South African National Water Resources Infrastructure Agency SOC Limited Bill: DWS briefing; with Deputy Ministers

Meeting report

Chairperson's opening remarks

The Chairperson apologised for having called the meeting at such late notice, but the Bill was critical to South Africa's national interest, given the water management crisis in the country. It was thus imperative for the Committee to conclude the legislative process.

The Chairperson took issue with Bill that had arrived at the National Council of Province (NCOP) this late in the term. He said the Department of Water and Sanitation (DWS) must account for bringing this Bill now. The NCOP had to be taken seriously. The legislation at hand was important, as it aimed to establish the South African National Water Resources Infrastructure Agency (SAWRIA), which would deal with water and sanitation infrastructure and related issues. Different entities were also to be integrated so that there was synergy in mitigating water management challenges.

He also informed the Committee that he had to request permission from Chief Justice Raymond Zondo to be excused from the Judicial Service Commission’s (JSC's) interviews that were currently underway. He would re-join the interviews as soon as the meeting concluded.

He asked Dr Sean Phillips, Director-General (DG), DWS, why the Minister and the two Deputy Ministers were absent in the meeting.

Dr Phillips responded that the political principals had previous engagements.

The Chairperson was displeased with this response, and labelled it as “unacceptable". Members were also busy, yet they were present at the meeting. The Department had two Deputies, yet none of the two had deemed it important to attend this very important meeting. No apologies had been tendered either.

He recalled that the JSC interviews had been scheduled six months ago, yet he had found it important to convene and attend this very important meeting.

It was critical for the executive/political principals to be present at the meeting, as they were the only ones who could respond to the political and strategic aspects of the proposed legislation. The Executive’s non-attendance sent a very wrong signal.

He asked the Department to ascertain the whereabouts of the Deputy Ministers, and also requested the Committee to proceed with the presentation in the meantime.

Mr G Michalakis (DA, Free State) supported the Chairperson's views. The attendance of the political principals was crucial, as they had to account for the political and strategic considerations.

He said that there was precedence in the event that the Department was unprepared. It should be requested that the Committee be briefed at a later opportunity.

Mr Michalakis then proposed that in the event that it was impossible to reschedule the meeting, that a follow-up meeting with the political principals be scheduled where the political and strategic considerations could be discussed.

Mr C Smit (DA, Limpopo) recalled that the Chairperson had considered the Bill to be important, yet it seemed as if the Department's political principals did not share his views.

He found it “bizarre” that the Bill was just “dropped" before the Committee for consideration and adoption a mere five weeks before an election was to take place. This had never happened in his ten years as an NCOP Member. He asked that the Committee should have a vote on whether to proceed. He did not see why they had to deal with it now and on such an urgent basis.

The Chairperson pointed out this was a Section 75 Bill that did not require the provinces' assent, as it was not a Section 76 Bill.

He added that the Bill would be published for 14 days for public comment once the presentation had been tabled. Once these submissions had been received, the Department, in conjunction with the Committee, would process the Bill.

He thus proposed that the meeting should continue in its current form, and that there would be follow-up opportunities to engage with the political principals.

Arrival of Deputy Minister

At this juncture, Mr David Mahlobo, Deputy Minister of Water Affairs, announced that he had joined the meeting.

Mr Smit acknowledged the presence of Deputy Minister Mahlobo in the meeting. He decried the timeframes available to process the Bill, and emphasised that only five weeks remained available to process the Bill. There had been assumptions that they would not have any amendments, but that was pre-empting their decision-making.

He proposed that the legislation be referred to the Seventh Parliament for consideration and adoption, and that it was wrong to force something of such national importance.

The Chairperson said that the Bill would be processed within the prescribed rules, and that amendments would be considered. It would be wrong for anyone to pre-empt the Committee's work.

The Deputy Minister's presence in the meeting would assist in getting a handle on the political and strategic considerations related to the Bill.

He reiterated that all prescripts would be followed, and expressed his disappointment with the initial absence of the political leadership at the beginning of the meeting.

The Chairperson then asked the Deputy Minister for his comments.

Deputy Minister's comments

Deputy Minister Mahlobo conveyed his sincere apologies to the Committee, saying that he would never disrespect the Committee and that he had always previously appeared whenever his presence was required. He attributed his initial absence to a communication breakdown between officials, and also informed Members that he was currently attending to a water delivery challenge in Ekurhuleni.

He called on the Committee to continue with the important Bill within the prescribed legislative process. The Department was not asking the Committee to circumvent prescripts.

He said the Bill had already been considered by successive Parliaments and it was time to pass it, especially since some citizens were still being denied the right to water. Water security was paramount, and issues around the funding and implementation model would also be addressed.

He commented that South Africa was a water-scarce country and that the Bill sought to address water infrastructure challenges.

The Chairperson said that the Committee should not be “de-focused" from the matter at hand. The National Assembly passed this Bill just before Easter, and it was now before the NCOP. They needed to deliberate on it. Convening this meeting now showed that they attached importance to the Bill.

Motion to proceed with the meeting

The Chairperson called on Members to support a motion to proceed with the meeting.

Mr Smit objected to the proposal and asked for a vote to be called.

Ms S Shaik (ANC, Limpopo) said that the Committee had dealt with this matter extensively, and that the meeting should continue.

The Chairperson said he did not want to suppress any views, and then called for a vote on whether the meeting should proceed.

Mr Smit asked the Chairperson to remind the Deputy Minister that he had no voting rights.

The Chairperson replied that he knew how the rules should be applied.

The Deputy Minister said that he had not intended to vote unless Mr Smit wanted him to vote as well.

The Chairperson then called for a vote.

Ms Shaik, Ms A Maleka (ANC, Mpumalanga), Ms M Bartlett (ANC, Northern Cape) and Ms N Ndongeni (ANC, Eastern Cape), supported by the Chairperson, voted in favour of the meeting proceeding.

Members Michalakis, Mr F Badenhorst (DA, Western Cape) and Mr Smit opposed.

The “yes" votes had it.

Mr Smit raised another point of order on the basis that the Chairperson was not allowed to vote, unless to break a tie.

Ms Bartlett interjected, expressing her displeasure with Mr Smit's conduct.

The Chairperson asked Ms Bartlett to refrain from interjecting, and said he was quite capable of running the meeting himself. He stated categorically that he was allowed to cast his vote as a Member of the Committee.

The Chairperson then announced that the scheduled meeting would continue.

The Deputy Minister was then called to proceed with his opening remarks.

Deputy Minister's overview

Deputy Minister Mahlobo said the Bill was being brought to the Select Committee for consideration and adoption. It was already passed by the National Assembly. Its object was to reform the water sector, and it was not a new issue. Attending to water security infrastructure was important, as it had social, economic and environmental consequences.

Government had to respond on behalf of the nation so that Vision 2030 and the Millennium Development Goals (MDGs) could be achieved.

The Department had built on the special purpose vehicle that had been used to look for funding through the market. It had thus followed the same principles as the Lesotho Highlands Water Project. A lot of work had been done already, and the Department had construction capabilities. The necessary funding would be raised from the markets, as this would relieve some pressure on the national fiscus.

The Bill also did not seek to privatise the provision of water, despite the formation of the new entity. The Department was only building on what was in place already, and it would remain in government hands. An independent board would operate under government directives and guided by the Minister of Water Affairs and Sanitation.

This new arrangement would also look at social issues, and it already have the endorsement of the National Economic Development and Labour Council (NEDLAC), as well as that of water sector experts. Reform stood central to the vision of the formation of the new entity.

DWS presentation on SA National Water Resources Infrastructure Agency SOC Limited Bill [b24-2013]  

Ms Bronwyn Naidoo, Legislation Specialist, DWS, said this Bill addressed issues related to water security and socio-economic growth and development, which were highly dependent on the development, operation and maintenance of national water resources' infrastructure. The Bill was founded in legislation for the lawful establishment of the Agency, and did not replace or supersede the National Water Act 36 of 1998, nor the Water Services Act 107 of 1997, but was read with these pieces and all other legislation. The Bill would not cause any of the institutions emanating from the above Acts to be replaced.

The main rationale for the Bill was that currently, the Department could not raise capital directly on the financial markets, and was reliant on special-purpose vehicles, such as the Trans-Caledon Tunnel Authority (TCTA) to finance and implement viable economic projects. In addition, if properly managed and maintained, the current national water resources infrastructure base could be leveraged to fund and develop the infrastructure requirements identified in the National Water Resource Strategy and Master Plan. The Agency had the added advantage of separating the policy development and regulatory responsibilities of the DWS from the development and implementation responsibilities for infrastructure management.

Ms Naidoo gave an overview of the various chapters of the Bill.

Chapter 1 dealt with definitions and purpose.

Chapter 2 dealt with the establishment of the Agency.

Chapter 3 dealt with the governance of the Agency.

Chapter 4 dealt with the appointments and terms of the chief executive officer and chief financial officer.

Chapter 5 dealt with financial reporting and accountability, and sources of funds and borrowing by the Agency were subject to approvals.

Chapter 6 dealt with the transfer of national water resources infrastructure and the disestablishment of the TCTA. The Minister would designate the national water resource infrastructure and transfer it to the Agency on a date determined by the Minister, and the disposal of national water resources infrastructure by the Agency would need ministerial approval and the concurrence of the Minister of Finance.

Chapter 7 dealt with the powers of the Minister.

Chapter 8 dealt with miscellaneous provisions.

She then addressed the processing and status of the Bill which was currently in Parliament.

(See attached presentation)

Discussion

The Chairperson said that a need had existed to merge the Trans-Caledon Tunnel Authority with water trading authorities to better facilitate the coordination, construction, maintenance and operation of water resource infrastructure. This new entity would assist the country in meeting the MDGs.

The Chairperson then invited the other Water and Sanitation Deputy Minister, Ms Judith Tshabalala , who had since joined the meeting, to deliver her remarks as well.

Deputy Minister Tshabalala also apologised for the communication mishap that had led to her initial absence at the start of the meeting.

She said the South African National Water Resources Infrastructure Agency had been in the pipeline since 2005. It was thus important that the NCOP consider the Bill, as processes were at an advanced stage. The Bill had been tabled before the National Assembly (NA) in September 2023, and normally, processing in the NA took time before a Bill was advanced to the NCOP.

She acknowledged the important mandate of the NCOP.

She added that water was a source of life, and that South Africa faced serious water resource management impediments. The Bill sought to address these issues, coupled with the supply and access to water.

The legislation should therefore be regarded as a priority, and she hoped that the Sixth Parliament would pass it. The necessary public participation processes had been conducted, and there was an “appetite for this legislation."

Ms Shaikh said that the Deputy Minister had covered what would have been her first question, which was on the timeframes attached for consideration and adoption of the Bill.

She asked how the establishment of the SANWRA would support a stable water supply. She also wanted to know how the Agency would link with water boards and water service authorities, and how the transfer of staff would be managed.

Mr Smit asked about the financial implications to the end users, as the Agency needed to be funded since there would be salaried officials.

The Chairperson asked whether municipal water resource infrastructure would also fall within the new Agency's ambit, and whether reticulation challenges at the municipal level would also be addressed.

He also wanted to know how the disestablishment of the TCTA would affect the Lesotho projects.

Mr Badenhorst asked about the envisioned funding model for the Agency, and urged that the Department be straightforward on this point.

He added that almost all of the 200 parastatals had a proven track record of maladministration, poor corporate governance, fraud and corruption, and a litany of other challenges that always ended in bailouts from the national fiscus.

He asked what measures had been put in place that ensured that allocated funds were spent on core funding imperatives.

DWS's response

Deputy Minister Mahlobo said that the Bill sought to respond to water scarcity through water resource infrastructure development. Dams and canals were important water resource infrastructure that should attract investment priority, as infrastructure was the backbone of any development.

The Department had spent time bringing stalled or incapacitated water resource projects back online. The entity was not slated to work in the local government sphere, as another regime had responsibility. Local governments oversaw localised issues, and had no hand in bulk infrastructure development.

A number of reforms had been touted, such as a review of the Water Services Act that allowed for interventions when water services authorities failed to discharge their constitutional duties. The envisaged Water Services Amendment Bill would separate water services authorities while at the same time building capable water services agencies.

Members were also informed that water boards would remain and be reconfigured. The proposed entity would manage the country's rivers, dams and canals. The water boards would distribute the water resources to the relevant authorities. There was a demand, and they wanted the boards to be licensed. The Agency would thus not be part of reticulation issues.

Regarding the financial implications to end users, the Deputy Minister said that the National Water Act was clear about water pricing- it had to be affordable and competitive. Establishing the commission that regulated water pricing ensured that the government was not both a player and referee.

Government was also mindful of the social component of water, as poor South Africans had a right to water.

Deputy Minister Mahlobo commented that he was worried when people said that all state agencies were crippled with malfeasance and corruption. There were some that made them proud.

The TCTA had access to the markets, had good collateral, and performed well.

Establishing the SANWRIA would also allow the TCTA to build high-level technical abilities.

Different work streams have been created to look at aspects such as human resources. No one stood to lose their employment, and it would be "enticing" to work in that space.

The Deputy Minister further added that the remuneration of boards was governed by prescripts, and that the Department did not foresee any financial implications.

He also said that alarmist comments and questions were unfounded, as there were countless accountability measures in place, including the role of Parliament. Transparency and accountability had always been maintained at the soon-to-be defunct TCTA, and would continue under the new Agency.

He stressed that this was not an ANC attempt to agentise. The checks and balances were there. They were not creating more agencies.

Dr Phillips added that a lack of water posed a significant risk to economic growth. and that there should be increased investment in national water resource infrastructure. Government expenditure was constrained, so investment from the private sector was important.

Members were also told that National Treasury was very conservative in granting government guarantees, and that the TCTA had always received them due to sound corporate governance.

He said that by establishing the SANWRIA and transferring the national water resource infrastructure assets, as well as their associated revenue streams, to it, they would then have an agency with a balance sheet that could access the markets directly and more importantly, access them without government guarantees.

The SANWRIA's main aim was to construct water resource infrastructure that would capture raw water. This raw and untreated water would then be sold to water boards who would treat it and sell it onwards to water service authorities. The national government thus captured the water, and municipalities distributed it as the Constitution dictated.

On human resource (HR) matters, Dr Phillips said that Section 197 of the Labour Relations Act applied, and that employees of both the Department and the TCTA would be transferred as a “going concern."

He added that there would be no change to the Lesotho Highlands Water Project. The TCTA would be substituted by the SANWRIA in the treaty.

Responding to the corruption and maladministration-related questions, he said that the risks posed by corruption and maladministration had a bearing on all levels of government. Provisions within the Bill had taken acts of corruption and maladministration into account.

He asked that Ms Naidoo be given an opportunity to speak to these legislative provisions.

Ms Naidoo said that the Bill's governance chapter had been comprehensively crafted. Chapter 19, for instance, dealt with the recovery of improper benefits. The Offences Clause and Clause 5, which dealt with the Ministerial discretionary powers, were also listed as anti-graft measures.

The two Deputy Ministers thanked the Committee for the opportunity to table the Bill, and once again apologised for the miscommunication that had led to their absence at the beginning of the meeting.

Chairperson's closing remarks

The Chairperson thanked the Deputy Ministers and Departmental officials for having explained the legislation to Members, and said that the Bill highlighted the importance of water and sanitation as important drivers of the right to dignity.

The Bill should have been processed a long time ago, and the Committee should have had the opportunity to engage with a wide variety of stakeholders in the interest of hearing as many diverse views as possible.

The Chairperson explained the process that would unfold now that the Bill had been tabled before the Committee. It would be published for public participation for 14 days. This process could thus not be pre-empted, as the Committee would consider all proposals.

He said that the Committee was happy that the Deputy Ministers could eventually attend the meeting, as only they could respond to the political and strategic dynamics of the legislation.

Administration and logistics would also be looked at, to avoid miscommunication from happening again.

Members were also thanked for their willingness to attend the meeting.

The meeting was adjourned.