The Portfolio Committee on Human Settlements, Water and Sanitation convened virtually to be briefed by the Department of Water and Sanitation, along with the Bloem Water, Lepelle Northern Water and Amatola Water Boards on their 2019/20 annual reports.
The Lepelle Northern Water Board mentioned the kind of environment that it is situated in and the challenges within that environment. This included scarce water resources, high rates of indigents and unemployment, and aged or aging infrastructure - which put pressure on the entity to set tariffs that are affordable and yet sustain the existence of the organisation. In terms of the non-financial performance of the entity, it had achieved 61% of its goals in 2018/19 and achieved 60% in the 2019/20 financial year. It had targeted 80% customer satisfaction in the 2019/20 financial year, and they managed to reach 82%. It also managed to complete 74% of its Capital Projects and quoted delays on other projects as being caused by cash flow challenges that were experienced during the project implementation stages.
The Bloem Water Board reported that in terms of the organisational environment and the challenges to service delivery, the continuous non-payment of services by municipalities, COVID-19 related challenges, increased demand, and population all remain a major challenge. Enterprise Risk Management identified aging water infrastructure, deteriorating raw water quality and 0% tariff increase as some of the main risks that remain a threat to the entity. The entity’s water treatment works met the compliance and operational monitoring of 99% and the water losses amounted to 7.29%, which was below the 10% shareholder target. The maintenance of the aging infrastructure is continuously conducted in line with the entity’s maintenance strategy. In terms of the financial performance, the Auditor-General report for the 2019/20 financial year was unqualified with some matters. Some of the matters of emphasis included irregular expenditure, which increased from R3.7 million in 2019 to R4.1 million in 2020 due to supply chain requirements, the restatement of corresponding figures, material impairments in terms of trade receivables and subsequent events, such as the impact of COVID-19.
In terms of the key performance highlights, the Amatola Water Board said that it earned revenue amounting to R570 million in 2019, in comparison to R478 million in 2020. On the jobs created, the entity indicated that it created 568 temporary jobs in 2019, in comparison to 529 in 2020. The entity spent R15 million on Capital investment in 2019, in comparison to R59 million spent in 2020. On non-financial performance, Amatola Water’s overall performance of the shareholder compact declined to an average of 53% in 2019/20, in comparison to 86% achievement in 2018/19 – which is an overall decline of 33%. In terms of the overview of the financial performance, Amatola Water operations depicted an operating deficit of R14.9 million in the current financial year, compared to a restated operating surplus of R141 million in the previous financial year. This was to ensure that the Amatola Water budget realistically reflects the anticipated revenue to be collected over the year under review.
A Member pointed out that the Department should provide a template for presentations for the water boards so that the issue of time is factored in because the way the water boards are rushed to finish their presentations within the allocated time looks very unprofessional.
Members asked why the process of addressing the percentage of employment equity is very slow in Bloem Water and added that the entity is very silent about its consequence management plans for the R4.1 million irregular expenditure.
Members asked Lepelle Northern Water to explain the fruitless and wasteful expenditure amount of R799 000 reflected for interest and penalties, as well as the amount of R12 million incurred on irregular expenditure due to not following a competitive bidding process. They also noted that Lepelle Northern Water mentioned challenges relating to vandalism, dilapidated or aging infrastructure and lack of cost recovery in their presentation and wanted to know why they always mention the same problems year after year.
Members, on Amatola Water, asked the Deputy Minister about the timeframes of the filling of vacant executive positions such as the Chief Executive Officer and Chief Financial Officer positions in the water board. They also wanted to know if the water board has a plan to reduce the deficit of R14.9 million.
The Committee was concerned about the audit reports of the water boards, as none of them were pleasing. A Member reminded the water boards that as much it is understood that municipalities have a responsibility to provide water their people, water boards also share the same responsibility to ensure that boreholes are working and that people have drinking water.
Opening remarks by the Chairperson
The Chairperson opened the virtual meeting, welcoming the delegation from the Department of Water and Sanitation (DWS) and the representatives from the three Water Boards. She also acknowledged the presence of the Deputy Minister of DWS, Mr David Mahlobo, in the meeting and acknowledged apologies of the Members who could not attend.
The Chairperson asked the Committee to observe a moment of silence for meditation or prayer in light of the current events happening in KwaZulu-Natal and Gauteng.
She asked the Deputy Minister to introduce his delegation and lead the presentations by the three water boards.
Deputy Minister Mahlobo introduced the delegation from the Department as well as the delegations from the three water boards. He said that the leadership of the water boards were advised to concentrate on the key issues during their presentations. He then handed over to the first water board for its presentation.
Presentation by Lepelle Northern Water Board
Mr Joe Mathebula, Chairperson, Lepelle Northern Water, said that he represents the interim board that was elected in May 2020 and added that when they started in Lepelle Northern Water, their reception into the board was not smooth. In the first week, they had to deal with challenges pertaining their appointment and whether they could be able to continue executing their duties of stabilising Lepelle Northern Water. They were able to navigate through the challenges and began their work after having gone through court processes. The immediate issues that the board focused on included the stabilisation of the entity, which meant that they had to engage with the key stakeholders and understand their struggles in relation to bulk-water service delivery in the province and the general relationship between them and the water board. They went to the water service authorities – South African Local Government Association (SALGA), traditional leadership, business forums – and had meetings with the provincial government. Their main strategy was that for them to execute the task that they were given by the Department, they need everybody in the province, particularly in the water service areas to understand that there is a need of doing things in a new way. The board also managed to improve in terms of governance issues, as Lepelle Northern Water had recently been in the news for all the wrong reasons, including the issue with the Special Investigating Unit (the SIU) investigations in the Giyani Water Project. As part of the board’s process to improve governance, they started coordinating with the SIU and reached out to the Auditor-General (AG) to improve governance processes. The previous board’s interaction with the stakeholders as well as the SIU investigations were at an all-time low, to an extent that the new board had to try their best to ensure that there is an improvement. The newly elected board visited all the water projects in the province to familiarise themselves with the activities of the entity.
Mr Mathebula said that they started engaging with the Department to prioritise certain projects such as Giyani Water Project and identify the gaps to ensure that the gaps are filled so that the project could be concluded. There are outstanding matters that the SIU had submitted findings on, and the board has started implementing action against the previous CEO and the previous general manager who were pointed out in the report. “Lepelle Northern Water was like a crime scene because everything that was happening needed special attention, as governance was at an all-time low”, he said. He said that the new board has now stabilised the entity. The annual report that will be presented by the Acting CEO and Acting CFO will indicate an unqualified audit report and considering that, Lepelle Northern Water is insisting that governance becomes a priority for the board. The report also insists on a change in the delegations of authority because the previous delegation of authority allowed management too much power to decide on projects. Mr Mathebula said that the new board came in at a difficult time because of COVID-19, which made it a very difficult environment to operate in. But despite those challenges, they were able to go to certain communities where they launched certain interventions and projects. He then handed over to the Acting CE to provide a detailed presentation of the report.
Mr Ahuiwi Netshidaulu, Acting CEO, Lepelle Northern Water, presented the 2019/20 annual report for Lepelle Northern Water. The presentation was focused on the performance environment, organisational environment, non-financial performance as well as the financial performance of Lepelle Northern Water. In terms of the performance environment, he mentioned the kind of environment that the water board is situated in and the challenges within that environment. This included scarce water resources, high rates of indigents and unemployment, and aged or aging infrastructure, which puts pressure on the entity to set tariffs that are affordable and yet sustain the existence of the organisation. On the non-financial performance of the entity, Mr Netshidaulu said that the entity had achieved 61% of its goals in 2018/19 and achieved 60% in the 2019/20 financial year. The entity had targeted 80% customer satisfaction in the 2019/20 financial year, and they managed to reach 82%. It managed to complete 74% of its Capital Projects and quoted delays on other projects as being caused by cash flow challenges that were experienced during the project implementation stages.
Mr Netshidaulu also provided details on the Ministerial directives of the entity as well as the financial performance and the implementation of the capital projects of the entity. He indicated the reduction of irregular expenditure by 50% from 2019 to 2020, which was a result of the actions taken by the entity, including training on Supply Chain Management (SCM) by the National Treasury and the SCM policy induction. Investigations on all reported unauthorised expenditures were conducted and consequence management was applied to those responsible. In terms of contingent liabilities, he said that there is a dispute relating to interest charged and invoices billed by a supplier amounting to the value of R32.818 million.
Presentation by Bloem Water Board
Mr Tefetso Phitsane, Chairperson, Bloem Water Board, said that Bloem Water operates on the southern side of the Free State and it is also responsible for the bulk provision of water to Mangaung. He said that the water board has experienced multiple situations of the non-payment of its services by municipalities, which has brought the institution to its knees, as it does not receive funding from anywhere else except from their distribution of water services to municipalities. The situation was so dire, especially in the Mangaung Municipality because it is also under administration because they were unable to pay to a level where their bill ballooned to over a R1 billion. The municipality is also under an intervention by the provincial government because even Bloem Water’s own sustainability was threatened, but fortunately, the entity has received some assistance and was able to keep afloat. The entity still faces serious problems because it has serious backlog of maintenance. It has also had to let go of staff members due to financial problems, which also put them in conflict with a trade union. The other problem that it faced with Mangaung and other municipalities had to do with communication, as they would not communicate with the entity when it is time to pay their debts, even in instances where there were payment arrangements agreed between them and the municipalities. Bloem Water has recently roped in the assistance of the provincial government to form part of the whole process so that they can remind each other and the municipalities when they must pay for the services.
Mr Louis Van Rheede van Oudtshoorn, Acting CEO, Bloem Water Board, presented Bloem Water’s 2019/20 Annual Report, where he focused on the overall performance and financial statements. In terms of the organisational environment and the challenges to service delivery, he noted the continuous non-payment of services by municipalities, COVID-19 related challenges, increased demand, and population. Enterprise Risk Management identified aging water infrastructure, deteriorating raw water quality and 0% tariff increase as some of the main risks that remain a threat to the entity.
In terms of the non-financial performance of the entity, he said that its water treatment works met the compliance and operational monitoring of 99% and the water losses amounted to 7.29%, which was below the 10% shareholder target. The maintenance of the aging infrastructure is continuously conducted in line with its maintenance strategy. Female representation in the entity has grown from 31.43% to 33.09%, while the overall youth workforce representation is at 30.15%. Mr van Oudtshoorn said that a total of 24 of the 36 shareholders compact targets were achieved, representing a performance level of 67%. This is lower than the previous financial year. Executives collectively achieved 77,98% of the 204 set targets despite the challenges faced by the entity; many of the targets that could not be achieved, such as Capital Expenditure and some financial ratios, were negatively impacted by the COVID 19, lockdown conditions and debtor payment.
On the financial performance, he indicated that the AG report for the 2019/20 financial year was unqualified with some matters. Some of the matters of emphasis included irregular expenditure that increased from R3.7 million in 2019 to R4.1 million in 2020 due to supply chain requirements, the restatement of corresponding figures, material impairments in terms of trade receivables and subsequent events, such as the impact of COVID-19. In conclusion, he said that the sustainability of the entity requires innovative interventions such as revenue generation considerations, expenditure management considerations and the Xhariep pipeline because it is critical for the entity both for demand management and sustainability.
Presentation by Amatola Water Board
Mr Zamikhaya Xalisa, Chairperson, Amatola Water Board, said that they are a fairly new board and were appointed just over four months ago. Without dwelling much on the common challenges faced by Amatola Water Board and other water boards, he said that the new board has made a commitment that they are going to work very hard to turn the water utility around for the benefit of the people of the Eastern Cape. One of the biggest challenges that the entity has encountered since the election of the new board was the element of instability in terms of the incoming and outgoing of the people in the labour force, as the positions of the CEO and CFO were vacant.
Mr Sazile Qweleka, Acting CEO, Amatola Water Board, presented the Integrated 2019/20 Annual Report for Amatola Water, specifically on the non-financial performance, financial performance, AG report and the overview of human resources. In terms of the key performance highlights, he indicated that the entity earned revenue amounting to R570 million in 2019, in comparison to R478 million in 2020.
In terms of jobs created, the entity created 568 temporary jobs in 2019, in comparison to 529 in 2020. He said that the entity spent R15 million on Capital investment in 2019, in comparison to R59 million spent in 2020. On Non-financial performance, Amatola Water’s overall performance of the shareholder compact declined to an average of 53% in 2019/20, in comparison to 86% achievement in 2018/19, which is an overall decline of 33%.
As an overview of the financial performance, he reported that Amatola Water operations depict an operating deficit of R14.9 million in the current financial year, compared to a restated operating surplus of R141 million in the previous financial year. This was to ensure that the Amatola Water budget realistically reflects the anticipated revenue to be collected over the year under review. In line with National Treasury requirements, the Amatola Water Board resolved to adjust the reporting year’s budget downwards as some of the planned contracts that would have yielded additional revenue could not be confirmed. Implementation of the Financial Recovery Plan and key areas to be addressed during the review process would be to ensure that the following issues are elevated:
- Identifying additional revenue generating projects for Amatola Water so as to grow the current revenue base.
- Reduction in costs associated with doing business.
- Identifying potential projects and cost savings to be implemented and achieved in the short, medium and long-term.
- Proper cost analysis of all potential projects to be implemented.
The key focus areas in Supply Chain Management identified during the year included the appointment of a Contracts Manager, a review of existing policies, and the development of Standard Operating Procedures.
Ms G Tseke (ANC) said that the presentations from the three water boards showed different performances in the 2019/20 financial year, which is also different from the presentations of the other water boards that presented before the Portfolio Committee, as those water boards received clean audits. She said that, around February 2020, the Committee visited the Limpopo province and one of the projects that they visited was the Giyani Water Project. During that time, only a few villages, out of 55 villages in total, had drinking water available, and the most significant challenge with that were the boreholes. “As much as we understand that the municipality has a responsibility to provide water to its people, Lepelle Northern Water also shares the same responsibility to ensure that the boreholes are working and that the people in Giyani have drinking water”, she added. She wanted to know how many of the 55 villages in the municipality are now receiving clean drinking water.
Secondly, she said that Nandoni bulk-water looks like a sewer pit and that she is not sure whether COVID-19 and the protests delayed the project, since it is moving at a slow pace. The last time the Committee visited the project, the Department was there trying to intervene. She wanted to know the causes of the delays in that project and the conflicts that emerge between the Department, the entity, and the traditional authorities around the area and whether they have been resolved. Ms Tseke said that a deficit of R90 million is a cause for concern on the cash flow to pay creditors and that debts owed by municipalities to water boards have been and are still a recurring problem. She wanted to know the legal steps taken by Lepelle Northern Water against its defaulting debtors. She said that the Committee had also visited another water treatment plant in Limpopo that had brand new infrastructure and was officially opened by the former president together with the former minister, but after a short period of time, the treatment plant was not working. She wanted to know how far the entity has gone in terms of intervening in that water plant. She said that Bloem Water indicated that in Thaba Nchu, out of 67 boreholes that have been drilled, only 26 have been equipped. She asked when the outstanding boreholes are going to be given attention.
She also expressed that the matter of female representation in the staff of water boards is non-negotiable and the undermining of females in the workplace will not be tolerated. She said that the female representation in top management positions should be improved in Bloem Water.
Ms R Mohlala (EFF) said that DWS should provide a template for presentations for the water boards so that the issue of time is factored in because the way the water boards are rushed to finish their presentations within the allocated time looks very unprofessional. She said that Lepelle Northern Water presented a material finding in the audit report related to the achievements reported in the Annual Performance Plan, which materially differed from the supporting evidence provided for strategic objective one – the provision of equitable and sustainable regional water and sanitation services. She asked if there are internal controls or quality assurance implemented in the entity to ensure that the AG receives verifiable information.
She also wanted to know if there are systems in place to correct this basic accounting principle. She said that the entities and their representatives who provide presentations in front of the Portfolio Committee need to understand that the UIFW expenditures that they talk about are the hard-earned money of taxpayers. “The issue of fruitless and wasteful expenditures must come to an end because it is corruption”, she added. She asked Lepelle Northern Water to explain the fruitless and wasteful expenditure amount of R799 000 reflected for interest and penalties, as well as the amount of R12 million incurred on irregular expenditure due to not following a competitive bidding process. She also wanted an explanation of why the debtors are not paying their bills.
In terms of Bloem Water, Ms Mohlala asked for an explanation of the R4 million incurred on irregular expenditure due to non-compliance with local content. She said that the debtor’s collections for both Lepelle and Bloem Water are not adequate, as there is significant increase in the provision of impairment of receivables, which will have a negative impact on service delivery for future capital projects. She asked both water boards to clarify and provide strategies to address this problem.
Regarding Amatola Water, she asked what the extent to which there is political interference on the appointment of board members to the water board was. “Although whistle-blowers’ accounts of governance and water institutions are dismissed by the political heads of the DWS, there needs to be an interrogation of whistle-blowers’ reports”, she added. She wanted to know why the financial statements and supporting evidence were submitted late to the AG. She also asked why the 2019/20 annual report was only tabled to Parliament on 13 July 2021, adding that this is a poor reflection on the water board as well as DWS. “It is also concerning that Amathole District Municipality does not want to enter into a long-term agreement with Amatola Water Board, which puts the security of its revenue at risk”, she said. She wanted to know the reasons for this and how Amatola Water plans to offset this future revenue stream to ensure financial viability.
She said that another area of concern is debt management, saying that it is a huge problem that impacts on cash flow and financial viability, as Amathole District Municipality is in serious financial trouble. She said that both Bloem Water and Amatola Water are at risk due to the inability of municipalities to pay off their debts and asked both water boards to provide details on how they are planning to deal with this problem.
Ms S Mokgotho (EFF) said that Lepelle Northern Water mentioned challenges relating to vandalism, dilapidated or aging infrastructure and lack of cost recovery in their presentation and wanted to know why they always mention the same problems year after year. She asked what measures were put in place to stop vandalism once and for all, and how the Board is effectively dealing with the problem of dilapidated and aged infrastructure. Ms Mokgotho also asked how the water board plans to reduce the deficit of R98 million in operating activities. She also wanted to know whether the water board has conducted any consequence management for the irregular expenditure of R21 million and fruitless and wasteful expenditure of R2 million. If they have already applied consequence management, who was responsible for the irregular and wasteful expenditure?
Bloem Water also mentioned that their challenges include deteriorating raw water quality and aging water infrastructure, which are serious issues because they include a health hazard. She wanted to know how soon the entity plans to address the problem and whether they have an effective plan in place to improve the situation. She also asked the entity to provide an outline of the maintenance strategies or plans for the maintenance or replacement of the aging water infrastructure.
Ms Mokgotho asked why the process of addressing the percentage of employment equity is very slow in Bloem Water and added that the entity is very silent about its consequence management plans for the R4.1 million irregular expenditure. In terms of Amatola Water, she asked the Deputy Minister about the timeframes of the filling of vacant executive positions such as the CEO and CFO positions in the water board. She said that she was not surprised that Amatola Water received a qualified audit report, as they stated in their presentation that their effective internal controls and risk management are at 10%. She asked if they have an effective plan in place to remedy this situation and wanted to know if the water board has a plan to reduce the deficit of R14.9 million.
Mr R Mashego (ANC) wanted to know DWS’s opinion on the recommendation from Bloem Water that the provincial government grants be paid directly to the water boards instead of municipalities, as the municipalities continue failing to pay the water boards even when they receive grant payments from government.
Mr Mashego asked that Lepelle Northern Water provide the Committee a full report of the sequence of events that led to the resigning of the CEO and the dispute that the CEO had with the Minister that led to court cases being opened. This was because the Members needed to know the details of the situation so that they can be able to address it when speaking to the people of Limpopo and would also help in the mending of the relationship between the water board and the municipalities.
He wanted to understand the process of digging the boreholes, as his understanding was that they are supposed to be community orientated rather than household oriented. He wanted to know the level of efficiency they provide when they are operating in a household-oriented manner than when they are community oriented.
He said that, under normal circumstances, Amatola Water would not have to account for the annual report because they were appointed in March 2021, when the financial year that is being discussed, 2019/20 ended in February 2021. The new board is reporting on problems that existed before they were appointed. “Therefore, we must appreciate that they took those issues as their own and committed to solving the issues”, he said.
Ms N Sihlwayi (ANC) agreed with Ms Mohlala that there needs to be a set structure for the presentations of the water boards because some of the information that they present to is weakened by the structure of their presentations. She said that the boards need to be able to present solutions or the initiatives that they are taking towards solving their problems when they meet with the Portfolio Committee, instead of dwelling on the challenges that they face. The Committee wants to know the impact that the boards are making in communities given the budgets that are allocated to their projects. She said that Amatola is an organisation that should possess the necessary skills and quality to be able to get its debtors to pay the money that they owe them, but in their presentation, they did not mention their solution to the municipalities not paying them. “The programme performance must be accompanied by the skills of the individuals in the establishment”, she said.
The Chairperson said that there was a report in the media of a township in Giyani where the Letaba Dam is unable to supply the township with water, with the problem being farmers closing the water streams to the township. Lepelle was tasked to report back to the Portfolio Committee on that issue, and one of the other challenges in that township was the reticulation that was done by the district, which was not working, and there was no working relationship between the district and the water board. She wanted to know if those issues have been resolved by the water board. She pointed out that there have been outstanding issues around the pipelines and illegal connections, where the people of Collins Chabane Municipality complained about the not receiving clean water. She wanted to know whether those issues have been resolved.
In terms of Bloem Water, she said that the Committee acknowledges that Mangaung has had some problems and the premier has intervened. She wanted to know the progress with the other municipalities that have not been paying their debts to the water board. She said that the Deputy Minister needs to take the matter up with the National Treasury, as it provides municipalities with money for indigents. The indigents money is supposed to assist municipalities to pay the water boards. She said that SALGA raised a point that the indigent money is not equivalent to the amount that would be given to individuals by National Treasury. How far the Department is in raising that issue with National Treasury?
On Amatola Water, she said that the issues that need to be investigated need to be handed over to the SIU and other investigation units, as it does not do justice for such issues to be discussed with the Portfolio Committee. In terms of the format of presentations, she said that the Public Management Act directs what the water boards or any other entity of government should do to give out the information that is needed. The Portfolio Committee itself needs to decide on how to handle presentations, moving forward.
Amatola Water Board
Mr Xalisa welcomed all the questions and comments from the Portfolio Committee and added that the board wants to go back to its glorious times, most importantly by serving the people of the Eastern Cape province in terms of providing water as one of their basic human rights. He said that the board has done the process of recruitment of the CEO and the recommended potential candidates were escalated to the shareholders, which is where the final appointment of the potential CEO will be made. He said that the board is working very hard to ensure that the challenges that the entity is facing are resolved.
Mr Qweleka said that Amatola Water submitted the financial statements to the AG on time and there were challenges that were experienced by the AG in terms of completing the report, and COVID-19 was also impacting heavily, especially during the time when they undertook the audit. Subsequently, the AG presented to the Committee in terms of the delays that they experienced, but that also led the AG into delaying the provision of the final report to Amatola Water, which was eventually received by the entity in March of the current financial year. Amatola Water was late in tabling the annual report, which is a consequence of what had happened, alongside the issues of capacity. The board that came in is here to ensure that while strengthening the capacity, it will also observe the protocols in terms of submitting those reports with the board. The board had to make sure that the governance structures that will deal with the financials, and reports are in place so that they will have followed all the correct processes. He said that Amatola Water experienced the challenge of the debts and ended up involving the legal entities to ensure that they recover the debts, but the Department said that they should not proceed with the legal proceedings and go back to the issues of IGR (Inter-government Relations Policy and Regulation). Amatola Water, the Department, National Treasury, and the Department of Cooperative Governance and Traditional Affairs (CoGTA) are collaborating to try and recover this debt. Amatola Water is working very closely with Amathole District Municipality to ensure that they minimise the losses that they are incurring because of their meters to assist them to manage them better, but the pandemic has been a challenge for them as well. Amatola Water is also involved in the task team that talks about the financial recovery of the institution, which is Amathole District Municipality, to ensure that they are sustainable as an institution.
He said that, as an institution, Amatola Water has embarked with their cost containment measures in trying to make sure that they cut down all the non-discretionary expenditures and make sure that they minimise as much as possible on the input costs that they are incurring so that they can be efficient. He said that the issue of UIFW expenditures is linked closely with the issue of the debt that they are owing with the Department because they are not able to collect from their debtors, and are thus unable to pay their creditors. In terms of the internal audits and the 10% deficit, Amatola Water targeted to deal with all 20 findings, but they only managed to complete 10 of them. One of the findings that they dealt with was that the entity did not have an internal audit due to the passing of the internal auditor. A new internal auditor was appointed and is assisting intensively towards ensuring that, moving forward, such issues are dealt with ahead of time.
Mr Unathi Mbali, Acting CFO, Amatola Water Board, indicated that, as part of their section 30 activities, Amatola Water is implementing projects that are aimed at addressing the water challenges in Nelson Mandela and the areas of Makana, on behalf of the Department and on behalf of water service authorities. The infrastructure master plan of Amatola Water, which is being developed, comprehensively looks at how they will act in the gazetted operations where they are supplying water in Buffalo City and Amathole District Municipality, as well as the Ndlambe area. There are projects that are in the infrastructure master plan, which also informs the growth strategy of the entity itself and addresses the water challenges and the issues that are being experienced. An assessment on irregular expenditure is being conducted to get the entity in a position to implement consequence management.
Bloem Water Board
Mr van Oudtshoorn said that the boreholes that were left out did not warrant enough quality to be equipped and some of them were dry.
On employment equity, he said that the board is aligned to its five-year plan and added that female representation in the top management of the entity is 60%. “It is on the lower levels, such as the technical staff that are still falling short with female representation. But in general, we have improved on this and we are still working on improving female representation”, he said.
In terms of irregular expenditure, he said that the problem with the R4.1 million that was indicated in the AG report was that the local content requirements were the biggest portion of the value, and the numbers as well. The procurement processes included standard bidding documents 6.2 and Annexure C, which were included; the AG findings were that the request for quotations should have included it as well and as part of the process, the entity should have submitted to the Department of Trade Industry and Competition (DTIC). The appointment would have not changed and there was no money lost, as it was a procedural thing that the entity did not comply with. Most of the issues had to do with the correct procedure not being followed correctly However, there was no money lost in all those occasions. The entity has also followed legal processes, in terms of the Worker Services Act, the Municipal Finances Management Act, as some of the debts have been outstanding for a while, with the metros for five years and the smaller municipalities for a longer period.
On the deteriorating raw water quality, he said that the problem is not the quality of water that the entity provides, but rather the quality of water that they receive from the rivers. On the maintenance programmes, he said that funding is always a challenge, but Bloem Water has got maintenance plans in place, which work on a day-to-day basis and refurbishment plans for specific equipment.
Lepelle Northern Water
Mr Mathebula said that the Deputy Minister has been part of the Nandoni intervention to try and assist in terms of the traditional leadership in relation to communities that have been blocking and making it difficult for the water board to implement the project. Lepelle Northern Water also visited most of the communities to create an understanding with them for an intervention to be done. The entity also held meetings with different stakeholders in the area to give them an update on the implementation and project plans. He said that Giyani has been a topic of discussion for quite some time, and the water board wants to come to the Portfolio Committee with an action plan that will give a specific timeline of the finishing of the intervention, as well as the costs of the project and the possible interventions that would be required from the Department and from Parliament.
He said that the interim board of Lepelle Northern Water intervened at two of the municipalities that had the highest debts, and those municipalities have now begun to honour their debt repayment. The entity is now almost in the green in terms of its finances because of those arrangements.
On the matter of the previous CEO, he indicated that the SIU has been engaged with the matter, but he does not want to engage on the issue between the previous CEO and the Minister, as the former CEO is no longer an employee in the entity.
Mr Netshidaulu responded on the 55 villages that were without drinking water, the situation has been resolved and the issue was that the project needed to be completed and handed over to the municipality. On villages that were receiving water, he said that the entity had prioritised pipelines that were near completion.
He said that material finding number one was based on the calculation of the achievement of the targets in terms of water quality. But when doing manual calculations, they were not getting the same figure, which is why this was raised as an issue. The internal controls are there so that these things can be practiced on a quarterly basis to pick up any inefficiencies and solve them. The internal audits are there to check the effectiveness of the controls. The entity has also adopted a systematic management approach where everything will be done systematically so that information is captured correctly. Investigations on all the irregular expenditure and the consequence management are still in progress. To deal with vandalism of infrastructure, the entity has established a Multi-Stakeholder Steering Committee, which is currently working but has been disrupted by the lockdown.
In terms of cost recovery, Lepelle Northern Water is looking at the value chain, where they assist the municipalities by doing presentations and aiding their recovery of costs on the downstream from the reticulation sites so that the entity can he paid by the municipalities.
Mr Netshidaulu said that, in terms of the R98 million, they are focusing on increasing sales to start with so that they can benefit from economies of scale and be able to help fund some of their activities. He said that they also have the cost containment strategy and cost containment plan, which they presented to the board for overseeing to ensure that efficiency in their operational activities is enhanced.
Department of Water and Sanitation
Deputy Minister Mahlobo said that the issues related to the debts owed to the water boards have not been concluded, but they have been included as part of the broader issues that the state has been trying to intervene on through the Deputy President. In the meantime, while these issues have not been resolved, the water boards are within their authority in terms of the law to proceed with handling those issues in the same way that Bloem Water has done.
He said that, on the boreholes matter, in certain villages they could see that most households have drilled their own individual boreholes, which would fall under stable one, in terms of authorisations for use. He said that there needs to be an improvement on the submission of oversight reports to the Portfolio Committee by the Department and the different water boards. He said that the water boards have been crucial in saving municipalities that are failing, except for Mangaung, as the municipality was mismanaged from the onset.
The Deputy Minister said that they are very pleased that there is stability in Amatola Water and that there is a board that is working. He said that he foresees a good working relationship between the board and the Department, especially because within four months of their appointment, they managed to fast-track the appointment of the CEO. He said that the Ministry should be concluding the process of appointing senior staff for the water board, as they are currently deliberating on such matters. “We have to strengthen our oversight responsibility and the remedial action plan to check whether the remedial action plan that was put in place during the previous financial year has been adhered to”, he added.
Ms Mohlala wanted to know what DWS is doing to protect water infrastructure in the country during this period, especially with the violence and looting happening around the country, as a water treatment plant was set on fire in KwaZulu-Natal. She said that the Chairperson had promised to invite the TCTA because there are certain things that the Committee did not understand after the visit to Lesotho and asked her to do a follow-up on the matter.
Responses by Deputy Minister
Mr Mahlobo said that DWS condemns the acts of violence perpetrated, as well as the damage to property and looting of goods and services. He said that they support the interventions made by the President of the country and added that their appeal is that citizens need to exercise restraint and calmness, as the infrastructure that is being damaged is very important and belongs to all people. “The people also have a responsibility to guard the infrastructure and we commend the communities that stood up and said, “Not in our names!” These acts of violence and criminality must be dealt with decisively”, he added. The affected water infrastructure belongs to a water services authority in KZN, and it is going to have a major negative impact on the delivery of water services to the people because it also plays an important role in the economy of KZN. The main infrastructure that is managed by the Department has proper security and most of the infrastructure installations are safe now. He said that any citizens who witnessed the crime need to report it to the authorities.
Closing remarks by Chairperson
The Chairperson thanked the Deputy Minister and the delegation from the Department, as well as the three water boards for availing themselves for the meeting. She said that the Lesotho visit is in the pipeline, as the plan was to first consider the annual reports of the boards and then look at the trade plans, but they have not been tabled and the agreement with the Committee Secretariat was that the Lesotho report will be dealt with alongside the trade plans. She said that the Committee will postpone the trade plans and start with the Lesotho report, as it will be very helpful for the Committee even after this engagement.
The meeting was adjourned.
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