Engagement with DWS on Committee resolutions & recommendations; with Minister and Deputy Ministers present
Water and Sanitation
31 January 2023
Chairperson: Mr M Mashego (ANC)
The Portfolio Committee convened in a virtual meeting to engage with the Department of Water and Sanitation (DWS) on resolutions regarding the Committee's recommendations on the 2022/23 annual performance plans of the Department and its entities, water and sanitation sector issues, and the oversight visit to the Eastern Cape.
On the resolutions on the oversight visit to the Eastern Cape, the Committee heard that the fiscal model of the country was one in which water and sanitation services were self-financing, apart from equitable share allocations to municipalities to enable them to provide free basic services to the indigent, as well as grants to enable them to address historical infrastructure backlogs. This meant that municipalities were supposed to fund the operation and maintenance of their water and sanitation infrastructure and schemes from revenues they received from selling water to residents and businesses.
On the water and sanitation sector issues, the Department said local water supply and sanitation services were a function over which municipalities had executive authority regarding section 156 of the Constitution, read together with Schedule 4 Part B. However, although municipalities had executive authority, other sections of the Constitution and legislation required government (national and provincial) to support and intervene in municipalities where there was a failure of municipal water and sanitation services. The combination of the Constitution, the National Water Act, the Water Services Act and other legislation such as the Municipal Systems Act and Municipal Structures Act, clearly defined the roles, responsibilities and accountability within the entire water and sanitation value chain.
Regarding the 2022/23 annual performance plans, the Department reported that it was partnering with mining houses in Limpopo and the Northern Cape to implement mega infrastructure projects. The Olifants Management Model (R24 billion) involved the construction of a bulk pipeline from the De Hoop Dam to Olifantspoort and from the Flag Boshielo Dam to Mogalakwena. It also included water distribution infrastructure to 94 villages adjacent to the pipelines, which currently did not have water.
An agreement was signed between the DWS and the Lebalelo Water Users Association (LWUA) in which they would each fund 50% of the project, with LWUA as the implementing agent. The project was in the construction phase, and negotiations with the Mogalakwena and Sekhukhune municipalities were at an advanced stage regarding the distribution infrastructure.
The Committee felt that the problems at municipalities lay with the political leadership within them, and was concerned about whether solutions would be found for such problems and if service delivery would be provided to communities in the long run. It was also concerned that the Department seemed to be creating many structures for intervention to ensure its performance, which seemed to be pointing at the lack of performance from municipalities. It asked how the Department was going to monitor all these interventions in municipalities that were clouded by underperformance.
The Chairperson commented that what was expected from the DWS was for them to say what they were going to do, because they already knew that the municipalities were not going to meet their commitments in terms of payments, because the revenue base was not there.
The Chairperson welcomed the Members and the representatives from the Department of Water and Sanitation to the meeting, acknowledging the presence of the Minister and the Deputy Ministers of Water and Sanitation in the meeting.
He said the Committee would receive a briefing from the Department of Water and Sanitation (DWS) on its responses to the resolutions of the National Assembly on recommendations made by the Portfolio Committee on Water and Sanitation.
The Committee adopted its draft minutes dated 29 November and 2 December 2022.
The Chairperson said Mr N Myburgh (DA) was always absent from Committee meetings, and always sent apologies, and that needed to change.
Mr L Basson (DA) said he would take the issue up with him.
Draft Committee Programme first term of 2023
Ms R Mohlala (EFF) was concerned about the number of virtual meetings for the first term, and wanted to know when they would end because COVID-19 was no longer a big threat. Physical meetings would be welcome, especially because of the challenges that came with load shedding. Referring to oversight, she wanted to know when the Committee would visit the Northern Cape regarding the bucket eradication programme (BEP).
The Chairperson said the Committee had agreed last year that it would visit the Free State because it had committed to concluding the BEP by the end of March 2023. The Northern Cape would conclude its BEP around August, but the plan was to visit all the provinces participating in the BEP.
He said Ms Mohlala rarely attended physical meetings, but agreed that the Committee should consider more physical meetings. He asked the Committee Secretary to see if any meetings in the first term programme could be changed into physical meetings, and make the necessary arrangements.
Ms Mohlala suggested that the physical meetings could be arranged in Pretoria to cut costs, since most of the Members were closer to that city, considering that parts of Parliament were affected by the fire.
Mr A Tseki (ANC) said the Committee never had an agreement with the South African Local Government Association (SALGA) and the DWS on the issue of water tariffs, and asked that the meeting on 7 March must be well prepared for so that it became fruitful, unlike the meetings of the past three years. He moved for the adoption of the programme, and was seconded by Ms M Matuba (ANC).
The Committee adopted its draft Committee programme for the first term.
DWS on Portfolio Committee resolutions on water and sanitation sector issues
Mr Senzo Mchunu, Minister of Water and Sanitation, said the Department would provide a detailed report that would touch on partnerships, which were one of the pillars of its broader strategy to deliver water in the country against the backdrop of limited financial resources. The partnerships were both within and among the public sector with other departments and other spheres of government that were already involved in several projects, especially in agriculture, where the DWS was partnering on canals, which would commence during the year.
The Department was also partnering with other spheres of government in other projects which would be rolled out during the year, such as Umkhomazi and Umzimvubu, which were both close to completion. It was involved with the private sector in the Vaal Gamagara water supply scheme, as well as the R24 billion partnership project with Lebalelo in Limpopo.
He said the Department would also speak on the reconfiguration of boards which would be completed by the end of March, as others had already been completed and were in the process of implementation. The presentation would also speak about poorly spent government grants, as they were being managed and closely looked at by the Department amidst the demand for water reticulation all over the country. It would also cover the Nooitgedacht Water Treatment Plant and the constitutional and legislative imperatives for government support and interventions. He said they understood themselves to be in broad agreement with SALGA and municipalities that there were constitutional and legislative imperatives, but they were intervening in different ways through section 163 and section 139, and they were mainly intervening to help.
The Department would meet with the North West government and all its municipalities on Monday to agree on implementation programmes to bring in water after its second-round visit two weeks ago to all of the North West, which had led to the establishment of a steering committee and a technical committee at the provincial level. This was going to see the Department working together with the provincial and local government in a coordinated, unified and streamlined way to avoid a situation where the Department would have to go to each municipality, which would take a long time.
The Technical Committee for the entire North West province had been established to create an implementation plan for all the municipalities within the province for sustainable projects to deliver water. Some implementation plans would be short-term, and others would be medium to long term plans. The Department would be implementing sustainable projects and groundwork projects that would be consolidated as per the need in each of the areas. This followed the constitutional and legislative imperatives that obliged the Department to provide water and observe the roles of the spheres of government so that there was no confusion.
There had been a sharp decline in the performance of local government, especially in the management of water plants. The local municipalities did not have answers for the poor management of water plants. The Department was investigating those issues, because they affected the DWS constitutionally and legislatively in terms of people’s right to access water.
The presentation would also touch on the Blue and Green Drop, as they were anticipating releasing the reports during the year. The Green Drop would be for the second time, and the Blue Drop would be for the first time after the break in results last year, to assure people of the quality of effluent in the after-treatment of water in the country and picking up areas of concern and addressing them. Lastly, the Department would deal with guidelines or frameworks that deal with accountability roles in the water sector and all the value chain, indicating who was liable for rivers, dams and other water sources, and how those were managed up until water was ready for use by the public. He then handed over to the Director-General to do the presentation.
DWS's responses to National Assembly resolutions
Dr Sean Phillips, Director-General (DG), DWS, presented the Department’s responses to the National Assembly (NA) resolutions on the report of the Portfolio Committee on Water and Sanitation's oversight visit to the Eastern Cape, on the water and sanitation sector issue, and on the annual performance plan (APP) of the DWS and its entities for the 2022/23 financial year.
Oversight visit to Eastern Cape
He said after the Portfolio Committee’s oversight visit to the Eastern Cape, the NA had resolved that the DWS must do the following:
Provide concrete measures in the water and sanitation sector to develop an implementation model, which factored in the maintenance of schemes, whereby unspent or poorly spent government grants could be managed on behalf of the water services authorities.
Should develop a strategy with the Amatola Water Board to improve the timeframes of work payment to contractors on the Nooitgedacht project.
Needed to strengthen its oversight of job creation for community members if and when utilising the services of the private sector.
In response, the DWS noted that the fiscal model of the country was one in which water and sanitation services were self-financing, apart from equitable share allocations to municipalities to enable them to provide free basic services to the indigent, and apart from infrastructure grants to municipalities to enable them to address historical infrastructure backlogs. This meant that municipalities were supposed to fund the operation and maintenance of their water and sanitation infrastructure and schemes from revenues they received from selling water to residents and businesses.
The Nooitgedacht Project was commissioned on 29 September 2022, and a practical completion certificate was issued. All the payments to the contractor were up to date. The contractor was expected to submit final invoices for the remaining minor amounts related to testing and commissioning before 13 February 2023.
Municipalities and other implementing agents were engaged in social facilitation prior to the commencement of a project, where employment opportunities were discussed with the community. Social facilitation also took place during project implementation, to ensure a good working relationship between the community and the contractor(s). The DWS monitored and administered the process of job creation for community members on all projects funded through grants. The implementing agents and/or water services authorities were required to report monthly on jobs created.
If DWS site monitoring and report reviewing indicated a problem related to local employment on a project, it would engage with the municipality or implementing agent to seek a resolution to the problem. The DWS was in the process of strengthening its monitoring of this issue through its site visits and review of the monthly reports. In this regard, local ward councillors were also involved in social facilitation, and their role also needed to be strengthened.
Water and sanitation sector issues
The resolutions of the Portfolio Committee on water and sanitation sector issues included that the DWS must:
Develop an institutional framework or guidelines that clearly define roles, responsibilities and accountability within the entire water and sanitation value chain;
Promote good governance in the water sector institutions, thereby ensuring separation of policy-making, shareholding and regulatory functions;
Ensure the Blue and Green Drop assessments comply with statutory requirements, which deal with discharging effluent wastewater into streams and rivers; and
Provide a report together with respective water boards, with associated timeframes on action plans, that provide concrete and tangible results on debt collection, governance issues, and water boards' amalgamation to establish regional utilities.
In response, the Department said local water supply and sanitation services were a function over which municipalities had executive authority regarding section 156 of the Constitution, read together with Schedule 4 Part B. However, although municipalities had executive authority, other sections of the Constitution and legislation required government (national and provincial) to support and intervene in municipalities where there was a failure of municipal water and sanitation services. The combination of the Constitution, the National Water Act, the Water Services Act, and other legislation such as the Municipal Systems Act and Municipal Structures Act, clearly defined the roles, responsibilities and accountability within the entire water and sanitation value chain.
The boards of the water sector institutions were accounting authorities and were responsible and fully accountable to the shareholder. The Minister and boards conclude a shareholder compact annually (Treasury Regulation 29.2), and this serves as the “performance contract” between the shareholder (the Minister) and the boards of water sector institutions.
The Blue Drop and Green Drop assessments had a set of criteria which included water use authorisation as one of the key performance indicators to assess compliance of water services institutions. The Department also continuously monitored compliance with the water use authorisation. The Blue and Green Drop processes assessed all the water and wastewater systems of all municipalities. They provided the municipalities with details of where there was non-compliance with statutory requirements, the causes of non-compliance, and what should be done about the non-compliance.
The DWS convened a joint workshop with water boards, National Treasury, the Department of Cooperative Governance and Traditional Affairs (COGTA) and SALGA on 5 December 2022. The purpose of the workshop was to develop strategies to improve billing and revenue collection in the water sector. The water boards’ debtors’ book was growing, and water boards were facing liquidity and financial challenges because of non-payment by the municipalities. The resolution for the workshop was to draft standardised operating processes for debt recovery, covering both the water boards and the Department’s Water Trading Entity (WTE), including the following key interventions:
Bulk pre-paid meters to be incrementally installed by water boards;
Consistent enforcement of water limitations/restrictions for non-paying municipalities;
The use of incentive-based credit control mechanisms;
Legal processes to attach municipal bank accounts where necessary;
Collaboration with National Treasury to withhold equitable share allocations from non-paying municipalities.
Annual performance plan of DWS
On the resolutions on the annual performance plan (APP) of the DWS and its entities for 2022/23, the NA noted the following:
The Portfolio Committee had recommended that the Department provide plans/interventions to address this issue and provide details on whether it was considering public-private partnerships (PPPs) to develop mega infrastructure projects.
The need to clarify the slow progress in finalising the National Water Act and the Water Services Act, and how these delays would affect the long-overdue water allocation transformation.
The Department should provide a progress report on its national sanitation framework to ensure that the country's bucket system was eliminated in terms of norms and standards.
The Portfolio Committee had recommended collaboration with government departments such as the Department of Trade and Industry and Competition (DTIC) and COGTA, to ensure the uptake of the Water Research Commission's (WRC) research products and technology, and develop the industry for the mass production of these technologies.
The Committee had recommended that the Department provide a detailed response on the modalities, including a roadmap with timeframes to establish the National Water Resources Infrastructure Agency.
The Department responded that it partnered with mining houses in Limpopo and the Northern Cape to implement mega infrastructure projects. The Olifants management model (R24 billion) involved the construction of a bulk pipeline from the De Hoop Dam to Olifantspoort and from Flag Boshielo Dam to Mogalakwena. It also included water distribution infrastructure to 94 villages adjacent to the pipelines, which currently did not have water. An agreement was signed between the DWS and the Lebalelo Water Users Association (LWUA), in which the DWS and the LWUA would each fund 50% of the project, with LWUA as the implementing agent. The project was in the construction phase, and negotiations with the Mogalakwena Local Municipality (LM) and Sekhukhune District Municipality (DM) were at an advanced stage regarding the distribution infrastructure.
The DWS was also negotiating with mining houses in the Northern Cape to implement a similar joint project to refurbish and expand the Vaal Gamagara water scheme (R10 billion), which would also include water distribution to communities currently without water services. An agreement is currently being finalised. The Department was also exploring similar partnerships in the agricultural sector for the Vaalharts and Oranje-Riet irrigation schemes. It also established a water partnership office with the Development Banks of Southern Africa (DBSA) and SALGA, to support municipalities in entering into PPPs for water services.
Minister Mchunu had increased the focus of the DWS on municipal water services, and was leading a process of strengthening its role in regulating, supporting and intervening in municipalities regarding water services. It was working with the WRC to conduct detailed research on possible amendments to the Water Services Act to enable this strengthened role, which might include measures such as licensing water service providers. This research needed to be completed before amendments to the Water Services Act could be finalised, to avoid piecemeal amendments.
The DWS had developed the National Sanitation Framework (NSF) and submitted it to Cabinet for approval. The NSF was on the agenda of the Cabinet meeting scheduled for February 2023. The NSF provided a policy framework which would form the basis for revising the minimum norms and standards for sanitation to make them more equitable and to align them with technology developments in the sector. The framework also provided for strengthened monitoring of compliance to these norms and standards and strengthening governance structures in the sector.
Establishing the National Water Resource Infrastructure Agency (NWRIA) would address the current fragmentation of asset management and revenue collection functions for national water resource infrastructure. Currently, these functions are fragmented between the Trans Caledon Tunnel Authority (TCTA), the WTE and the infrastructure branch of the Department, and the establishment of the NWRIA would enable them to be integrated into one entity. The national water assets currently owned by the Department -- the dams and associated infrastructure -- would also be transferred to the NWRIA.
Ms Mohlala was concerned that the presentation spoke about problems that should have been solved long ago, because the Minister had spoken about the problems within municipalities. She felt the problems within municipalities lay on the political leadership within them. She was concerned about whether solutions would be found for such problems and if service delivery would be provided to communities in the long run. The problems in municipalities resulted from cadre deployment by the governing party, which caused the municipalities to be stuck in a rut.
She wanted to know to what extent the Department, National Treasury and COGTA were engaging on the challenges inherent within the three spheres of government. What was apparent was that the national Department refused to rigorously engage with the respective stakeholders on strengthening the financial component of water service provision for citizens across the water value chain. She understood the Constitutional and legislative imperatives, but there appeared to be no political will to unpack why their model was not working.
The DWS had spoken of the District Development Model (DDM), but the responses in the meeting made a mockery of attempting to work coherently to ensure a seamless approach to ensuring that citizens attained reasonable rights to water. It seemed as if neither the national, provincial or local departments wanted to allocate water as a basic human right. What were the most evident challenges in implementing the statutory requirements at both the national and provincial levels of government?
The presentation had merely listed the legislative and regulatory aspects of each of the recommendations, but very little critical thought processes had been given on why the institutions that feed the taps were non-functional and were not capable of undertaking basic duties. Ms Mohlala said there was a need to differentiate the terms ‘non-capability’ and ‘lack of capacity’ at all spheres of government.
What were the current challenges encountered in the reconfiguration of water boards, and what criteria were used by the Department in reconfiguring the water boards? Would the National Water Infrastructure Agency (NWIA) Bill be tabled in Parliament this year, and if so, how would the election process impact the process? If the Bill lapsed in Parliament, it would have to be reintroduced in the Seventh Parliament. Had the Department factored this in their tabling of the Bill in the current Parliament?
The presentation spoke of the construction of pipelines from the De Hoop Dam to Mogalakwena, which was a good project, but the problem was that the people of Sekhukhune had not had water for decades, yet they lived near the De Hoop Dam. What would happen to the people of Sekhukhune who live closer to the De Hoop Dam, and who would provide water to them? On the reconfiguration of water, she said she had just read that in the KZN water boards, there was R2 billion that had gone to irregular expenditure, and wanted to know what had transpired.
The Chairperson said the meeting had been called because the Department had responded to the Speaker of the National Assembly’s recommendations. (The Chairperson got disconnected before he could finish his point, and the Members continued with their questions while he tried to reconnect).
Mr Tseki said that after listening to the responses to the recommendations of the National Assembly, he still did not feel that the Department really understood the nature of the challenges faced by municipalities regarding water and sanitation. He asked the Department to explain the slide in the presentation that explained water distribution centres, as it referred only to points three, four and five, and did not have one and two and was difficult to read.
The Department had said the formulation of the National Water Act and the Water Service Act was going to delay the allocation transformation. He wanted to know what interventions would be made to speed up the formulation of the Acts and whether there was nothing that could be done to continue with the programme of transformation of water allocation in the absence of the Acts.
Ms N Sihlwayi (ANC) was worried about the Chairperson’s disconnection when he was trying to reinforce the purpose of the meeting to the Members, and commented that the temptation that she had was on the areas that she believed should be raised for current and future purposes so that the Committee would not find itself in the quagmire that it was in.
She said the National Assembly had stated that the DWS should strengthen its oversight on the job creation by the private sector, and wanted to ask how the Department was expected to do oversight on something that it had not been told that the private sector was prepared to do, or how it was going to do it. Her view was that the private sector should present its plan for jobs to be created to the Department before it started its work so the Department could oversee what the private sector had told it.
The national Department was giving a lot of grants for service delivery to municipalities and there was non-compliance with those grants by the municipalities, including the Municipal Infrastructure Grants (MIGs). She asked the Department if a portion of the MIG grants was meant to be allocated for salaries. She was concerned that the Department was being used as a "Messiah" outside of the constitutional directives of municipalities. The municipalities refused to account for the loss of funds and their underperformance.
She said the Department also wanted the water services infrastructure grant (WSIG) and the regional bulk infrastructure grant (RBIG), which covered the refurbishment, to extend their work to maintenance and commented that "even God would get tired" because there were many grants given to municipalities, but the issue was that there was no implementation. The national Department needed to intervene on such issues, because the grant was critical for bulk infrastructure. Perhaps there needed to be a report on why municipalities were not doing their work and not performing in the presence of COGTA.
She was also concerned about money not being spent by municipalities and the shifting of money that belonged to Nelson Mandela Bay in the Eastern Cape to other provinces. The issue of the set-aside policy of government by the private sector also concerning to her, and she noted that the private sector must also present how it was going to consider the programme of transformation of government and the programme of redress on the projects that had been given to them.
Lastly, she said the Department seemed to be creating a lot of structures for intervention to ensure its performance, and this seemed to be pointing at the lack of performance by the municipalities. How was the Department going to monitor all these interventions in municipalities clouded by underperformance? She requested a report on why municipalities were underperforming, and the consequence management actions taken in that regard.
Ms Sihlwayi suggested that the Committee appoint a co-Chairperson for when the Chairperson of the Committee was disconnected, so the meeting could continue.
Mr Basson agreed that in the instances where municipalities did not have capacity, the Department must insist that implementing agents be appointed, and gave the example of when an implementing agent was appointed at the Madibeng Water Purification Plant, where a portion of the project should have been completed in 2016 but was never completed. When the Department did not play its financial contribution role to the implementing agents, the projects got delayed and ended up costing more than they should, so when appointing implementing agents, the Department must ensure that the funding was available. All projected challenges had solutions before the projects commenced.
He asked the Department what the cap was on the amount that implementing agents were allowed to add to the implementation of projects to make them viable for themselves and the Department. He agreed that municipalities that did not pay for their water should move to pre-paid water meters, but wanted to know whether that would also include raw water, as there were a lot of municipalities in Madibeng that were not paying for raw water and owed the municipality around R50 million.
The Committee Secretary asked Members to nominate a co-Chairperson for the meeting while the Chairperson was disconnected.
The Members nominated Mr Tseki as the co-Chairperson.
Response by DWS
Dr Phillips said the Department engaged with COGTA and National Treasury continuously. In December, they had an engagement with National Treasury on strengthening the financial situation in the sector and strengthening billing and revenue collection. They were going to implement the action plan for that in collaboration with National Treasury, which included standardising credit control measures across all the water boards.
Ms Thoko Sigwaza, Chief Director: Institutional Oversight, DWS, said the first key challenge with reconfiguring water boards was misinterpreting the Gazette notice. It appeared that the municipalities did not understand the intention of the reconfiguration of water boards, as some of the municipalities had responded negatively to the Department’s call to reconfigure, especially on the extension of Rand Water to Mpumalanga and the extension of Amatola Water in the Eastern Cape and the Western Cape. The Department intended to implement a corrective measure to provide clarification that its intention to reconfigure water boards was not to take over municipal functions, but mainly to support municipalities on bulk supply.
There had also been delays in due diligence exercises, because it took longer to appoint independent consultants to provide due diligence support. The criteria were to look at areas where there was no access to bulk water provision and coverage, and where there were financial sustainability issues, and such water boards were prioritised. They also looked at water boards where there were issues with liquidity challenges and an inability to raise capital.
The irregular expenditure of R2 billion in Umngeni was well documented in the annual report, and the transgressions were related to deviations to approvals on supply chain issues around competitive bidding. There was R108 million which was considered non-compliant, and around R141 million related to contract management and the approval of variation orders. There was also an issue where the variation orders of more than 20% were approved by the entity, but the Minister had requested them to provide an intervention plan and corrective measures on what they would do about the officials who were responsible for the submission of their quarterly reports.
Dr Phillips said the NWIA Bill was intended to be tabled in Parliament this year, and for the public consultation process to be concluded by March, and then go to Cabinet for approval.
Mr Vusi Mathye, Deputy Director-General: Water Services, DWS, said there were challenges around water supply in Sekhukhune, and noted that there were projects that the Department was doing in the area. The Loskop project was long outstanding, and aimed at providing sustainable water provision to Sekhukhune as one of its beneficiaries. Other projects had been done by the Department under the WSIG, because the Department allocated funding through the WSIG annually, which went to various projects such as refurbishment and upgrading current water services.
He said there were a few other projects in the Sekhukhune area that was currently under construction, including the Nebo bulk water system, which the RBIG currently funded, and the Moutse bulk water system and the Mooihoek bulk water system. The RBIG funded the three projects through the DWS to try and provide water security in the Sekhukhune area. Apart from that, about five WSIG projects were being implemented in the district municipality that aimed at securing water sustainability in the area.
Dr Phillips said the diagram in the presentation was not produced by the Department, but was a copy that they used to try and explain the roles and responsibilities of water supply. Number one in the diagram was the national DWS, number two was the water boards, and number three was the water service authorities. Regarding the Department’s understanding of the cause of the challenges faced by the municipalities, he said the Department assessed that the underlying core problem was weak governance and management in municipalities, which led to several problems.
There was also a big problem with corruption in municipalities, especially corruption related to the supply chains, which also had implications for poor water and sanitation service delivery. Weak management resulted in strong weaknesses in areas such as billing and revenue collection, supply chain management (SCM) in the municipality and the management across projects. In many municipalities, people with inappropriate skills had been appointed -- for example, as heads of wastewater treatment works. The municipalities therefore did not have the right skill sets for the type of work that was required of them, and they did not prioritise the technical skills required to manage water plant functions like process controllers and engineers. In some municipalities, even though they did not have skilled staff to do the work, they were sometimes overstaffed and did not have enough money to do the work that was required.
Mr Xolani Zwane, Deputy Director-General: Regulation, Compliance and Enforcement, DWS, said the Department was doing a lot within the current legislation to reform water use allocation, especially through its water allocation reform project, which was looking at a few areas. One of them was where the Department was in control of allocating water from its own dams and systems, and had set aside water which they only reserved for historically disadvantaged individuals (HDIs).
The Department was also running a programme in its validation and verification of water use, as most of the water in use was still registered under the previously advantaged. The DWS was using this programme in terms of section 35 to verify water use. It had verified about 50% of the properties, and the aim was that once they got an idea of the water being used lawfully, it would issue a compulsory assessment programme where it would engage all water users to apply through section 43 of the Water Act. Once the water had been allocated, a water allocation plan would be developed and water would be reserved for HDIs.
Dr Phillips said the Department did not take away money from the municipalities permanently -- they reallocated it in the current financial year because the municipalities were not able to spend it during the period, and then gave it back to the municipalities in the following financial year.
Mr Mathye said that when municipalities submitted their WSIG implementation plans and their RBIG business plans, part of the technical report requirements was a requirement in the Division of Revenue Act (DORA) framework for the municipalities to indicate their expected level of job creation. These conditions went into their internal tender documentation through which they had to source employment from the local people. Part of the monitoring also went to local ward councillors so that all the relevant stakeholders controlled the whole value chain.
The Department received monthly progress reports and did site inspections and received some progress reports on site, part of which the appointed contractor, as well as the dedicated private service provider or consultant, reported in the presence of the municipalities on the number of jobs that had been created, progress reports, etc. If there were issues of non-compliance locally, the information was escalated to the relevant stakeholders, but it was received by the local councillors first, so the Department was reliant on the internal processes that the municipalities put in place and the conditions they put in the tender documentations when they advertised for such jobs.
Regarding the management and control of the RBIG and WSIG, he said the Department held monthly progress meetings and monitored expenditure, which was part of the conditions in their regulatory framework, where they monitored how municipalities spent their money. If they were non-compliant, there were conditions that the Department could not overlook, including the institution of intervention methods.
Dr Phillips said the Department was reducing the number of structures through the reconfiguration of water boards. With the decision taken by the Minister concerning management agencies, they had reduced the originally envisaged number from nine to six. With the creation of the NWIA, they were reducing the number of entities by amalgamating the TCTA with the water trading entity of the Department.
Regarding the pre-paid water meters, he said it was technically difficult because of the extraction methods that were used on raw water. The Department assessed that the key risk that needed to be focused on regarding the sector's financial sustainability was the risk of municipal billing and revenue collection, and non-payment by municipalities to the water boards.
He agreed with Mr Basson that the Department had some challenges with implementing agents in the past in terms of their performance, such as the historical performance of Lepelle Northern Water regarding the Giyani Water Project, and the problems that occurred there were well known. To try and prevent the repetition of that challenge, the Department was being more careful regarding the appointment of implementing agents. It ensured that there was no over-allocation of projects to them when they did not have the capacity to manage them. They also monitored working implementing agents more closely, and assisted where they found the implementing agency struggling. For example, the Department and the Ministry were providing a lot of support to Lepelle Northern Water recently to ensure that the Giyani pipeline project was completed.
The Chairperson asked Dr Phillips to ensure that the officials he delegated to speak responded to all the issues at once, instead of responding piecemeal. He was concerned about the time that this process was consuming, and asked him to change the approach.
Dr Phillips apologised, and said that this would be the final response to the questions by Mr Mathye.
Mr Mathye said the investment advisory fees were curbed between 5% and 10%, depending on the scope of work covered in the agreement. For example, the fee would be less if the implementing agent was doing only the programme management without doing engineering designs, putting together tendering documentation, etc. However, if they were involved in more work, the fees would be higher, and the fees were always aligned to the investment advisory fees of South Africa.
Magalies Water was the implementing agent of the Madibeng water project, and the project was near completion in the Brits Water Treatment Works -- the committed completion date was towards the end of March. Phase one had started a while back and phase two had been completed, and the civil work was sitting at 90%, with some electrical work of about 12% left. The committed completion work of the treatment works was for 60 to 80 megalitres, and was set for completion by the end of March.
The Chairperson said the purpose of the meeting was for the Committee to understand the Department’s responses to the Speaker of the National Assembly’s recommendations, and the Committee would revert to the Speaker on the responses received. It was unfortunate that the approach had taken a different direction, but it did not matter because the engagement had been fruitful.
Having heard the response from the Minister and the Department on the recommendations, the Committee needed to read the documents, state what it was happy and unhappy about, and make a proposal to the Department on what it needed to factor in moving forward. He said it was not necessarily correct that all municipalities in the country were run by the ANC, as Ms Mohlala had insinuated.
Ms Mohlala interjected to say the Chairperson was misleading the public by saying there were municipalities run by the EFF, as that was untrue.
The Chairperson said he was giving an example, and commented that the Department’s responses must be underpinned by the view that the buck stops with the Minister in terms of water supply. When South Africans did not have water, the DWS must answer. What was expected from the Department was for them to say what they were going to do, because they already knew that the municipalities were not going to meet their commitments in terms of payments because the revenue base was not there. What was the Department going to do with municipalities that failed to pay the water boards? There must be a buffer that did not take away the right to access water from people, even though water was no longer free. “We cannot just put regulations in front of people as if it is business as usual -- we need to behave differently because people need water”, he said.
Minister Mchunu said the current plan, which was a partnership between the DWS and Lebalelo, an association of water users including mines, had been launched on 27 October 2022, and on the same day the Department had also launched the first project of the partnership, which was a pump station with all equipment available. This was the first project that was implemented to demystify the launching of projects without visible progress.
He invited Members to go and see the progress of the R24 billion project, which would cover between five and six years. The villages that Ms Mohlala had mentioned were part of 38 villages that would benefit from the project in Sekhukhune, which was the eastern wing of the project centred on Burgersfort. The western wing of the project, which was centred on Flag Boshielo to Mogalakwena, would cover 96 villages and mines in the five to six year period. There were also similar projects all over, and the Department had recently completed Brandvlei and a very important project for farmers in the Boland in the Western Cape.
As much as there were challenges with the reconfiguration, the process was going smoothly and should be completed by the end of March. Processes such as human resources and financial issues would remain. The Department would accept the statement that it did not understand the water challenges in municipalities from Mr Tseki’s point of view, but from their own view, the Department understood water challenges in the municipalities and was intervening. Regarding the reasons for the underperformance of the municipalities, he said that question could be answered by local government. It was going to take time to turn municipalities around because their performance was not currently satisfying.
Mr Tseki said he was not saying the Department did not understand water challenges, but was merely asking if the Department had the issues at the tips of its fingers, and the Minister had responded.
The meeting was adjourned.
Mashego Mr MR
Basson, Mr LJ
Magadzi, Ms DP
Mahlobo, Mr MD
Matuba, Ms M M
Mchunu, Mr ES
Mohlala, Ms MR
Pietersen, Ms M L
Sihlwayi, Ms NN
Tseke, Ms GK
Tseki, Mr MA
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