The Committee was briefed by the Department of Human Settlements, Water and Sanitation. There was a slight delay to the start of the meeting as Members debated whether to start without the presence of the Minister or Deputy Minister. The Minister and Deputy arrived late and apologised before becoming fully involved in the discussions. The Minister made Members aware that there were Cabinet meetings running alongside Committee meetings hence her lateness.
The Committee was briefed on the progress of the turnaround strategies implemented to deal with poor financial and non-financial performance. Members were made aware that financial balances showed that several municipalities and entities have not cleared off their debt which stands at R82 467 611.40. While Members were pleased to see that the Department was trying to turn things around, they felt that it should be noted that due to the lack of action in the drive towards restructuring the financial status of the Department, it was not easy to believe that the proposed plans would be realised. Members were concerned that the Department had appointed former Director Generals as part of the Advisory Board while these were the very same individuals who were involved in the downfall of the DWS. They had difficulty understanding how the Department had come to the decision to contract these former employees, as ‘why would the DWS want to learn from the worst’? The Minister in an attempt to allay Members’ concerns said that the decision was based on the premise that the only people who would be able to explain what happened to cause the financial breakdown in the DWS were those who were in decision making positions at the time.
The Committee was disappointed that there was no sign as to whether any of the 86 officials who were found to be guilty had paid back the money. Members asked which employment ranks were implicated in the139 cases that had been referred for disciplinary action; if the indicated two thousand rand was the only recovered amount out of the total ten million which accounted for fruitless and wasteful expenditure for the years 2019/20; if there was any consequence management against those who entered into agreements without proper due diligence; the progress in filling vacancies for critical positions; and whether amongst the 86 charged officials there were individuals who currently sat in the Advisory Board. Members said that they found the sentences imposed on those who were found to be guilty were lenient and wondered whether these were proper considering the damage that had been caused. Members asked the Department to promise that the said plans would be properly implemented.
The Committee heard that the War on Leaks project, although initiated to reduce the loss of non-revenue water, had actually seen a rise in water loss at an estimated value R9.9 billion. This accounted for real or physical losses, commercial losses and unbilled usage. Members asked how the decision to appoint Rand Water to recruit and train learners under the War on Leaks project was made; and whether the Department would consider decentralising the project so that it could be easily accessible to many. The artisan skills development initiative has also seen obstacles with high expenditure and trainees who cannot be deployed for employment. To amend a collapsing system the Department has proposed an exit strategy as it can no longer sustain the process financially. This decision is being deliberated at present.
Members were concerned about the increase in municipal debt and the increase in non-revenue water. In addition to this was the increase in the Trans-Caledon Tunnel Authority (TCTA) liability which will apply pressure for loans to be repaid. Members added that the loss of R2.96 billion in total expenditure, is a criminal offense and it is not the student’s problem but the results of an initiative by the previous Minister Nomvula Mokonyane that did not work out. Those who had been trained had to be utilised.
Members acknowledged the progress that had been achieved by the Department and forwarded suggestions to further lead to the success of the presented plans. The Committee requested regular updates on the financial recovery plan so as to follow up on the progress made.
Mr Mbulelo Tshangana, Acting Director General: Department of Water and Sanitation (DWS), highlighted that there needs to be clarity as to when meetings are permitted to proceed or not without the presence of the Minister, as previous meetings had been postponed due to her absence.
The Chairperson acknowledged that the Minister’s presence is important in the Committee meetings, however, she saw fit that the briefing should proceed in her absence as she was of the understanding that the Deputy Minister (DM) would be in attendance.
Mr X Ngwezi (IFP) stated that there was no reason not to proceed with the meeting. He mentioned that although both the Minister and the DM should be able to perform their duties, they should be able to attend Committee meetings and it should not be the norm that they are not in attendance.
The Chairperson mentioned that as the Committee they cannot accept apologies from both the Minister and the DM as the matters discussed are very important. She added that Mr Tshangana should proceed with the presentation.
Briefing by the Department of Water and Sanitation
Part A: Progress on the turnaround strategy in dealing with poor financial and non-financial performance
Broad strategies implemented to achieve the desired outcomes
There are specific strategies targeted to complete and achieve the proposed plans by the Department and these include; strengthening governance, human resources management, and improved cash flow, the reprioritisation of the budget, improved control environment, infrastructure and service delivery improvements.
Focus Areas of the Financial Recovery Plan and Progress to date
Several priority areas aimed at addressing key deliverables have been identified and implemented.
Alignment of strategic intent, Government and Compliance
Some of the progress to date has been the establishment of the Ministerial Water Advisory Committee which is inclusive of former DGs and these serve to advice on governance and management of the Nation’s Water Resources.
The introduction of consequence management and condonation processes; investigations of unauthorised, irregular, fruitless and wasteful expenditure is in progress.
Cash and Revenue enhancement
The Department has entered into debt restructuring arrangements with creditors which have seen an improvement in the cash position by the end of September 2019.
A Ministerial National Rapid Response Task Team has been established to address urgent challenges in the water and sanitation sector.
Infrastructure projects incorporates community participation
Monitoring and reporting
Bilateral meetings with the National Treasury are ongoing as scheduled in support of the Department’s turnaround strategy and the revenue and cash flow enhancement strategies are being implemented for Water Sales debt customer categories.
Summary of financial position
Financial balances show that several municipalities and entities have not cleared off their debt which stands at R82 467 611.40. For the year 2019/20 it has already been documented that there has been fruitless and wasteful expenditure with minimal cash recovery. However, through consequence management a number of cases have been investigated and disciplinary action taken. The results indicate that 139 of the 249 cases brought forward were found to be true with a total of 86 officials found guilty, 14 officials found not guilty, 24 officials resigned and one official reinstated following an arbitration award.
Part B: The War on Leaks project
The project was initiated as a result of a study conducted by the Water Research Commission (WRC) in the year 2012, which focused on the state of non-revenue water in South Africa: The national average for non-revenue water was found to be 36.8% with an estimated value of R7.2 billion. High level objectives were indicated which were focused on changing the status quo. These were mainly based on water conservation and skills development; however, the project has not produced the desired outcomes. The Department proposed an exit strategy which stands at an estimated value of R 724 197 389 as it can no longer financially sustain the project
Mr M Mabika (DA) indicated that it is always good to see that the Department is trying to turn things around from what has been the norm in previous years. However, due to the lack of action in the drive towards restructuring the financial status of the Department, it is not easy to believe that the proposed plans will be realised.
His concerns were that the Department had appointed former Director Generals as part of the Advisory Board while these were the very same individuals who were involved in the downfall of the DWS. He added that the same people should have been part of the investigations which are aligned with consequence management. He did not understand how the Department had come to the decision to contract these former employees, and why DWS would want to learn from the worst.
Mr Mabika wanted to find out which employment ranks were implicated in the139 cases that had been referred for disciplinary action. He indicated that those who are responsible to account do not take responsibility for what is happening under their management and junior officials get fired.
Ms L Arries (EFF) pointed out that there were no indications as to whether any of the 86 officials who were found to be guilty had paid back money in cases where money was involved. She asked if the indicated two thousand was the only recovered amount out of the total ten million which accounts for fruitless and wasteful expenditure for the years 2019/20.
Ms Arries wanted to know if there was any consequence management against those who entered into agreements without proper due diligence and funding confirmations. She also enquired about the progress in filling vacancies for critical positions.
She added that she needed clarity on how the Department decided on the selected 41 municipalities identified under training focus areas as areas for learner placements.
Mr Ngwezi indicated that planning and strategising is important, but the Department should promise that the said plans would be properly implemented.
He asked Mr Tshangana to inform the Members whether amongst the 86 charged officials there were individuals who currently sat in the Advisory Board. He added that the sentences imposed on those who were found to be guilty were lenient and wondered whether these are proper considering the damage that has been caused.
He asked the Department how the decision to appoint Rand Water to recruit and train learners under the War on Leaks project was made and further added that the project is centralised. He also asked whether the Department would consider decentralising the project so that it could be easily accessible to many.
Mr Ngwezi mentioned that some government departments spend money training people who end up unemployed. The DWS has spent money training personnel and there are those who have not been placed, he inquired of the plans the Department has concerning these individuals. He asked what the DWS was doing to assist those who wanted to enter the business sector.
Mr L Basson (DA) mentioned that there were concerning issues raised in the presentation and these were; the increase in municipal debt and the increase of non-revenue water. Being a water scarce country, it cannot be allowed that water be lost and in addition to this is the increase in Trans-Caledon Tunnel Authority (TCTA) liability which will put pressure for loans to be repaid so that infrastructure that will protect the stability of water in the country be built.
He agreed that teaching people skills is a positive action to take, however, the approach for the artisan skills development initiative was wrong. The loss of R2.96 billion, in total expenditure, is a criminal offense and it is not the student’s problem but the results of an initiative by the previous Minister Nomvula Mokonyane that did not work out. He mentioned that those who had been trained have to be utilised and should not sit jobless.
He asked what effect the Lesotho Highlands Water Project (LHWP) would have on loans. ‘How much of the R21.8 billion is already inclusive of some of the loans of Phase two and if not, what would the outcome be and is that affordable considering the trend of none payment’
Mr M Mashego (ANC) highlighted that as specified in the presentation the Department undertook in previous financial years commitments relating to various Projects which were initially funded through the Water Trading Account but eventually transferred to the Main Account without the corresponding Budgets. This transfer of projects was to ensure mandate, alignment and compliance with the National Treasury directive. He added that this was permitted under the leadership of a specific person and in which employment rank was the individual? If it was at the DG level, is the person part of the Advisory Board?
He highlighted that there was mention of community involvement but there is no content that further elaborates on this and as the Committee they would like to be involved in such activities. He inquired on the financial impacts of the processes of separating the use of treated and untreated water and asked for clarity on the artisan skills development initiative delivery model.
Mr Mashego asked why Rand Water remains an agent of water while it actually wants to pull out from the Minister’s dictates. He lastly emphasised that the Department should be treated as a singular entity and not divided into two separate different departments.
Ms N Mvana (ANC) indicated that it is unacceptable that both the Minister and the Deputy Minister were absent in the meeting, however, they appreciate their arrival in the current meeting as it was not expected.
She sought for clarity as to whether the current Advisors are under contracts or full-time employment and how had they been employed following the results of the work they previously were responsible for. She asked if the municipalities would have the capacity to maintain leakages, as this was established as being impossible in previous meetings.
Ms S Mokgotho (EFF) asked why the Department took a long time to implement consequence management to those who contravened the Supply Chain Management (SCM) and Public Finance Management Act (PFMA) regulations which resulted in the 6th Parliament adopting the accruals from 5th Parliament. She added that fruitless and wasteful expenditure has already occurred for the current financial year and as such what is the Department doing about this situation.
She mentioned that the sanctions which have been imposed on the officials charged with misconduct are lenient and asked if these were enough to discourage other officials from being involved in irregular, unauthorised and wasteful expenditure.
She questioned the employment of former DG and DDG’s and why, if they have the needed expertise, did they not do the right thing in their term of office and what else can they do differently in the present time.
Mr M Tseki (ANC) wanted clarity of “Summary of financial position” and “Bank overdraft analysis” and asked when the process of consequence management was completed.
He pointed out that the Department should make the issue of municipal payments and intergovernmental relations a standing item because that is where the issue of debt can be resolved. In the previous meeting this was discussed, and a joint task team was requested, and this should be clearly indicated in the reports that the Committee receives in the future.
He pointed out that the leaks on non-revenue water have increased from the year 2012 and inquired whether the municipalities are unable to resolve this matter.
Ms S Sihlwayi (ANC) stressed that one of the issues to understand is the value of money, as huge amounts have been lost in the Department over the years.
When Program Managers (PM) deal with the programs they, at times, miss certain loopholes which the DG might not be able to monitor and by the time reports are handed in, the damage has already been done. There has been no monitoring and evaluation, a program unit that looks at the decisions taken and the implementation plans with timeframes to hold PMs to account and these should be the intermediates between the DG and PM.
There should be clear communication between the Department and those being trained as there are differing views on what their role in the War on Leaks is.
The Chairperson applauded the work by the Ministers and DG and indicated that progress is seen through the evaluation of strategic plans.
She indicated that the weakness in government is that once consequence management has been done, implicated individuals are then able to be employed in a different sector in government again and this is an issue that needs to be dealt with. She noted that if the sentence is severe, implicated persons should not be employable within Public Works.
The Chairperson said that there should be visible work when it comes to closing the gap on the issue of War against Leaks. She asked if the recruitment process is informed by the work that needs to be done as this will curb instances of trainees who sit without work.
She indicated that the Department should continue to make sure that the municipalities repay their depts.
The Minister, Ms Lindiwe Sisulu, and the Deputy Minister, Mr David Mahlobo, were welcomed to the meeting.
The Chairperson accepted an apology from the Office of the Minister and Deputy Minister, Ms E Powell (DA) and Mr S August (GOOD)
Minister Sisulu apologised for her late arrival and clarified that most times when there are Committee meetings there are also Cabinet meetings to attend to. She also indicated that she would not be able to attend the following Parliamentary sitting as she would be in Lesotho; however, the Deputy Minister would be present.
She indicated that the issue on the War on Leaks is not complete. As the Department they have taken a memorandum to Cabinet for consideration and they have made a proposal on how to move forward. The Department will then take the memorandum to Cabinet for acceptance. Out of the discussions held with Cabinet on the matter of the War on Leaks Project they were concerned about the fact that the DWS was exiting the project as it was no longer financially able to sustain it. Cabinet forwarded suggestions which were added to the memorandum and upon approval will be presented to the Committee. Cabinet was against exiting the project as there were already students that had been trained. The suggestions that were made by Cabinet will be presented in the next meeting.
Cabinet had agreed that the first phase of students trained should be absorbed into the current district model approach that has been adopted by the government. The DWS has been in talks with the Minister of Cooperative Governance and Traditional Affairs (CoGTA) and students will be catered for.
As proposed by Cabinet, the second phase of students should conclude the program and there should be ways in which their experience can be broadened beyond water. In this matter also, the DWS is in talks with the Minister of CoGTA who is very receptive to the idea.
Concerning the third phase which has not begun there will be discussions with the Minister of Higher Education so that students will be put through university to become productive parts of the society. She indicated that this is work in progress as are most of the questions asked and these will be presented to the Committee in due time.
To address the question on employment of the former DG, the decision was based on the premise that the only people who would be able to explain what happened to cause the financial breakdown in the DWS were those who were in decision making positions at the time. These former DGs are needed to explain why the current state is as it is. They are not employed by the Department but serve to assist the Minister.
The Minister emphasised that her team is doing everything they can to turnaround the Department and she would appreciate it if Members would try and understand the situation. As the Department they would be grateful for suggestions from Members on how to solve the pending problems. She indicated that the DWS is trying to follow the Chinese model and to implement projects well.
She explained that the Department is made up of two Departments, a Minister and two Deputy Ministers and they are used as one as they are interlinked.
She added that the LHWP will not add to the TCTA costs and that the project is necessary for South Africa to be able to address the water issue. The water issues experienced in the Vaal were as a result of closure of the project for six months without having any resources to supplement what was being received.
The Department is monitoring liability and debt and this process is doing well.
Mr Ngwezi asked if there were any Advisors from the 13 dismissed personnel.
The Minister replied that there are six Advisory Councils and no advisors have been appointed yet. Out of the six individuals, one had been previously dismissed, another had resigned and four had resigned because they were of pensionable age. It is only two out of the 13 dismissed DGs that currently form part of the advisory council.
The Chairperson thanked the Minister and added that as the Committee they would appreciate it if the Advisory Council could be part of the sitting so that they may answer questions that the Committee might have.
The Minister mentioned that members of the Advisory Council are at the discretion of the Minister and remain as long as she needs them. The DWS discovered water in the Eastern Cape using one of their innovations, but this would be presented in the future.
Deputy Minister Mahlobo mentioned that they forwarded an apology since they were in the Cabinet meeting. He added that they had presented a turnaround plan to the Committee and are now currently in the implementation stages.
When it comes to sentencing, the determination is not weighed by the Minister or the DG but by an Independent Committee and as such the issue of cost recovery also depends on the nature of the investigation.
The Department was to request Cabinet to revise the IMC and they busy with this. They will continue to engage with the South African Local Government Association (SALGA) and they specified that the government must be consistent. All government entities need to cover all debts owed and including those debts owed by and to the municipalities. The focus should not only be on municipalities as debtors.
The challenges around non-revenue water are the biggest issue for the country as it reflects asset management. The infrastructure is old and needs to be replaced and not fixed, and the illegal connection further adds to the loss of water. So far, there has not been an allocated budget towards infrastructure management and replacement, and this is the reflection of the increase in the number of leakages and the budget spent.
Mr Tshangana mentioned that the Department is making sure that key projects such as the Inkomati project are not dropped as these contribute to the economy.
In the execution of consequence management there are senior personnel who have been implicated. There are 14 Senior Management Service (SMS) members who have been affected by the process, two DDGs on suspension and this clearly indicates that it is not only junior officials that are being targeted. He added that these irregularities will be condoned but they do consider that some of these cases were not intentional.
He added that the TCTA liability is still affordable, clean and a good audit.
The War on Leaks program was informed by the reported quantities of water lost as non-revenue water which was reported by the Water Research Council (WRC) in a 2012 published research study, and this will be shared with the Committee.
Consequence management began in 2014 and has been an ongoing exercise which involves forensic investigations and the process needs to be done with integrity, this adds to the length of investigations.
He added that there was 14% open vacancies and the filling of these vacancies will start with critical positions at management levels, and these have been advertised. There are 249 posts advertised and out of this number, 19 are SMS positions and the Committee will be given the breakdown.
The meeting was adjourned.