown results, since in the last discussions with SAPS there had been fewer reports of vandalism. The DWS would be dealing with the water meters. The KZN drought was a focus area, and in a recent broadcast of Morning Live, the Office of the Premier in KZN spoke about the interventions, and the Premier of KZN, Mr Senzo Mchunu, would be paying a visit to the drought-affected area of uMkhanyakude. He agreed with Mr Mnguni’s comment on the figures and agreed that this would be done in future.

Mr Swaswa Ntlhoro, Acting Chief Executive, Mhlathuze Water, referred to the Chairperson’s question on the “energy mix.” In the last year, Mhlathuze completed a project, which allowed the Board to get power as a backup, from a core generation plant for Richards Bay in KZN. It was still able to get power during load shedding or other issues. In relation to water losses, he stressed that Mhlathuze Water operate. bulk supply and the water losses referred to did not include water losses from the point of supply, when water was supplied to municipalities. The involvement of this Water Board in uMkhanyakude is mainly related to implementation of projects that are funded by the DWS. The municipality should be responsible for monitoring water losses. Mhlathuze Water’s plants recorded water losses of less than 1% within its area of operation. .

Mr Ndaba said that the Board was mandated to appoint KPMG, who was only appointed for one year due to the amalgamation of water boards. The debt collection situation has remained the same. The biggest customer had paid on time. With reference to the pipes, he said that uMkhanyakude Municipality was responsible, and this was reported in the media. There were big challenges at uMkhanyakude, but Mhlathuze Water would conduct a project and then hand it over to the uMkhanyakude to handle the maintenance and operation. The problem started when uMkhanyakude operated the project, but Mhlathuze Water would try to assist and guide with infrastructure. The Minister of Water and Sanitation had also directed Mhlathuze Water to help, and it had always availed itself to do so. He emphasised that more still needed to be done. 

Mr Ntlhoro confirmed that Mhlathuze Water’s financial year started in July 2015. The financial year start of April 2015 applied to DWS projects that were implemented by Mhlathuze Water. There was a temporary scheme, owned by DWS, but operated by Mhlathuze Water. The scheme started about 20 years ago and transferred water from the Thukela River to provide an augmented supply of water in the Goedertrouw Dam to provide water to Richards Bay. Now that the drought was severe, the scheme had proved its worth. He said that Mhlathuze Water’s water quality was good. He was not sure how Mhlathuze Water would be able to get involved in North West Province and Rustenburg’s issues. He said that there were a number of initiatives within the corporate social investment sphere, which included giving uniforms to school children. Mhlathuze Water identified projects in which it became involved for the short to medium term such as the building of a science centre to promote science in rural schools.

Ms Baker asked what the level of water was in the Goedertrouw Dam and wanted to know how water would still be able to be supplied from the dam.

Mr Basson said that he wanted to elaborate on the Chairperson’s question on the energy mix as applied in Rand Water Board. He said that the answer received by Mhlathuze Water was not the answer he wanted to hear. He explained that at the Rand Water Board, turbines were placed in their pipelines to generate electricity, and he wanted to know if Mhlathuze Water would also do that. He asked if the water losses at a Mhlathuze Water’s plant lost backwash water, and, if so, why the backwash water was not recycled back into the plant. He noted that R22 million was approved by the DWS, but was not yet received from the DWS. He asked when the money would be received and how much money the DWS owed Mhlathuze Water.

The Chairperson asked how much production of any measurement out of a treatment plant cost.

Mr Ntlhoro said that over the last few years Mhlathuze Water had implemented school sanitation projects on behalf of the Department of Basic Education and the Department of Higher Education and Training. Mhlathuze Water was still involved in the sanitation project, but the budget has been smaller than previously. The last bi-monthly meeting with stakeholders and DWS led to an agreement that once water levels at Goedertrouw Dam reached 30%, the farmers would stop using their allocations. Subsequently, water at this Dam would be augmented. With the current water restrictions, more water should be available by March or April 2016. Currently, there were no plans for an energy mix, but the DWS should consider the Committee’s comments. He said that the backwash water does get recovered by Mhlathuze Water.

Mr Ndaba said that the DWS promised to allocate the R22 million. Invoices would be completed after the work was completed, but Mhlathuze Water has not received the go ahead due to the DWS having not allocated money yet. Money was allocated for the Director General’s scheme. The first stage of the scheme was covered through rebate.

Mr Singh said that a basic plant would cost between R300 million to R500 million. He said that the DWS would provide the information of the cost of a basic plant in writing, as he did not have the exact figures with him.

Mr Basson asked the Chairperson if he wanted to know the cost of water per mega-litre.

The Chairperson responded that he wanted to know about the cost of the infrastructure that would produce certain amounts per day. He asked what, for instance, the cost of one plant would be that provided water to an area populated by 20 000 people. Mhlathuze Water dealt with this type of information on a daily basis and should know the cost.

Mr Ntlhoro acknowledged that Mhlathuze Water dealt with information on costs on a daily basis. He said that the Chief Operations Officer could not attend this meeting, and that was the person who would have the information.

Mr Ndaba added that the Chairperson’s question was difficult to answer immediately, because there was a difference between viable cost and fixed cost. He said that the volumes that the Chairperson questioned, would differ. There were existing plants, but there was no plan to build a new plant. He said that he could answer the question of the cost of water pumped.

The Chairperson said that he would come back to the question of the cost of water pumped. He said the reason he asked his question was because he had thought that it should cost less than quoted; and the Board needed to confront the reality that state money could be looted by consultant engineers.

Mr Basson agreed with the Chairperson. He gave examples of the cost of plants, such as eMalahleni, Mpumalanga Province, where a 20 mega-litre package plant was being constructed. The municipality would not pay for the eMalahleni plant that would cost R30 million. It would cost R5.19 per kilolitre of water.

The Chairperson said that part of the Committee’s oversight was to make sure the state funding was not looted. He said that those who did wrong would have to be punished.

Mr Singh said that the DWS has given serious attention to looking at plants that would cost less. Local manufacturers were involved in designing plants.

Amatola Water Board First Quarter 2015 Performance briefing
Mr Kevin Govindsamy, Chief Financial Officer, Amotola Water Board, presented the Amatola Water Board (Amatola Water) first quarterly performance progress report, noting that this highlighted areas where it had done well, and challenges. Amatola Water operated in most of areas in Amathole and Chris Hani District Municipalities. The water quality standard was met and assurance of water supply was maintained at an average of 98%. Skills capacity building was provided through training courses, learnerships and bursaries for 89 beneficiaries.  

Discussion
Ms Baker asked if there was sufficient capacity to augment water supply and what the process was to augment the water supply. She asked if there were plans in place for the maintenance and further expansion of infrastructure.

Ms Khawula said that water boards should speak directly to the local people. Sometimes officials speak English well and seemed economically knowledgeable, but subsequently money would get looted and the government would receive the blame. She mentioned that in one area there were people who spoke well and were diplomatic, but in another area there was a young official who said things that were contradictory to what happened on the ground. She suggested that the water boards' management must all go to sites to conduct oversight, instead of merely appointing a labour official.

Mr Nguni said that if there were better plans there would be less challenges in Amatola Water. He asked if there was a plan to deal with water losses. He mentioned that there were instances in Amatola Water’s presentation where information summarised was problematic, as performance issues were mentioned yet no expectations or targets were outlined.

Mr Basson wanted to know the size of Amatola Water’s plant. He referred to 12% mentioned in the presentation and that he could only understand what the figure translates into if the size of the plant was mentioned also.

Ms NK Bilankulu (ANC) wanted to know what the challenges were with the targets, and if they were perhaps too high. She said that it was not clear if the figure of 89 beneficiaries was related to the skills capacity building. She thought that the audit findings provided corrective guidelines and if the audit findings were not addressed she did not know if there were plans in place. She asked if unaddressed issues were due to lack of capacity.

Mr T Makondo (ANC) suggested that for the next presentation, Amatola Water should be better prepared. He asked how large a problem there was of water losses on the bulk distribution network.

The Chairperson said targets outside of monitoring targets must be aimed for, to improve the lives of people.

Ms Khawula said that water was available in Jozini, where there were boats in the area and recreational water facilities, yet the livestock of black people was dying since they did not have access to the water which was available. She suggested that a quarter of the recreational water should be taken and given to the people in Jozini. 

Mr Govindsamy referred to the source and capacity. He said that in the Amatola Water’s region there is a high rainfall; hence the dams would become full. From that capacity, Amatola Water could provide water to other municipalities. He suggested a grant from the government for aiding infrastructure. There were plans in place to address the challenges. The 89 beneficiaries were those who benefitted from skills capacity building, and they were people who were on a specific skills training initiative. This was referred to still as a challenge as the company had not capacitated the entire staff previously. There had been a moratorium on employing people. It had been difficult to find people with good skills for project management. These challenges would be overcome due to the lifting of the moratorium and a Human Resources action plan. Within four to six months the issue of skills capacity should be resolved. There had been considerable progress of debt collection turn around. Amatola Water has interacted with all the companies who owe money to Amatola Water. There were instances of cash flow problems, but where there were no such problems; the companies were requested to pay the money.

Mr Ray Bukubukwana, Acting Director: Planning, Amatola Water, said that there are renewable energy plans by placing turbines in the bulk pipeline. With reference to capacity of Amatola Water’s plants, five out of the nine plants were being upgraded. He referred to Amatola’s upgraded water plants such as the Sandile Dam that provided water to the municipalities of Nkonkobe, Ngqushwa and Buffalo City. The current capacity of that plant was designed to supply 18 mega-litres. Nkonkobe and Ngqushwa municipalities supplied water under the Amathole District Municipality (ADM). Due to demand the Sandile Dam plant was in the implementation stage of augmenting water supply. Currently all the plants that were overloaded were being upgraded. He said that currently a pipeline was being connected from Sandile Dam, via Peddie, to Port Alfred. The pipeline would augment water supply to the Fish River and the East London Airport. It would also augment water supplies to areas near the Peddie scheme. It had been very expensive to operate the Peddie scheme, hence the decision for the augmentation of water supply from the pipeline. Amatola Water would put a project in place to repair and replace pipes. The access route to Ciskei was in a mountainous area, and this made some areas where there are leak. difficult to reach, hence a budget would be created to construct access routes. He mentioned the challenge of water losses where water is extracted illegally. Speaking to how Amatola Water was contributing to improvement in the lives of people, he mentioned an Amatola Water network scheme that connected Sandile Dam plant schemes to another scheme. Amatola Water had been implementing the construction of a borehole and water pump project in areas of poor infrastructure under the Oliver Tambo District Municipality, Eastern Cape. At the moment there were 5 344 people to be reached, but the Water Board had managed to serve about 1 300. Amatola Water had created 116 jobs in the area. In some areas the boreholes were not able to deliver the demand; therefore the storage capacity is being increased.

Magalies Water Board First Quarter 2015 Performance briefing
Mr Charles Mohalaba, Acting Chief Executive, Magalies Water Board, presented the Magalies Water first quarterly performance progress report. In the North West Province, Magalies Water serves the local municipalities of Moses Kotane and Rustenburg. In Limpopo Province, Magalies Water serves the local municipalities of Thabazimbi, Bela Bela and Modimolle. In Gauteng Province, Magalies Water serves the City of Tshwane Metropolitan Municipality. Average plant and distribution losses were in excess of the target due to the high losses experienced at the Klipdrift Plant. This was due to non-recycling of backwash water and this process would be enhanced during the plant upgrades. Projects were delayed mainly due to community unrests in the Walmannsthal area. Court interdicts had been obtained to deal with elements that were disruptive to the construction process. Some of the projects were still in the procurement phase and would be awarded in the second quarter. The Projects Management and Supply Chain Management Units had been enhanced for projects implementation.

Discussion
Ms Maluleke asked whether, when people are trained, consideration was also given to assisting municipalities, so that they could in turn help their own people.

Ms Baker mentioned that the design capacity of, for example, Cullinan and Klipdrift supply areas were far greater than the reservoir capacity. She asked what intervention was in place to augment the reservoir’s storage capacity. She mentioned the recent water shortages in Tshwane that resulted in water restrictions due to low levels of water at reservoirs of Magalies Water. She asked how the requirements of 125 jobs given on a temporary basis and the numbers of indirect employees were funded, once the number of people being employed had increased to 259. She asked if the increased employment had an impact on the annual target. She asked for the reasons for delays. Infrastructural delays indicated that only 50% of the first quarterly target was met.

Mr Basson said that he presumed that for the municipalities of Bela Bela and Modimolle, in Limpopo Province, there was one pipeline that split off. There was a water shortage in Bela Bela and he asked how many mega-litres of water Klipdrift provided to Bela Bela. It seemed as if Modimolle received less water, which could be due to the water pressure. He asked when a booster pump would be placed to augment water supply to Modimolle. He asked if Klipdrift would be upgraded. Sewerage was placed into the Crocodile River, which also supplied borehole water. He asked how the mixture of the water at the same point affected the water.

Mr Basson asked the DWS when the Committee would receive a draft of the new Water and Sanitation Act.

Mr Nguni said that Magalies Water indicated that it could not meet the targets in their remuneration. He asked why, and what the challenges were. He asked if the Water Board knew the importance of meeting targets.

Mr Makondo commended Magalies Water on its debt turn around. He suggested that Magalies Water must speak about and improve its planning, because it would affect annual performance. He told Mr Singh that the price of raw water per kilolitre was very poor. The issue of municipalities who owed water boards would remain. He said the DWS should assist with debt collections by consulting with the National Treasury and the Department of Cooperative Governance and Traditional Affairs (COGTA) to solve the problem.

Ms Maluleke inquired about the working relationship Magalies Water had with Lonmin, and whether this assisted the municipalities.

The Chairperson said that he saw raw sewerage flowing into a dam that sourced water from the Crocodile River. He mentioned that children who played near the dam in the dark had been injured.

Mr Singh said that a letter had been sent to the Committee, informing it of existing legislation and new legislation in the pipeline. In 2016 the Committee would have to deal with the “Water Research Amendment Bill, and that had already been submitted. The National Water and Sanitation Amendment Bill was in its’ final stages of being developed and had to be presented to the Minister. The Chairperson would be informed when the Bill was sent to Cabinet, as this must happen before the Bill could be sent to the Committee.

Mr Singh said that the institutional reform and realignment programme of the Water Boards was ongoing and the future of the Boards is very bright. The Minister has been dealing with the two boards in KZN, Mngeni Water and Mhlathuze Water, to consolidate them into one single board, to have ward to ward coverage. The Trans Caledon Tunnel Authority has already been appointed and during the week to come the inauguration of the Board here would take place, and the Committee would be invited to that. He was personally aware of the Lethlakeng and there were several interventions, but he had not recently been involved in any interventions.

Mr Mohalaba said that the bursaries offered are related to water and focused on electrical and civil engineering. Magalies Water received a letter from Lethlakeng about two weeks ago that indicated that the municipality would be taking a reservation to Council that declared the constraints in terms of water. Magalies Water and the DWS had looked at interventions in the area. The biggest issue was around borehole drilling and the immediate resuscitation of these boreholes was needed. The financial state of the municipality was quite challenging as it owed Magalies about R3 million. The municipality had indicated high yield levels of underground water. The sewerage plant in Madibeng Local Municipality had been resuscitated as part of the intervention. He referred to “the other three plants” that needed resuscitation, yet there have not been funds. With reference to storage capacity, Klipdrift has been upgraded. There was certainly progress. Magalies Water was contracted to supply Bela Bela with 5.3 mega-litres per day, but it was currently supplying 3.8 mega-litres per day, but the planned upgrades would augment water supply. Magalies Water was contracted to supply Modemolle with 4.5 mega-litres per day, but currently 2.6 megalitres per day was achieved – and that meant there was a huge deficit. However, with the upgrade of the Klipdrift treatment works with the provision of R295 million, the current supply would certainly be augmented to meet demands. He agreed that the booster pump station was needed and that Magalies Water has been analysing the design of a pump to augment water to the Mookgopong District Municipality, which could be started once funding was received.

With reference to storage capacity, he mentioned an example where there was a pipeline design finalised to Thabazimbi and Rustenburg to augment water supply. Local administrators have been in contact with mines, particularly Lonmin, to see whether investment could be increased. Part of the reason that delayed the implementation of a programme was due to the fact that turnaround times to augment processes were slow. The slow process was also due to the capacity issues in the DWS. The biggest issue related to funding. 

Lepelle Water Board First Quarter 2015/16 Performance briefing

Mr Phineas Legodi, Acting Chief Executive, Lepelle Water Board, presented the first quarterly performance progress report of the Lepelle Water Board. The calculations of performance objectives were listed such as management of avoidable water losses and the reliability of water supply. Some of the major challenges were debt owed to Lepelle Water that affects the entities sustainability, the high price of raw water and electricity. (See attached presentation for further details).

Discussion
The Chairperson pointed out that there was a severe drought situation in the North West Province and Limpopo Province, and wanted to know if there was anything that could stop the restriction of water to the country. The education and the behaviour was seemingly not changing. He mentioned the issue of Water Boards and how, over time, debt has increased. He stressed the importance of financial discipline.

Ms Baker asked if all the bulk agreements were in place. She asked what the biggest factor was that impacted on raw water charges. She asked if the pollution of sources had a high impact on the charges. She asked why the revenue was reduced for laboratory services and if it was due to the water not being utilised.

Mr Nguni asked Lepelle Water if it was aware of the importance of meeting targets. He directed a question to both Magalies and Lepelle Water and asked if the bursaries being offered were water related. He also asked if the bursaries were budgeted for 2015, or if they carried on until 2016.

Mr Mnguni said that it had been a while since the DWS had appointed an independent water economic regulator. He asked if the DWS involved the water boards in discussions on economic regulations. He asked what studies the DWS conducted to look into the administered regulated prices of water, which included incentives for demand management, adequate provision for cash management and subsidies for the poor.

Mr Singh said that the Magalies and Lepelle Water presentations signalled improvement. With reference to economic regulators, he noted that recently the DWS gazetted the pricing strategy, and it was now open for public commentary for 90 days. The DWS team had been having tariff consultations all over the country. The issue with having the water tariff regulator was that it was within DWS and the question of whether it would go out of the DWS would be subject to discussion with the Minister. The future of the Water Boards was bright as they were used as the implementing agents and the delivery agents in line with the National Development Plan. The Water Boards should be nationalised to make them more effective and for cost saving purposes. He said that in order for the Committee to also have a say in who could be appointed to the Water Boards, then legislation would have to be amended.

Mr Legodi said that Lepelle Water did have bulk agreements with other plants, with the exception of Vhembe District Municipality that Lepelle Water has recently been directed to operate. An assessment had been initiated to outline the purpose of what had to be done. Lepelle Water’s laboratory was not more than three years old, but it competed with two very old labs in Limpopo Province. A marketing drive had been implemented to advertise the laboratory. Some remuneration targets were required to be met and others were required to be low. Currently operational expenditure stood at 27%, but if it were to go above 35% it would mean that too much money was being spent on operations. Most of the bursaries provided related to technical capacity needs of Lepelle Water. Bursaries had increased over the years. He mentioned that the debt collection figures were indeed too high and Lepelle Water is owed not less than R380 million. Currently, Mopani District Municipality could only afford to pay R12 million. He mentioned the issue of “old debt” and debt that accumulated. It could reach a point where a municipality could not afford to pay back the debt and would request to focus on the “new debt. However, it was difficult to estimate when “new debt” would begin. He mentioned that chemicals need to be utilised to treat the water.

The Chairperson said that there were many issues that arose. He said Mr Mnguni raised an important question of which way issues would be taken forward nationally. He highlighted the issue of economics of water. He was concerned on the matter of bursaries. The Committee had asked the Water Research Commission what would happen once training for water related occupations were completed. The Commission responded that the private sector “comes and snatches whoever is trained.” He questioned how many municipalities would call on engineers operating in their areas to come and be of assistance. He noted that often, retired engineers were not looking for money, but would be willing to assist and are readily available. He stressed that there are municipalities where there would not be one director who was an engineer, despite the fact that they were operating in a highly technical and specialised area of expertise.

The meeting was adjourned.

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