Department of Water and Sanitation 2022/23 Annual Performance Plan; with Deputy Ministers

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Meeting Summary

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Water and Sanitation     

The Select Committee on Cooperative Governance and Traditional Affairs, Water and Sanitation and Human Settlements met virtually to consider the 2022/23 Annual Performance Plan and budget of the Department of Water and Sanitation.

In its 2022 estimates of national expenditure, the Department has been allocated R59.6 billion over the Medium-Term Expenditure Framework, which translates to a budget allocation of R18.5 billion in the 2022/23 financial year.

The Department's budget allocation for 2022/23 is the Compensation of Employees, which amounts to R1.836 billion, Goods and Services at R1.770 billion, Transfers and Subsidies at R10.528 billion, and Payments and Capital Assets at R4.404 billion.

The Department’s projects were not easily implemented because of the restrictions of the COVID-19 pandemic and the challenges caused by floods in KwaZulu-Natal, the Eastern Cape, and North West.
One of the precarious challenges the Department is faced with is revenue collection from both the water boards and the municipalities. Proper billing systems are also being developed.

Members raised concerns about the appointment of the new contractor for the Windberg Bulk Water Supply Project and the R275 million which was budgeted for the project over the next three years. The main concern was the project was designed by a specific engineer who completed all the feasibility checks, but this was later denied by the municipality, who said the contractor had delayed the project and replaced him. Members said the new contractor seems to have some dodgy links based on former directorship and noted the contractor comes from the same town as the Municipal Manager. The municipality in question has a 16% collection rate and is untrustworthy during the implementation stages of the project.

The Committee asked which initiatives or plans were in place to capacitate water service authorities, as it was clear water service authorities were experiencing a lack of capacity. Members wanted to know how the Department was utilising the District Development Model platform, how the Department managed rotation levels in dams, and if it assessed the areas surrounding dams to see if they were managed from a conservation point of view and an access point of view.

The Committee said the bucket system should already have been eradicated last year and highlighted the Department’s underspending on infrastructure. Members wanted to know how this would be turned around. The Committee also raised questions and concerns on fruitless, wasteful, unauthorised, irregular expenditure and the consequence management. The Committee pointed out the Giyani Bulk Water collapse as there were allegations of corruption around the matter. The Committee heard the Department was experiencing a backlog in issuing Water Service Licences, which should be issued within 90 days. The Department committed to remedying the situation by June 2022. Members were concerned about sewage leakages and contaminated boreholes not fit for human and animal consumption.

The Committee also asked about a project called War on Leaks, which had been an unauthorised expenditure of R641 million, R3 billion in accruals and payables. The Committee asked how contingency liabilities and litigation against the Department were catered for.

The Committee said the Department’s budget of R18.5 billion for the 2022/23 financial year was not enough for the water issues, but the Committee remained committed to working with the Department to fulfil its mandate.

 

Meeting report

Absence of the Minister
Deputy Ministers of Water and Sanitation, Ms Dikeledi Magadzi and Mr David Mahlobo, were present.

The Chairperson asked why the Minister was not present.

Deputy Minister Magadzi said the Minister could not attend the meeting because of prior commitments.

The Chairperson said the Committee wanted to hear how the Department was dealing with communities who needed water the most and dealing with issues connected to water tanks, as this was a problem. The Committee wanted to ensure the Department was doing the necessary infrastructure development. Over the past few years, the water boards were also experiencing serious political issues and leadership issues. The Committee wanted to know which challenges the Department faced. Lately, the Department has been involved in matters related to Section 63 of the Water Services Act, intervening in municipalities not fulfilling their obligations. The country had been bedevilled by floods that had taken so many people's lives, particularly in KwaZulu-Natal (KZN), the Eastern Cape, and the North West. The Committee wanted to know how these provinces would be assisted and how funds would be utilised.

Mr G Michalakis (DA, Free State) asked about the nature of the Minister's other commitments.

Deputy Minister Magadzi said the Minister was doing political work in the Eastern Cape, which could not be handed over to anyone else. She said the project was not easily implemented because of COVID-19 restrictions and the challenges caused by floods in KZN, the Eastern Cape, and North West. She presented a brief overview of the performance plans.

The Department’s budget was R18 billion for the current year. The Department believed it would achieve several of its goals and was aspiring to work towards issues of transformation and aligning water boards to work with municipalities to ensure effective service delivery and eliminate working silos.

President Cyril Ramaphosa said in his State of the Nation Address (SONA) that within 90 days, water use licenses should be issued. The Department was working well to achieve this. One of the precarious challenges the Department is faced with is revenue collection from both the water boards and the municipalities. Proper systems of billing are also being developed. From 1 April 2022, the Department has filled the Chief Financial Officer (CFO) and several other vacancies. There are also two Deputy Directors-General (DDGs) awaiting Cabinet endorsement. Several projects and mega projects will be executed within the current financial year.

Mr I Sileku (ANC, WC) asked when the date for the meeting was set and if the Minister was aware of it. He said political work could not excuse absence from parliamentary work. Some Members of the Committee had been in meetings all day long and were still present at the meeting. The Minister’s absence was a sign of disrespect and it was unacceptable.

The Chairperson said the Minister was not present to defend himself and sent an apology through the Deputy Ministers. The Committee could take up the matter with the Minister later.

Deputy Minister Magadzi said the Department would always touch base with the Committee to ensure it is involved in its work.

Overview of the 2022/23 Annual Performance Plan and Medium Term Expenditure Framework Budget of the Department of Water and Sanitation (Vote 41)
Dr Sean Phillips, Director-General, DWS, and representatives from the Department presented an overview of the 2022/23 Annual Performance Plan (APP) and the 2022/23 to 2024/25 Medium Term Expenditure Framework (MTEF) estimates of the Department.

[Refer to presentation slides for detailed tables and figures]

Discussion
Mr Michalakis said he was pleased the DG said any acts of corruption would be dealt with appropriately. On 2 December 2021, during House questions, Mr Michalakis said he asked Deputy Minister Magadzi if she would be willing to investigate the appointment of the new contractor for the Windberg Bulk Water Supply Project and the R275 million budgeted for the project over the next three years. He asked if the investigation was initiated and, if so, how far the Department was with it. He said the project was designed by a specific engineer who also completed all the feasibility checks, but later a municipality denied this and said it had delayed the project. The Department had to prove it was not the contractor who had delayed the project. The municipality which had been implementing the project replaced the contractor. The new contractor seems to have some dodgy links based on its former directorship, and the contractor comes from the same town as the Municipal Manager. The previous contractor’s work has been used, but he has still not been paid for this, which caused his business and employees to suffer.

Mr Michalakis asked how far the investigation into the dismissal of the initial contractor was and asked about the appointment of the new contractor. He also asked when the contractor who did the initial work would be paid; and if the Department would be willing to take over this project given the amount of money budgeted for it over the next three years. The municipality that will implement the project has a 16% collection rate and has already been shown to be untrustworthy during the implementation stages of the project. He said he feared the project might not become a success.

Dr Phillips said the Internal Audit Unit (IAU) is investigating the case referred to the Department.

Ms S Shaikh (ANC, Limpopo) said assessment of water service authorities was not covered in depth in the presentation and she asked for more details on this. She asked what the Department’s findings on this were and what initiatives or plans are in place to capacitate water service authorities. It is clear water service authorities are experiencing a lack of capacity. She asked how the Department utilises the District Development Model (DDM) platform and at what level the Department is engaging on this.

It is important to manage climate change and its impact on water resources and the impact around the catchment areas.
Ms Shaikh asked if the Department managed rotation levels in dams and if it assessed the areas surrounding dams to determine if it is managed well from a conservation point of view and an access point of view.

She asked about eradicating the bucket system, as the Department should have done away with it last year.

She also asked what the Department is doing about this and when it can be expected.

She highlighted underspending on infrastructure and wanted to know how this would be turned around.
On fruitless, wasteful, unauthorised, and irregular expenditure, she asked what had happened around consequence management, what happened with the Giyani Bulk Water collapse, as there were allegations of corruption around this matter, and who was being held accountable?

Dr Phillips said the Green Drop Report issued by the Department provides a detailed assessment of the sanitation systems managed. A Blue Drop report was also issued on the state of water services, and the final Blue Drop Report would be issued during the coming financial year. The Department intends to create a public dashboard for all the water service authorities (WSAs) in the country, which would provide summary information from the Blue and Green Drop Reports and other sources of information, for example, National Treasury's monitoring of the state of WSAs.
He said the Department wanted to be more careful and mindful when it allocated grants to municipalities to ensure grants are allocated in a way that addresses what is contained in the Blue and Green Drop Reports and what is identified on the Dashboard.

The Department wants to work closely with the Municipal Infrastructure Support Agency (MISA), Cogta, and National Treasury to ensure engineering capacity issues; the municipality can coordinate with MISA. The Department also has an internal construction unit. Some water boards are already assisting the Department with interventions. For example, Rand Water is assisting with an issue in the Vaal area.

Ms C Visser (DA, North West) said in the North West and parts of the Free State, some farmers now have to obtain water licences. These licences have been outstanding for three years and are needed for the cattle. Lawyers have sent letters but have been unable to assist the farmers. She was concerned about the integrated Vaal system and the toxicity, which has continuously been ignored since it began in 2009. Plants end up in rivers. She asked when last the Department took real action against municipalities and actually fined the municipalities for transgressions according to the Water Services Act.

She said it was a disgrace to see what was going on in the Vaal System. Fish have died below Sasol’s plant in Sekhunda. She asked if the farmers in the area downstream were informed of this.
There are also towns without reticulation systems where boreholes remain contaminated. Ms Visser said she visited towns where boreholes were so contaminated that they were not fit for human or animal consumption. She asked what would be done about this, deserted buildings, and R6 billion spent on it through Rand Water.

There are water leakages over the country. Ms Visser asked what happened to all the people trained to find and repair water leakages, regression in capacity of water authorities and how the Department would ensure water authorities comply with what it was legislated to do.
 
Dr Phillips said Rand Water was assisting in creating four wastewater treatment works in Emfuleni and Sebokeng. The Department is replacing sewer pipes and removing blocked sewer pipes to stop sewage spills into people’s yards and the environment.

The contractor working with Rand Water in Emfuleni is on the ground and the situation has improved over the last couple of months. There was still much to be done on wastewater treatment works and increasing the capacity of Sebokeng's wastewater treatment works. There is sufficient capacity for these tasks to be completed by the end of the current year. The approach in support of municipalities is somewhat ad hoc, and the Department intends to be more strategic about this in future. If there is a material breach of the minimum in norms and standards, for example, the Department will direct the municipality to remedy the breach, update its Water Services Plan and offer support to the municipality. If there is a serious breach, the Minister of COGTA and the MEC for Local Government will impose a recovery plan for the municipality to meet its water services obligations according to Section 139 (5)(a) of the Constitution. If there is a serious and persistent breach of a municipality’s obligations, the Department would have to impose a recovery plan again and assume responsibility for it according to Section 139 (5)(c) of the Constitution. A notice will then be tabled in the National Council of Provinces (NCOP).

The Chairperson said there was no doubt the Department had an important role. The difficulty with the Department’s presentation was it did not indicate any answers or information on the questions and recommendations the Committee had previously posed and what the Department had committed to doing. The DG inherited a problematic Department as it was riddled with leadership issues. 

The Chairperson asked to what extent the senior positions in the Department had been filled, given there many suspensions were based on financial misconduct. He asked what the current situation was.

The Department had an issue with infrastructure spending. If 100% of the budget will be spent, he asked how much was spent in the past financial year, given slow expenditure of the budget in the past.

There was a stage where R1.9 billion had to be rolled over on infrastructure. There was also a project called War on Leaks which had unauthorised expenditure of R641 million. The Chairperson wanted to know how this has been dealt with.

There were also issues with accruals and payables between the Department and the Water Trading Entity. R3 billion was declared as accruals and payables, which had caused the Department to become bankrupt. This is unacceptable. He asked how this was dealt with.

Two years ago, the Committee recommended the Department provide a solid and systematic plan. The Chairperson asked if contingency liabilities were catered for in the current financial year, given the litigation against the Department. People suing the Department were receiving compensation of R100 million. About 60 000 households are still using the bucket system, but a decision was taken to eradicate this system by 2007. The Chairperson said it was unacceptable for people to use buckets to relieve themselves.

The presentation also did not address proper sanitary facilities in schools. A year ago, there were 4 000 schools without proper sanitary facilities. During the SONA 2020, the President committed to creating a programme called the Safe Learning Environment Initiative (SLEI) for education to be unfolded, ensuring all issues at the 4 000 affected schools would be fixed.
He asked how the Department implemented this programme and how far its implementation was. In the context of the current budget, he asked how this programme has been budgeted for.
The Department’s budget of R18 million was insufficient in light of challenges it was facing regarding water issues, and this would not help attain the medium-term sustainable goals. The Committee remained committed to working with the Department.

Dr Phillips said there had been delays in eradicating the bucket system in informal settlements, and this should be eradicated by March 2023. There is an issue with buckets springing up in informal settlements. The issue here is that municipalities are not allowed to invest in informal settlements. Temporary solutions are then put in place, such as new bucket toilets and chemical systems. It should be against the law to do this. Under-expenditure will be addressed through project management in the Department, but at the moment, the Department does not have this. The Department has tended to work in silos on planning and implementation, which has been a problem. Infrastructure procurement within the Department will be improved. This is a regulatory requirement from National Treasury for the Department to have a regulatory framework for Infrastructure Procurement. Such a strategy is not in place yet, but Dr Phillips and the Chief Financial Officer (CFO) are developing it. Longer term, three-year contracts will be used to make the process more effective.

Mr Frans Moatshe, CFO, DWS, said the Chairperson was correct about the Department’s R641 million worth of unauthorised expenditure. This was because of overspending on bucket eradication. Since then, no unauthorised expenditure has been incurred. Through implementing the recovery plan, the Department has managed to reduce obligations on accruals and payables.

Mr Leonardo Manus, Acting Director-General: Regulations, DWS, said there was a backlog of 61 applications in the Northern Cape, reduced from 100. A target has been set for June 2022 to have all backlogs eradicated. The Department found there are many applications for water usage licences which were declined before. Applicants should apply for this immediately after it is declined. The Department has set a target to issue water usage licences within 90 days. He assured the Committee that the Department had a very aggressive plan to improve its business processes and capacity.

The Green Drop process as part of the Incentive Based regulation programme is not only there to point out what has gone wrong but also to help change behaviour and encourage people to take responsibility for wastewater services. A rough order of measurement has been done to restore functionality of sewers instead of depending on replacing infrastructure at high costs. The Department is optimistic that through a hybrid of support and regulation processes, it will tackle the anti-pollution plan. The Department has a Spatial Land Information Management Unit (SLIM) linked with the Survey Units to do sedimentation surveys at a regular frequency. Dams in catchment areas are assessed at a higher frequency.

Dr Phillips said there is an investigation into the War on Leaks programme by the Special Investigating Unit (SIU). Thus the Department was not spending any money on this. He said the Department did not receive any funding for school sanitation and this budget was allocated to the Department of Basic Education. 

Deputy Minister Mahlobo said it was a new Ministry but an old Department. Since the new Ministry was appointed, a DG had been appointed to the Department within less than three months of assuming office. This was quite an achievement as the Department did not have a DG for over four or five years. Many other senior positions were also filled. The Department awaits Cabinet to consider the appointment of two other Deputy Directors-General (DDGs) in the following week for Water Services and Regulation. The Department's financial position had improved over time, unlike when the new Ministry came in.

One of the undertakings of the Department was to produce a financial turnaround plan, which was completed. The only thing outstanding is to report on the performance of the financial turnaround plan to the Department. The fight against corruption and malfeasance has also been prioritised, for example, in Giyani and a number of other areas.

The Department has worked together with the Special Investigating Unit, the Hawks and other agencies on this. The Department's own Internal Audit and Risk Management Unit has also been actively working on this. He said the Department was portrayed as a being a haven for criminals and corrupt elements, which was why the Department wanted to set aside a time to brief the Committee on dealing with corruption issues. Successful provincial visits were conducted. He said a number of municipalities were not in good shape and required the support of Section 154 of the Constitution. Through the Minister, the Department would place the water boards at the disposal of the affected municipalities. After the Department's intervention, progress has been made at Emfuleni, Limpopo, and Tshwane.

Metros themselves were also struggling. Sanitation targets have not been met and there is an absence of a national framework on sanitation, given that many South Africans live without a sewer system. Such a framework has been developed and will be presented for consideration by Parliament, as it was of utmost importance to protect the dignity of South Africans.
Spatial and town planning and regional planning were of great importance to ensure there is access to services. Pollution is unacceptable as water quality is deteriorating based on human activities. Mining is a huge cause of this.

The Department is working with the Department of Mineral Resources and Energy on acid mine drainage. Mines created this issue, and people should not have to pay for issues which the people did not create. On polluted wastewater treatment plants, the Department will ensure the polluter pays for this. The Waste Discharge policy is currently being worked on. There is also an Anti-pollution Task Team. He said pollution campaigns should be embarked on so citizens do not pollute rivers, as this is the only heritage we have to leave for the next generation.

Deputy Minister Magadzi said the Minister of Water and Sanitation and the Minister of Education are engaged in discussions of sanitation in schools. She said the District Development Model was being implemented. The province and the municipality got involved whenever the Department dealt with issues. Most of the time, the Department would implore the municipality to contribute financially. The Department also considers how it can assist municipalities with all the issues it is faced with holistically.

As the Department travelled throughout the country, it noticed, particularly in the Western Cape, that almost every municipality was a Water Services Authority. For example, Musina was up in arms about its Water Services Authority in the Vembe District not providing any assistance. Musina wanted to be a Water Services Authority on its own.

When doing its outreach programmes, it was important for the NCOP to remind communities that pollution is a serious issue.

During a meeting in December 2021, she promised to visit Wynberg and said the investigation was continuing. The Department’s Internal Risk and Audit Unit was in the process of working on this. As soon as there is tangible progress, the Department will provide feedback to the Committee.
The Minister would address dam safety issues.

There are recreational facilities around the dams, but no income is being generated from this, which is a cause for concern.

Deputy Minister Mahlobo said climate change was no longer a myth but was here. The Ministry tasked the Water Research Commission to produce research for innovative development. The Integrated Water Resource Management Philosophy will have to be adapted to build dams so that high levels of evaporation no longer occur. Underground dams should be built where mining operations have stopped. Climate change will require a change in construction methodologies. For example, in eThekwini, where floods occurred, one could see how people built on flood lines. Looking at topography, it must be ensured pipelines have structural integrity.

The Chairperson thanked all present at the meeting and the meeting was adjourned.

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