The Department of Water and Sanitation and three water boards briefed the Committee on the work of the water boards.
The Department said loadshedding and the destruction of infrastructure caused by flooding were challenges. The Department had met five of its eight Sustainable Development Goals (SDG) 6 targets. Three targets, namely water, sanitation, and water quality, were not met.
The Minister had reconfigured boards to deliver on its mandate and the reconfiguration would be complete by the end of March. One challenge was the debt of water boards. The Department needed to work more closely with municipalities. Several water boards had challenges filling senior managerial posts and this needed urgent attention from water boards. Magalies water board had an unqualified audit with no findings. Amatola and Mhlathuze Water had qualified findings, while the rest had unqualified audits with findings.
The Department discussed key water board reforms in 2021/22; the status of water board reconfigurations; the performance of water boards; its financial status; irregular, fruitless, and wasteful expenditure; and governance.
Amatola Water said the Interim Board started on 7 March 2022 to stabilise the organisation, strengthen governance and delivery capability, and improve relations with municipalities. Its presentation covered non-financial performance; financial performance; achievements, and challenges. There were audit findings on the Annual Financial Statements (AFF); expenditure management; procurement and contract management; consequence management; revenue management; and strategic planning. The entity’s performance declined by eight percent based on the Annual Performance Plan (APP) targets.
The challenges facing Amatola were Eskom load shedding; ageing infrastructure; prolonged drought and floods; long outstanding municipal debt; low levels of stakeholder confidence; financial deficits for three consecutive years; declining organisational performance; qualified audit outcomes in three consecutive years; and outdated organisational policies.
Lepelle discussed its performance; organisational environment; non-financial performance; and financial performance. Lepelle operated with municipalities with high indigent and unemployment rates, putting pressure on the entity to set affordable tariffs. Most of the water and wastewater infrastructure had reached its maximum capacities, were ageing, and were dilapidated. Non-financial performance improved from 67% to 77%. It noted there was a general challenge in the country regarding sourcing chlorine gas. Investigations on all reported irregular, fruitless, and wasteful expenditure were conducted and consequence management was put in place to deal with those responsible.
Magalies Water spoke to governance issues, budget and audit outcomes, operations and service delivery challenges, instituting directives, and work of board members. Revenue collection remained one of the major challenges for Magalies Water.
Members asked the Department to what extent the directives issued by the Minister to metros were complied with and what oversight water boards, as implementing agents, engaged in to ensure compliance; why Amatola was not disbanded and the board reconstituted, as it had a history of irregular expenses and Supply Chain Management (SCM) challenges; what the rationale was to retain the Amatola water board; how many water authorities have accepted Amatola water board servicing the entire Eastern Cape; what the role of the Department in capacitating water boards was; if the Department bailed out some water boards; and regarding water quality, if directives were issued to non-compliant water boards, and what steps were taken on critical transgressions such as water losses by water boards and municipalities.
Members asked what measures the Department had put in place to capacitate municipalities to provide effective and sustainable services; why Amatola, Umgeni, and Overberg did not comply with the blue and green ‘drop’ standards, why the board did not correct the misstatements of the prior year in preparing the current years statements; why it took so long to implement consequence management regarding irregular expenditure; what measures had boards put in place to eliminate water loss and what the time frame for these measures was.
Members also asked when Magalies would stop supplying water to Mogwase households as it was unclean and brown in colour; said the entities only reported losses of water, or audit outcomes, but one did not get a sense of focus or ability to address the issues and challenges facing it. The Department should engage the Minister and Deputy Minister on the chlorine issue.
Members asked how inexperienced service providers could be appointed.
The Committee was responsible for overseeing the Department’s programme performance and water boards as there was a lack of standards and values to make things happen as they should. Members asked if it was not part of the Department’s work to bring outdated organisational policies up to standard. Members said Lepelle water had many litigation lawsuits against it, asked why Lepelle was negligent in its initial SCM controls; asked how long court cases could go on; and asked what the amount appropriated for litigation was.
Department of Water and Sanitation Overview & Assessment of Work of Water Boards
Ms Dikeledi Magadzi, Deputy Minister of Water and Sanitation, said load shedding was a challenge which wreaked havoc. The Department also had to contend with the destruction of infrastructure caused by flooding. The Department convened a midterm review on the eight targets of Sustainable Development Goal (SDG) Six. The Department was not doing well in the target areas of water, sanitation, and water quality.
On the issue of water boards, the Minister reconfigured boards to deliver on its mandate, and the reconfiguration would be complete by the end of March. One challenge was the debt of water boards. The Department needed to work more closely with municipalities on this. Several water boards experienced challenges filling senior managerial posts, and this needed urgent attention by water boards.
Regarding audit outcomes, the Magalies water board had an unqualified audit with no findings. Amatola and Mhlathuze Water had qualified findings, while the rest had unqualified audits with findings.
Ms Lindiwe Lusenga, Deputy Director-General (DDG): International Water Cooperation, gave an overview and assessment of key water board reforms in 2021/22; the performance of water boards; financial status; irregular, fruitless and wasteful expenditure; and governance.
Key waterboard reforms included the reconfiguration of water boards. Sedibeng Water was disbanded, and its previously serviced areas were incorporated into Bloem Water and Magalies Water. Bloem Water would cover the Free State and the Northern Cape. Magalies Water would cover the Northwest province, and so some areas and assets from Lepelle Northern Water (LNW) and Rand Water would go to Magalies Water. Rand Water would service the Gauteng and Mpumalanga, resulting in the transfer of some areas and assets from Magalies Water to Rand Water. Lepelle Northern Water would cover Limpopo. Umgeni and Mhlathuze Water would be combined into a single Water Board for KZN. Amatola Water Board would service the whole Eastern Cape. Overberg Water would cover all areas of the Western Cape which require the services of a Water Board.
The performance outcomes of five water boards, namely Amatola, Bloem, Lepelle, Mhlathuze, and Rand Water, were below 80% of the planned targets.
Regarding the water quality status, Amatola had a chlorine gas shortage caused by an interrupted supply. Umgeni said water demand outstripped supply and was larger than the originally designed plant capacity. The plant was being upgraded. Overberg said the inefficient filtration process was the main reason for not fully complying with SANS 241.
On water losses, the Magalies regressed because of poor raw water quality, and Lepelle regressed mainly because of ageing infrastructure, leaking, and illegal connections. Overberg did not meet its water loss target because of prolonged pipeline repairs and network maintenance.
On audit outcomes, Magalies Water had an unqualified audit with no findings. Bloem Water, Umgeni Water, Rand Water, Lepelle North Water, and Overberg Water had unqualified audits with findings. Amatola Water and Mhlathuze Water had qualified audits with findings.
See presentation for further details
Briefing by Amatola Water
Ms Pam Yako, Chairperson, Amatola Water Management Board, said the interim board started on 7 March 2022 to stabilise the organisation, strengthen governance and delivery capability, and improve relations with municipalities.
Mr Spelele Galada, CFO, briefed the Committee on Amatola Water Board’s non-financial performance, financial performance, achievements, and challenges.
Audit findings on the Annual Financial Statements included expenditure management, procurement, contract management, consequence management, revenue management, and strategic planning. The entity’s performance declined by eight percent, based on the targets of the Annual Performance Plan (APP) which was attributed to water restrictions imposed by the Department during 2021/ 2022, the national shortage of chlorine, the prolonged drought, and ageing infrastructure.
The challenges facing Amatola were:
Eskom load shedding
Climate change (prolonged drought and floods)
Long outstanding municipal debt
Low levels of stakeholder confidence
Financial deficits for three consecutive years
Declining organisational performance
Qualified audit outcomes in three consecutive years
Outdated organisational policies
The Interim Board’s intervention plan to stabilise the institution and halt its declining performance was based on creating a primary business focus, strengthening governance, and restoring leadership.
See presentation for further details
Briefing by Lepelle Northern Water
Dr Nndweleni Mphephu, Chairperson of Lepelle Northern Water Board, introduced delegates present.
Dr Cornelius Ruiters, Chief Executive Officer (CEO), Lepelle Northern Water, briefed the Committee on Lepelle’s performance, organisational environment, non-financial performance, and financial performance. Lepelle worked with municipalities which had a high indigent and unemployment rate. There was pressure on the entity to set affordable tariffs while sustaining the existence of the organisation. Most of the water and wastewater infrastructure had reached its maximum capacities, and were ageing and dilapidated, affecting the quality of raw water. Non-financial performance improved from 67% to 77%. The country had a general challenge regarding sourcing chlorine gas from the only domestic chlorine gas manufacturer NCP. Project delays occurred because of inexperienced service providers and poor planning by the appointed service providers.
On financial performance, the investigations regarding irregular, fruitless, and wasteful expenditure which had been reported was conducted and consequence management was applied to those responsible.
See presentation for further details
Briefing by Magalies Water
Mr Ofentse Nthutang, Acting Chief Operations Officer, Magalies Water Board, offered the apologies of Dr Lydia Sebego, Chairperson, Magalies Water Board, and Mr Sandile Mkhize, CEO, Magalies Water Board, for being absent. He briefed the Committee on governance issues, budget and audit outcomes, operations and service delivery challenges, instituting directives, and work of board members.
Revenue collection remained one of the major challenges for Magalies Water. Since the disbanding of Sedibeng Water, Magalies Water has taken over its customers and these customers continued with the culture of non-payment. There were continuous engagements with local municipalities to collect due amounts and/or finalise payment plans. Payment arrangements and commitments were regularly monitored to ensure municipalities’ compliance. Lepelle implemented its water restriction procedures on defaulting local municipalities, but the impact was reduced because of the legal process of having to obtain concurrence from the Minister before any action could be taken against delinquent municipalities.
See presentation for further details
Ms M Mohlala (EFF) asked the Department to what extent the directives issued by the Minister to metros were complied with, and what oversight water boards, as implementing agents, engaged in to ensure compliance.
She referred to infrastructure projects by Amatola where the start date was 2016 but the completion date was 2024, and said it increased costs over the years because of unrealistic timeframes. This created challenges as it appeared there was double dipping taking place. Amatola was performing badly because of the board’s composition and because of court cases. She asked why Amatola had not disbanded and why the board was not reconstituted, as it had a history of irregular expenses and supply chain management (SCM) challenges.
She asked what the rationale was to retain the Amatola water board; how many water authorities had accepted Amatola water board servicing the entire Eastern Cape; what the role of the Department was in capacitating water boards; if the Department bailed out some water boards; regarding water quality, she asked if there were directives issued to non-compliant water boards and what steps were taken on critical transgressions such as water losses by water boards and municipalities.
Ms S Mokgotho (EFF) asked what measures the Department had put in place to capacitate municipalities to provide effective and sustainable services. She asked Amatola, Umgeni, and Overberg why it did not comply with the blue and green ‘drop’ standards regarding water quality compliance. She said according to the Auditor-General’s (AG’s) financial overview, Amatola did not correct the misstatements of the prior year in preparing the current year's statements, and asked why the board had not corrected these misstatements.
Regarding irregular expenditure, she asked why it took so long to implement consequence management.
Knowing water was a scarce resource Magalies, Amatola, Lepelle and Overberg were losing water because of ageing infrastructure and lack of effective maintenance. She asked what measures these boards put in place to eliminate the water loss, and what the timeframe for these measures was. She asked when Magalies would stop supplying water to Mogwase households, which had unclean and brown water.
Ms N Sihlwayi ( ANC) said the entities did not appear to see what government wanted to achieve through the entities. It reported losses of water, or audit outcomes, but one did not get a sense of focus or ability to address the issues and challenges facing it.
Lepelle had an issue with wastewater infrastructure which was dilapidated. It affected the quality of water and was a health hazard. The issue was service was not given to the people, and no recovery plan was indicated. The Department should engage the Minister and Deputy Minister on the chlorine issue. Something needed to be done to procure chlorine.
The project delays were because of appointing inexperienced service providers. She asked how inexperienced providers were appointed.
She was glad to hear of the regulations around SCM and training in SCM at Lepelle water boards.
On Amatola, she said there had to be clear research analysis of what the problems at Amatola were. There were many issues such as governance structures, leadership, and litigation. The Committee had a responsibility to oversee the programme performance of the Department and water boards. There was a lack of standards and values to make things happen as they should.
The Chairperson thanked the Deputy Minister for reconfiguring the boards and wanted the Deputy Minister to talk about the Amatola board in particular.
Referring to the recent SDG 6 summit, he asked if the Committee could give no other input as meetings were held and the Committee, as a stakeholder, was not informed about the meetings. It was only informed about the meeting later.
He asked for the Deputy Minister’s comment on the appointment of inexperienced service providers.
On the issue of chlorine, he said the Committee was told South Africa would create a company to make chlorine, yet in Chloorkop, there had been a company’ named NCP, which manufactured chlorine.
On the reported debt of Amatola, he asked what the Department’s mandate was, as one could not report an irrecoverable debt forever.
The Department was not meeting its targets because the entities had outdated organisational policies. He asked why it was not part of the Department’s work to bring policies up to standard.
The Deputy Minister said the Department would be working with municipalities on skills development and capacity building so it could manage the water infrastructure in its particular area. This was key.
It was important for the Department to deal with the whole value chain, including water services authorities and municipalities. Municipal infrastructure needed to be revamped and resources needed to be given for this. There had to be stable operations and maintenance.
The Minister was very clear on the reconfiguration of water boards; it was important to have water boards that could work with municipalities and capacitate municipalities that were found wanting. Municipalities had many challenges such as water losses and theft of water, resulting in lost revenue, ultimately impacting municipalities and water boards negatively. The Committee and the Department needed to look into this.
The Department was working hard with all stakeholders regarding chlorine supply.
The Department had not been the one inviting people to the Sustainable Development Goal (SDG) Six summit; it was done by the United Nations Chapter in South Africa. When the Department received the invitation, it should have requested an invite be sent to the Committee and other stakeholders.
South Africa had to be congratulated because it was doing extremely well on SDG Six. Statistics South Africa (Stats SA) made a presentation on all the targets which were met. Three targets were not met, but this would be corrected and reported on at the next engagement with the Committee.
The Chairperson of Lepelle water board was present and would invite the Committee to the opening ceremony of a canal.
Dr Sean Phillips, Director-General, Department of Water and Sanitation, said the Department issued directives to municipalities and the private sector regarding the National Water Act’s pollution of the environment, water catchments, pollution of water sources, and non-compliance with standards, including wastewater treatments.
Some municipalities complied, while others did not. Follow-up directives were issued to the latter, who was taken to court if there was still non-compliance. The Minister appointed water boards as implementing agents for projects and to develop water schemes. It had nothing to do with controlling and issuing directives to municipalities.
On what the Department had done to capacitate municipalities, he said it helped municipalities develop five-year liability plans and water services improvement plans; it helped with sourcing funding to address infrastructure backlogs through the Water Service Infrastructure Grant. The Department’s regional offices assisted with getting the grants and helped to manage expenditure.
The Department helped the municipalities in its blue and green drop assessments, which told municipalities exactly what was wrong with the water and what needed to be done to address these issues and improve water quality.
The Minister frequently met with municipalities around the country and worked with mayors to put in place action plans to address weaknesses. The Department monitored the implementation of those action plans. The Department could not capacitate municipalities by putting people in place, because it did not have the budget to do this. Water services, municipalities, and water boards were supposed to be self-sustaining. Therefore, billing and revenue collection was important. There was recently a workshop with all the water boards and the South African Local Government Association (SALGA) to develop common proposals on strengthening billing and revenue collection in the sector. The Minister wrote to municipalities to standardise billing, revenue collection, and credit control.
On water losses of water boards, he said water boards were encouraged to reduce water losses and were doing well when compared to municipalities. Amatola had the highest level of water losses at 18%, but this was in light of the international standard of 15% loss being regarded as doing well. The water loss problem in the country was not a water board problem but rather a municipality problem as it had 40% and 50% losses, and this was where the Department’s focus was.
On the chlorine issue, he said he was aware there was currently a global shortage of chlorine. He would contact the Department of Trade and Industry to see if it could collaborate to facilitate the development of the chlorine industry in SA.
On wastewater treatment and the pollution of wastewater treatment works, he said water boards were responsible for providing water, not for wastewater treatment, which was a municipality function. This was why the Department was issuing directives.
On Amatola water, Ms Lusenga said the Department’s assessment reflected water services in the Eastern Cape were not able to deliver bulk services, and Amatola was assisting with this. The Department’s consultations were in an advanced stage to get Amatola to cover the Eastern Cape. The Department was addressing the capacity of Amatola and providing technical support and establishing the new board.
She said the provincial offices monitored the directives which were issued.
On the delays, she said Amatola should respond by addressing why there was a delay.
On what the problem was with the Amatola Board, she said the Department went through a process on the challenges Amatola board faced, namely in-fighting and misconduct.
Mr Galada said Amatola had covered irregular expenditure and reported on irregular expenditure, but there had been irregular expenditure incurred as implementing agents of projects which should also have been reported. This was not how Amatola understood the reporting requirements, which was subsequently corrected. Amatola allocated responsibility for the irregular expenditure and the consequence management which follows.
On water losses, he said there was poor performance. The 18% losses were targeted to be reduced by at least four per cent in the current year. The target was met for the first quarter of 2022/23. Amatola had over 1800km of distribution pipelines, which were ageing. There were ongoing projects regarding this and there was a distribution plan.
Previously there had been a lack of stakeholder engagement and issues with the stakeholders were resolved.
Regarding Alexandria, he said a pipeline was being put in place to address Alexandria’s issues.
Some service providers did not have the required capacity, or, as in one instance, the service provider in the Makana area went into liquidation. A competent service provider has since been appointed. The work was currently on schedule.
Amatola will work on long outstanding debt with municipalities.
Regarding improvement of the capacity of Buffalo City Metropolitan Municipality (BCM), there were additional requirements regarding the supply of bulk water. This would result in an improvement of the revenue from BCM.
On the outdated policies, Ms Yako said the new board approved nine policies and, in the current year, would be approving more policies to bring the policies up to date, reviewed, and approved.
On stakeholder engagement, he said Amatola would have a workshop in March, with water supply authorities in the whole Amatola area looking at the issue of provincialisation, and preparing for the new business plan of the coming year by getting input from the Water Services Authorities.
On water production losses, the measures Magalies water would be taking, and the timeframes involved, Mr Nthutang said Magalies had very stringent targets on water production losses. The target was five per cent production loss and the actual losses were 5.5%. This was mainly because of the quality of raw water received. It was currently implementing a project to optimise supernatant recycling. This project would be completed in the next financial year.
Regarding the water quality, especially in Mogwase, he said Magalies implemented a stringent water quality programme monitoring supply to distribution. Mogwase was an isolated problem within the reticulation system run by municipalities. Magalies worked jointly with municipalities to isolate issues and Magalies Water complied with SANS 241.
On water losses, Dr Ruiters said Lepelle’s water losses were around six per cent.
Lepelle had implemented measures to deal with project delays and the criteria for the appointment of service providers.
Consequence management was being applied in its SCM and a number of disciplinary actions had taken place, in some cases dismissals.
Ms Mokgotho said Lepelle water had many litigations against it. She asked why Lepelle was negligent in its initial SCM controls; for how long court cases could go on; and what the amount appropriated for litigations was.
Dr Mphephu asked for a written answer to the question.
The Chairperson agreed and the meeting was adjourned.
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