Department of Water and Sanitation Quarter 1 & 4 Performance; with Minister

Water and Sanitation

12 September 2018
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Department of Water and Sanitation (DWS) briefed the Committee on its performance during the two quarters making up the first half of 2018, reporting on measures implemented to deal with the recent drought in the country, the situation at the water boards and the catchment management agencies, the provision of suitable and reliable water supply and sanitation services to disadvantaged communities, and the financial challenges facing the Water Trading Entity.

It had found that some of the contracts it had entered into were not in its best interests, and was setting aside those that were unlawful and unwanted, such as open ended or easily extended contracts, and continuing with the contracts that addressed its best interests. Consequence management had been started so the DWS could rid itself of the image that it was a corrupt Department. It was striving to instill an ethical work culture and to promote accountability. It was on a journey of change, and was dealing with the bad reputation that it has.

The Committee asked for details about the Green Drop and Blue Drop certification programmes, and their cost, and about progress with the “War on Leaks” campaign. Concern was expressed about the pollution of rivers caused by acid mine drainage, particularly in the Mpumalanga province, and the effect on fish life and potable water. What was the DMR doing to retain staff who were being poached by the private sector after receiving training at the Department’s expense? What was it doing about securing water rights for black farmers?

Meeting report

The Department of Water and Sanitation (DWS) said that municipalities had been active in selling water to each other. There had been reference to Nkangala in Mpumalanga, where there were problems with the water board.  It was asserted that the board was run by its chief executive officer (CEO), although it was the board that was supposed to be the driving force.

Mr D Kabini (ANC) said the CEO had mentioned that this board had been unlawfully put in place. He asked if there any specific panel in the Minister’s office or the Department which dealt with the appointment of these water boards.

He said that accountability had become a problem because people were now reporting to the Minister instead of the CEO reporting to the Board, and then the Board to the Minister. This had become a very big problem.

The Chairperson said the Committee would have to find an appropriate time to deal with issues involving water boards, as it had an interest in having stable water boards that deliver on their mandate. so the details would be dealt with when that time arises. However, Mr Kabini had been very specific in his comment, and asked for a response from the Department.  

The DWS said that Nkangala had long been disestablished, and this was why it had not been mentioned. Those were issues that would be picked up in the presentation when the detailed discussion took place.

The Chairperson said there were a number of water boards in the country, but there were specific ones that needed to be discussed. These were the water boards that were accounting to the DWS, which were appointed and disestablished by the Department. The rest of them belonged to the other municipalities.

DWS Quarterly Performance

Overview

Ms Deborah Mochotlhi, Acting Director General: DWS, said the Department was mindful of the fact that it had to respond to the matter of how it implemented the Disaster Risk Reduction (DRR) and how it had been factored in to its programmes, due to the recommendations. Part of the DRR required the Department to undertake a forensic audit into programme 3, which was infrastructure and development. This was a work in progress, and the Department would not be able to give a detailed report on this when it presented the annual report in October. The Department would be able to give a comprehensive report in due time.

The Department realised that there was an overdraft and a debt of the Trans Caledon Tunnel Authority (TCTA). The Department was working on a turnaround strategy and would respond in October when the annual report was delivered. However, it was not sitting around, waiting for October. It was continuing to pursue debt collection, and had considered the advice given by the Portfolio Committee to send its debtors’ books to the bank.

A programme called “contract review” had started. The Department had found that some of the contracts it had entered into were not in its best interests. It had started a process where it was setting aside unlawful and unwanted contracts such as open ended contracts, or easily extended contracts, and was continuing with the contracts that addressed its best interests. Some of these processes would end up in the courts, because the matter of obligations to fulfill contracts was one that had to be dealt with in court.

Consequence management had been started so the DWS could rid itself of the view that it was a corrupt Department. It did not want to be seen as an entity that was not being serious about the remarks being thrown around. The Department strived to instill an ethical work culture and to promote accountability. It was on a journey of change, and that it was dealing with the bad reputation that it has.

The Department admitted that there were problems that needed to be dealt with, and there was a a mentoring programme that was on course. There was a complement of 67 candidates who were performing candidacy work due to this program. Over the years, the Department had had 842 candidates.

Presentation

Ms Babalwa Manyakanyaka, Chief Director: DWS, said that she would not repeat what the Director-General had said. The presentation would be an overview of the Department’s performance. To shorten the presentation, the Department had added annexures. Included in the presentation was the supply chain management (SCM) issues and matters that related to the litigation costs that it faced. Also included was the high level audit committee report.

She said the water supply systems had operated under drought conditions in five provinces. In the Western Cape, the Cape Town municipality had introduced level 6B restrictions to meet the consumption target of 450 megalitres per day. The ground water levels in the Eastern Cape and Western Cape and some parts of the Northern Cape had really deteriorated. Because of some rain received in Mpumalanga, North West and Gauteng, there had been a slight improvement during the year.

Because of funding pressures, operations and maintenance was not receiving the required funding allocations.

There had been a decision to establish a single Catchment Management Agency (CMA) for the management of water resources in the nine water management areas. This decision had subsequently been reviewed to work towards establishing the remaining seven CMAs.

Performance highlights included the development of a draft national water and sanitation master plan, and the provision of suitable and reliable water supply and sanitation services to 159 463 households.

She said the Water Trading Entity’s (WTE’s) bank balance reflected an overdrawn account of R1.412 billion as at 31 March 2018, which was a reduction of R774 million from the prior year balance of R2.186 billion. The trade debtors balance had amounted to R4 billion (after impairment). Impairment on trade receivable amounted to R8 billion for the financial year 2017/18. The age analysis reflected a balance of R12 billion before impairment. The entity was still struggling to recover the historic outstanding balances mostly owed by municipalities and water boards. The WTE still did not have sufficient liquid assets to meet short-term financial obligations. The cash flow was tied to the long outstanding debts owed mostly by the municipalities and water boards.

Discussion

The Chairperson said a lot of money gets spent on capacity building, but now there were a number of people in Belgium and other overseas countries. One had to question the retention strategy of the Department, because so many people that it had trained were poached by other institutions. What was it doing about this? This was an administrative matter, and there was a well-known policy that if one trained someone for three years, then that person had to work for the Department for three years as a return on the investment, for being trained by the Department. The DWES should look into this as soon as possible and come up with a policy in order to deal with this matter.

The Chairperson said that he was keen to hear more about the eight projects under the Water Service Capital Grant (WSCG), and asked the Department to unpack these and state what stage they were at.

He was concerned about the month to month contracts that the Department was involved in, and the fact that it also had illegal contracts. There were also reports which the Department never got to talk about --

the Green Drop Certification for Excellence in Wastewater Treatment, and the Blue Drop certification for drinking water. He asked whether these were matters for regulation and compliance. These were supposed to be very serious reports, as they spoke to the levels and quality of the water resources in South Africa. 

The Chairperson asked the Department, given the status of the South African rivers, how it was planning efficiently and effectively when it did not know the quality of the country’s water. It would be important for the Portfolio Committee be given reports annually. The last time it had those reports was in 2013. Since then, the Committee had literally been on an autopilot when it came to the quality of South Africa’s water resources. It was no wonder that not give much attention was given to the status of its infrastructure, or that what was happening in the Vaal and Mpumalanga was happening. In these areas it was supposed to be business as usual, but the infrastructure was deteriorating, and so was the water quality.

He asked the Department to give a clear picture of the budget for the overall water sector and sanitation in the country. This was needed in order to get a clearer sense of what investments were needed, and what was lacking. This would make it easier to answer questions pertaining to any backlogs that existed in regarding refurbishing or even new infrastructure. This was important so that the Department was not found wanting. There needed to be a clearer picture on what the private sector and other sectors involved were contributing.

Ms H Kekana (ANC) asked what programme was in place in the seven catchment areas. She asked what the budget was regarding the “War on Leaks” leaks programme.  

Mr M Galo (AIC) referred to the Department’s drought measures, and indicated that according to Statistics South Africa, the economy had shrunk by 7% because of the continued drought and severe hail. This had caused extensive crop damage and placed additional pressure on production. He asked what the Department what had done, as the custodian of water resources in the country, to respond meaningfully to matters of water scarcity, especially where they had a negative impact on the economy.

He asked for clarification on the decision to review the proposal to have a single catchment management agency.

Mr L Basson (DA) said that last week, the Committee had been informed that the accruals and payables had been R2.005 billion, and he had requested that the payment on accruals be indicated in a separate column, which had been done. Last week, the Department had said that most of the accruals had been paid, but now a figure of R870 million had been paid, which was less than half of what had been mentioned last week. He asked why the figures had differed. 

Inkosi R Cebekhulu (IFP) said he was also not sure why the decision on the single catchment management agency had been subsequently reviewed. In his view having one agency would have allowed the matters emanating from the agencies to be easily addressed.

He was worried about a matter where learners who were undergoing training, and who were being affected directly by rainwater, had requested stipends. What worried him was the fact that the students requesting the stipends were the very same students who were under a programme of the agency. He was not sure why the agencies were used in this kind of training, and were handing out stipends, because these very agencies were known to use up a lot of money from the state. There should be people used by the Department for these processes, as well as for other additional training programmes.

He said the DWS had very good programme that assisted municipalities, but warned that one in some of the municipalities asbestos pipes were still being used, and they were not easily repaired due to the great water leakages that occur while they were being fixed. In other municipalities, the problems were handled with no problems or delays, but this also required assistance from the Department.

Regarding the mines polluting water, what strong measures could be put in place to make sure that this was corrected? There was a lot of water going into various streams, and at a later stage one would find the water in those streams more acidic. Wild animals and fish were dying, which meant that this pollution was impacting the environment severely.

The next matter he moved to was the compensation of employees, pointing out there had been R32.6 million under-spent due to vacant market posts. If the department wanted to perform better, filling the posts would be important.

Referring to the water boards, he said he did not know who controlled the water boards, but there needed to be an overseer as lots of money was squandered at these water boards, so they needed to be supervised.

Mr D Mnguni (ANC) asked about the many adjustments that had been made to the targets, and said the Portfolio Committee should be alerted as to why changes were being made. He also urged the Department to provide ratios to indicate performance against targets, as this would indicate clearly if it was overspending in a particular programme or not, and what its plans to improve were.

Ms N Bilankulu (ANC) asked the Department to provide details on the challenges it faced with operations and maintenance. Infrastructure had not achieved 80% of its strategic objectives -- how would this non- achievement impact on the service delivery of water and sanitation to communities? What did the vacant posts mean for service delivery? She asked the Department to provide more details on the establishment of a national water infrastructure agency. Lastly she asked about the Special Investigating Unit (SIU) that was investigating the DWS -- what areas they were looking at, what some of the current findings had been, and how the Department was going to deal with the findings. Had the Department undertaken a risk analysis? 

The Chairperson asked if the Department’s had cash in the bank, and whether it was able to pay its commitments. Did it have enough money to pay its daily costs? He said that he was raising this question in light of some of the statements made by some of the Department’s officials. It had been revealed that in Mangaung, some of them had to pay for their own flights and accommodation for business ventures,

and that some of the official’s personal credit cards were being used for department activities. The Committee was hearing that the Department did not have funds for new projects, and also that could not pay people to whom they owed money.

He thought he would have heard something being mentioned about DWS programmes or sub-programmes on water rights for black farmers. What was the Department’s progress in this regard?  

He asked about progress on the irrigation boards in the Patensie area, as people were asking when these irrigation boards would be transformed.

The Portfolio Committee had been told that there were 240 water boards. With such a number, where did the Department start and where did it end? Where were these water boards located in the scheme of things within the Department’s work? Who was responsible for these water boards in the Department?

DWS’s response

Ms Mochotlhi said that she would like to explain the matter of the Blue and Green Drop programmes a little further. The Blue and Green Drops were regulatory tools that had been embarked on for some time now in terms of water quality. The blue drop was for drinking water quality and the green drop was for waste water assessment. These were not the only measures that the Department was taking for water quality.

She said that when one looks at the annual performance plan (APP) on river monitoring, this year it was focused on 97 rivers. These rivers were being monitored for various parameters such as the chemicals and toxicity.  Over and above this, there was a ground and water surfacing unit.

Mr Anil Singh, Deputy Director General: Regulations, DWS, said he would explain a little bit about the blue and green drop project. The acting Director General was the pioneer for this project. It was an incentive-based regulatory programme, and was an expensive programme that had started in the 2000s. The project gave municipalities a prize for complying. It was also connected to the responsibility for water quality from the Department and the municipalities which was impacting on investment and the economy, and the Department did need to give serious attention to this.

The Department had released the blue drop and green drop report in 2013, and it had had huge policy implications. A decision had been made that the reports needed to be submitted to the Cabinet for consideration. The reports had been considered. That was why there had been a non-release of the reports.

He said that if the Department had resources, an assessment on compliance would be done in terms of the projects. He wanted to emphasize that the Department was not assessing the municipalities, but their performance or compliance. He mentioned that over the years the Department had been doing a partial assessment which had revealed those municipalities that were performing well, and those which were not doing so well. To deal with the ones that were not doing so well, the Department’s focus had been on capacitating smaller municipalities that required support.

The Department received the Committee’s input, and focused on how it could do better. It would report back on this at a future date. The partial assessment reports that he had mentioned were available, but they belonged to the Executive Authority, which was the Minister.

The Chairperson said that Mr Singh had raised a very interesting point regarding the green and blue drop belonging to the Minister. He asked what was meant by this.

Mr Singh said that if one followed section 85 of the Constitution, it creates the concept of Executive Authority that was exercised by the President and Members of Cabinet. This section stated that when it comes to policies and important decisions, etc, these could be dealt with by the Cabinet member responsible from the policy perspective but that also, the current Minister or a Minister could share that information with the rest of the Cabinet, and then Cabinet could make the decision regarding the policy. This was why there were so many policy processes around it. The report itself very much belonged to the Minister, but that the interest of the policy was then shared in the public domain. Before it was shared in the public domain, it had to be shared with other government domains. This was where the policy was then shared with the Department, but this was the process that was followed before it reached the public domain.

Mr Trevor Balzier, Deputy Director General: DWS, referred to the Chairperson’s remarks regarding the budget, and said the master plan – and chapter 12 in particular -- covered in a fair amount of detail the financial requirements in the water and sanitation sector. What was not included in the master plan was what the private sector spent on their water, but what the DWS had covered most of the public institutions. Chapter 12 also included a requirement of an investment over 10 years of R900 billion, or R90 billion per annum. In the R90 billion breakdown, 70% would go into water, and 20% into sanitation. That would cover the capital costs that the Department required, as well as the costs of governance and administration. Currently over the 10 years, the Department estimated that it had over R560 billion available. This gave the Department a gap of about 37%, with an extra R33 billion per annum. This may include what the private sector may be investing in water.

Regrding the asbestos pipes, it was important to note that the infrastructure in South Africa had an estimated capital replacement cost in the order of about R1.3 trillion. If this was looked at in terms of book value, as it would be reflected in the books of those institutions that provide water, it would be R504 billion. The pipes in this existing asset base and the replacement of them were a cause of disruption among the municipalities. A budget was needed to replace these pipes, and he had already indicated the current shortfall of the Department.

The capital loans currently existing were in the order of R61 billion. 68% of these loans sat with the TCTA and the water boards. The balance was with the municipalities which were creditworthy, and these loans were reflected in some of the metros and the smaller municipalities.

He spoke about the drought and the economy. He reassured the Committee that the Department had also taken note of the reports done by Stats SA about the impact of agriculture on the shrinking economy. In terms of the security around a water scarce country like South Africa, the Department relied on the system of dams. There were about over 300 large dams that the Department managed. South Africa had just experienced what could be most certainly be considered as one of the worst droughts ever experienced. It had started in about 2014 in the North West and Kwa-Zulu Natal, and had moved right through to 2018, where there were still water restrictions in place in the Western Cape.

He said that the Department had reconciliation strategies which looked at setting aside provisions for the transformation agenda. The Department was revising and updating their planning as it moved forward with the transformation agenda.

Ms Lindiwe Lusenga, Deputy Director General: Integrated Obligations, DWS, referred to the Polihali Dam, part of Phase Two of the Lesotho Highlands Water Project, and said both Ministers of South Africa and Lesotho had met in July to pave the way forward for embarking on the project. The matter of procurement was being dealt with, and the processes from Lesotho to South Africa would be fast tracked. She said that everyone was on board, and that both parties intended meeting their obligations. Both Basothos and South Africans would benefit from the creation of industry stemming from the process. This needed to be monitored by the Department.  The Commission in Lesotho was also expecting the Parliamentarians from South Africa to go and do oversight.

She also spoke about Japan, and said there were four opportunities for master’s students.

The Chairperson said that in the main, the matter pertaining to Japan or Belgium had to do with the personnel retention strategy. A person could not be trained, and then after training disappear. He asked how the Department was going to urgently tackle this.

Ms Lusenga said that normally upon a student’s return, that student would serve the Department according to the number of years that they had studied, but those spoken about who had disappeared were unfortunate events.

Mr Squire Mahlangu, Deputy Director General: DWS, said the policy was that bursaries were given for a number of years, and then when the bursary was completed the student served an equal number of years with the Department. The key factor here was that it stated one must serve government – it did not state that one must serve the Department of Water and Sanitation specifically. This became a problem when a person got a promotion from another department.  All the DWS could do was to try and recover any monies from the bursary that the employee may be owing to the Department.  If an employee moved to the private sector, the Department would have to check if it had recovered any money in this regard. What tended to happen was that the private sector paid out the money owing to the Department when they took an employee from the Department.  The long and short of it was the salary scales offered, compared to the Department. In most cases, the employees who joined the private sector were prepared to buy off their contract. He would check in any employees had left for the private sector, and would report back to the Committee on this point.

The Chairperson asked the Department to provide the Committee with this policy so that the it could refer to something in writing.

Mr Mahlangu said that it would be sent by next week.

The Chairperson asked for it to be sent by Friday.

Mr Mahlangu said that in 2013, the Cabinet had approved a decision for nine catchment management agencies. The idea of a catchment was to manage water resources at the local level. In 2017, there had been a decision in the prevailing cost containment climate, for there to be just one, but the current Minister had reviewed the decision, as the catchment management agencies had said the involvement of communities was critical. There was a road map of how the Department was going to transform the irrigation boards, which it would provide.

Mr Mahlangu said the vacancies were related to the financial structure of the Department and the fact that its organisational structure had been changing since 2014. Fortunately, the Minister had identified the value chains and as the Minister said during the budget speech, the Department was busy with implementing the changes. The Department had finished the top layer and was now busy with the bargaining council in negotiations, as it affected the employees from level 12 downwards. There were other matters that came with the new structure. There was an economic regulator, which would then have to break away from the Department and be an independent body.

Ms Lusenga began unpacking the aspects around the War on Leaks programme, and said that during the financial year of 2017/18, the Department had indicated that it was not in the APP, but it had been recommended that the Department see it to that it was inserted in the APP. There had been discussions with National Treasury based on the fact that War on Leaks was a training programme purely to supplement and capacitate skills required in the sector. The National Treasury had proposed that the project be part of programme 1, but in the current discussions that the Department had with the Portfolio Committee, it had reviewed this and inserted the project in programme 3, to deal with issues around operations and maintenance. The Department had been compelled to use other implementing agents for the War on Leaks programme, as one would find instances where the Government had not even provided a vehicle to take care of certain situations around the care of school children. Using agents was not really an ideal route to take, but in certain circumstances and due to capacity constraints, it had to be done.

She mentioned that the Rand Water did not do the training itself, but was responsible for some of the administrative responsibilities.

She said that the Department had worked on a plan to ensure that the stipends had gone out on time so that the Department minimised the negative publicity.

Chairperson said that whenever the Department mentioned any programme and commitments that it made, he always took an interest in the cost implications. When maintenance and operations were mentioned, the Department was intervening in the area of infrastructure, and he asked what the cost implications of this were, as the DWS was unpopular because it was known for spending money that it did not have. The Department simply disregarded infrastructure that already existed, and preferred to come up with new infrastructure that was going to cost more money.  It was well known that they should be doing more with less, but that the Department always preferred to do less with more in respect of infrastructure build.

Mr Cebekhulu referred to the challenge that climate change, and asked what the DWS’s future plan was to preserve water for future generations. He drew attention to acid mine drainage, pointing out the effect that the many coal mines in Mpumalanga were having on water quality, and said this had to be dealt with. The water boards were needed to provide water for human consumption.

Mr R Hugo (DA) referred to the bucket eradication programme, and asked how many bucket toilets were still left in the country.

Mr Balzier responded regarding climate change. It was being taken into account by the Department, which expected that over time, there would be a warming, and that the changes would have an effect on the country’s rainfall patterns.

The Chairperson said the Department was briefing the Committee on what it already knew about climate change. The Committee’s main interests were programmes that the DWS would engage in to mitigate the drought situation so that South Africans were not adversely affected by these conditions. There were programmes in the rural areas in which the Committee took a keen interest. It wanted to know about them, and not climate change facts.

Mr Balzier said that he wanted to touch on the physical aspects -- the increasing temperatures and the operation rules at the dams. The Department took into account managing situations where different scenarios were looked at, and then strategies were created around that. The Department did not only look at how to manage conditions under scarcity, but also considered climate change where there was an increase in rainfall. Flood events were also looked at.

The Chairperson said that there seemed to be no further questions or comments, which meant that preparations for the annual report had been made. The Portfolio Committee would need the of the Budget Review and Recommendation Report (BRRR) document, as well as the 2016/17 report in order to  engage with the Department on the 2018/19 report, as well the budget. These reports were very important as they guided the Committee, and also maintained the consistency.

He asked if the Minister of the Department, Mr Gugile Nkwinti, if he would like to comment on any of the points mentioned.

Mr Nkwinti said that he was happy with the conclusion, and merely wanted to thank the Committee for its support.

The meeting was adjourned.

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