SONA implications for Human Settlements, Water and Sanitation, with Deputy Minister

Meeting report

The Chairperson said the State of the Nation Address took place on 13 February 2020 and it would be the central point of discussion in the meeting. Both departments were to present on the implications of SONA for their sectors and how ready they are to execute and implement.

Deputy Minister of Human Settlements, Water and Sanitation, Pam Tshwete, gave welcoming remarks and asked her team to introduce themselves.

SONA Implications for the Department of Water and Sanitation
Mr Mbulelo Tshangana, Acting Director General: Department of Water and Sanitation, reported that the Department of Water and Sanitation (DWS) intended to brief the Committee on the SONA implications in three areas: water security measures (including drought mitigation strategies), Umzimvubu Dam Project (background, locality map, project schedule, status and configuration, budget estimate) and water use licenses (90 day turnaround, legislative framework, annual performance figures 2015-2019). In doing so, the briefing would cover turnaround time for different sectors, such as mining, agriculture and local government.

Water Security Measures
Government had the responsibility to mitigate drought and floods and these interventions are outlined in the National Water and Sanitation Masterplan. Drought interventions currently implemented were to ensure water supply systems operated efficiently and to assess country-wide demand trends. Operating rules are important to ensure water resources are sustained and made resilient to the climate. Restrictions are implemented, informed by the operating rules to avert hydraulic failures as far as dams are concerned. The current drought had seen a few dams failing. New boreholes, effluent water, sand water extraction (with the assistance of the Water Research Commission), water conservation and demand management needed to be implemented across the country to ensure supply. The National Integrated Water Information System (NIWIS) ensures access of information to stakeholders, entities and authorities. Working together with the WRC, DWS was focusing on water losses and had identified the need to become more efficient in this.

The proposed Smart City will be primarily supplied from the Integrated Vaal River System (IVRS), which is in the process of being augmented by the implementation of Stage 2 of the Lesotho Highlands Water Project (LHWP). DWS plays an advisory role for water efficient technologies that come on the market, working with the Water Research Commission and the Department of Science and Innovation (DSI) to bring in new technologies. Some of these include the non-sewer sanitation technologies.

The DWS has a Climate Change Response Strategy for the water sector which will need to be updated to be in line with the proposed Climate Change Bill.  

Umzimvubu Dam Project
The Umzimvubu Dam Project is a project with two dams on the Tsitsa River. While the project is to supply potable water, it is also to provide irrigation water and hydropower. The project is expected to play a role in the broader socio-economic development in the area. This all stems down to water security, which is being enhanced by this project in this area. The project will have four stages: advanced infrastructure (Stage 1), Ntabalanga Dam (Stage 2), bulk distribution network (Stage 3), irrigation along with hydropower (Stage 4).

The Committee was then taken through maps of the proposed site for the Ntabelanga Dam, as well as the Laleni Dam (significantly lower than Ntablelanga Dam) which was a very good site to produce hydroelectricity because of the gravity required. Another map indicated where current water schemes are. Construction would take place to expand the footprint on the map. There are possibilities for agricultural development in that space as well.

The budget costs as per 2017 estimates was R17.93 billion. Funding arrangements at present include funding available for Stage One (advanced infrastructure including roads as per agreement with TCTA). DWS has applied for budget from National Treasury, and is also in the process of issuing a request for proposals (RFP) for Stages 2 to 4 on the basis of Fund, Build and Transfer.

Achievements to date include detailed design development which is at an advanced stage. The Minister launched the project on 18 February 2019. The Project Organising Committees (POCs) and Project Liaison Committee (PLC) have been established to ensure social facilitation. Site meetings have also been held.

On proposed project reconfiguration, DWS considered three options to reconfigure the Umzimvubu Dam project: limiting the project to abstraction work (water services programme), building a weir plus water services programme or a reduced size dam plus water services programme. DWS had come to the conclusion, after many planning meetings, that it would be best to restore the dam at full size to store 490 cubic metres. This dam would include ‘dead storage’ to allow the dam to fill to a percentage, but it would mean that the visitors centre will be taken out of the plans. This would come to a saving of R340 million. On Bulk Potable Water Distribution Infrastructure, the process was continuing. Once the work was further along in process, DWS would come back to the Committee to give further reports.

Current activities included preparing for the expropriation of land, to see who would be most impacted by this. Local labour was also being recruited. Stage 1 was started in March 2020 for completion in June 2021. With the RFP process, it aims to ultimately finish the entire project until Stage Three and Stage Four if funding allows in 2027. This does not imply that the entire impact area will benefit only in 2027 – the project schedule would be further broken down to ensure the security of those in the area will be enhanced. Should the funding proposal allow, DWS would go ahead with Laleni Dam in 2023.

Looking at the Project Schedule for Stage 1, the key milestone of land acquisition, due to start in May 2019, was delayed and started in September 2019. The contractual dispute with the professional service provider (PSP) had caused some delays. The procurement of sub-contractors is underway.

Key challenges are the unavailability of funding to implement the entire project due to the pressure on the fiscus. This made implementation difficult. The solution as decided by DWS and National Treasury was the outcome of the request for proposals and reallocation of grant funding for bulk and reticulation. It would continue with the reconfiguration of the high-cost project phases to enhance affordability. The other challenge is to resolve the contractual dispute between the and DWS.

Water Use Licences
Water Use Licensing was a critical implantation tool in response to the National Water Act and the Bill of Rights Section 24 and 27: Environment, Water and Food. In March 2017, Water Use License Applications and Appeals had been instituted to bring in regulation. DWS also had to internally review business and electronic systems processes. A complicated area was the discussions currently between DWS and the Departments of Environmental Affairs and Minerals and Energy – regulations of a 300 day turnaround period were applicable for water use authorisation.

Despite meeting their target of 80% authorisation applications, DWS took cognisance some applications were delayed due to various further challenges detailed in the report. DWS, through this process, accepted applications as they were received – even those that were unfinalized. In a process of many days, DWS would then consult with the applicant to ensure all required details were obtained and ensure proper consideration to the water-use application.

DWS welcomed the call from the President to reduce the process from 300 to 90 days. This would include the mining sector which is under pressure. This is in an effort to improve South Africa’s economy. By differentiating the timeframes applied to the different water use sectors, DWS intends to have a turnaround period of even less than 90 days for some sectors. Agriculture and Forestry, for example, were forecast to be able to take 70 days. Mining and Industries were the most strenuous - DWS would have to do a quantitative check that all necessary details are provided (instead of having to go to and fro) to minimise time taken. The Department would give itself 45 days to fully scrutinise applications.

Discussion
Ms L Arries (EFF) asked about the Umzimvubu Project and contractual disputes as well as the milestones achieved in Stage 1. How did DWS mitigate disputes concerning local communities, especially regarding employment? Given the Coronavirus challenge and other diseases, was DWS ready to support schools and communities? What happened to the 20% authorisation applications that could not be achieved or processed in the past? Would past failures not impact on the proposed 90 day turnaround?

Mr M Tseki (ANC) asked if the President did not say anything, what would DWS be doing. On cost minimization, was it confirmed or speculated that R2.2 million would be saved – stating that it was a minimal amount in terms of the entire budget to regard as a ‘saving’ but was, of course, a lot of money in and of itself? On the initial plan and actual plan, a comment was made about delays. What was the cost of these delays and what has DWS done to mitigate these? On integration of government plans, he asked if all stakeholders were involved, such as traditional leaders and municipalities. Did DWS ensure traditional leaders were involved? Who owns the land where DWS is going to build? Will acquiring this land without compensation not take further complications or delays?

Mr X Ngwezi (IFP) asked “how many masterplans must we have to address water challenges?” He expressed concern about how many master plans would need to be made and in how many different ways. The biggest problem with the three spheres of government was that each sphere creates its own plan. The Committee should investigate if DWS is telling the truth about the Umzimvubu Dam. At the same time, he was optimistic and said it seemed that the Umzimvubu project had gained momentum. The plan is good but the main concern is about implementation and schedule efficiency. Would strict measures be in place to counter corrupt practices? The community have long been waiting and does not deserve the disservice of delays. Municipalities and COGTA deal with reticulation but are we assuming their capacity? DWS should have regular meetings with COGTA to ensure that when DWS finishes bulk infrastructure projects that municipalities will be able to implement reticulation so the fruits of the projects can be seen on the ground.

Ms E Powell (DA) welcomed the expansion of bulk water infrastructure, noting that just to the north of the proposed dam site, only 45% of residents have water 26 years into democracy. On the R6.1 billion required for the municipality to provide water to the community, in addition to the R400 million the municipality already receives – these costs were described as prohibitive. What plans does DWS have to capacitate and work with the Department of Cooperative Governance and Traditional Affairs (COGTA), especially with funding reticulation provision ? She had concerns about reticulation, saying that DWS efforts would amount to nought if municipalities were not supported.

Ms M Mohlala (EFF) stated that the National Water Act allows for the discretion of the minister in extending applications – would this not give too much power to the minister such as with mining where applications impact the environment. She asked how DWS incorporated the framework into the water and sanitation masterplan. Would this not rather be the responsibility of the water tribunal? On water security, how had DWS incorporated the National Water Security Framework into the Water and Sanitation Masterplan? Although this presentation spoke to water security measures inclusive of drought mitigation, the one aspect missed is the low targets for reconciliation efforts critical to address water supply and demand.

Ms N Mvana (ANC) asked if the plan detailed where boreholes would be drilled and how many would be drilled? Could repairs to existing boreholes also not take place? She was excited about DWS comments about Smart Cities, but asked if this element was really possible for the Vaal River in Phase Two of the Lesotho Highland Project, and how DWS would practically get it done. She called for the memorandum of agreement and said that the money has still not been transferred to the contractor since 2019 – by when would this be done? She was sceptical about the plan set to be finished in 2026 – stating that DWS needed to be cautious about not constantly re-planning.

Ms N Sihlwayi (ANC) reminded DWS that the Committee required a presentation on the DWS Masterplan as there was a lot that they still needed to understand about it. Re-scoping and re-configuration was noted as a potential escalator of costs in these projects.

Mr M Mashego (ANC) did not agree that about cancelling the Umzimvubu Dam visitors centre as it was an economic opportunity. On the shortened turnaround time of 90 days that the President had mentioned – why was DHS taking 300 days? Was it possible to come down to 90 and even 45 days?

Ms Mohlala requested that Members introduce themselves as there is a new committee member.

The Chairperson invited Ms Tafeni to introduce herself and ask questions.

Ms L Tafeni (EFF) introduced herself and asked if DWS has addressed the lifting of a suspension for a company to develop in Mpumalanga. This was a contested matter and is still the subject of an appeal.

Ms Mohlala asked when the additional water catchment areas would be established to mitigate drought. Would the farmers in the Umzimvubu Dam project area afford the water? Was there a place to develop the hydro-component of the dam as we are facing an energy crisis in South Africa? What is going to be done about the allocation of proper sanitation to all schools?

The Chairperson noted that plans for joint meetings with COGTA are already on the way. The Committee would be meeting with COGTA regularly. She asked if cognisance was taken of population growth in the country as the dams were built? Since the project has been pronounced by the President, she expressed scepticism on whether the Medium Term Strategic Framework (MTSF) would truly be implemented given the track record of projects announced by Presidents. Payments for contractors was not addressed in the report. Another item was the setting aside of 30%, which should be reflected in the division of revenue.

Response
Deputy Minister Tshwete replied that the traditional leaders were not happy with the way they were handled under the former minister and wanted politicians to be part of their meetings. Disputes were occurring at the time and the deputy minister was involved with this.

Mr Tshangana replied that the presentation lacked an introduction to the Umzimvubu dam project, which would impact 138 000 households in the three districts. Current schemes were being run in these districts. Once the dam is up and running, most of these schemes would be revitalised. Addressing the question on what DWS would have done had the President not made an announcement on turnaround times, this had already been part of the MTSF before SONA. There are no offtake agreements with the Umzimvubu dam project. He was optimistic that they had plans to make the project financially viable although it had been deemed financially unviable at present. He offered a future meeting where a deeper understanding of the Umzimvubu Dam project could be explored.

Implications of SONA on the Human Settlements Sector
Mr Neville Chainee, Acting Director General: Human Settlements, introduced the report on SONA implications for the Human Settlements Sector.

The Chairperson explained that many of the DG and DDG positions in the Department were in “acting” positions as responsibilities have been delegated. The DG post is not vacant.

Ms Zoleka Sokopo (Chief Director for Strategy Human Settlements) spoke about two current programmes in the Medium Term Strategic Framework (MTSF): the Community Residential Units (CRU) and Social Housing Programmes with Social Housing Regulatory Authority (SHRA). DHS has a credible system with their own monitoring body. They are reporting quarterly and annually on progress.

Statements made at SONA about Human Settlements include the building of rental housing for low-income families through the social housing programme (which is at implementation stage). This could leverage as much as R9 billion private investment in the construction of 37 000 rental apartments. A new smart city in Lanseria for 350 000 to 500 000 people within 10 years was mentioned by the President. There are also plans to expand the District Development Model to 23 new districts, drawing on lessons from the three pilot districts: OR Tambo, Ethekwini and Waterberg District Municipalities. National and provincial governments were set to redouble their support of and strengthen the capacity of municipalities as required by Section 154 of the Constitution to provide for monitoring and support of municipalities. The Procurement Bill as well as Infrastructure Fund implementation was relevant here.

Outputs indicated 30 000 social housing units and12 000 CRUs. Additionally, 94 priority development areas had been identified and declared for integrated multisectoral investment completed by 2024. Strategic enablers had been identified to strengthen implementation of policies and programmes, improve monitoring, reporting and evaluation. The development of capacity and capabilities is a key implementation area.

Mr Chainee added that the consolidated capital grant is related directly to SONA which responded primarily to the development of social housing. The development plans in each province would outline the Smart Cities, along with funding allocated.

Discussion
The Chairperson requested that Members not take more than two minutes each for questions, as when 13h00 arrived, the meeting would be adjourned whether the discussion was completed or not.

A committee member raised the challenge faced with informal settlements. There were squatter areas towards the airport alongside the N2 Gateway in the Western Cape. How could this be addressed? Foreigners were renting these properties. The rental houses were not being used but rented to foreigners. Another challenge when building houses - on announcement of the DHS building homes, people would occupy the designated land – delaying the building of houses.

Mr Ngwezi asked about the provision of housing units to South Africans. The process for the advertising of the units and awarding of the tenders had happened, yet construction has not begun. The Department was asked to intervene in these instances. He was alarmed that people had waited seven years for houses – yet there is budget for smart cities. He was concerned that citizens have the perception that to be heard by government, they needed to fight and this was costly for government.

Ms Powell asked about smart cities. In light of the budget cuts, how was it possible to focus on building smart cities instead of capacitating municipalities and metros. Should we not be focusing on capacitating existing municipalities? She used the example of the Western Cape government that was delivering, but still was subject to budget cuts.

Ms Sihlwayi asked about the 94 development areas and smart cities. How were these identified? How far was the Upgrading Informal Settlements Grant that was to deal with shacks?

Ms Mohlala asked about the goals of SONA and said that substantial investment was needed in the education and training of young people and planners at local government level. She asked if affordability and sustainability had been addressed in a holistic model for rental housing for low-income families.

Ms Ntafeni stated that DHS has the responsibility to track the outcomes of grants. She asked how it was handling this.

Ms Mvana raised a concern about informal settlements asking if DHS is able to evict residents who had occupied land, as the ‘expropriation without compensation’ bill might have been taken advantage of by many people.

Ms G Tseke (ANC) asked about the three pilot district municipalities. She asked if support could be given to municipalities that could not spend grants due to backlogs.

Mr M Mashego (ANC) raised a point about social housing for student accommodation and why NSFAS had not been approached to deal with this. He said DHS should take a bold step to deal with rental housing.

The Chairperson commented that the majority of the questions raised would be dealt with when the Committee were briefed on the DHS strategic plan. She asked if, as the DHS planned, it was taking cognisance of the report which stated that delivery of services must go where the people are and not just because there are nine provinces. The Chairperson began to relay the decisions of the previous meeting in Gauteng.

Ms Mohlala interjected to convey to the chairperson that her time was up.

The Chairperson rejected this, stating that Ms Mohlala should direct qualms to her office to discuss the matter. She explained that she was conveying the decision of the previous meeting, and as such was not subject to the two-minute time frame imposed on members in the interest of time.

Ms Mohlala expressed a grievance that she felt she was not allowed to follow-up.

Ms Sihlwayi was worried that a debate on time had ensued, adding that the Chairperson had a role to round up all arguments.

Mr Ngwezi expressed frustration that members were only given two minutes, while the Chairperson had unlimited scope to raise points. He requested that in future the Chairperson ensure there was sufficient time to follow-up and raise all questions.

The Chairperson stated that her responsibility was to end the meeting by 13h00. Members should direct complaints about the time being too little to their party whips.

Responses
Deputy Minister Tshwete responded briefly to the questions raised. If money was not used by municipalities, it would be taken and given to other municipalities that needed it. She agreed with the Chairperson about inviting MECs to the meeting for monitoring and feedback purposes. Questions on investment and budget would be explored at a further meeting. A follow-up was promised to those who had complained.

Ms Sokopos replied that smart cities was not driven by DHS, but the cities themselves. Most major cities, such as Cape Town and Johannesburg, had already initiated the smart city model. Social housing was for a higher income group than the CRU project. On the funding model, DHS was currently undergoing a study of what was the best financing model. Once the study was completed within a year’s time, the outcome would be shared with the Committee. A comprehensive list of projects could be made available to the Committee..

Mr Chainee reiterated that the provinces would present their plans and challenges such as tenders and district delivery to the Committee. On the Treasury cuts, the Department would face cuts of R14 billion. This would mean DHS would have to be more focused and directed. There were only two municipalities that were doing well in spending the Integrated Urban Development Grant (IUDG): Johannesburg and Buffalo City. On smart cities, matters such as aligning traffic lights was also part of creating smart cities, thus it is not an abstract objective and could happen in conjunction with developing poorer communities and informal settlements. On education and training, 3% of funds were provided by DHS for training and capacity building. On a coherent funding model, SONA mentioned 37 000 units over 10 years. However, DHS intends to deliver 35 000 units over five years. On informal settlements, a court order was required in order to uphold the Constitution before attempting to evict anyone from a home.

Ms Powell requested that the presented documentation be sent to the Committee so that they can understand how the budget cuts by National Treasury would impact the rollout of projects.

The meeting was adjourned.