Department of Water and Sanitation briefing; Amatola Water Board & Bloem Water Board 2016/17 Annual Report; Minister and Deputy Minister in Attendance

Water and Sanitation

06 March 2018
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

 

The Amatola and Bloem Water Boards briefed the Portfolio Committee on Water and Sanitation on their annual reports for the 2016/17 financial year. The Department of Water and Sanitation (DWS) was also represented at the meeting with the Minister and Deputy Minister in attendance.

Amatola addressed the reduced rate of disability incidences; how spending on training has reduced due to budgetary constraints; an improvement in quality standards; how female employees have reduced from 46% to 38% in the last financial year; how the current financial environment is not sustainable; and the decrease of performance from 100% to 75% due to instability in the institution.

The briefing also covered the tariff increase, revenue decrease, and cost of sales being below inflation, the distribution of payment to employees and operations and how gross profit objectives have not been met. The biggest challenge is the expenditure trends due to fruitless and wasteful expenditure that resulted in a penalty from SARS. Investigations to regulate expenditure and recover money from employees are underway.

The Minister said there should be an intervention to have the municipalities pays the Board as it is experiencing many financial problems and he looked forward to engaging with the water board. He was pleased with the clean financials and to see what the results of the financial management will be.

Bloem Water, gave a brief explanation of the entity and said the responsibility of the board is to have infrastructure within the institution, board committees that are running properly and board charters that can be shared. It also has a social responsibility as the board and assist communities and impoverished and dysfunctional schools, especially with issue of toilets. The board tries to have many meetings with the municipalities to address water leakages. Because of the infrastructure problems, the municipalities can lose up to 50 % of the water. The difficulty is that the board is not being paid by the municipalities and the bill is R900 million.

Challenges

-Not being paid by municipalities

-The continuing drought

-Ageing infrastructure.

-Ability to fund current and future Capex projects.

-Debtors position and cash flow constraints.

-Operational costs hindered by outstanding debts.

Achievements

-From 2015 until 2017 there is authorised expenditure and irregular expenditure that stands at zero.

-Unqualified reports since 2012.

-Achieved R37 million profit

-A partnership with the University of Free State.

-Discovery of over 30 boreholes and 10 are now in use.

-Implementation of energy efficient program.

The Committee interrogated Amatola and asked what the plan was to curb the wasteful expenditure, how much money was owed by the Department and how it dealt with budget cuts, especially in terms of the Nooitgedacht scheme as the board does not have the capacity to pay contractors.

Members wanted to know what caused the decrease in revenue, whose responsibility it was to take actions against officials who are not performing well and details on consequence management in terms of fruitless expenditure.  The Committee also asked if people in the communities are getting proper services and why there was an increase in extraction, but the board has not made profits.

The Committee then turned its attention to Bloem Water. Members commended the board on its zero irregular and expenditure achievement, but wanted to know the amount owed to Bloem Water by the Department and whether the toilets in schools are being monitored. Members also noticed the 29% female representation and said it was not enough in terms of employment equity and also urged the Department and the Minister to come with a plan on how ageing infrastructure will be resolved because that it the biggest issue municipalities face.

Members also wanted details on boreholes and said there was an enquiry about the qualifications of some of the managers and DDGs that are part of the DG’s team. It raised some suspicions, because some of them only have a matric. This is a highly technical department that requires skilled managers. Members requested detailed on the Department’s debt owed to water boards and a list of all employees in the Department with their qualifications by Friday.

Meeting report

Amatola Water Board

Mr Kwandiwe Mviko, Acting CFO, Amatola Water Board, stated that Amatola Water had received unqualified audit reports for the previous five years and compared findings in annual reports from previous financial years.

There was an interruption as Members requested that Amatola adhere to the standard format of financial reports that is required by the Department as it was difficult to follow the presentation. Members also requested that the Acting CEO begin the presentation rather than the Acting CFO.

The Chairperson agreed.

Ms Asanda Gidana, Acting CEO, Amatola Water Board, apologised and began with the non-financial performance overview. It has four quadrants: economic, environmental, social and financial. She covered the various increases and decreases in each quadrant and what the distribution of revenue to suppliers and employees are.

Mr H Chauke (ANC) interrupted and asked that the Water Board use the proper format for financial report as it is difficult to extract the information from the document. He also advised on the importance of following the format as documents in meetings become official records and may be accessed by people in the future.

The Chairperson responded that Members should take notes and allow the water board to present what it has and comments about shortcomings will come after the presentation.

Ms Gidana addressed the reduced rate of disability incidences; how spending on training has reduced due to budgetary constraints; an improvement in quality standards; how female employees have reduced from 46% to 38% in the last financial year; how the current financial environment is not sustainable; and the decrease of performance from 100% to 75% due to instability in the institution.

Mr Mviko briefed the Committee on the tariff increase, revenue decrease, and cost of sales being below inflation, the distribution of payment to employees and operations and how gross profit objectives have not been met. The biggest challenge is the expenditure trends due to fruitless and wasteful expenditure that resulted in a penalty from SARS. Investigations to regulate expenditure and recover money from employees are underway.

Ms Nokulunga Mnqeta, Chairperson, Amatola Water Board, addressed legacy issues that the institution faced. The main concerns for the water board are the high cancellation rates and non-payment of debt from municipalities. The institution had implemented remedial process and had opened criminal and civil cases against people. The water board had begun the recruitment of executive members.

Mr Sifiso Mkhize, Acting Director General, DWS, concluded the presentation and addressed outstanding issues about the work that had been done by Amatola. Together, they were working hard to stabilise the institution, strengthen the capacity as demand was huge and find a way to strengthen the balance sheet. He was pleased about the appointment of a CEO and stated that the Department would support the water board to ensure that they achieved a clean audit. He showed concern about debt and irregular expenditure and the deteriorating relationship with Makana Municipality due to lack of payments.

DWS Deputy Minister, Ms Pam Tshwete, added that although the Committee was hard on the Department, it has tried to assist to get back the money that was owed to it and there were meetings to understand why the Department was not paid. She apologised as she had requested that the entities use the Magaliesburg format for financial reports as the previous Minister had been happy with the format.  She requested that Bloem Water give a full background of the entity.

Minister of Water and Sanitation, Mr Gugile Nkwinti, asked the members of his team to introduce themselves to the Committee. He was pleased with the intervention of Mr Chauke asking that the non-financial performance be explained first as the presentation made more sense once the numbers were explained. There should be intervention to have the municipalities pay the Board as it is experiencing many financial problems and he looked forward to engaging with the water board. He was pleased with the clean financials and to see what the results of the financial management will be.

Bloem Water Board

Mr Tefetso Phitsane, Chairperson, Bloem Water, gave a brief explanation of the entity. The board has nine members and one passed on in the previous year. The board’s term ends in March 2018. There is an advertisement for the positions but the process of selection is left with the Minister. The attendance of board members at meetings is 80%. The mandate is to supply bulk water to municipalities that fall under its jurisdiction. The unwritten mandate is that with the little resources that the water board has, aims to have infrastructure that is able to help others. The responsibility of the board is to have infrastructure within the institution, board committees that are running properly and board charters that can be shared. It also has a social responsibility as the board and assist communities and impoverished and dysfunctional schools, especially with issue of toilets. The board tries to have many meetings with the municipalities to address water leakages. It is the responsibility of the municipalities but the institution likes to assist. Because of the infrastructure problems, the municipalities can lose up to 50 % of the water. We assist to fix leakages by providing water to areas that do not have water, providing water and alerting them if the board comes across a leakage. The difficulty is that the board is not being paid by the municipalities and the bill is R900 million.

Challenges

-Not being paid by municipalities.

-The continuing drought. The Caledon River carries water to Gariep. The board needs to get water from Gariep dam and into Mangaung as there is no water in that area.

-Ageing infrastructure.

-Ability to fund current and future Capex projects.

-Debtors position and cash flow constraints.

-Operational costs hindered by outstanding debts.

Achievements

-From 2015 until 2017 there is authorised expenditure and irregular expenditure that stands at zero.

-Unqualified reports since 2012.

-Achieved R37 million profit

-A partnership with the University of Free State.

-Discovery of over 30 boreholes and 10 are now in use.

-Implementation of energy efficient program.

Mr Chauke requested a review of from the shareholders as the board’s terms was coming to an end. He asked for clarity on the CEO as the allegations made against her were making headlines.

The Chairperson asked for clarity on the arrest of the CEO and asked Members to avoid pre-empting the boards and to allow the Minister time to investigate before answering questions.

Mr Chauke replied that the board could give assurance that there are measures in place to deal with the situation. The question was not intended for the Minister to give the Committee instructions of what would happen.

Mr T Makondo (ANC) asked what would happen when the board expired and a new team had not been chosen. The entity would experience great problems.

Mr Mkhize replied that there is a meeting with the Minister scheduled for Thursday and Friday. The Minister will have to appoint a section panel that will complete the process of appointing board members. However, there are provisions in the Water Act should a board not be appointed in time.

The Minister responded that all matters would be dealt with on Thursday and Friday.

Mr Phitsane clarified that the CEO’s arrest was not affiliated with Bloem Water business. The arrest was made due to matters concerned to her previous employment at a municipality.

The Chairperson thanked him for the clarity.

Mr Chauke added that the CEO should have ensured that the arrest not affects Bloem Water and that it would not hamper her ability to work there.

Mr Phitsane responded that the she had not mentioned Bloem Water but her position was included by the newspapers.

Mr Mkhize stated that non-payment from municipalities is a serious matter that needs attention,

The Chairperson thanked them for the presentation.

The Chairperson asked for questions and comments for Amatola Water.

Mr L Basson. (DA) stated that although the audit is fine the water board only made R5.5 million. The main concern is that the board has not curbed water losses. What is the plan to curb the water losses at the treatment and distribution system? The board has spoken about the fruitless and wasteful expenditure but it has allowed it for a few years. What is the plan to curb the wasteful expenditure? How much money does the Department owe the board? The board is the implementing agent for the Nooitgedacht scheme. In January, the project was stopped due to a budget cut. How has the board dealt with the budget cuts? What is the progress with the scheme? When will the current phase be completed? What does the Department owe in regards to the Nooitgedacht scheme as the board does not have the capacity to pay contractors?

Mr D Mnguni (ANC) indicated to the Minister that the Committee had made examples of good reporting to the water board. He stated that they were not likely to discuss good reporting the following year. He understood that there were advancements in revenue collection. The Auditor-General’s report indicates there is a decrease in revenue. What caused the decrease? The actual document must be looked at and it will show that there is no consistency in by the board members in attending meetings. That leads to a lack of effective monitoring. Whose responsibility is it to take actions against officials who are not performing well?  Fruitless expenditure is something that should have been avoided. The legal fees increased from R5 million to R18 million. There is also an increase in traffic fines. Whose responsibility is it to pay it? There is no consequence management. Mr Mkhize has stated that there have been steps taken but who has been charged? Can a plan be provided that shows time frames and procedure?

Mr Makondo asked for clarity on secondment of staff.  He was dissatisfied with Amatola’s presentation and insisted that the Department should guide water boards on the format of the presentations as it is confusing. Someone who has not read the report would not understand the presentation. The Acting CEO spoke about decrease in disabilities. Can she clarify as to how a water board creates disabilities? Why is there a reduction in staff?  What is the board’s turnaround time? What are your debtor’s days? The profit objectives were not met and he said Amatola is a dying water board with only R5 million in profits. The board cannot take on other projects. The Auditor-General’s report makes it clear that the board can account for where money has been spent. Are people in the communities getting services properly? There was an increase in extraction but the board has not made profits. How does the board balance that? Chemicals are at 2% and other water boards are at 5%. Can the board explain that?

Mr Chauke said he is aware that the mandate of the board is to supply bulk water. What are the current challenges and future plans? The Eastern Cape is facing the same troubles as the Western Cape. What is the issue of water in the Eastern Cape generally? Is the water supply going to be sustainable and if not, what is the solution? Who owns water in your area of operations? What does the board find with dams that are in private hands and in the hands of the State? How are black people empowered with business with Amatola? More explanation is needed about irregular expenditure. Where are the reports on the fruitless expenditure and what actions have been taken? The Department must help the board with the formatting of the reports. - it needs detail. It will provide a challenge to the Committee and anyone that look at the reports in the future. Internal controls are important. Can the board raise issues on the supply chain? In the board’s view, does it think that it is necessary to have it existing in its area? Are people on the ground satisfied with the board’s services and is the water reaching them?

Mr R Hugo (DA) asked about the cash balance of the R130 million and the under spending in the budget. What are some of the reasons? How many capital projects in terms of providing bulk infrastructure is the board embarking on?

Mr Basson asked that the board explain the individual cases as the costs have grown. What are the prospects of winning those cases? The board has the Darlington dam and that dam is leaking water and five stone gates are not functioning. On a monthly basis that is more water than Nelson Mandela is using. Wasting water due to faulty infrastructure in an area affected by drought is unfortunate. Either the Department or Amatola should account for what will be done about the leaks.

The Chairperson congratulated the board on the unqualified report status. The narrative that says for the board to be an implementing agent instead of making use of its own construction unit is a quicker way of making money for some people. It is proving more and more to be nothing else but corrupt. Using the Kleiningham Dam as an example, he said a construction unit is on site and then has to mysteriously leave. Then a private contractor comes on board. If it was a matter of money not being there, the Department would have gone through a sale. This is something that the Minister, Deputy Minister and the DG must look into. What is the role of the water board? The board needs to strengthen the balance sheet and he asked if there is there no other way to strengthen the balance sheet rather than being implementing agents. The issue related to the Makana municipality is the capacity to pay. On capacity and the costs for expanding capacity, he asked if the funding is coming from the Department or the water board. Any traffic fine has to be taken care of by the transgressor and cannot be paid for by the institution. What are the costs of the litigations? The last issue is the water losses that the board is experiencing versus its leaks programme. Can a comment be made about that?

The Minister responded that he will be happy to hear the responses and learn from them.

Mr Mkhize responded that there are three personnel seconded to the water board from the Department and are under its payroll. There was a letter from the chairperson asking for support in financial administration due to the absence of a CFO. Those officials will be withdrawn as soon as the CFO is appointed. There is only one directive in relation to Nooitgedacht. There was consideration of cutting the budget but it did not happen and the budget of R90 million was maintained. The Department will ensure that water boards give detailed presentations that follow procedure.

Ms Nokulunga Mnqeta, Chairperson, Amatola Water Board, apologised for the lack of detail in the report. The board has been guaranteed that funding is available from the Department. The Nooitgedacht completion date is May 2020 and the project is on track. The board attendance is a challenge. Due to unforeseen circumstances board members miss one or two meetings due to their day jobs, but it is not a trend. The board tries to accommodate the schedule of everyone and the attendance rate is 80%.

The board has tackled the consequence management for fruitless expenditure. It has dismissed the CEO and CFO on the basis of irregular expenditure allegations. There was a complete breakdown of compliance. It is pursuing civil matters against them and has withheld their pension but it is little in comparison to expenditure. They were found guilty on all charges and the process to recover the money is underway. The CEO had 15 charges which included increasing their own salaries, friends’ salaries and insubordination to the board.

The mandate of the board is bulk water supply. The challenge is that Amatola has very limited infrastructure operating at full force. The board have engaged with the Department and it has agreed to transfer the assets. The future of Amatola is managing the bulk supply for the whole Eastern Cape. The first step to achieving that is acquiring assets from the Department and managing them. It will be a two-year process. The board sees itself existing beyond now. The performance is very low there are concerns, hence the initiative to engage with the Department. There has been no issue about the quality of water.

Ms Gidana responded that the Department owes the board R23 million, R14 million which is current and is doing well with its payments. There could be contractual disagreements that would make other payments to be in dispute. The target is how well the board manages the incidences that take place. The national benchmark for disability incidences is point 8 and Amatola aims to remain below the national benchmark. The turnaround time is 24 hours. There is a correlation between the revenue and the inability to recover money from the municipalities. The board is supplying water but not receiving money and that has contributed negatively.

Mr Mviko responded that the surplus of R5.5 million needs to be taken in consideration with the debt owed from the municipalities and R23 million would have to be added.  The biggest concern is the municipality’s ability to pay for the services. The money for the traffic fines is recovered directly from the employees and fines are not paid for by the entity. Money owed in relation to Nooitgedacht is R14 million. The litigation costs were R4.8 million and outcomes of the cases have not been finalised. Amatola is producing at full capacity so any increase related to revenue is related to tariff increase. There is a decrease in the number of employees who are affiliated to unions, not a decrease in the number of employees in general. The cost of employment is still very high and the board is working to bring it down. The debtor’s days are at 88 days currently. It is unsatisfactory but the board is working on it. The board has had good engagements with the Makana municipality and have a payment plan in play. The matters of ownership of water are for the Department to answer. Amatola as a section 33 has a budget to ensure that it produces services with the revenue generating mandate. The objective is to keep costs low and producing under budget is a win for the board. Internal projects are upgrading of water works to increase water works which will have the effect of increasing revenue and ensuring sustainability for the future. Those projects are ongoing and there are six water projects ongoing at the moment. Amatola do undertake external projects for the Department as implementing agents.

Mr Mkhize responded to the issue of strengthening the balance sheet. There are a few options at disposal and one of them is the asset bases that are available in the region and the possibility of transferring them to the entities. The issue of who owns water has been discussed previously. There are over 5 000 dams owned in the country and the Department has oversight over 300 to 350 dams. DWS was looking to see how the process can be taken forward.

The Deputy Minister responded to the war on leaks programme that was initiated by the Office of the President. The program responsibility was given to the Department to train 15 000 youths and at the moment there are 10 000 that have been trained. The Department is still going to find out how many leaks are absorbed by municipalities. A previous report showed that it is difficult for municipalities to absorb leaks due to budget constraints but, she will find out how many need to be absorbed in the Eastern Cape and the Minister will be briefed on the war on leaks.

The Minister responded that when he met with the previous Minister, she indicated that she had commenced with transforming the institutions that are involved in the water and sanitation services. He looks forward to engaging on the matter. After more meetings on Thursday and Friday, he will be in a position to answer questions in the meetings.

Mr Chauke stated that there is a water board that covers almost the whole of the Eastern Cape. How much water is Amatola in control of? The question should not be answered by the DG as it is the water board that runs the affairs of its water. The biggest challenge is that there is so much water that the State is not in control of and the board should be able to answer all the operations related questions. There was an oversight done in Mpumalanga recently and it came up that there are dams there that the community is not benefitting from. That is the type of information that is expected from Amatola. Has the board done investigations on the over R200 million in irregular expenditure and talk about the consequences? How does the board plan to recover all that money? In such cases, there is a process of condonement or recovery. If the expenditure has not been condoned, how will it be recovered? Again, does the board think that it is necessary for it to exist? It is a loaded question because the board has to demonstrate that it is. Where is the deputy chair? He has only been to three out of nine meetings and only two members have been to all nine meetings and two board members have resigned. Board members are elected to perform and they should be at all board meetings. The Committee only meets the board twice a year. Reports should be detailed enough so that the Committee does not probe the board with questions. That detail is important so in the end the Committee can say if the board has done well.

Mr Basson asked if the Committee could have a detailed report of the cost of litigation against Amatola at the following day’s meeting. He requested that the Committee hasits own strategic meeting with the Minister and Deputy Minister to discuss issues.

Ms Mnqeta responded that Amatola does not control any of the dams in the Eastern Cape and that all fall under the jurisdiction of the Department. On the issue of irregular expenditure, Amatola has done the investigations and has taken appropriate action. None of the irregular expenditure has been condoned.

Mr Chauke asked what appropriate action was taken.

Ms Mnqeta replied that all the reports would be shared.  

Mr Mnguni stated that it is not the water board that is the one to condone irregular expenditure, but Treasury. Treasury must be convinced that Amatola has taken all the steps to investigate

Mr Makondo asked when will the information that Mr Basson and Mr Chauke requested will be available.

Ms Mnqeta responded that the information will be submitted by the end of the week as the reports are there.

Mr Chauke asked where the deputy chair of the board is.

Mr Mnqeta replied that he could not attend the meeting due to prior commitments.

Mr Chauke repeated that the deputy chair had only attended three out of nine board meetings and could not even attend a meeting at Parliament. He requested that the Minster take note and investigate.

The Chairperson said they do take note of the processes of condoning.

The Minister replied that there should be a strategic meeting to answer some questions and that there will be an investigation as to how the Department can help the water board become more effective. If some of the dams are privately owned then the transformation question kicks in immediately. There are many people that work on the farm and he asked to what extent do the workers on farms have access to the farmers’ water?

The Chairperson thanked Amatola for their presentation and asked for questions and comments on the presentation by Bloem Water. He asked what the risk associated with boreholes was and if all details could be given. The board had five banks on its books and he what the reason was.

Mr Basson congratulated Bloem Water for the lack of irregular expenditure. The Committee had a meeting with local government and Treasury last year. The Committee requested that the three spheres of government meet and come up with a plan on how to address non-payments from municipalities. The meeting happened in December but the Committee has not received that report yet. He asked what the amount is owed to Bloem Water by the Department and how much is outstanding. Three years ago, there was a problem with releasing water from the Gariep dam. It was indicated that it only a third of the water is released to Bloem Water. Losing two thirds of water is in a country experiencing drought is crucial. If water boards cannot manage their finances then the communities will run dry. The board will need external funding but that will only happen if there is a proper payment culture.

Mr Mnguni also commended the lack of fruitless and wasteful expenditure. The issue of recreation is a course for concern. Are there instances where the Department does not pay the board on time? The board talks about how the municipalities are not paying, but it was soft on municipalities and that is why the relationship with Mangaung has regressed. There must be strictness with the municipalities otherwise they regress. He said he is happy with the social programs. Does the board monitor how these toilets are monitored by the schools? If it does not, are there plans to monitor the schools?

A Committee Member addressed the Minister and said the Department needs to come with a plan how ageing infrastructure will be resolved because that it the biggest issue municipalities face. The AG’s report indicated that the board is doing financially well but it also indicated that the board lacks monitoring. There are internal audit outcomes and the findings have never been taken care of. The board needs to strengthen it monitoring processes.

Mr Makondo said that he had expected to hear about bucket eradication, its issues and whether there was litigation costs involved. Of the projects that are of the Department, he wanted to know whether the repairs of the 33.7 km of pipe will be within the budget of R500 million and how much has been spent. The board is doing very well but it has spoiled it with the equity in employment - 29% of female representation.

Mr Chauke asked for details as to how the boreholes will be operated and the costs involved. Years ago, Members were informed that in QwaQwa there were people just making boreholes and now the board has partnered with the university. What does that entail? The government has already pronounced that a drought has been declared in the country. The Free State, Eastern Cape and the Western Cape are most affected by drought. What are the interventions in place to deal with drought? Drought has been declared at a national level. The entities of government should show that they are engaging with drought interventions. What does the board know of sources of water in your area of operation? There are visitors from Lesotho that are present to hear how South Africa deals with the drought and sources of water. In QwaQwa, there are 140 boreholes but the people do not benefit from them. In your knowledge what do you know of sources of water in your area of operation and what can be done to tap into them? How do you make sure that at a local level you tap into issues of non-payment?

The Chairperson asked the Minister that if he were to take away directives from the water boards, what would the water boards be left with to achieve and what is necessary to achieve?

Mr Phitsane responded that the drought is their greatest concern. To combat it, the board first liaised with municipalities to help them lessen the amount of water supply lost. On average they lose up to 30% and want to lessen it to 5% to 10%. Secondly drought affects the boreholes. If there is no rain, the boreholes can also dry up and it is a challenge to look for water. Only a third of the water reaches the board and the Caledon River is heavily silted. Gariep dam has the highest volume of water and to have a pipeline from there would be sustainable. The board has to consider how to assist municipalities and how to recycle the water that municipalities use. Bloem cannot provide large volumes of water and not get paid. The board did engage with the previous Minister and she announced in December that there will be water cuts if municipalities did not pay. The taps would have to be closed, but the board will continue to assist where possible,

Dr Limakatso Moroosi, CEO, Bloem Water, said the board does monitor the programs at school. They do regular check-ups to ask if they still monitor what we give them. The board also goes to schools to inform female students that they can specialise in water hence there is an ongoing awareness. The number of females in the industry has slowly increased over the years and will be addressed.

 Mr Abraham Le Roux, Chief Financial Officer (CFO), Bleom Water, responded that the board does have five banks that it has been lending money from and some have been paid off in the financial year.

Mr Phitsane added that the Katse Dam is standing at 47% and that is problematic as there is a threshold and water cannot be extracted after a certain amount. Resfontein does not have a natural source of water has to be pumped from storage into Resfontein and it is standing at 22%. Knelpoort, where the water is stored, is at 44%.

Mr Le Roux replied that the bucket eradication from the financial year is R82 million but they are in contact with the Department as they are verifying it.T

Dr Moroosi added that the board has not been doing bucket eradication for the previous two years and the Department is dealing with it directly.

Mr Ngubane responded that phase one of Welbedacht began in July and is progressing well.  To date they have received 13 km of steel pipeline and have laid 10 km of pipeline on the ground. The expenditure that was allocated in the current financial year was R108 million. They have spent close to R80 million on construction materials. The R500 million will include everything. The borehole projects began in 2012. During drought they had to intensify the augmentation of the bulk water supply to ensure continuing supply of water to communities. More boreholes were made with a total budget of R10 million.  A borehole cannot exceed R150 000. The total budget will cover drilling and materials. The workshop that has been established has the main purpose of looking into the components of the pipeline. The pipeline is very susceptible to breakages. There are components in pipelines that have to be maintained and the workshop ensures that the components are manufactured in house as they are very expensive when bought elsewhere.

Mr Phitsane added that the board produces its own electricity and stated that they struggled to get money from the Department.

The Chairperson asked what the mission of the water board is versus the role that a water board is expected to play. What would the water board be left with if all the directives from the Department were to be taken away?

Mr Chauke applauded Bloem Water on their presentation. He asked that if the ministerial directive of the pipeline is budgeted for by the Department and where it is specifically budgeted. Previously, directives have had to pay with their own money and boards have collapsed due to lack of cash flow. What is the plan of the Department in dealing with these situations? We have not picked up this R500 million in the budget. The issue that has not been further discusses is how much does a borehole cost.

Mr Mkhize responded that Bloem Water has two directives and the planning is done by a unit. The budget is under Infrastructure. The budget is R108 million for the pipeline and the water board has indicated that they have spent R80 million. He indicated that he was alerted that DWS has a debt of R82 million.

Mr Chauke responded that the DG always says that he has just been alerted and advised him to come to meetings with verified answers as the trend of questions from the Committee are predictable.

Mr Basson said that the Committee had requested the previous week that the DG give them paperwork and the Committee only received it on the day of the meeting. It seems that the DG does not know what is happening in his department and its finances. They are putting the boards in a position to fail and it is unacceptable. There should be an investigation into the DG’s department to get more information. If Mr Mkhize cannot get that information then someone else should be appointed that can account for the financial position of the Department.

The Deputy Minister stated that she had attempted to meet with the boards as she was aware that the Department owes boards a lot of money. She had a meeting with the two present entities about the monies that were owed to them and had hoped that the Acting DG would have resolved that issue before the meeting.

Mr Mkhize replied that they had sent emails to water boards the previous week to verify the amount of money that they owed to water boards. Many of the water boards only started replying on Monday and some have not replied so some information is still being received. The debt to Bloem Water is an old debt and is due to contractual issues between the water board and the Department. The Department did not have the invoices yesterday and he said he was still awaiting them. He  will enquire why the payment was not processed after the invoice was sent and will send the full list of the amounts owed after verification from the boards and the Department.

A Department official  requested that they are given a month to verify the information as there are teams of engineers and quantity surveyors that need to look at the paper work before the amount of the debt is agreed upon.

The Chairperson responded that when documentation is requested it has to be given at least a week before the next meeting as it gives people a chance to engage with the work and that all the information can be verified.  There was an enquiry about the qualifications of some of the managers and DDGs that are part of the DG’s team. It revealed some suspicions, because some of them only have a matric. This is a highly technical department that requires skilled managers. That is a matter that will have to be followed up with the Public Servants Association (PSA).

Mr Basson requested that the figures must be given by Friday and if they cannot verify then they should indicate that. The Committee needs an idea of how much money is owed. The new financial year is approaching and all these payments will have to be made from the new financials year’s budget. It will have an effect on projects that cannot take place and that should stop now.

Mr Chauke said that the Committee had received information that showed that there is only one quantity surveyor in the whole Department. The Committee needs to have a list of people on that team to know the details and qualifications by Friday. The Department has already passed the budget. In addition, the Committee wants to know where the money to be located in the budget is and whether it is a multi-year project. All this is needed by Friday.

The Minister stated that there is a serious problem. On Friday, he has a meeting with all the managers where he wants the answers to all the questions that have been asked and will relay the answers to the Committee.

The meeting was adjourned.

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