The Committee convened in a virtual meeting to be briefed on the annual performance plans for 2022/23 of the Breede-Gouritz Catchment Management Agency, the Inkomati-Usuthu Catchment Management Agency and the Trans-Caledon Tunnel Authority.
The Breede-Gouritz Catchment Management Agency (BGCMA) said the current Greater Brandvlei water scheme project was to improve people’s lives by completing a feeder canal to the Brandvlei Dam, which would increase job creation and economic growth. Its presentation included plans to capacitate historically disadvantaged individuals and resource-poor farmers with water supplies and water resource protection through maintaining good water quality. The proposed budget was R82m, up from R75.1m, a 9.18% increase. The Minister was looking at expanding the Agency's services throughout the Western Cape.
The Inkomati-Usuthu Catchment Management Agency (IUCMA) said water pollution in the area came from municipal wastewater plants operating at overcapacity and beyond their service lifetimes. It planned to increase stakeholder satisfaction levels, enhance human resource capabilities, maintain financial sustainability and protect water resources. It pointed out that during droughts, it found itself in a situation where it had to implement restrictions without being delegated the power to do so. Key projects for 2022/23 included river cleaning and alien vegetation removal, the transformation of irrigation boards to water use associations, stakeholder empowerment through training and employment creation, and the implementation of a groundwater strategy. Among its challenges were the increased international obligations to Mozambique, hence the need for the Mbombela Dam, and the expansion of the water management area to include the Pongola Catchment.
The Trans-Caledon Tunnel Authority (TCTA) said its work was aligned with government priorities in the form of a massive rollout of infrastructure. It was also involved in the development of black businesses through enterprise development, emphasising women, youth and people with disabilities; job creation and employment of local citizens; skills development; the provision of bursaries to deserving students from previously disadvantaged backgrounds; and poverty alleviation. Some of its challenges in implementing projects were the raising of funding, debt management, delays in agreeing funding models with project beneficiaries and obtaining their commitment to sign off-take agreements.
Members asked about the influence of the "construction mafia" in water infrastructure projects; the extent of transformation in the construction industry, and whether women and youths were fairly represented; whether the Water Research Commission’s technology was being used to assist in the removal and clearance of invasive aliens species and the removal of water hyacinth; what their view was on the way wetlands were being rehabilitated; what the challenges were regarding the change from irrigation boards to water user authorities; how acid mine drainage was being managed; and why the Berg River Dam budget was being increased. Members said there was a need for the upskilling of the youth, notwithstanding the paucity of finance; otherwise, there would be a brain drain.
Ms Lusenga Lindiwe, Deputy Director-General (DDG): International Water Cooperation, Department of Water and Sanitation (DWS), tendered the apologies of Director-General, Dr Sean Phillips, and said she would be representing him in the meeting.
Minister Senzo Mchunu said the Department had had interactions with the Breede-Gouritz Catchment Management Agency (BGCMA) and was looking forward to implementing their plans. This year, the Department still had to have engagements with the Inkomati-Usuthu Catchment Management Agency (IUCMA), but it had had some interaction with the Trans-Caledon Tunnel Authority (TCTA).
2022/23 Annual Performance Plans
Breede-Gouritz Catchment Management Agency (BGCMA)
Mr Bongani Mnisi, Board Chairperson, BGCMA, said the current Greater Brandvlei water scheme project was to ensure people’s lives improved by completing a feeder canal to the Brandvlei Dam, which would increase job creation and economic growth. The 30m increase in wall height would lead to a 15% increase in agricultural yield.
Mr Jan van Staden, Acting Chief Executive Officer (CEO), presented the BGCMA annual performance plan (APP), covering water resources management, water use management and legal water use, institutional and stakeholder relations and their awareness of water resources management; and also empowered stakeholders. It also addressed water allocation reforms and the capacitation of historically disadvantaged individuals (HDIs) and resource-poor farmers with water supplies; water resource protection through maintaining good water quality; strategic support through compliance with financial reporting prescripts and the filling of approved posts; and management and governance through compliance with corporate governance regulatory prescripts.
Ms Zanele Mngoma, Chief Financial Officer (CFO), said the proposed budget was R82m, 9.18% up from the previous R75.1m. Employee-related costs would increase by 7.7% due to the filling of vacancies, and the repairs and maintenance budget would increase by 24.76%. She said the Minister was looking at expanding BGCMA's services throughout the Western Cape. Referring to the funding sources, she said 49% of the budget would be funded through augmentation from the DWS. This amount included water transfer to the Berg Olifants water management area. The DWS collected the water charges on behalf of the Agency in terms of an agreement where the Department would transfer the money back to the BGCMA, and 40% would be funded through direct billing and collections of water resource charges.
Inkomati-Usuthu Catchment Management Agency (IUCMA)
Mr Sam Mthembu, Board Chairperson, said water pollution in the area came from municipal wastewater plants operating at overcapacity and beyond their service lifetime.
Mr Lucky Mohalaba, Chief Executive Officer, said the Incomati-Basin and Inkomati-Usuthu Water Management Area were part of the IncoMaputo River Basin covering Mozambique and Swaziland and operated under the Interim IncoMaputo Agreement (IIMA).
He said the IUCMA's APP outcomes were increased stakeholders' satisfaction levels, enhanced human resources capabilities, maintaining financial sustainability and protecting water resources. He then addressed the IUCMA programme targets for the output indicators, the strategic risk-mitigation plan for reputational risk; information communication technology (ICT) systems; unsustainable financial resources; and a decline in water security. Referring to water resource management, he said the IUCMA was responsible for water resource management functions within its area of operation, but the water use authorisation function was currently not delegated to the IUCMA. Water quantity and flow management were also not delegated to the IUCMA. During droughts, it found itself in a situation where it had to implement restrictions without being delegated the powers to do so. He said the economy of the water management area was highly dependent on water, with forestry, irrigation-based agriculture and eco-tourism as the main economic drivers. The IUCMA also managed the Kwena and Inyaka Dams.
The key projects for 2022/23 were the expansion of the monitoring network for the quantity and quality of water; disaster management; river cleaning and alien vegetation removal; waste discharge charges; water conservation and demand management; pollution remediation; ecological risk assessments; the water allocation plan and water allocation reform programme; pro-active support to HDI water users in application processes; transformation of irrigation boards to water use associations; stakeholder empowerment through training and employment creation; the audit and billing of water users; and the implementation of a groundwater strategy.
The proposed budget for 2022/23 was R147.9m, of which R96.8m would be for salaries and wages. The financial challenge was that total projected revenue was expected to be R50.7m (29%) less than actual cash received, because of the 23% reduction in the parliamentary grant; the expected 40% reduction of catchment management area (CMA) charges due to bad debt; and the projected R1.5m (3%) loss of revenue from CMA charges due the misalignment of proposed versus approved tariffs. The impact of the budget cuts was that the budget was not sufficient to cover all personnel and critical contractual obligations. Critical earmarked activities which would remain unfunded were valued at R50.7m, which would result in a reduction of the Agency's ability to fully execute its mandate and overall public value, cessation and/or downsizing of key strategic projects, and immediate suspension of any further appointments to critical positions.
In the short term, the proposed action plan was to engage urgently with the Department to revise allocations for 2022/23 to ensure effective delivery of the IUCMA mandates and approved strategic outcomes and the implementation of debt management and cost containment strategy. In the long term, the plan was to identify other revenue streams to augment already strained sources and to engage the Department to review and redevelop a sustainable funding model.
The challenges the IUCMA faced included the increased international obligations to Mozambique, hence the need for Mbombela Dam; the slow pace of transformation; the bulk water allocated to irrigation boards; costly maintenance of integrated decision support systems; and the expansion of the water management area to include the Pongola Catchment.
Trans-Caledon Tunnel Authority (TCTA)
Mr Percy Sechemane, Chief Executive Officer, said goals of the TCTA included raising funding for the implementation of infrastructure goals; to manage debt; to effectively control corporate expenditure; to ensure the organisational positioning for the planned water agency; and to clear irregular, fruitless and wasteful expenditure.
Its contribution to government outcomes were, amongst others, providing cost effective water infrastructure as an enabler of economic growth and jobs; developing a strong skills set in scarce fields; developing infrastructure in an environmentally responsible and socially inclusive manner; and contributing to the development of critical knowledge in the sector on project financing and implementation, desalination, and water re-use.
Its work was aligned to government priorities in the form of the massive roll out of infrastructure of the uMkhomazi Water Project Phase 1, which was at the preparation phase; the Mokolo Crocodile Water Project, which was at the implementation phase; the Berg River Voëlvlei Augmentation Scheme (BRVAS); the Lesotho Highlands Water Project (LHWP) Phase 1; and the operation and maintenance of acid mine drainage (AMD). Its transformation strategy included its procurement policy reform for goods and services, as well as for infrastructure development and the provision of economic opportunities to previously disadvantaged individuals through preferential procurement. It was also involved in the development of black businesses through enterprise development, emphasising women, youth and people with disabilities; job creation and employment of local citizens; skills development; the provision of bursaries to deserving students from previously disadvantaged backgrounds; and poverty alleviation.
Projects funded and implemented by the TCTA and their economic impact were, for example, the uMkhomazi Water Project, the Mokolo Crocodile Water Project, the Berg River Voëlvlei Augmentation Scheme, and the Lesotho Highlands Water Project.
Some of the challenges it faced in implementing projects were the raising of funding, debt management, and delays in agreeing funding models with project beneficiaries and obtaining their commitment to sign off-take agreements. Funders had a reduced appetite for lending to state-owned enterprises (SOEs), generally tight lending conditions. On debt management, challenges included municipalities’ ability to pay water tariffs, ensure that tariffs were affordable and sustainable to assure the viability of water sector institutions and tighter conditions of regulatory approval for borrowings, and reduced flexibility to deal with unforeseen liquidity challenges.
Ms Busisiwe Shongwe, CFO, gave a brief analysis of the budget. She said staff costs were a major administrative cost driver, so staff levels had to be optimised to consider the uncertainty surrounding newly mandated projects. There had been significant investment to improve IT infrastructure and systems. She addressed the budget and funding requirements of the TCTA.
Ms R Mohlala (EFF) said the Water Research Commission (WRC) had undertaken a study on women’s involvement in TCTA projects. Could the TCTA provide details on the study's findings and to what extent measures were in place to address gender inequalities in the construction industry?
She said the construction industry in South Africa was mired in so-called mafia operations to secure large construction and infrastructure projects. Had the TCTA encountered this, and how was it being addressed?
What percentage of the construction industry was transformed to facilitate the entrance of black companies into the market?
She said the TCTA presentation had highlighted the likely financial risks it would encounter. What measures were in place to mitigate against them, and how was Treasury supporting the creation of an enabling environment to ensure smooth operations?
She asked the BGCMA if it had used any of the Water Research Commission’s technology to assist in the removal and clearance of invasive alien species and the removal of water hyacinth.
On the rehabilitation of wetlands, she asked if the catchment management agencies had identified compromised wetlands in their areas of jurisdiction. What was their view on the way wetlands were being rehabilitated? She said catchment management agencies (CMAs) were better positioned to deal with water allocation in terms of drought and climate change. Was the delay in establishing all CMAs stymieing the work of the Department?
Ms G Tseke (ANC) said the President’s State of the Nation Address (SONA) had emphasised job creation. What were the entities doing to contribute to this? How were the agencies taking cognisance of climate change and developing adaptation and mitigation plans in their work? What were the entities' contribution to the Department’s targets on procurement set asides for qualifying small enterprises and the exempted micro enterprises owned by youth and people with disabilities? She said the BGCMA presentation had been generic regarding the three vulnerable groups. What were the challenges regarding irrigation boards with water user authorities?
She said the TCTA had implemented projects across the country and reported bursary allocations to students. How many bursaries were issued since the programme’s inception? The TCTA had said there were engagements between it and the Department on the planned establishment of a national water and sanitation infrastructure authority. How different was this to the National Water Resource Infrastructure Agency?
On the BGCMA rollover of R3m of its budget, she asked why the allocation was not spent and whether they had the capacity to spend the R11m budget for current projects.
Referring to the 2017 drought in the Western Cape, Ms C Seoposengwe (ANC) asked how Grabouw farmers had been allowed to keep substantial amounts of water. What accounting systems were in place to allow them to hold such amounts of water? Were the forums mentioned in the presentation reporting these occurrences?
Were any black companies involved in river rehabilitation programmes, and what was the ratio of their involvement? Was there any accounting of the boreholes drilled by farmers for this water?
She asked the TCTA about the technical issue of the management of acid mine drainage. How did they manage water coming from mines? Why was the Berg River Dam budget being increased? What had the TCTA done to support technical upskilling in the water engineering sector, and could they give a breakdown of how many women and youth per province had benefited?
Ms M Pietersen (ANC) asked if the TCTA had considered qualifying small and micro enterprises' (SMEs') targets in their procurement plan.
She asked the IUCMA how many previously HDIs and resource-poor farmers were being supported and if it was ensuring that the latter had a water supply.
The Chairperson said that for the last two to three years, there had been problems around TCTA operations. To what extent had these issues been fixed?
He asked IUCMA for more information on the difficulties it faced at Inyaka Dam, which sometimes dried up. At one point, it was operated by Rand Water, but the Bushbuckridge municipality now ran it. What were the benefits of the dam being run by the municipality?
He said the Sybrand van Niekerk Dam was too huge. What was happening regarding this dam?
He said the BGCMA claimed it was using 77% of its budget for employee compensation when the acceptable norm worldwide was 25 %. Goods and services accounted for only 11% of the budget, and the Board’s remuneration accounted for 1.3%. It appeared that no operational work was being done.
Mr Sechemane responded to questions directed at the TCTA and those related to the Water Research Commission and women in TCTA projects. He said the size of the TCTA's projects needed to be taken into account. He said that a lot of ground work was done before the project had started. This response would also consider the question of the construction mafia, which was a reality. The TCTA had a unit on the ground that engaged with the communities and traditional leaders to look at available skills to ensure that locals benefited from qualifying micro enterprises. This was how the TCTA rolled out projects. In terms of what the TCTA consumed as a business, it followed Treasury rules on the matter.
SOEs had been stopped from going into the market. Previously the TCTA had the ability to determine the tender parameters, where it could specifically target the youth, women or people with disabilities, but after 2017 this was not possible and it had to follow the state processes. Hence there were women who benefited, but it was limited by the amount of work available. When project financing was funded from outside sources, these sources imposed their own conditions. The TCTA always ensured it followed the rules regarding procurement.
Regarding the construction mafia, he said that when one worked closely with communities, it was easy to deal with the challenge, but it was not foolproof. The issue with the small players was that there were always problems guaranteeing the work they did on multi-billion rand projects. The TCTA therefore engaged with the main contractors on the sub-contractors they employed. This also addressed the issue of facilitating new entrants into the field. If the TCTA set its targets properly for contractors to foster new entrants, there would not be the skills transfer that one was looking for.
He said the TCTA did not have a balance sheet on mitigating funding challenges. The Department and Treasury assisted it, but it was engaged in finding funding sources other than the banks. It was diversifying its sources of funding and even looking at tenderers to provide money. The TCTA worked closely with Treasury to ensure it met their conditions, and it also had to ensure that the costs of funding remained competitive. The projects supported job creation, which impacted many communities.
On the issue of bursaries, he said the TCTA was a small organisation comprising 171 people. It supported seven students with bursaries and had nine interns working at the Agency.
Responding to the National Water Agency question, he said it was the same Agency -- there were no different agencies.
He said there was a history of the issue of acid mine drainage. The issue was that there had not been strong environmental laws in the past. There are currently strict controls in place, and the issue surfaced only when there was no mining activity at a mine.
Regarding the Berg River Voëlvlei Augmentation Scheme and the cost escalations, he said it had been seen as an emergency project and there had been many assumptions made, as there had been no time to do proper costing. The cost escalated because of the long time municipalities and farmers took to finalise water allocations and get final approvals and signed contracts, which could take a number of years.
On technical upskilling, he said that despite the TCTA being a small organisation, it appointed people on a contract basis for projects. That was how upskilling occurred without incurring overheads when there were no projects. He said the TCTA dealt with the Department through a shareholder compact, and the Minister could elaborate on his expectations regarding upskilling.
On the challenges that existed between the TCTA and the Auditor-General of South Africa (AGSA), he said that the TCTA was at a point where AGSA finally accepted the accounting process of the TCTA.
Mr Mnisi affirmed that the BGCMA used the WRC findings on clearing invasive species and worked with the national strategy on invasive species management and the National Biodiversity Act. He highlighted that BGCMA did not clear alien species but worked with small, medium and micro enterprises (SMMEs) to do this, as it was not an operational entity but a services entity. This also answered the question of its budget, where it reflected costs skewed towards the compensation of employees because it hired specialists for specialised inputs.
Regarding identifying vulnerable wetlands in areas that needed rehabilitation, he said the BGCMA had identified the work that needed to be done to ensure water yields were improved through river rehabilitation programmes to clear wetlands in catchment management areas.
He said he would like the question of why it had taken so long for CMAs to decentralise services and reach out to communities to be referred to the Department to answer. The BGCMA responded that there was debate on how many of these entities needed to be created because each entity would have a board. He said the DWS had committed to establishing six entities, but they would be amalgamated in certain areas to save costs. Most of the staff would be drawn from the Department’s regional office, so the CMA budgets would increase while the Department’s budget would decrease.
There had been a question on the BGCMA providing generic information on job creation. He said it was a fair comment, as its work was more catalytic -- creating projects that created jobs and absorbed interns. Rain-water harvesting projects allowed people to irrigate and create employment in this way. It also had internship projects where students from the Western Cape were absorbed through memorandums of agreement (MoAs) at universities for three years to build skills in the sector.
Regarding the 2017 drought, he said the matter was related to farmers' water rights rather than them owning the water, and he was happy that access had been allowed to that water.
On whether farmers drilled their own boreholes, he said they did so following approval through a general authorisation or a water use licence.
Regarding the rollover of the unspent R3m of the budget, he said they could not operate because the budget funds had arrived late from the Department.
Ms Mngoma said the budget rollover was because of receiving the funds late from the Department due to the validation and verification of committed funds and delays in alien vegetation clearing and rainwater harvesting tanks due to the lockdown restrictions. The BGCMA had the capacity to use the budget, and by the end of the current year, it would have used all the money set aside for projects.
Regarding the use of SMEs, she said the BGCMA reported quarterly to the Department on that as a line item.
Mr Van Staden said all water use, including boreholes, was accounted for on the BGCMA system.
On the high percentage of the budget going to salaries, he said water resource management involved providing professional water research services which required specialised skills such as ecologists, engineers and hydrologists.
On employment creation, he said the quicker the BGCMA processed licences, the quicker job creation opportunities were created. Its preventative water pollution efforts, for example, had a positive impact on irrigation and, therefore on farm production and, therefore on farm work job opportunities.
Mr Sam Mthembu, IUCMA Board Chairperson, said the IUCMA did support historically disadvantaged farmers in terms of water licence applications.
Regarding direct job creation, Mr Mohalaba said there were 21 new employees in the organisation. Indirect job creation came through projects to install water tanks and boreholes. Approximately 200 jobs were created in the alien vegetation clearing programme, and there were a further 30 jobs in river cleaning programmes.
The IUCMA played a facilitation role in transforming irrigation boards into water use associations. An internal task team had been established to implement the project and had developed the terms of reference for the Inkomati Water Users Association and the transformation charter for the water users' association. The IUCMA had met with all the irrigation boards, and the 26 boards would be transformed into two water use associations. There were challenges around emerging water users in irrigation districts, as their participation was minimal. The second challenge was the participation and involvement of other water users who were traditionally not within the jurisdiction of the irrigation boards, such as industry.
On the question of Inyaka Dam, he said their participation related to control of the resource in the dam pertaining to the quality and availability of the resource. Meetings were convened quarterly with all users. The dam belonged to the Department.
The IUCMA was looking at developing a climate change strategy that was currently in a draft format and would be finalised in the next quarter.
The Board had allocated R30m to support enterprises and their capacitation in procurement, including ensuring that women and youth prospered.
There was a programme that supported resource-poor farmers, and currently, there are only four beneficiaries. Cooperatives were also supported. He said the Van Niekerk dam was private and was not operated by either the Department or the IUCMA.
He said the IUCMA considered wetlands critical and of the utmost priority when considering water use licences. Conditions were attached regarding the rehabilitation of the wetlands where there was an impact on the wetland
The IUCMA was supporting about 28 HDIs concerning water rights.
Ms Lindiwe said the Department had gone through considering all the entities’ inputs and reviewed their performance quarterly.
Regarding the Inyaka water treatment plant, she said the Director-General had been briefed and was considering the request by the Bushbuckridge Municipality to operate the plant.
Ms Tseke said she thought the Department would have confirmed their engagement with the IUCMA on their budget shortfall and assisted them with their business model.
Ms Seoposengwe said the hoarding of water by the BGCMA was a grey area that needed to be worked on, as the principle was that water was not owned privately.
She said there was a need for the upskilling of the youth, notwithstanding the paucity of finance. Otherwise, there would be a brain drain.
Ms Lindiwe said the Department would work with IUCMA on its budget funding model and the issue of water hoarding and the upskilling of youth.
The meeting was adjourned.
- Breede-Gouritz Catchment Management Agency; Inkomati-Usuthu Catchment Management Agency and TransCaledon Tunnel Authority 2022/23 Annual Performance Plans; with Ministry (Part 1)
- Breede-Gouritz Catchment Management Agency; Inkomati-Usuthu Catchment Management Agency and TransCaledon Tunnel Authority 2022/23 Annual Performance Plans; with Ministry (Part 2)
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