National Water Resources Infrastructure Agency SOC Limited Bill: DWS response to public submissions; with Minister

Meeting report

DWS response to oral submissions on National Water Resource Infrastructure Agency (NWRIA) Bill

Ms Bronwyn Naidoo, Legislation Specialist, Department of Water and Sanitation (DWS), presented a comprehensive overview of the public comments on the Bill, comments addressed by the DWS, recommendations to the Portfolio Committee (PC), responses to key stakeholders, and the Department's stance on strengthened governance, viability and sustainability.

The public comment phase spanned 120 days from 16 September 2022 to 17 March 2023, indicating the DWS's commitment to a participatory democracy, as outlined in the Constitution. 120 comments were included in the submissions during this phase, with 75% of them expressing non-substantive concerns about the Bill. However, three pertinent issues had been identified, including recommendations from the researcher. These recommendations urged the Portfolio Committee to consider submissions from the South African National Biodiversity Institute (SANBI) and the Western Cape provincial government. The DWS committed to briefing the PC on how it addressed these submissions. Mr Hendrik du Toit's suggestion to implement existing acts was acknowledged, emphasising the alignment of the NWRIA's establishment with the National Development Plan.

Addressing the inputs of key stakeholders, Ms Naidoo noted that SANBI's support for the Bill with ecological infrastructure considerations had been referred to the National Water Act amendment team. The inclusion of the word "environment" in the preamble had been agreed upon. Mr Hendrik du Toit's call to implement existing acts had been recognised, in alignment with the National Development Plan. Concerns raised by the Western Cape provincial government regarding impact assessments had been addressed, confirming the approval of a socio-economic impact assessment (SEIA) and a reviewed business case.

Key stakeholders, including the National Economic Development and Labour Council (NEDLAC), National Treasury, the South African Local Government Association (SALGA) and the Congress of South African Trade Unions (COSATU), had presented comprehensive submissions, expressing varying degrees of support for the Bill.

Ms Naidoo emphasised DWS's engagement with these stakeholders to address concerns and the opposition to "agencification."

Regarding responses on strengthened governance, viability, and sustainability, Ms Naidoo expressed confidence in Chapter 3 of the Bill supporting strengthened governance. Viability and sustainability concerns were addressed through a comprehensive business case, reviewed by National Treasury and independently by Ernest and Young, both of which supported the Bill.

She asserted that the Department of Water and Sanitation had effectively responded to all raised issues.

(See attached presentation document)

Minister’s input

Mr Senzo Mchunu, Minister of Water and Sanitation, emphasised the critical need to address water infrastructure backlogs in the country, and underscored the importance of enhancing the state's capacity to protect South Africans with regard to water infrastructure. There was a need to not only meet the current demand for water resources, but also to prepare for climate changes, including the possibility of drought.

He stressed that the agency's role went beyond just matching the existing demand for water resources. It would play a crucial role in addressing challenges, gathering resources, and involving the private sector in infrastructure projects. He refuted the notion that the functions of the agency could be handled by the DWS alone, emphasising that the agency would be overseen by the Department and fully owned by the government or the public.

He addressed concerns raised by SALGA, stating that the matter went beyond the merits of establishing the agency. He expressed satisfaction with the process, and said that all necessary steps had been taken to highlight the need for the agency. He refuted claims of agencification, asserting that there was no evidence justifying such assertions, unless they were purely ideological.

The Chairperson expressed gratitude to the Minister, and acknowledged the engagement with the entity. He noted that Mr Du Toit had been invited to make a presentation, but could not attend on the scheduled day. The Committee had relied on his written input for consideration.

Acknowledging the inherent ideological differences between employers and employees, especially in labour matters, he emphasised the importance of these differences for the existence of workers' unions. The Committee should recognise that differing views were natural, and constructive engagement was vital for both parties.

The Chairperson invited Members to ask questions or comment, highlighting that it was the finalisation of the Bill, so they should provide input or seek clarity.

Discussion

Ms M Matuba (ANC) noted that the Committee had previously dealt with similar issues, having received presentations from SALGA and National Treasury. She mentioned the Committee's invitation to Mr Du Toit, and said that the current clarity from the Department aligned with their expectations.

She sought clarification from the Department regarding the responses to those who had submitted rejections. She inquired whether the department had already provided responses, or if they were still pending. While recognising that the Constitution did not bind them to accept all raised points, she commented that the Department's consolidated report had summarised the responses, especially for substantive presentations.

She queried whether the Department had submitted the required letter to the President, as mentioned in the report, and if not, when they planned to do so. Ms Matuba expressed her alignment with the recommendations as a Member of the Portfolio Committee.

Ms N Sihlwayi (ANC) mentioned the importance of acknowledging the Department's role in providing clarifications, and commended the legal unit for ensuring a clear legal standing for the Bill.

She highlighted the significance of addressing the challenges to the constitutionality of the Bill, and said she had found the Department's responses clear, especially in relation to NEDLAC and labour concerns.

Regarding Mr Du Doit's matter, she suggested finalising and closing the issue, noting that he had been given the opportunity to present his views individually before the Committee.

In alignment with Ms Matuba's concerns, Ms Sihlwayi raised the question of whether written responses had been provided to those who had submitted written submissions, aiming to avoid challenges in the process. She expressed agreement that the Bill should proceed to Parliament and the National Council of Provinces (NCOP) for enactment, addressing the identified issues related to water services distribution.

The Chairperson suggested recommending to the DWS that, as a courtesy, they respond in writing to those who had made presentations. He clarified that this was a section 75 bill and did not require the NCOP processes, but informing them was still necessary.

Ms Naidoo confirmed on behalf of the Department that written responses had been prepared and were currently being processed.

Mr N Myburgh (DA) conveyed his party's inability to support the Bill, citing various concerns. He sought clarification on the Department's claim that it could no longer secure financing from the open market, questioning the reasons behind this, and how the proposed agency would address these financial challenges. Given the historical issues with such entities in the country, he expressed apprehension that the new agency might be akin to creating another state-owned enterprise (SOE), raising concerns about potential mismanagement and corruption.

A significant point of inquiry was how the proposed agency would differentiate itself from existing SOEs, considering the challenges highlighted by commissions like the Zondo Commission. He sought assurances on measures to prevent the pitfalls of corruption encountered by other SOEs, and questioned the underlying rationale for establishing the new agency.

The Chairperson interrupted Mr Myburgh's concerns, stating that the Committee was now entering a political discussion and debate phase, after having been engaged in the process for some time. He questioned the logic of raising objections at this stage, especially considering the previous engagement and discussions on the urgency of the matter. Additionally, there had been a challenge posed to Mr Myburgh regarding the involvement of the Democratic Alliance in the process, given his assertion that the party might still reject the Bill. He asked why the Democratic Alliance was actively participating in the process if they intended to oppose it.

Mr Myburgh said there was a need for clarity and answers to serious questions and reservations the DA had regarding the Bill. He pointed out that the opposition's role was to oppose the Bill unless satisfactory answers were provided. He raised concerns about the effectiveness of the proposed SOE, questioning why it would be different from previous failures. He highlighted the importance of writing laws, not just for good ministers, but also for the worst-case scenarios, considering the potential for misuse of power and interference in procurement processes. He asserted that the Bill could set the stage for a potentially disastrous situation. He expressed the need for a credible explanation from the Minister on why it would be different this time. He underscored the importance of preparing for various scenarios, including changes in leadership after the upcoming elections.

The Chairperson accused Mr Myburgh of engaging in political manoeuvring rather than focusing on the Bill. The Chairperson then invited the Minister to respond to Mr Myburgh's concerns and questions.

Responses

Minister Mchunu expressed gratitude for the opportunity to address Mr Myburgh's concerns. He provided insights into the Department's engagement with the private sector on water projects, highlighting specific agreements. On 27 October last year, the mining sector in the area of Sekhukhune in Limpopo signed an agreement with the Department to provide water to mines and villages in the eastern and western regions of the project. The mining sector had committed nearly 50% of the total project cost of approximately R24 billion, with government contributing the remaining R12 billion This model, according to the Minister, not only served to fund the project but also countered potential corruption by ensuring separate oversight of the funds allocated by the private sector and the government.

Minister Mchunu mentioned a similar arrangement for phase two of the Mokolo and Crocodile Water Augmentation Project in the Western Cape, with a project cost of R10 billion. He highlighted the establishment of a partnership office with the Development Bank of South Africa (DBSA) to invite private sector participation in various programmes. He emphasised the global challenge of private sector reluctance to invest in water projects, and argued that the proposed agency would play a crucial role in encouraging such investment.

He acknowledged corruption's persistence, but argued that corruption was rooted in individual decisions rather than the institutional structure. He pointed to successful entities like Transnet and the Lesotho Highlands Water Project, both managed by the Trans-Caledon Tunnel Authority (TCTA), which had maintained good practices and culture over time. The Minister stressed the need for a collective effort to fight corruption, whether projects were managed within the Department or through an institution like the proposed agency.

In response to concerns about the appointment of the board, the Minister clarified that board members were appointed through an independent processes, considering factors such as merit, demographics and transparency. He emphasised the need to separate corrupt individuals from the merit of ideas, expressing confidence in the collective ability to fight corruption and allow ideas of merit to prevail.

Minister Mchunu commended Parliament's commitment to addressing corruption, and expressed his willingness to engage further with Members offline.

Follow-up discussion

Ms R Mohlala (EFF) said that the Committee should take note that the EFF would withhold its comments on the Department's report for the time being. They would revisit it, to express their perspective on the legislation in the future, making it clear that the EFF would provide a categorical stance on the legislation at that point.

Speaking in Sesotho, the Chairperson humorously asked, "But you want water, don't you?"

Ms Mohlala, replying in Sesotho, conveyed that that was true, but the EFF would withhold its comment. She said the Committee should acknowledge this stance, noting that the EFF would share its perspective on the legislation later.

Response

Dr Sean Phillips, Director General, DWS, added responses to Mr Myburgh's question and provided further information. He explained that according to the Public Finance Management Act (PFMA), departments were not allowed to borrow, and National Treasury must do all borrowing on behalf of departments. National Treasury, however, had limits on borrowing, and increasing debt had prompted efforts to reduce it. He clarified that when the Minister mentioned borrowing for projects like the Lesotho Highlands, it was done by the Trans-Caledon Tunnel Authority (TCTA) with explicit guarantees from National Treasury.

He said the objective of creating the NWRIA was to expand on the TCTA model. The NWRIA would merge the infrastructure part of the Department with the TCTA, transferring revenue-generating assets to the NWRIA. This approach would allow the NWRIA to borrow based on its profits, balance sheet, and associated revenues, putting it in a better position than the TCTA.

Dr Phillips added that clauses in the Bill addressed the appointment of the board to ensure proper governance. Specific clauses outlined the qualification and experience requirements for board members, aiming to mitigate the risk of the agency not being well-managed. He suggested the Director of Legal Services provide additional details if needed.

The Committee Secretariat informed the Members that the Chairperson was facing difficulty reconnecting, and suggested choosing an interim chairperson for the time being.

Ms Matuba suggested appointing Ms G Tseke (ANC) as acting Chairperson, to which Members agreed.  

Finalising the process

Ms Aadielah Arnold, Legal Advisor, said that they would proceed to deliberate on the Bill, consider any proposed amendments, and draft an A-list document for amendments.

The Acting Chairperson inquired about the timeline for finalising the process, and whether it could be done before the Committee adjourned or if it would be a process for the next day.

Ms Arnold mentioned that considering the time of the year and the current status, the process would likely stand over until next year.

The Acting Chairperson thanked the Members for their contributions to the Bill and mentioned the intention to fast-track the process, aiming to finalise it before the end of the term. She acknowledged the support of the majority of the Committee Members for the Bill, considering it was a section 75 bill with potential for smooth processing.

Adoption of Minutes

The Committee considered the minutes of its meeting on 21 November.

Ms Tseke proposed their adoption, Ms Sihlwayi seconded, and the minutes were adopted.

The meeting was adjourned.