Appropriation Bill: Department of Water and Sanitation briefing; with Ministry

Standing Committee on Appropriations

24 May 2022
Chairperson: Mr S Buthelezi (ANC)
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Meeting Summary

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The Committee convened virtually to receive a briefing from the Department of Water and Sanitation, on the 2022 Appropriation Bill. The Minister and Deputy Minister were in attendance.

The Department reported that is in the process of planning and implementing a range of major projects to augment national bulk water resource infrastructure, and is in the process of establishing the National Water Resource Infrastructure Agency to finance and implement the large-scale investments in national water resource infrastructure that are required to ensure that South Africa has sufficient bulk water supply now and in future. This will ensure that challenges with municipal water and sanitation service delivery are not exacerbated by a shortage of bulk water

The Department reported that it has been allocated an amount of R59.6 billion over the medium term expenditure framework, i.e. R18.5 billion, R20.1 billion and R20.9 billion in 2022/23, 2023/24 and 2024/25, respectively. The Department (inclusive of the water entities) has also developed and is currently implementing a Financial Recovery Plan. There are no new cases of unauthorised expenditure with significant reduction in the incidents of irregular expenditure. Existing irregular expenditure is mainly expenditure from prior year irregular contracts.

The Ministry said that the floods in KwaZulu-Natal caused severe damage to bulk infrastructure. Assessments have been done and submitted to the National Disaster Management Centre on what needs to be done.

The Members asked if the Department had a long-term vision in the sense of water supply for the whole of South Africa. Is the Department looking at investing in water augmentation projects and building more dams in catchment areas? What support is being presently provided to Nelson Mandela Bay? The Committee asked for an understanding of timelines for the eradication of the bucket system. What is happening around the floods around KwaZulu-Natal? 

Meeting report

The Chairperson welcomed everyone to the virtual meeting. He briefly spoke about the importance of water and the seriousness of water shortages across the country.

He then handed over to the Minister for his opening remarks.

Minister’s Remarks

The Minister of Water and Sanitation, Mr Senzo Mchunu, appreciated the engagement with the Committee. He said that Water and Sanitation services in South Africa need to be unpacked. The country is better off when it comes to water resource management rather than water and sanitation services. The national government has been tending to water resources, whilst water services are a responsibility of municipalities. The municipalities are not doing well as a sphere of government, in numerous instances. There are different challenges in their performance in terms of their duties. The Department has committed itself towards shaping itself for the tasks ahead and strengthening the Department. Corruption is slowly being rooted out, vacancies are being tended to – many posts have been filled up. Water boards and the rendering of services are being addressed. The team is in Limpopo and is currently overseeing progress on projects. Infrastructure that is under the responsibility of municipalities and other infrastructure that needs to be tended to will be visited by the team. The Department will work with municipalities to address the issues they face.

Presentation by the Department of Water and Sanitation

The Department of Water and Sanitation (DWS) reported that the National Water Resource Infrastructure and Water Board infrastructure are generally in a much better condition than municipal water and sanitation infrastructure. Historically, the DWS has focused more on the planning, delivery and operation of national water resource infrastructure (such as major dams and associated infrastructure) than on municipal water and sanitation services. DWS is in the process of planning and implementing a range of major projects to augment national bulk water resource infrastructure, and is in the process of establishing the National Water Resource Infrastructure Agency (NWRIA) to finance and implement the large-scale investments in national water resource infrastructure that are required to ensure that South Africa has sufficient bulk water supply now and in future. This will ensure that challenges with municipal water and sanitation service delivery are not exacerbated by a shortage of bulk water, as has happened in the cities of Cape Town and Nelson Mandela Bay, amongst others. However, as will be described in the following slides, many municipalities are failing to deliver water and sanitation services to national norms and standards and the situation is generally deteriorating

The Department has been allocated an amount of R59.6 billion over the Medium Term Expenditure Framework (MTEF), i.e. R18.5 billion, R20.1 billion and R20.9 billion in 2022/23, 2023/24 and 2024/25, respectively. Included in the allocation:

  • Compensation of Employees is allocated an amount of R5.4billion over the MTEF i.e. R1.836 billion, R1.741 billion and R1.819 billion in 2022/23, 2023/24 and 2024/25 respectively.
  • Goods and Services is allocated R5.5 billion over the MTEF i.e. R1.770 billion, R1.819 billion and R1.908 billion in 2022/23, 2023/24 and 2024/25, respectively.
  • Transfers and Subsidies is allocated an amount of R34.9 billion over the MTEF i.e. R10.528 billion, R12.002 billion and R12.393 billion in 2022/23, 2023/24 and 2024/25, respectively.
  • Payments for Capital Assets is allocated an amount of R13.788 billion, i.e. R4.404 billion, R4.593 billion and R4.792 billion in 2022/23, 2023/24 and 2024/25, respectively.

The Department (inclusive of the water entities) has developed and is currently implementing a Financial Recovery Plan including, inter alia:

  • Implementation and monitoring of audit action plans aimed at achieving a clean audit
  • Progress made on disciplinary and investigation matters related to financial misconduct
  • Alignment of annual performance plan with procurement plans and project implementation plans including regular monitoring processes

There are no new cases of unauthorised expenditure with significant reduction in the incidents of irregular expenditure. Existing irregular expenditure is mainly expenditure from prior year irregular contracts. The Department has developed exit plans and has also applied for condonation from Treasury for these. The Department also continues to implement stringent credit control measures with regard to debts owing to it, which has resulted in repayment agreements to the value of R2.4 billion. Going concern issues raised by the Auditor-General of South Africa have been resolved. This includes a significant reduction of unfunded accruals, payables and elimination of the bank overdraft.

[See presentation document for more details]

Discussion

Mr E Marais (DA) said that it is disturbing that 39% of municipalities’ waterworks are in disarray. Is there a long-term vision for water supply for the whole of South Africa? Is there a vision to build dams in areas where rainwater is going to waste?

Mr A Sarupen (DA) said that South Africa is a water-scarce country. Is the Department looking at investing in water augmentation projects and building more dams in catchment areas? What support is being presently provided to Nelson Mandela Bay? How is the Department responding to this issue? Have they been released funding? What is the long-term plan for water and water security?

Mr O Mathafa (ANC) asked what the status of the creditor's book for the Department is. On slide 37: can the Committee get an understanding of timelines for the eradication of the bucket system? He hoped that the case against the Deputy Director-General goes swiftly.

Mr X Qayiso (ANC) said that having 40 million people who do not have access to clean water is concerning. He wanted more clarity on the bucket system and the water harvest programme. Is there any water harvest programme to deal with the water crisis in the country?

Ms M Dikgale (ANC) said that there is no assistance for certain villages that do not have clean water. There is underspending – more trucks need to be bought to assist these villages.

Mr Marias said that he needs an engagement with the Director-General. Solutions need to be made, going forward, on water issues faced in certain areas.

Mr Sarupen said that the Department is making good progress.

Mr Qayiso said that the shortage of supply of water in rural municipalities needs to be addressed. There is a problem with licences – does the Department have a good idea of accessibility to small emerging farmers?

Ms Dikgale asked if the Department can try and identify families that need water tanks and assist them with this.

The Chairperson said that he is happy with the progress being made within the Department. He encouraged proper planning and programmes. What is happening around the floods around KZN? What is being done now? There are some companies not wanting to pay for water. What is being done around this? Black emerging farmers need to be tended to, and people in rural areas need to be assisted with water supply. What is the value of the assets, and how do they reflect on the balance sheet? What is achieved via the district development model?

Underspending of R2.5 billion is too much when there are people in the country that need the Department’s services. There needs to be a decrease in this figure. The Vaal project has many challenges. Can more information be provided on this and its timeframes? The bucket system is dehumanising and needs to be prioritised.

Responses

Minister Mchunu said that the Department is considering creating other dams, and this is under discussion. The Berg River is having a canal being built near it – Mr Marias will be engaged with on this. Phase Two of the Lesotho Highlands Water Project is being discussed, and many matters around this are being dealt with. Nelson Mandela Bay has faced seven years of drought. The municipality gains water from two main sources, the east and the west. There has been refurbishment of the water plant in the Bay. Decisions need to be taken on the time taken to plan to pipe water into this municipality. Appropriate measures need to be taken on time, and good governance needs to occur. The Department will visit Nelson Mandela Bay.

He indicated that there are empowerment programmes and that the problems with licenses are being dealt with. Regarding women and youth encouragement in the workplace, he said that there are training centres in place, but more needs to be done. The Department will provide standpipes, and assist communities and families that are in areas of severe water shortages. Water treatment plants will be built. Villages that lack access to clean water are being discussed in order to properly service them. Functional municipalities are crucial to aid with efforts being made by the Department. Partnerships have helped significantly with the water crisis by offering their aid. Black farmers that are affected by the water crisis in the Mooi River will be visited and assisted soon.

The Deputy Minister of Water and Sanitation, Mr David Mahlobo, said that the floods in KwaZulu-Natal caused severe damage to bulk infrastructure. Assessments have been done and submitted to the National Disaster Management Centre on what needs to be done. Umgeni Water has progressed in its water supply, but 280 million litres of water is being lost in a day; this needs to be addressed. The Department is helping with this issue. Areas affected by the floods are being supported by the Department, municipalities, and communities, among others. The water system is being improved. Water cutting is not a good solution. Some of the water systems are being discussed on how they can be revived. The capacity of the treatment plant in the Vaal has increased. On water security: entire sectors are being worked with. Wastewater should not be regarded as waste. Wastewater treatment plants are the way forward, and some municipalities are supporting this. Abandoned mines have caused immense pollution of water. Groundwater is being explored. A number of other options are being considered. Rainwater and recharging borehole water is under discussion.

DWS Director-General, Dr Sean Phillips, said that it is criminal to return money to Treasury, considering the state of water in the country. There are many areas of inefficiency, such as deliverance, project management, etc., and this is being discussed. Expenditure management is being dealt with.

The bucket system is remaining in Free State and the Northern Cape, and it will hopefully be eradicated before the end of the financial year. The system had been introduced as a temporary solution. The timeframe for the completion of the Vaal project will be provided to the Committee.

The Chief Financial Officer said that the water boards owe the Department R7.6 billion. Municipalities and other departments owe R8.4 billion. This is being addressed through credit control measures, repayment agreements and other arrangements with Treasury. Incentive schemes have been placed, as well as discounts and wavering off interests. Legal action also takes place when money is not being repaid. There is also R26 million worth of accruals related to disputes. There are continuous engagements in sorting out invoices.

The Chairperson thanked the Department for their responses. He asked for a written response of all those that owe the Department R25 billion. The private sector gets away with its pollution and leaves all the costs to the Department. The budgetary implications need to be provided to the Committee in writing. There need to be more engagement on the role of water in the economy and how it can be used as a tool to empower black people.

Minister Mchunu thanked all the Members for their engagement.

The Committee adopted the minutes of 11 May 2022 and 17 May 2022.

The meeting was adjourned.

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