Water Master Plan; Water and Sanitation Bill; Economic Regulator for Water: DWS progress report; with Minister

Meeting report

The Acting Chairperson said the Chairperson would be joining the meeting later because he had been delegated to the team that would be assisting the Cape Peninsula University of Technology (CPUT) with their management and student affairs crisis. The Committee would be receiving updates from the Department on the Water and Sanitation Master Plan; Water and Sanitation Bill; Independent Economic Regulator and the national Water Infrastructure Agency and regional water utilities.

National Water and Sanitation Master Plan: Progress Report

Ms Nomvula Mokonyane, Minister of Water and Sanitation, said the Department made an announcement on 2 December 2015 that it would develop and embark on the implementation of the Water and Sanitation Master Plan. The Master Plan would assist the Department with providing water and sanitation services by helping it to establish a consolidated plan for water and sanitation management. The Master Plan was also expected to assist the Department with meeting future water and sanitation demands and providing a framework for managing water resources. The presentation would reflect on the state’s capacity to provide water and sanitation services in accordance with the National Development Plan’s Vision 2030, as well as the African Union’s (AU’s) Vision 2063. The Department had formed partnerships with both the Canadian and Netherlands governments, as well as the Development Bank of Southern Africa (DBSA) ,to provide the Department with expertise in implementing the Master Plan.

The Acting Chairperson asked that in order to save time and allow the Minister to attend to her other commitments, the Department take the Committee only through the progress made with regard to implementing the Master Plan.

Mr Trevor Balzer, Deputy Director-General (DDG): Strategic and Emergency Projects, DWS, said the development of the Master Plan had commenced and a final draft Master Plan would be available on 31 March 2018. The national Water and Sanitation Master Plan would be developed concurrently with the new Water & Sanitation Bill and the proposed Water Security Framework. The scope of all the above somewhat overlapped, but timelines for development were not synchronised. The Master Plan would provide an overall perspective of the situation in the water and sanitation sector and a consolidated plan of action to improve the current situation. It would set out the framework for managing water resources and the provision of water and sanitation services, and would include a schedule of interventions, actions and investments required to enable the achievement of these targets. The draft Master Plan would be ready for consultation on 15 November 2017. The consultations would take place between 24 November 2017 and 8 December 2017, and a final draft plan would be completed by 31 March 2018.

A water and sanitation Master Plan was necessary because there was a rapidly growing and urbanising population, meaning there was an increase in water requirements for socio-economic growth. Climate change meant there were warmer and drier months overall, and longer and more extreme events such as droughts and floods, meaning there would be less water available. The World Economic Forum’s (WEF’s) Global Risks Report of 2017 reports that this year the environmental concerns were more prominent than ever. As such, urgent measures were required to protect the river systems, as they transferred the life blood of the nation around the country, and about 50% of South Africa’s water resources originate from 8% of the land.

The key challenges were that by 2030, the water deficit could be between 27 000 and 38 000 million cubic meters -- a gap of about 17% of available surface and ground water: This would require a “business unusual” approach to close the gap. The Master Plan was the exact “business unusual” that the country needed to assist with water management. Serious interventions should be made to reduce demand by improving efficiency, adopting new technologies and reducing losses. SA’s water availability could deteriorate rapidly as its supply contracts and demand escalates due to growth, urbanisation and inefficient use. The international shared basins could potentially become a problem for South Africa. Four of its main rivers were shared with six neighbouring countries, which covered only 60% of SA land and contributed only 45% of the country’s total river flow. These areas supported around 70% of gross domestic product and a similar proportion of the population.

Other challenges related to the deteriorating water quality, which was a major constraint to economic and social development. The loss of ecological infrastructure, such as wetlands, affected system yield when clusters of wetlands lose their ability to release water in times of drought; similarly, the ability to reduce flow in times of flooding may also be lost. Equitable access to water and sanitation services between water uses and a lack of data and information resulting from a weak monitoring system posed a high risk to decision making and planning. This needed to be urgently addressed through the formalisation of an effective national hydrological monitoring centre.

Discussion

The Chairperson announced that there was a new Committee member, Ms D Manana (ANC), who would be replacing Mr T Mokondo (ANC), who had been assigned as full time Committee Whip for the Portfolio Committee on Arts and Culture. Mr T Manyoni (ANC) had resigned as a Member of Parliament, and had gone back to serve in his province.

The Acing-Chairperson said the Master Plan was the definition of real transformation. He asked at what point the Department would present its final Master Plan draft to Parliament. How was the Department going to ensure that it monitored and collected the correct statistics in order to plan for monitoring water usage, and how would it ensure that the legislative processes and the Master Plan fitted into one another while they were being developed concurrently?

Mr D Mnguni (ANC) said the time frames for the Master Plan were not convenient for adequate collection of data and consultation. The Department should rethink the 31 March 2018 deadline and push it back. Although he understood the relationship between the Master Plan and legislation, the Master Plan should come before the legislation. He did not understand how the Department could implement the Master Plan and the Water and Sanitation Bill concurrently. He asked the Department if it was expecting any budget constraints to implementing the Master Plan, and asked for clarity on the sunset clauses that the Department expected to deal with during the implementation.

Ms Manana said that although the Department’s time frames seemed to be ambitious, it also showed its commitment to implementing the final plan within the next financial year. The time frames were good to have, because they could assist the Committee in holding the Department accountable. She suggested that the Department should also work with the Department of Cooperative Governance and Traditional Affairs (COGTA) in assisting municipalities to collect money that was owed to it. Construction companies should also pay for the amount of water that they were using during construction.

The Chairperson said the Department must present the final plan to the Committee, and continuously update the Committee on any new developments.

Ms M Khawula (EFF) said she appreciated the commitment made by the Department, but these commitments were not enough. There had been a number of so-called “master plans” to save water in the past -- how would the Department ensure that the current Master Plan worked for the entire country? There were a number of issues that she had raised in 2014 relating to the availability of water in Wards 1 and 19, which had not yet been attended to. Also, she did not see how the Master Plan was going to work if the Department did not work with COGTA.

Mr L Basson (DA) said the funding for the Master Plan was important. He asked how much the Department would need to implement and maintain the structure. In the previous year, it was reported that the Department anticipated spending at least R100 million per year on the Master Plan alone. The work done by the Department and COGTA seemed to be similar in nature; for most of the country, the bulk water infrastructure was managed by COGTA, and not the Department. It was unfair that large amounts of money were being transferred to COGTA for work that was water-related, and which should be the sole responsibility of the DWS. The problem was that COGTA did not have the means to carry out most of the projects, nor did they trust the municipalities. The other problem was that the Department received only 1% of the total budget.

The Chairperson suggested that the Department complete its presentations and the Committee and Department could have a consolidated discussion, because the presentations were interlinked. What measures had the Department put into place to deal with drought, and how was it educating the public on how to save water? How did the Department deal with the illegal use of water with only 35 compliance officers in the whole country, as it was impossible to monitor water usage with only 35 compliance officers?

DWS response

Minister Mokonyane replied that the Department was determined to stick to the time-frame which they had set for themselves. If there were any further developments, it would report them to the Committee. The Master Plan was an inter-departmental and stakeholder priority which would eventually become a country-wide plan. Regarding complying with the sunset clauses, the Department had been asked why the value chain of a critical resource could be skewed and uncoordinated. The fact of the matter was that water-related matters, such as water security and services, could not be dependent on the fiscus alone, otherwise they would not be sustainable. The Department was also considering an investment summit, because there were no returns on the investment that would be made for water security.

Water and Sanitation Bill

Mr Puseletso Loselo, Chief Director: Legal Services, DWS, said the first draft of the Bill had been produced in May 2015, and was followed by consultations with the Department’s entities, which had led to the establishment of a technical committee. The technical committee had commenced consultations with stakeholders between August and October 2015. On 15 February 2016, the Department had presented the Bill to the top management committee, and this was followed by a consultation with other government departments in September 2016. The inputs from the government departments had been taken into consideration and consolidated into the Bill, which had been presented a second time to the top management committee on 26 June 2017. The aim of the second meeting was to update the top management committee on the changes made to the Bill after the consultations, and to approve a request that the Bill be presented to the clusters and Cabinet.

On 19 July 2017, the Bill had been presented to the Economic Cluster. At the briefing, the Cluster suggested that owing to the fact that some government departments claimed that they had not been consulted, there should be further consultations with these departments, as well as with the Economic and Social Clusters. While that process was being finalised, the Bill was presented to the state law advisors for certification. The second consultation with government departments had commenced on 10 August 2017. The state law advisors had raised a number of issues upon awarding the Department with the certification of approval. Firstly, there was a clause in the Bill which suggested that the Bill would take precedence over any other legislation dealing with the same matter/s as the Bill. The view of the advisors was that the provision was in conflict with another provision found in the Municipal Structures Act. Secondly, the state law advisors said the Bill was unconstitutional and the Department needed to consult with COGTA and the chief state law advisors. The Department was waiting on the office of the chief state law advisors as to when the meeting would take place.

Discussion

The Chairperson asked the Department to supply the Committee with copies of the presentation. The aim of the presentation was to inform the Committee of the processes followed by the Department, and of the advice from the state law advisors.

Mr Chauke said it was unfortunate that the Committee could not make any inputs to the Bill until the Bill had been tabled in Parliament. At this point, the role of the Committee was to do oversight to ensure that it sticks to the timeline. It was important that both the National Council of Provinces (NCOP) and the National Assembly (NA) understand the Bill, because the Bill would have to be tagged correctly when it was tabled in Parliament.

Mr Basson said although it was good to know what the Department’s aims were, it was also important that the Committee had the opportunity to comment on the Bill during its early stages.

Mr Mnguni asked if the Committee could be given a copy of the report from the state law advisors, indicating what the issues with the Bill were.

Mr Chauke said the issue regarding what the Members of the Committee were proposing, was that the contents of the Bill, which were not made for public consumption, may be exposed if the Bill was presented to the Committee. The Department may give the Committee a summary of the objectives of the Bill.

Ms Khawula said her previous question had not been answered. In most cases, planning started at the bottom with the wards, followed by the municipalities and provinces, and up to the national government. However, the national government seemed to be the engine that was driving the planning, and the local level was not being consulted.

Mr Loselo replied that the NCOP would have to be part of the consultation process when the Bill was tabled to Parliament. The contents of the Bill dealt with the water-use entitlement; transformation of the water users’ associations; provisions that had been made for water use; strengthening of the Department’s capacity to make legislation; and a sunset clause, which would be used for individuals who wanted to claim entitlement of the water usage.

Establishment of an Independent Economic Regulator

Minister Mokonyane said Outcome 6 of the National Development Plan (NDP) required the Minister of Water and Sanitation to approve the regulation of the water and sanitation sector through an independent economic regulator. Since 2011, the Department had instituted a project to investigate the most appropriate institutional model for an effective economic regulator within the sector. The decision had been made to have an internal component in 2014, and the Chief Directorate: Economic and Social Regulation, had been established

Ms Thoko Sigwaza, Acting DDG: Regulation, DWS, said currently there was a conflict of interest, such as a dual mandate which affected the decision-making -- as a referee and a player -- for raw water charges. The sector was currently under-capacitated in regulated institutions, where there was a lack of capacity in human resources, skills and experience within the sector.

The economic regulator created a balance in the representation of the interests of government, institutions and users. It would assist the Department to have control and be responsible for personnel policies, with earmarked funding to promote the necessary expertise. It would act in a neutral or unbiased and non-discriminative manner towards its customers, and understand the business that was regulated through a proficient and effective process with measurable outcomes. It would make fair and justifiable recommendations, use fair and acceptable procedures and operate in a predictable manner and make impartial decisions. The powers of the economic regulator would include having the power to collect information through compulsory processes; review and publish regulatory performance/ benchmarking of water institutions; assess investment plans of the water institutions and assess tariff setting processes; and approve tariffs throughout the water value chain.

The reporting protocol would lie with the Minister and the Accounting Authority. The role of the Minister would include policy making, shareholder representation, project development and operations, and setting the minimum levels of service. The Accounting Authority would be responsible for setting the strategic guidance and developing the operational policy of the regulator, appointing the managerial staff and monitoring performance, and being accountable for regulatory efficiency. The National Treasury and the Department were expected to fund the establishment costs of the economic regulator, with users paying the running costs in the form an Economic Regulator charge. The main source of revenue for an independent Economic Regulator would be the revenue received from the economic regulator charge once all the legal requirements were done. The charge would cover the costs of operations, with no profit element. The estimated budget for the Economic Regulator was R2.821 million per year.

A proposed consultation plan included all the stakeholders and government departments. The consultation process started on 8 November 2017 with the NCOP. This would be followed by a consultation with the NCOP chief directors on 21 November 2017 and the sector institutions on 28 November 2017. The consultations were expected to conclude in March 2018, with the Clusters and Cabinet.

Discussion

Mr Basson said he thought it would be advisable for the Economic Regulator to also regulate and approve the municipal water tariffs as well. The problem was that municipalities charged individuals differently, without considering other reasons for a large usage of water, such as pipe bursts. As such, one would find that people were paying different amounts to the municipality, yet they were using the same amount of water. The Economic Regulator should assist the municipalities to develop a set standard tariffs for water users.

Ms H Kekana (ANC) asked on what basis the Economic Regulator would be able to function without a legal provision, and if there would be an amendment to legislation to support the existence of the regulator.

Ms Manana said data collection would have to be taken very seriously, especially if the Regulator would be collecting information on the number of people that used water. She asked if the Regulator would be making use of the Government Communication and Information System (GCIS) to source the correct data.

Ms Khawula said the Regulator was a good idea, as it would assist those individuals who had been paying for others to use water. She asked what would happen to those who did not pay for their water, and stressed that the information of the individuals who did not pay for their water should also be communicated to COGTA as well. The Department should consider educating the public about the machines that were used to detect water leakages, the water meter readers, and what processes to follow when there was a burst pipe.

Ms Sigwaza replied saying that the Department was also adamant about changing the tariff for the municipalities, but it would be dependent on the legal services’ interpretation and constitutional issues surrounding the current legislation. The current legislation allowed the Minister only to set standards but not to intervene in the tariff setting at the municipal level. There would be no amendment of any legislation -- the Economic Regulator would have its own independent legislation. The information technology (IT) within the Economic Regulator would be developed at the same time as the legislation for data collection.

Establishment of National Water Infrastructure Agency and Regional Water Utilities

Minister Mokonyane said the goal of creating fewer, stronger water boards with larger geographic footprints and a strong economic base would enable urban areas to be linked to rural areas more effectively and equitably, which would improve service delivery and cross-subsidisation. It would assist with the management of regional water resources and water services infrastructure and improve the integration of water systems from source to tap, and from waste back to source. It would improve economies of scale and make better use of scarce human and capital resources. For technically complex systems, it would be more efficient if technical capacity was shared across a number of schemes. The fewer water boards would make much better use of scarce financial resources, enabling each water board to be financially viable and to raise debt finance, releasing scarce government funding for other important purposes in the water sector.

She reported on the status of the establishment of regional water utilities.

On 9 July 2015, the Minister had taken a decision to establish a single KwaZulu-Natal (KZN) water board. On 3 September 2015, she wrote to both the chairpersons of both the Umgeni and Mhlathuze water boards informing them of the establishment of a single water board. It was decided that the Mhlathuze water board would be disestablished. As such, on 8 September 2017, the Minister had approved the disestablishment of Mhlathuze Water and the incorporation of its assets, staff and liabilities into Umgeni Water, changing the name of Umgeni Water into “KZN Water Board.” The Minister had since sent letters to both Umgeni and Mhlathuze water boards indicating her intention to disestablish the Mhlathuze water board. The Minister had signed letters to all municipalities and provinces, but Umgeni had requested that these letters be put on hold until the release of the audit report. As part of the letter to Umgeni Water, a directive was given that Umgeni Water should procure a consultant to undertake due diligence for incorporating Mhlathuze Water, as stipulated by Section 54 of the Public Finance Management Act (PFMA).

Ms Sigwaza said the National Water Sanitation Infrastructure Agency (NAWASIA) would need a due diligence report done to ensure comprehensive coverage and an independent review of all aspects impacting on the establishment of NAWASIA. Currently, an executive task team (ETT) to assist with the collecting, validating and first level screening of required data/information had been nominated to enable Deloitte to perform the due diligence. The ETT members served under the following functional streams: operational and technical; finance; human resources and legal. The Deloitte team was finalising the draft due diligence report, and it was expected to be complete by the end of November.

Discussion

Ms Basson said the Department was moving in the right direction. The problem was that municipalities did not have the same technical skills that the water boards possessed due to the municipalities not being able to afford the salaries of technically skilled employees. Also, water boards were able to survive with only two engineers, while municipalities needed at least 10 engineers to solve their problems. The reality was that if municipalities were not able to deal with water issues, then the directorate should be handed to the water boards.

Mr Mnguni asked how the merger of the two water boards would impact on the municipalities and the structure of their staff, especially since it seemed that some staff members would be duplicating responsibilities. He asked why the other seven water boards were also not merged.

Ms Manana commented that the employment of engineers would assist the water boards to control water usage in the rural areas.

Minister Mokonyane proposed that the Department present the progress report on the 56% of the waste water treatment programme to the Committee. The due diligence report would assist the Department in determining how the staff composition should be structured. As a matter of fact, the establishment of the Umgeni water board would create work opportunities, instead of laying off staff. She added that water should not be seen as a social need, but rather a right. This would help to determine who needed water, what amount of water they needed, and how much individuals should pay for water usage.

The Chairperson said the Committee had been tasked with having a joint meeting with COGTA, National Treasury and the Department of Environmental Affairs to deal with drought issues. He added that Ms Khawula had been raising the same questions regarding the availability of water in Wards 1 and 19, as these issues were yet to be addressed, and the Department had not provided any feedback on the progress made.

Ms Mokonyane replied that the Department must be given some time to engage with the departments responsible for providing water services in the different wards. The Department had previously tried to intervene and probe for a progress report from COGTA when it was not the Department’s responsibility to do so. She advised that the Committee should have a joint meeting with the on COGTA Portfolio Committee and its Department.

Ms Khawula thanked the Minister for her interventions. Mr Andries Nel, the Deputy Minister of Traditional Affairs, was aware of the problems that she had been raising, but had failed to provide feedback on the matter. She added that the problem lay mostly with the municipalities – they refused to provide the community with services.

The Chairperson said the progress reports should assist the Committee as a guide to which direction the Department was going.

The meeting was adjourned.