In a virtual meeting, the Committee met with the Department of Water and Sanitation (DWS) and the Breede-Gouritz Catchment Management Agency (BGCMA) to be briefed on their 2019/20 annual reports.
The DWS indicated that there had been slight improvements in the financial year, but it was not happy with its performance. 33 of its 62 targets were achieved. Of concern was the increase in debtor payment periods to 207 days, and issues of internal procurement processes which had resulted in the non-completion of certain plans and projects. There were delays with the completion of two major water infrastructure development projects. Only one of four water projects under construction was completed, with the rest delayed due to issues with the service providers. Six regional bulk infrastructure grant programmes were not completed, with five of them due to community unrest. The development of a water economic regulator had been put on hold. There were challenges with the establishment of the Catchment Management Agencies due to the planned reconfiguration from nine to six. The DWS had under-spent its budget by eight percent. The Water Trading Entity account had shown a decrease in expenditure due to the over-payment of royalties to Lesotho. The DWS was awaiting condonation for R9.5 bn of unauthorised, irregular, fruitless and wasteful expenditure. It had implemented interventions in areas of prior non-compliance. Accruals and payables was an area of major concern. The DWS had maintained its unqualified audit opinion
The BGCMA indicated that it achieved 27 if its 32 targets. It had received a clean audit report. Of particular significance was the work done by the entity to become more independent and self-sustaining, with national grants decreasing. There had been an increase of about R7 million in expenditure, with about R6 million of that being deemed irrecoverable expenditure. The BGCMA’s employment profile was 66% female.
The Members felt strongly that the DWS had to provide more detailed information on its financial transgressions and performance for each individual programme. The R9.5 bn requiring condonation was a major concern. Questions were asked about the resolution of the issue of the royalties paid to Lesotho, as well as the matters of internal procurement challenges. The allocation of R1 bn from National Treasury and the shifting of funds to complete the Vaal River system project was a major issue, with questions asked as to what work had actually been done with that money. Concerns were also raised about the transfer of funds to municipalities, and the non-disclosure of reports given by the advisory committees to the Minister.
Chairperson’s opening remarks
The Chairperson welcomed everyone to the meeting. She acknowledged Mr David Mahlobo and Ms Pam Tshwete, Deputy Ministers of Human Settlements, Water and Sanitation. She indicated that this was a continuation of the meeting that was convened on 25 March with the Auditor-General of South Africa (AGSA) and the Department of Planning, Monitoring and Evaluation (DPME). The annual report of the Department of Water and Sanitation (DWS) would be considered.
She requested a moment of silence to remember those who had passed away. She forwarded the condolences of the Committee for the loss of Mr Mziwonke Dlabantu, former Chief Executive Officer (CEO) of the National Home Builders Registration Council (NHBRC). She remembered that Mr Dlabantu was employed to assist with the correction of the finances of the DWS when Ms Lindiwe Sisulu, Minister of Human Settlements, Water and Sanitation, was appointed. He was a dedicated public servant and would be missed.
She hoped that as time went by, the DWS would go forward and not backward. She asked the Committee Secretary to note the apologies.
The Committee Secretary said that the Minister was not invited to the meeting, but an apology was received stating that the Minister was attending a special Cabinet meeting.
The Chairperson asked the Members to adopt the agenda, which was duly adopted.
Deputy Minister’s briefing
Deputy Minister Mahlobo thanked the Chairperson for the moment of silence. He acknowledged the work done by Mr Dlabantu and the former Director-General (DG). It was because of their work that for the first time in a few years the DWS had improved financially and had an unqualified report, although there were matters that were reported. He agreed that the meeting was a follow-up discussion to that which was held on the annual performance of the DWS on 25 March. The DWS was pleased with that discussion.
He thanked the Committee for its oversight work, and commented that the work of the Committee had propelled the DWS and pushed it to stabilise the administration. The stabilisation of the DWS was not yet complete, but it was progressing well. Certain actions had been taken, particularly with regard to issues of malfeasance and the allegations of corruption. The issue of ensuring that the structure of the DWS was finalised was being completed. The turnaround plan was starting to bear fruit, but it could not be said that the DWS had arrived at its final product. These were the building blocks for ensuring stability.
He thanked the AGSA for its co-operation and engagements with the DWS. The last audit had highlighted issues of the international agreements that the DWS had, particularly the one with Lesotho as it pertained to the Lesotho Highlands Water Scheme, and the challenges faced with the finances and the accounting system. A clear framework and understanding were now in place on how to deal with that, as it impacted on the Water Trading Entity (WTE) and the Trans Caledon Tunnel Authority (TCTA). There was a correlation between the performance of the TCTA and the DWS, and there was an improvement in this regard. However, more could be done.
The DPME had presented on the issues of non-financial performance information of the DWS. He said that the DWS agreed with the DPME, as it, along with National Treasury, was very good to work with to deal with system improvements and structural reforms through Operation Vulindlela. He agreed with their presentation, which had acknowledged the achievements of the DWS, as well as the areas where improvement was needed. Performance was not satisfactory for the infrastructure programme, due to the fact that other projects had to be prioritised and the issues of funding and internal capacity. The main issue was that of procurement, which had to be overhauled and streamlined as it was becoming a fatal ground in terms of corruption and malfeasance. These matters had been attended to by the turnaround strategy.
He requested the team of Ms Deborah Mochotlhi, Acting DG, DWS, to take the Committee through the financial and non-financial information for the DWS. He indicated that Deputy Minister Tshwete had another commitment and would have to leave the meeting at some point, and that he also had a commitment with the Deputy President, but would be available to respond to questions when required. The unanswered questions from 25 March would also be responded to.
Department of Water and Sanitation 2019/20 annual report
Ms Mochotlhi said that the DWS had achieved 33 of its 62 targets. 14 targets were partially achieved and 15 were not achieved. In terms of the total performance of the DWS on the main and trading accounts, 53% of targets were achieved, 23% were partially achieved, and 24% were not achieved. The DWS was not very happy with its performance, and would seek to improve on it.
The year under review ended on a hectic note due to the Covid-19 pandemic. The personnel of the DWS still availed themselves for the audit, even while the DWS had to be closed due to a positive Covid-19 case or while dealing with health concerns and deaths of relatives. Everyone was impacted, and the impact was great during the audit process. The DWS was on the pilot list for the new AGSA Act. The DWS co-operated as much as it could with the audit, and was glad to report that both the main account and the trading account, the WTE, had received unqualified audit outcomes. The DWS was able to provide a portfolio of evidence of the work done.
The DWS was committed to ensuring the security of water in the country, its accessibility and quality. The quality of water should be fit for use. The DWS was working hard to provide South African’s with dignified sanitation. With all the weaknesses, there were strong points and key highlights in the DWS, which Ms Babalwa Manyakanyaka, Chief Director: Corporate Planning, DWS, would present. The unanswered questions from 25 March would be dealt with in the presentation.
Ms Manyakanyaka took the Committee through the key highlights of the annual report.
There was significant rainfall between January and March 2020, which had caused localised flooding in KwaZulu-Natal and Gauteng. Surface water improved, but the Eastern Cape was still a cause for concern. The groundwater level was slowly improving in certain areas. There were still restrictions in six water supply systems.
The DWS had started a structural review, and the process of abolishing unfunded vacant posts was also under way. An information and communication technology (ICT) strategic plan was developed, but funding constraints contributed to its poor implementation, and thus there was an over-reliance on the use of consultants.
The DWS had an allocation of R16.46 bn for 2019/20, and had spent R15.21 bn. The WTE’s operating surplus had increased to R5.47 bn in 2019/20, and sales revenue also had also increased.
During the 2019/20 financial year, there were still inputs for the development of the National Water and Sanitation Bill (Bill). The DWS had conducted a legislative review seeking to consolidate the National Water Act (NWA) and the Water Services Act (WSA) into one piece of legislation.
The DWS’s Learning Academy had signed a memorandum of understanding with 23 higher learning institutions. The DWS had granted 50 bursaries to learners, enrolled 15 engineering learners into the Learning Academy, and placed 40 graduate trainees in various units in the Department. 57% of targeted procurement had supported black entrepreneurs, which had exceeded the required 30%.
The DWS had completed operating rules for six water supply systems, classified two river systems, and implemented the river eco-status monitoring programme in 76 rivers. 108 municipal strategic self-assessments were completed within the Water Service Authorities (WSAs), and 15 infrastructure projects providing 502 221 households with sustainable and reliable water supply and sanitation were completed.
The DWS developed an acid mine drainage (AMD) mitigation strategy for the Limpopo water management area. 88% of applications for water use authorisation were finalised within 300 days. During the year, the 90-day period required by the President, as pronounced in the State of the Nation Address (SONA), had not been implemented. 383 non-compliant wastewater systems were monitored, 389 non-compliant water supply systems were monitored, and 84% of reported non-compliant cases were investigated.
Programme One: Administration
In terms of financial management of the main account, there had been an under-expenditure of eight percent. During the year under review, debtors’ days could not be reduced, and had increased to 207 days. The persistent problem of municipalities not settling their debts in time was a constant challenge.
Programme Two: Water Planning and Information Management
The DWS had held public consultations for the Bill, but due to extensive internal consultations with stakeholders, catchment management agencies (CMAs) and water boards taking place, it was unable to have the Bill gazetted for external public consultations. The process had been undertaken by another organisation, so the two existing Acts were being reviewed. The Berg River system was not classified and the requisite resource quality objectives for it were not determined due to technical delays with the Office of the Chief State Law Advisor in finalising the request.
All targets for water information management were met. For water services and local management, the five year water and sanitation services master plans were not completed because of internal procurement process issues. These issues also affected the completion of feasibility studies and the implementation of readiness studies for the water and wastewater services projects.
The socio-economic impact assessment report of the WSAs were not finalised, but mediation was under way with the service provider to complete this. Activities had stalled until that process was completed. There were policy and strategy issues which resulted in the third edition of the National Water Resources Strategy (NWRS-3) not being implemented and the Bill not being developed.
Programme three: Water Infrastructure Development
The 502 221 households provided with sustainable and reliable water and sanitation were in all of the provinces, except for Gauteng and the Free State. Ms Manyakanyaka said that more information on the individual projects could be provided, if required.
In terms of strategic infrastructure development and management, which consisted of the bulk raw water projects, there were protracted negotiations with the relevant municipalities which had delayed the completion of phase 2D of the Olifants River Water Resource Development Project. The under-performance of the service provider for phase 2A of the Mokolo-Crocodile (West) Water Augmentation Project had delayed the completion of this project.
Only one of the four water projects under construction was completed. There were delays in the appointment of the service providers for the Tzaneen Dam, protracted service level negotiations in terms of the Hazelmere Dam, and the access road construction for the Mzimvubu Dam was delayed, with arbitration discussions being finalised. There was still a contractor dispute for the Goedetrouw Transfer Scheme, so that contract was cancelled. Due to these delays, the ability of the DWS to create job opportunities was negatively affected.
In terms of the operations of water resources, two dam safety rehabilitation projects were affected by community unrest and were not started. The other three projects were not started due to procurement process issues, the appointment of environmental control officers, and the supply of equipment.
Planned maintenance projects were affected due to difficulties in getting maintenance contracts. This had affected the unscheduled maintenance. The conveyance systems target of seven kilometres was not met due to delays in the delivery of the necessary materials. Job opportunities in this sub-programme were affected by the delays.
For the regional bulk infrastructure grant sub-programme, five of the six projects not completed because of community unrest. The last project was not completed due to the contractor going into business rescue. Two of the smaller projects under construction were affected by procurement processes at the implementation level within the WSAs. For the water services infrastructure grant (WSIG) sub-programme, there were small projects that were not completed due to delays in the appointment of contractors by municipalities. The planned target for the accelerated community infrastructure programme was not met due to delays in the training of the learners.
Programme four: Water Sector Regulation
There were issues with developing the draft regulatory framework, so the individual regulatory requirements were being used and improved upon. There were capacity challenges regarding the verification and validation of the existing lawful use in two water management areas due to an additional 11 411 properties having to be incorporated in the process. The development of the water economic regulator was put on hold.
All water supply and compliance regulation targets were met. In terms of institutional oversight, there were challenges with the establishment of CMAs, but it was just a reconfiguration from nine CMAs to six CMAs which had delayed this. The approval process for the number of regional water and wastewater utilities gazetted for establishment took longer than expected.
Mr Frans Moatshe, Acting Chief Financial Officer (CFO), DWS, said that the DWS had spent 92% of its budget in the main account. The low spending could be attributed mainly to commitments that still had to be billed and invoices that still had to be certified at the end of the financial year. In Quarter 3 and Quarter 4, the DWS had reprioritised funding to drought and Covid-19 interventions. Most of those resources could be expended only in the new financial year. The advance payment for the drought interventions was reflected in the bank balance. Accruals and payables, as well as other liabilities, were decreasing.
For the WTE account, there was an increase in the revenue due to increased billing. Expenditure had decreased due to lower operating expenditure, with the majority of expenditure coming from the TCTA. There was an increase in the assets, with the bank balance reflecting as favourable for 2019/20 as a result of the recovery plans. The overall liabilities were also decreasing, largely due to repayments having been made on TCTA loans, payables and commitments.
Unauthorised, irregular, fruitless and wasteful expenditure
Unauthorised expenditure had remained the same from year end 2019 to 2020. The decrease in fruitless and wasteful expenditure, and irregular expenditure was dependent mostly on the ongoing condonation process, with some of the amounts having been written off once the investigations of the DWS, the Special Investigating Unit (SIU) and the South African Police Service (SAPS) had been concluded. The DWS had processed condonations to the amount of R9.5 bn, for both the main and WTE accounts. The DWS was awaiting the SIU and court proceedings to be resolved for National Treasury to condone the amounts.
The DWS had maintained its unqualified audit opinion. For the main account, there was an improvement of the going concern of the organisation, and one of the material irregularities was resolved, namely the issue of the Amatola Water Board not being paid in 30 days. The other material irregularity -- the payment to a consulting firm without evidence of work performed -- would be resolved in the new year. For the WTE account, the two qualifications from the prior report had been resolved. There was a regression of the contingent assets, which related to the payment of royalties to Lesotho. The DWS was working on that issue. Two material irregularities remained for the WTE account, and would be followed up on by the AGSA in the new reporting period.
Interventions on non-compliance areas
There had been significant improvements over the years in terms of the submission and quality of the financial statements, with the DWS not submitting the statements in 2017/18. There were serious interventions in place to ensure that no regressions occurred. On expenditure management, the DWS was still making payments for contracts entered into in previous years, which awaited condonation. Irregular and fruitless and wasteful expenditure was being reduced.
The DWS had had to respond to questions raised on the conditional grants not being spent in accordance with the applicable framework. This had been raised by the AGSA due to the fact that the DWS did not have any cash in the bank. This linked directly to the unauthorised expenditure of R641 million which awaited the approval of Parliament. Once this was approved, the DWS would get that funding back or would reprioritise funds to settle those amounts. It was not that the DWS did not comply with the applicable framework, but rather that the cash was not available due to the unauthorised expenditure incurred in previous years.
In terms of consequence management, there were concerns that sufficient appropriate audit evidence that disciplinary steps were taken against officials who incurred unauthorised expenditure was not obtained. To remedy this, disciplinary action was taken, and included investigations into the incidences.
Financial recovery plan
Work on the strategic objectives was being monitored closely and constantly. A major area of concern was accruals and payables. The recovery plan introduced measures to deal with the timely processing of suppliers. However, there were invoices that were not paid in the prescribed time. Most of those invoices related to historic invoices on the “War on Leaks” and water service intervention projects, where the DWS had entered into agreements and would be paying off those debts for a number of years. This was mainly to ensure that the DWS did not incur more unauthorised expenditure. There was a reduction of about R753 million for accruals. The WTE had payables of R1.225 bn, most of which was related to the TCTA payments.
The trade receivables balance was R17.756 bn, which was an increase from the previous year. The debt book was high, with there being a lot of non-payments by water user municipalities, water boards and other institutions. Measures were in place to resolve the water sales debt. Municipal debts were dealt with through the Inter-Ministerial Committee of the DWS, National Treasury, Eskom, the Department of Cooperative Governance and Traditional Affairs (COGTA), the Department of Mineral Resources and Energy (DMRE), and the South African Local Government Association (SALGA). There was also the enhancement of credit control measures in collaboration with municipalities, where repayment agreements were signed and legal action was taken against defaulting users.
Breede-Gouritz Catchment Management Agency 2019/20 annual report
Mr Bongani Mnisi, Chairperson, Breede-Gouritz Catchment Management Agency (BGCMA), said that the report would be presented by Mr Jan van Staden, Acting Chief Executive Officer (CEO), BGCMA, and Ms Zanele Mngoma, Chief Financial Officer (CFO), BGCMA.
He was happy to report that the BGCMA had received a clean audit with no findings, but nevertheless had to aim higher.
Mr van Staden said that the BGCMA operated in the south-eastern part of the Western Cape. There were seven strategic objectives that focused on the management of raw water resources and the creation of awareness of the public and the BGCMA stakeholders. There were 31 targets for 2019/20, and the BGCMA had achieved 27 of them. In terms of water resources planning, the 90% target for the percentage of land use rezoning applications was exceeded by 5%. These applications were important for stimulating economic growth.
In water use management, the BGCMA fell short of its 85% target for finalising water registrations and achieved only 73%, due to the national system that was used to register water users not always being available. 100% of general authorisations were confirmed. The target of 80% of audit reports being completed for water use compliance was exceeded by eight percent. These audits were important in creating awareness and ensuring that users complied with water use regulations.
The entity sent out only 93 confirmation letters, instead of the planned target of 200. These letters were directly linked to the verification and confirmation of existing lawful water use from 1996 to 1998. Confirming this water use was a challenging process, but the BGCMA had appointed a service provider, which was downsized and was rebuilding its capacity. No money had been paid out -- there was only a delay in the implementation of the project.
In institutional and stakeholder relations, the target of capacitating and making 5 000 learners and stakeholders aware of water resource management (WRM) was exceeded by 4 793. Every person involved had signed a document, so it was easy to record this. It was very important for everyone to get involved in this matter. Six intergovernmental cooperation initiatives were facilitated to enhance WRM, with the target being four. 100% of approved grant projects were funded. The BGCMA had a policy to support projects linked to WRM, such as food gardening and rain harvesting tanks. 30 forums were planned to be supported for WRM, but the BGCMA had supported 46.
In terms of water allocation reform, support and technical support was provided to 100% of historically disadvantaged individuals (HDIs) and resource poor irrigation farmers (RPFs) who applied for assistance. The target for assisting RPFs with completing financial applications for government subsidies was not applicable, as the project was now with the DWS and there were funding problems. The BGCMA held nine workshops with local universities and the Water Resource Commission (WRC) to capacitate and empower RPFs in WRM. 400 rain water harvesting tanks were installed. These tanks were linked to the irrigation of food gardens and micro-farming.
Water resource protection consisted of checking the quality of the resource and how it was looking ecologically. 80 water resource points were planned to be monitored, and the BGCMA exceeded this and monitored 146. Five river rehabilitation projects were to be funded and technically supported, with three the planned target. This was linked to the removal of alien vegetation that was growing next to the riverbanks that were killing the natural habitat and reducing the amount of water available for downstream users. 100% of non-compliant cases in terms of pollution of water contravening the NWA were resolved, in line with the planned target.
In terms of strategic support, about R15 million (163%) of the procurement budget was spent of broad-based black economic empowerment (BBBEE). This surpassed the target of 30%, or R9.2 million of the budget. 78% of WRM charges from registered water users were collected, which meant the planned target of 68% was exceeded. This was particularly good in light of the drought that was experienced. The impact of the drought had been slightly alleviated, but a big part of the BGCMA water management area was still affected. 15% of outstanding debts were recovered against a target of 10%. The target of having 75% occupancy in posts in the organogram was not met, with only 72% of posts approved and funded. All management and governance targets were met.
The BGCMA was truly a diverse entity. 66% of the positions in the entity were held by females.
Ms Mngoma said that the BGCMA was a going concern and was able to cover its debts and obligations. The revenue from exchange transactions amounted to about R49 million for 2020. The revenue constituted interest received and the water resource charges. The entity exceeded its water resource charges target by about R9 million, and collected a total of about R39 million. This was a good sign that the entity was committed to recovering the money it was due.
The grants received from the DWS were reduced from about R65 million to about R44 million, with the entity becoming more sustainable and independent. Expenditure increased from about R64 million to about R71 million, due to doubtful debts, with about R6 million of the debts determined to be difficult to recover. There was a positive surplus of about R22 million, which was less than in 2019.
There were no cash receipts from the DWS for 2020, but customer receipts increased from about R21 million to about R65 million. Payments to suppliers had increased to about R39 million. The BGCMA was a growing company, and thus had more commitments to meet. Cash flow from investing activities increased from R533 000 to about R1.9 million. This was a good sign for business. Cash and cash equivalents had also increased from about R34 million to about R71 million.
2020 was the first time the BGCMA had received a clean audit report with no findings. The BGCMA was committed to doing what it was required to do in a compliant and efficient manner.
Mr Mnisi added that WRM skills were scarce, and the BGCMA was trying to work with learning institutions to uplift the skills of the people to contribute more and to use water more sustainably, as water was becoming a very high value commodity in the country.
The Committee Secretary indicated that the Chairperson had been disconnected from the meeting, so she asked Mr M Mashego (ANC) to step in as Acting Chairperson.
The Acting Chairperson allowed the Members to ask questions and discuss the presentations.
Ms S Mokgotho (ANC) asked why the DWS did not intervene appropriately and timeously with the service provider that underperformed and caused a delay in the completion of phase 2A of the Mokolo-Crocodile (West) Water Augmentation Project. No information was provided on the grants transferred, so the Committee needed more clarity on how much was transferred to each of the provinces and how much was spent. Why was it still a challenge for the DWS to fill all the vacant posts? The presentation did not provide any timeframes for the actions taken to deal with the financial transgressions.
Regarding the regulatory review and recommendations on financial achievements for each programme, the presentation made it difficult to assess which programmes were financially viable. Why were the financial transgressions not correlated with the financial performance for each programme, as had been done in the past? The DWS tried to highlight the irregular expenditure, fruitless and wasteful expenditure, and accruals and payables, but the Committee had no understanding of which programmes these transactions had occurred under. Could the DWS provide information on these matters for each programme and sub-programme?
Ms M Mohlala (EFF) said that the DWS presentation was sketchy in not providing substantive information on its performance. The overview lacked details on the percentage expenditure for each programme, the variances, and what constituted each of the variances. There was no mention of the challenges and achievements of the criteria for the economic classification. Why was the overview so brief, when the Money Act provided that annual performance plans (APPs) were backwards-looking documents focusing on money spent, as opposed to targets? The performance targets were detailed. What was the rationale for the changing of the development of the Bill? Could more information be provided on how this would be achieved?
What were the implications of the emphasis on matters on the going concern of the WTE? Had the issue of the over-payment of royalties to Lesotho been resolved? How could the WTE work to alleviate the challenges associated with trade debtors? What was the basis for the lack of improvement for expenditure management as it related to the inability to prevent irregular expenditure resulting from new contracts? Did the DWS have any legal recourse to attain the accrued revenue that was not invoiced, or should that be deemed irrecoverable loss?
Was the sourcing of 30 advisors not a cause for concern to the Minister of the DG? With reference to the five projects not being implemented due to community unrest, were those communities engaged prior to the implementation of the projects? In the bucket eradication project, why were only 692 of the planned 12 221 sanitation systems replaced? Was the dignity of the people not being taken seriously? The replacement of these sanitation systems had been going on for a long time. WRM was reliant on the ability to establish CMAs, but South Africa had only two established CMAs. Why was this not being prioritised? How far along was the Minister with her approval of the six CMAs?
The Chairperson indicated that she had reconnected to the meeting.
Ms C Seoposengwe (ANC) asked if the DWS could give the Committee a breakdown of the 88% of water use authorisation applications finalised within 300 days in terms of the provinces, as well as an indication of who the beneficiaries were. She observed that most of the farms next to the rivers were very green pastures, and it was clear who the owners of those farms were. How far along was the process of the implementation of the human resources approval plan and ethics management strategy?
What progress had been made with the investigations into the invoices that were not paid within the 30 day period? That time period affected the small, medium, and micro enterprises (SMMEs) the most. Could the progress report be shared for the purpose of oversight? Monitoring was important to assess progress in the entity, so what process did the DWS have, along with the budget, for strengthening the monitoring of the under-spending for the compensation of employees, goods and services, and the regional bulk infrastructure grant?
Ms N Sihlwayi (ANC) said that the DWS had to clarify the impact of the delays in procurement on the finances of the organisation. The Presidential recovery plan had emphasised the infrastructure of the DWS. When the condonations amounted to R9.5 bn, could it be believed that the performance of the organisation was good? The budget had to transform the processes of service delivery and be able to make an impact on individuals. There was no efficiency in achieving the planned results to make the necessary impact of the people. Did the DWS understand? What did the DWS think of the R9.5 bn condonation?
She said the issue of gender parity at the BGCMA was not about the numbers and representation. The crux of the matter was what positions or contracts females were given. Which areas were focused on these women, and what positions did they hold in the BGCMA?
Mr Mashego added on the issue of gender parity. He asked how much money was associated with the 66% of women in the BGCMA. This statistic was not significant if the majority of the money still went to males. There had to be an appropriate allocation of money to females. The AGSA had raised the point of variances involving the TCTA, and made the example that the financial statements indicated R100 million in the bank, but when one went to the bank the R100 million was not there. One of the findings with the TCTA had been that the statements differed from the money in the bank. Had the DWS acted against the TCTA, and if so, what was done? This was the falsifying of information. What was being done about this issue?
Questions had been asked of the human capital report. When this Committee started in 2019, the DWS had no DG or CFO. After three years, there was still no DG, nor was there any plan. It could not be said that the DG post was being advertised and would be short-listed any time soon. The Committee’s term would finish without there being a DG in the DWS. No indication had been given of the intention of the DWS to advertise the DG and CFO positions. It was understood that there were disciplinary hearings taking place, but the DG was not suspended and taking the DWS to court. This position was a political appointee, so the hearings could not prevent the appointment of a DG.
However, he said that one had to appreciate that there had been a positive change in the DWS, although these improvements were small. There was a sound financial report. He asked what the plan of the DWS was. Was there anything preventing appropriate action to achieve the required targets?
The Chairperson said that R1 bn was a lot of money. The computers and laptops that were not purchased should have been purchased. She saw that the DWS was awaiting the condonation on the irregular expenditure, but within this financial year there had been wasteful expenditure, especially with supply chain management (SCM). What was the issue and what would the DWS do to deal with that wasteful expenditure permanently? That had to be eradicated.
She asked why the implementation of the National Water Resource Strategy (NWRS)-3 was not prioritised, in light of NWRS-2 prescribing in 2018. This spoke to the mandate of the DWS, which was the core business of the DWS. How far along was the process of implementation? Would it be finalised in Quarter 4? In terms of the municipal assessments, there were municipalities which were not WSAs and had more capacity than districts, but the DWS was not working towards making those municipalities WSAs. Why was this assessment not used to allocate the correct capacity to perform the necessary functions?
There had been millions shifted from goods and services and other programmes to the Vaal, with National Treasury having allocated R1bn to the Vaal, and the DWS having made another R20 million available to do the impact assessment of the Vaal. What was the shifted money used for, since none of the implementation processes had been completed?
She congratulated the BGCMA for its work and the clean audit.
Ms Mochotlhi responded on the WTE and the issues raised around the non-collection of revenues, and said there were a number of efforts taken to collect the revenue. The DWS had at one point gone as far as attaching municipal property. This matter had been escalated to the highest levels, namely the Inter-Ministerial Committee on Service Delivery. Where money was spoken about, there would always be resistance from those who deemed themselves victims of the process. There were many discussions around the recovery of debt, and this had hampered the operation of the WTE to deliver on its mandate, but something had been done.
On the issue of the advisors, she said the advisors were all assigned to different areas of operation.
The bucket eradication project (BEP) was worrying. The BEP function had been transferred to the Department of Human Settlements (DHS) before the merger, whereafter the function was given back to the DWS. The Minister had decided that the function should be given to the Housing Development Agency (HDA), as that element of sanitation was part of a home. Other elements of sanitation still remained in the purview of the DWS. This issue remained an embarrassment.
The DWS was concerned at the failure to establish the CMAs, but the process had improved.
She thanked the Members who had acknowledged the effort and improvements of the DWS, and said that the DWS would move to further improve.
Ms Mohlala raised a point of clarity. She asked what the modalities were in terms of the transfer of the BEP to the HDA
The Chairperson said that questions of clarity could be asked after the DWS had responded to the questions.
Mr Moatshe said that the annual report of the DWS reflected the appropriation and spending per programme. The details of the R990 million under-spent for programme three were in the annual report. The link to the rollover was also reflected in the annual report as R615 million in terms of programme three.
The shift of money to the Vaal river system was for the pollution assessment of that integrated system, where the DWS had to obtain approval from National Treasury to convert the capital from goods and services. Linked to that, as indicated in the financial recovery plan, accruals and payables were constantly monitored, but as the DWS had undertaken to not repeat prior mistakes, funds would unfortunately be allocated to accruals and payables only once funds were determined, and protocols were met. Attention was being given to that.
On the bank balance, reference was made in the presentation by AGSA relating to the Division of Revenue Act. As per this, all unspent funds had to be returned to the Revenue Fund annually. Because of this, and the unauthorised expenditure of previous year, the DWS had utilised the allocated cash in the bank for that expenditure. This would have yearly domino effect, but if the necessary procedures with Parliament were concluded, this should be capable of resolution.
On the details of the original Vaal infrastructure grant in programme three, full details per province and per municipality were contained in annexure 1A of the annual report.
There had been a decline in the wasteful expenditure of the WTE. A significant amount of that expenditure related to costs that could not be recovered from the construction unit projects. There were plans to optimise that unit. One area of improvement was that sufficient work allocated to the construction unit had been done through the budget process. In previous years the actual work done had not been allocated a budget and money would have had to be shifted from other areas. That had been corrected, and information on internal and external projects was available. The fruitless and wasteful expenditure of the main account had also declined after the resolution of the material issue with the Amatola Water Board.
Overall, concerns over the condonation of the irregular expenditure were noted. The condonation was linked to the conclusion of the ongoing investigations. These processes were being taken very seriously. The details on when the cases were being heard were available, and would be presented to the Committee.
On the matter of value for money regarding the R9.5 bn, that was an area that National Treasury had been engaged on. There had to be a loss assessment on those transactions to determine if any money was derived from that expenditure. This was being handled.
On the contingent asset over-payment in the WTE account, the DWS had engaged with the TCTA and Lesotho. The AGSA had indicated that preliminary work had been done, as was the assessment with calculations. This matter was moved from a possible qualification to a contingent asset after engagements had taken place. This was dependent on a resolution between the two countries.
Measures had been put in place for the training and development of staff members. There were ongoing engagements between the DWS and the Office of the Accountant General relating to the handling of the transactions for the Lesotho projects. There was an action plan in place to ensure that there was no recurrence of these issues.
On payment of debtors, the R2 bn payment provision for the debtors was in line with accounting standards. There were measures in place to try and recover as much as possible. There was no indication of issues with the going concern, hence the AGSA had precluded the paragraph on that.
Ms Emilize Nezar, Chief Audit Executive, DWS, said that there had been a lot of proactive work done which had prevented fruitless and wasteful expenditure from being incurred. The internal audit team was involved in preventative work amounting to R1.5 bn. This indicated management had considered preventative measures for wasteful expenditure. For the 2021 financial year, work amounting to R7.5 bn was also done. The DWS was continuing with investigations into those expenditures, and had noted that there was a downward trend. The audit team did annual assessments and assessments per request on the 30-day payments to resolve the long outstanding payments.
Mr Leonardo Manus, Chief Director: Infrastructure Operations, DWS, said that toilets had been built in all sites except for one, due to delays in connecting the toilets to the wastewater collection system and the internal collectors. There were also issues with procurement, as the construction unit was slow, due to the fact that in many cases it would come to the end of the procurement process and the DWS then had to cancel the contracts because the service providers lacked capacity. The Northern Cape was quite a distance from commercial centres, so those contracts were not always favourably taken up. Other elements which caused delays had to do with the blasting work that was required, which caused havoc for the progression of the projects. Progress had been made, but it did not always result in the connection of the units. The transfer of the BEP function to the HDA had been discussed.
Certain funds had been made available to the Vaal system in order to complete waste retrieval works. The work done there had progressed to a state of finalisation. Other funds were also availed in terms of the intervention, and even though some of those targets were not met, there had been increase in the flow of influent waste in the area, due to the material removed from the bulk sewer system. Although there was some positivity to report on the impact on the environment and the communities where the spillage took place, more work had to be done.
On the Mokolo-Crocodile Water Augmentation Programme, the underperforming service provider was appointed through the TCTA. What happened was that there were environmental authorisation appeals posed to the DWS, and if the service provider had proceeded and the appeals had been upheld, there would have had to have been a realignment which would have resulted in fruitless and wasteful expenditure. Thus, progress had halted until the appeals were dealt with, after which the design work had progressed to 99% completion in the last quarter.
Ms Nthabiseng Fundakubi, Chief Operating Officer, DWS, said that the delays in finalising the NWRS-3 were linked to the delay in finalising the Bill. This was because of the process undertaken to review the strategy to obtain its mandate from the Bill. When the Bill was to be concluded, the strategy would have been referred. When the decision was taken to revert to revising the two Acts, the development of the strategy had to be changed. This process was under way, with consultations ongoing. There were delays due to the national lockdown, but those had been overcome and the documents had been presented to, and supported by, both the social and economic clusters. The DWS was awaiting approval from Cabinet. Internal consultations were taking place, and the DWS was anticipating reviewing the time frames put in place to be done by the end of March 2022.
Ms Thoko Sigwaza, Acting Deputy Director-General: Regulations, DWS, said that the details of the CMAs and the issue of water use licences could be found on pages 70 and 71 in the annual report. There were still two formal CMAs established, but the current administration had taken the decision to reconfigure the number of CMAs from nine to six. The Minister had recommended that the BGCMA’s area of operation be extended to include another component of the CMA, and as such, the Western Cape would have a single CMA. That decision was gazetted and there had been no objections, so the final gazetting for promulgation would be done before 1 April. Other CMAs would also be gazetted. Consultations with the public on the Vaal area were being awaited. Due to financial viability issues and the number of reporting entities, and in line with the Presidential Review Commission, the number had been reduced.
The DWS had received 678 applications for water use licences in 2019, and had issued 645. Of that number, 166 applications were from HDIs. The issue of HDIs was critical, which was why the CMAs had to cover the entire country to support these people when using electronic systems to submit applications.
Mr Mnisi said that it was recognised that the role of anyone and everyone in an organisation was important, but the BGCMA would like to report that only one cleaner in the entity was female. All other female positions began from level seven, due to the entity hiring people mainly from the financial, water resource and science sectors. It was important that 61% of the total payroll in the entity went to females. The BGCMA was trying its best to have female leadership.
Department of Public Service and Administration (DPSA) responses
Mr Kenny Govender, Deputy Director-General: Human Resources, Management and Development, DPSA, said that the advisors were appointed to do more than just advise the Minister. The Minister was authorised by legislation to appoint advisors, and she had appointed them to standing committees on water services and resource management in the water sector. All of those committee members were appointed for a limited period and compensated per hour for services provided.
The stabilisation committee had been appointed in 2019 and focused on ICT, human resources and financial matters, as well as the establishment of entities in the water sector. That committee had completed its work, and its recommendations were being acted upon. It was then terminated in December 2020.
The Minister had three committees in terms of the Acts, with their total membership at 15. Another committee was the National Rapid Response Task Team (NRRTT), which had been appointed as community development workers, enabling the community to bring complaints regarding water to the Minister and act as a liaison in that respect.
The Chairperson thanked the Acting DG and the team. She asked for questions of clarity.
Questions of clarity
Ms Mohlala asked how the transfer of the BEP to the HDA was going to be done. The Acting DG had said that the DWS would attach municipal properties in response to non-payment. Was that the case? Could more information be given on that, and how it would be done? Could the Committee be provided with the reports of the work done by the advisory committees? Why would advisory committees work with municipalities when there were regional offices of the DWS?
Ms Sihlwayi requested that the Committee receive a written response to clarify what was said about the participation and compensation given to women in the BGCMA. The issue was to be able to measure the equal access of women to full participation in leadership structures. A report had to be given on the equal distribution of powers to women in the entity.
Ms Seoposengwe asked for clarity on the breakdown of water use authorisation applications per provinces.
The Chairperson repeated her question relating to the over-expenditure and the non-purchase of laptops. In the current environment where laptops were widely utilised, who had not been allocated laptops and what was the impact of this non-spending on those people?
National Treasury had allocated R1 bn for refurbishing and the building of pump stations in the Vaal system to unblock that system, and the DWS had allocated R20 million for that assessment. The explanation in the report indicated the shifting of money to that programme, but did not show what the DWS had done with the original allocation and what work had been done on that system. She asked for clarity on those issues. A report should have been received on the Vaal project, so that going into the new year the progress could be disclosed. It should be very clear what the money had been used for, and what it would be used for
Mr Mnisi accepted the request for a written response, and said that the BGCMA would submit that by 1 April at the latest.
Ms Mogkotho wanted to ask a follow-up question.
The Chairperson said that the allocated time for asking questions had passed, but if there was time after the responses, she would be allowed to ask her question.
Ms Mochotlhi responded on the attachment of property, and said she was making an example of the extent the DWS had gone to recover its debts. This was not a common practice, but the DWS was within its legal rights to do that. It had happened a few years ago.
Regarding the advisory committees, they were all assigned different responsibilities by the Minister. A few members from the stabilisation committee were working on the disciplinary hearings that the Committee would be briefed on. The advisory reports had been submitted to the Minister, and it was the Minister’s prerogative to share the reports with the Members.
The impact of the laptops issue was that those staff members would not work as efficiently as expected, due to working without the aid of a new, faster laptop. The DWS was not going to purchase desktop computers, only laptops. At the moment there were constraints in the market with the supply of laptops.
Mr Manus said that funds had been shifted to complete module six. Much progress had been made and it would be reported on soon, but it had not yet been completed. During the reporting period, more funding had been given to operations to introduce more influent into wastewater works at that space, even if all the targets were not met. The DWS did not get a grant for operating expenditure but was working on the issues of municipal operations and maintenance. He believed that the Minister would report to the Committee and Cabinet on the proposed section 63 interventions which would also work into the space of the Vaal, to bring sustainability to the prior capital expenditure works done there going forward.
Mr Moatshe said that the R1 bn allocated by National Treasury had been removed, as provision had been made in the budget in other years for the Mfuleni intervention. Since then, the DWS reported in this financial year that R314 million was approved by National Treasury, as part of the intervention of the Vaal River system rehabilitation, under goods and services. The other portion related to the capital expenditure element, which would also be reported in the reporting period for 2021.
On the laptops, the narrative provided on under-spending indicated that there were laptops in the process of procurement so there was under-expenditure. Further, some vacancies were not filled as expected.
Ms Mokgotho asked how much of the WSIG was transferred to each province, and how much was spent for the financial year. She said that more information had to be given on the challenges affecting programme three. She congratulated BGCMA for its clean audit report, but asked why there was no financial progress information contained in the presentation.
Ms Mohlala wanted to raise a follow-up question on the matter of the municipalities.
The Chairperson said that Mr Govender would finalise his response, and if there was time remaining afterwards, she would be allowed to ask her question.
Mr Govender said that the advisory reports were largely between the committees and the Minister, and mostly took the form of memoranda to the Minister on their specific areas that required improvement and attention. The stabilisation had also identified specific relevant areas that the DWS was then able to work on addressing. The NRRTT was not an advisory committee -- it was established under the Acts to support communities. Its members were akin to development workers and were tasked with working closely with the municipalities and acting as liaison, specifically for matters of water.
The Chairperson allowed Ms Mohlala to ask her question, but said the responses would have to be given in writing as she wanted to hand over to Deputy Minister Mahlobo to close the meeting.
Ms Mohlala said that Deputy Minister Mahlobo would also have to respond to her question.
Ms Mokgotho interrupted Ms Mohlala, and said that she was not satisfied with the response to her questions. She wanted a written response to be given to her questions.
Ms Mohlala continued with her question. She asked what the legal basis was for the DWS attaching municipal properties to recover its debts. The Committee needed to receive the advisory reports. The Members did not have the presentation on the disciplinary investigation at the DWS and the measures to turn the DWS around, which was to be discussed at 18:00. Could the Members be given that presentation?
The Chairperson said that the DWS had indicated that the Minister had the prerogative to share the advisory committee reports with the Committee.
Ms Mokgotho interrupted the Chairperson, and asked if there was any reason why no information had been given on the transfer and use of the WSIG funds.
Mr Mashego said that Ms Mokgotho was out of order.
The Chairperson asked Mr Mashego to allow her to chair the meeting. She was unsure why Ms Mokgotho had made this statement, as the question had not yet been responded to. She asked for a response to be given on the question on the WSIG funds.
Mr Moatshe said that page 196 of the annual report reflected the big transfers to municipalities. R2 bn had been allocated, and R37 million was not spent. For the WSIG, R3.6 bn had been allocated, and all of it was spent. The details per province and per municipality were available in the annexures to the annual report.
The Chairperson asked Deputy Minister Mahlobo to make closing remarks.
Ms Mohlala indicated that the Chairperson had not finished what she was saying regarding the advisory reports.
The Chairperson said that the advisory reports had been given to the Minister, and it was her prerogative to share it with the Members. Those reports contained measures to address the relevant issues.
Ms Mohlala asked what the Committee’s oversight was of the advisory committees.
The Chairperson said that the Committee exercised its oversight over the DWS and the executing authority. The Minister had the right to share those reports. If need be, Ms Mohlala could ask the Minister to provide those reports.
Ms Mohlala felt that the Chairperson was singling her out in relation to this matter. She said that was wrong, as this was an issue that affected the Committee as a whole.
The Chairperson said that she was not singling anyone out, but she was singling out the question.
Ms Mohlala said this was concerning, because the budgets for the advisory committees were coming from the DWS.
The Chairperson said the Ministry was saying that the advisory reports could be requested from the Minister.
Ms Mohlala said the Committee as a whole had to be concerned with obtaining those reports. She felt strongly that all of the Members had to be concerned.
The Chairperson made it clear that the request for the reports could be made to the Minister. When the Minister was present in the meeting, that request could be made directly to her.
Ms Mohlala felt that the Chairperson did not want to hold the executive to account by not personally requesting the Minister to disclose those reports.
The Chairperson asked Deputy Minister Mahlobo to close the meeting.
Deputy Minister Mahlobo said that as much as Members were allowed to ask questions, the officials had been clear in their directions that the advisory committees were those of the Ministry. It could not be said that Ms Mohlala could not ask questions regarding it. The entire annual report could not have been presented in detail, as this was a follow-up discussion. The details on the WSIG were in the annual report which had already been circulated to Members. The DWS was still very committed to its turnaround plan. There had been improvements in the DWS.
The issues of the remedial action had to be improved on. The DWS was on the right track, and appreciated the pushing of the Committee. Ultimately, the security of water availability had to be ensured. To be able to operate effectively, those people who were able to pay their charges had to pay. For those who were unable to pay, security for access to water was provided in the Constitution. Anyone who polluted the water resources would have violated the law and put other resources at risk. This was why investments were made to ensure that the water available was fit for use.
The DWS would be available to account. If additional responses were required for the annual report, they would be given.
Ms Mohlala asked Deputy Minister Mahlobo to respond to the question on the legal basis for attaching municipal property to recover debts. She also wanted a response on the presentation for the 18:00 meeting.
Deputy Minister Mahlobo said that the practice of attaching municipal property was not happening right now, but there was provision for that practice in the normal course of the contracts entered into by the DWS. The DWS was in a position to get a court order for an asset assessment and use some of those assets to pay creditors. This was something that Eskom was doing. The DWS would not being doing that, as it invoked the Inter-Governmental Framework Act. The Deputy President was dealing with the matters of debts owed by and owed to municipalities, amongst other things. If the behaviour of the DWS around non-payment continued, it would arrive at an unsustainable situation. This was why the Minister had implemented a zero percent increase for bulk water, at the expense of the water boards, in order to be a caring executive authority.
The Chairperson said a request had been received to postpone the meeting at 18:00 tonight, as the Minister was otherwise engaged. The Committee was still engaging to confirm a new date. There would not be a meeting at 18:00.
The meeting was adjourned.
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