SONA Impact on Water sector; DWS Q2 & 3 2024/25 Performance; with Ministry

Meeting report

Minister’s opening remarks
The Minister of Water and Sanitation, Ms Pemmy Majodina, addressed the Committee on the water and sanitation commitments outlined in the State of the Nation Address (SONA). Water has been elevated to priority number one but she expressed concerns about resource allocation. The Minister highlighted the challenges, including water disruptions, sewage spills, and the lack of technical skills in municipalities. She announced the identification of 100 municipalities in critical condition, with plans to develop turnaround strategies in collaboration with provincial premiers and COGTA.

The Minister provided updates on dam levels, noting that the Vaal Dam is at 97% capacity and the Bloemhof Dam, while showing cracks, poses no immediate threat. She discussed the impact of recent floods, particularly in KwaZulu-Natal (KZN), and the DWS interventions in eThekwini, where a two-month curtailment was implemented to address water disruptions caused by SANRAL’s road construction.

On infrastructure projects, the Minister mentioned the Lesotho Highlands Water Project had faced delays due to unexpected water flows during construction. She announced plans for a national water and sanitation indaba to engage stakeholders, including private sector players like South African Breweries and Coca-Cola, to adopt municipalities and support water infrastructure projects. The Minister stressed the importance of private partnerships, noting that R23 billion has already been secured out of a targeted R100 billion.

DWS response to the State of the Nation Address imperatives
Dr Risimati Mathye, DWS Deputy Director-General for Water Services Management, referenced the Minister’s earlier remarks and highlighted the progress in publishing the Blue Drop, Green Drop, and No Drop reports, which assess the state of water and sanitation services in the country. These reports, last published in 2013 and 2014, were reintroduced in 2022 and 2023 to provide a clear picture of water service delivery and drinking water quality.

Dr Mathye noted that 73% of water service authorities (WSAs) scored critically in the Blue Drop assessments, aligning with the Minister’s identification of 100 underperforming municipalities. He emphasized the growing non-compliance in microbiological water quality, which has increased from 5% in 2014 to a higher percentage in 2023, posing risks of waterborne diseases. Key challenges include technical capacity gaps, slow procurement processes, and aging infrastructure, with non-revenue water losses increasing from 37% in 2014 to 47% in 2023.

The presentation included maps showing the critical state of water and sanitation services across most provinces, with only a few areas in the Western Cape and Gauteng performing adequately. Dr Mathye warned that without intervention, these results would worsen.

He also discussed the DWS efforts to address non-revenue water through partnerships with municipalities and the private sector, including the establishment of the Water Partnership Office to facilitate private investment in water projects.

Dr Mathye highlighted several infrastructure projects, including the Lesotho Highlands Water Project, the uMkhomazi Water Project, and the raising of the Clanwilliam Dam wall. R38 billion had been approved for water resource infrastructure in the past year, with an additional R23 billion secured through blended finance models involving private sector investment. DWS is also working on reforms to improve water service provision, including amendments to the Water Services Act and the establishment of the National Water Resources Infrastructure Agency.

The presentation concluded with an overview of the DWS alignment with Operation Vulindlela, a government initiative to accelerate economic reforms. Key achievements include progress on water use licensing, catchment management agencies, and drought relief measures. Dr Mathye emphasized the DWS commitment to supporting municipalities and ensuring sustainable water service delivery.

DWS Quarter 2 & 3 performance
Mr Frans Moatshe, DWS CFO, noted that DWS had achieved 65% of its targets for the third quarter, with spending at 72% of the budget. He assured the Committee that DWS was on track to spend its entire budget by the end of 2024/25.

Financial Performance
The CFO provided a comparative analysis of the DWS performance against previous years, noting significant improvements. Programme 1 (Administration) and Programme 3 (Water Infrastructure Management) showed notable progress, while Programme 2 (Water Sector Regulation) experienced some deviations. He attributed these deviations to delays in the National Water Amendment Bill and challenges with infrastructure project implementation. DWS has since addressed these by appointing a panel of consultants to streamline planning and reduce delays.

Transformation Targets
The CFO reported on the DWS progress in meeting transformation targets, particularly in preferential procurement. DWS achieved 35% procurement from black-owned companies, exceeding the 30% target. Additionally, 81% of procurement was from women-owned companies, 13% from youth-owned companies, and 2% from companies owned by people with disabilities. He acknowledged the need for improvement in the latter category and assured the Committee that efforts were underway to address this.

Water Resource Management
The CFO outlined achievements in water resource management, including the completion of several infrastructure projects. However, he noted delays in some projects due to underperformance by contractors and challenges with IT systems. DWS has implemented corrective measures, including contract terminations and the appointment of more competent contractors. He also highlighted progress in finalizing water use authorizations, with 68% of applications processed within the targeted 191-day timeframe.

Water Services Management
The CFO provided updates on water services infrastructure projects, including those funded through the Regional Bulk Infrastructure Grant (RBIG) and the Water Services Infrastructure Grant (WSIG). Several projects were under construction or completed, with delays primarily due to procurement issues and contractor underperformance. DWS is working to address these challenges and ensure timely project delivery.

Budget and Spending Overview
There was a detailed breakdown of the DWS budget and spending for the second and third quarters. DWS had spent 46.6% of its budget in the second quarter and 72% in the third quarter, reflecting significant progress. The CFO noted the reclassification of some mega projects, such as the West Eight project, which was downgraded to a small project due to re-evaluation. Also, the Water Services Amendment Bill is still under review by the Office of the Chief State Law Advisor.

Financial Recovery Plan
The DWS financial recovery plan focuses on addressing water sales debt and improving financial management, budget management, addressing irregular expenditure, and ensuring compliance with National Treasury requirements. The CFO acknowledged underperformance in some areas, particularly related to overdrafts, but emphasized that corrective actions were being implemented. The overdraft on the main account relates to unauthorised expenditure from previous financial years, which will be cleared once parliamentary processes are concluded. DWS has implemented a Construction Efficiency Improvement Strategic Plan to address inefficiencies in its construction unit and recover costs from projects.

Irregular Expenditure and Audit Outcomes
The CFO provided an overview of the DWS progress in addressing irregular expenditure and improving audit outcomes. DWS has reduced irregular expenditure over the years and is working to eliminate fruitless and wasteful expenditure entirely. DWS has developed an audit action plan to address audit findings and is working closely with the Office of the Auditor-General to resolve outstanding items. The CFO assured the Committee that all remaining audit findings would be resolved before the end of the financial year.

Deputy Minister remarks
Deputy Minister David Mahlobo highlighted the DWS progress in addressing financial and performance challenges. DWS expenditure stands at 98% and is expected to reach 100% by the end of the financial year. He emphasized the DWS efforts to combat corruption, including the establishment of a Water and Sanitation Sector Anti-Corruption Task Team in collaboration with the Special Investigating Unit (SIU). The Deputy Minister also highlighted the reduction in irregular expenditure from over R10 billion to R6.15 billion, attributing this improvement to systematic interventions and improved financial management.

Discussion
Mr S Moore (DA) pointed to discrepancies between the presentation slides and the documents provided beforehand. Such discrepancies undermine the Committee’s oversight role.

The CFO acknowledged the concern and offered to address queries raised by the Member but he would need specific examples of discrepancies.

Mr S Dithebe (ANC) raised questions on the Lesotho Highlands Water Project and DWS plans to address critical infrastructure issues in water service authorities (WSAs):

Water Transfer from Lesotho: Would 490 billion litres of water be transferred from Lesotho to South Africa as part of Phase Two of the project?

Project Delays: Mr Dithebe referenced the Committee oversight visit to Lesotho where it encountered delays, particularly the technical challenges with automated and manual sandblasting. He expressed concern that the involvement of Sino Hydropower, a Chinese company, had introduced material defects, potentially delaying the project by 12 months or more. This could push the completion date beyond 2028 or early 2029, increasing costs.

Infrastructure Improvements: Would the R940 billion allocated for infrastructure improvements address critical issues highlighted in the presentation map, particularly the red spots indicating poor performance? What were the expected timeframes for these improvements, given that some service providers are engaged in multiple projects?

Minister Majodina acknowledged the delays in the Lesotho Highlands Water Project and assured the Committee that DWS would follow up on the issues raised. She emphasized the need for a clear acceleration plan to address any delays and invited DDG Mathye to provide details on the water transfer volumes and plans for addressing the WSAs.

DDG Mathye clarified that the Lesotho Highlands Water Project’s Phase Two would transfer 490 million cubic metres of untreated raw water to South Africa. The R940 billion mentioned by the President in the State of the Nation Address (SONA) is not solely allocated to water infrastructure but includes other sectors such as roads and schools. DWS has submitted projects to the Infrastructure Fund and is working to comply with National Treasury requirements to access funding.

On the critical state of WSAs, DDG Mathye replied that addressing these issues is a long-term process requiring collaboration with COGTA and other stakeholders. He highlighted ongoing projects and grant allocations aimed at improving infrastructure but cautioned that significant progress would take time.

Deputy Minister Mahlobo elaborated on the DWS plans to address the water crisis, emphasizing the need for a national turnaround plan. Key pillars of the plan include:

- Delivery Model: Reforming the implementation model to address capacity gaps in municipalities, potentially involving water boards or private entities.

- Financing Model: Leveraging blended finance, green bonds, and blue bonds to fund infrastructure projects.

- Institutional Reforms: Professionalizing the workforce and investing in research and development (R&D) and technology partnerships.

DWS set ambitious targets for improving water access, reliability, and reducing non-revenue water losses. By 2029, DWS aims to increase water access to 95%, improve reliability from 67% to 80%, and reduce non-revenue water losses from 47% to 20%.

The Chairperson thanked the Deputy Minister for his detailed response and asked Mr Dithebe if he was satisfied with the answers.

Mr Dithebe confirmed this but reiterated the importance of addressing project delays.

The Chairperson requested that the Minister provide a follow-up report on the Lesotho Highlands Water Project within 14 days.

 Mr M Dlelanga (ANC) asked questions on the uMzimvubu Dam and the Infrastructure Fund:

uMzimvubu Dam: He asked for an update on progress on the uMzimvubu Dam project, which has been delayed for years. This project was important for the Eastern Cape, particularly for the OR Tambo, Alfred Nzo, and Joe Gqabi districts. What is the current status of the project and the timeline for completion?

Infrastructure Fund Projects: What projects are funded through the Infrastructure Fund, including the amounts allocated and the expected completion timelines?

Minister Majodina acknowledged the delays on the uMzimvubu Dam project but assured the Committee that the project is now back on track. She made these key points:

- The original cost estimate of R18.9 billion was deemed unaffordable, leading to a review and reduction of the budget to R8 billion.

- The revised plan focuses on expanding existing water reservoirs in the three districts rather than building new ones.

- The Minister personally visited the site on 9 February to assess progress and address community protests that had delayed the project.

- Site establishment is complete, and construction machinery has been purchased and deployed.

- The project involves diverting the Tsitsa River to allow for the construction of the dam wall. About 80 families will be affected by the project, and compensation processes are underway.

- The Minister committed to quarterly site visits to monitor progress and timely completion.

Deputy Minister Mahlobo explained that Slides 16 to 18 detailed the projects funded through the Infrastructure Fund. He highlighted the following:

- DWS is working closely with National Treasury and the Development Bank of Southern Africa (DBSA) to access blended finance for infrastructure projects.

- The Infrastructure Fund supports projects such as the uMkhomazi Water Project, the Clanwilliam Dam and the Lesotho Highlands Water Project.

- DWS is exploring innovative financing models, including green bonds and blue bonds, to fund water infrastructure projects.

- The Deputy Minister emphasized the importance of strong business plans and social protection measures to ensure the sustainability of these projects.

Mr Dlelanga was satisfied with the update on the uMzimvubu Dam but noted his disappointment with the slow progress of the project. He reiterated the importance of accelerating the project to benefit the people of the Eastern Cape.

Ms M Kobe (Action SA) raised questions on infrastructure and water quality in municipalities:

Infrastructure Registry: Does DWS have an infrastructure registry for the 100 municipalities in critical condition as many issues stem from infrastructure failures rather than water resource shortages?

Non-Revenue Water: What were the DWS interventions to address the high levels of non-revenue water, despite the Vaal Dam being at 100% capacity?

Water Quality Compliance: There is an alarming increase in microbiological non-compliance from 5% in 2014 to 46% in 2023. How does DWS plan to improve water quality in municipalities, given their underperformance in monitoring and compliance checks?

Budgeting and Resource Allocation: Ms Kobe suggested an infrastructure registry could inform better budgeting and resource allocation, particularly for NWRIA.

The Minister acknowledged the challenges raised by Ms Kobe and emphasized the DWS commitment to addressing infrastructure and water quality issues. She highlighted the following points:

- DWS is working on establishing a comprehensive infrastructure registry to identify and prioritize critical infrastructure needs across municipalities.

- Interventions to reduce non-revenue water include partnerships with municipalities, water boards, and the private sector, as well as the implementation of advanced metering and leak detection technologies.

- DWS is strengthening its monitoring and compliance mechanisms to improve water quality. This includes increasing the frequency of water quality tests and providing technical support to municipalities.

DDG Mathye provided additional details on the DWS efforts to address water quality and infrastructure challenges:

- DWS has reintroduced the Blue Drop, Green Drop, and No Drop reports to assess the state of water and sanitation services. These reports provide a clear picture of infrastructure conditions and water quality compliance.

- DWS is working with municipalities to address technical capacity gaps and improve operational efficiency. This includes training programs and the deployment of technical experts to assist municipalities.

- The National Water Resource Infrastructure Agency, once operational, will play a key role in coordinating infrastructure projects and ensuring efficient resource allocation.

Deputy Minister Mahlobo reiterated the importance of a coordinated approach to addressing infrastructure and water quality issues. He emphasized the need for collaboration with COGTA, municipalities, and other stakeholders to ensure sustainable solutions. He also highlighted the role of the Water Partnership Office in facilitating private sector investment in water infrastructure projects.

Deputy Minister Isaac Seitlholo addressed water quality deterioration, emphasizing the significant impact of pollution on South Africa’s water resources. His points were:

- Pollution from Municipalities: Many municipalities discharge untreated sewage into water resources, with some provinces releasing up to 160 million litres of raw sewage per day. This unsustainable practice contributes to the deterioration of water quality.

- Industrial and Agricultural Pollution: Industries and agricultural runoff also play a significant role in polluting water resources. DWS is working to enforce the polluter-pays principle and finalize the National Pollution Registry to hold polluters accountable.

- Cost of Water Treatment: Polluted water increases the cost of treatment for water boards and municipalities, which ultimately affects consumers. For example, the Hartbeespoort Dam is heavily polluted due to upstream discharges from municipalities like Mogale City and Johannesburg, making it difficult and expensive to treat.

- Need for Comprehensive Oversight: Deputy Minister Seitlholo called for a detailed presentation to the Committee on the state of water pollution and its impact on water security. He stressed the importance of addressing pollution at the beginning of the value chain to ensure sustainable water management.

DDG Mathye provided further details on the DWS efforts to address infrastructure and water quality challenges:

Municipal Support: DWS is assisting municipalities in developing Water Service Development Plans (WSDPs) to identify and address infrastructure gaps. These plans are linked to their Integrated Development Plan (IDP) and are essential for improving asset management and service delivery.

Corrective Action Plans: Following the publication of the Blue Drop and Green Drop reports, municipalities are required to submit corrective action plans to address non-compliance issues. DWS uses grants to support the implementation of these plans, particularly for failing water and wastewater treatment plants.

Regulatory Enforcement: DWS is working to strengthen regulatory enforcement, including issuing directives to municipalities and taking administrative or criminal action against polluters who fail to comply with water quality standards.

Mr Xolani Zwane, DDG for Regulation, Compliance, and Enforcement, added:

Costed Corrective Plans: DWS has identified the critical municipalities and assisted them in developing costed corrective plans to address infrastructure and water quality issues.

Follow-Up Actions: DWS follows up on non-compliance cases through directives and, if necessary, administrative or criminal action. This ensures that municipalities and other polluters take responsibility for addressing water quality issues.

The Chairperson acknowledged the complexity of the challenges and emphasized the need for continued oversight and collaboration to address water quality and infrastructure. He reiterated the importance of holding municipalities and other stakeholders accountable for their role in water pollution and service delivery.

Mr K Ramaila (ANC) asked about: Delivery and funding for rural water services.

The Minister responded with these key points:

Reliability and Accessibility: One needed to ensure reliable water supply by pumping sufficient water to municipalities. However, the capacity of municipalities to distribute water remains a significant challenge.

Intervention Strategies: DWS is exploring legal and constitutional avenues to intervene in municipalities that lack capacity. This includes bringing in water boards to assist temporarily and reviewing the funding model for municipalities to ensure they can deliver services effectively.

Groundwater Interventions such as boreholes are important for rural communities. She cited a recent intervention where DWS, in collaboration with the Rand Water Foundation, installed 10 boreholes and 20 communal taps at a cost of R4.5 million.

Reallocation of Funds: DWS is considering reallocating grant funds from underperforming municipalities to those that can deliver services effectively. However, this raises concerns about how to address the needs of communities in underperforming municipalities.

Deputy Minister Mahlobo added:

Financing Models: DWS is working with National Treasury and the Development Bank of Southern Africa (DBSA) to develop credible business plans for municipalities. This includes exploring blended finance models and other innovative funding mechanisms to support water infrastructure projects.

Capacity Building: DWS is focusing on capacity-building initiatives to address the skills gap in municipalities. This includes training programs and partnerships with water boards to improve service delivery.

The Chairperson thanked the Ministry for the responses and emphasized the importance of addressing the capacity and funding challenges in municipalities. The Committee would continue to monitor DWS progress and provide oversight to ensure that water services are delivered effectively, particularly in rural areas.

Mr N Nxumalo (MK) raised: Water leaks, project delays, and Operation Vulindlela.

Minister Majodina responded with these key points:

- Water Leaks: Most leaks occur in municipal infrastructure, particularly in aging asbestos pipes that cannot be repaired effectively. Municipalities often lack the funds to replace these pipes, leading to persistent leaks and water losses.

- Project Delays: Delays in infrastructure projects lead to cost escalations so it was important to complete projects on time to avoid these financial implications.

- Operation Vulindlela as a Presidential initiative aims to reduce administrative barriers and improve service delivery. In the water sector, this has included streamlining the water use licensing process, with 70% of licences now processed within 90 days.

The Deputy Minister gave more details on Operation Vulindlela’s impact on the water sector:

- Streamlining Process: The initiative has focused on reducing delays in issuing water use licences which were previously a significant barrier to economic growth. DWS has built capacity to process licences more efficiently, including hiring additional engineers.

- Digital Systems: DWS is transitioning to digital systems to further streamline the licensing process and improve transparency.

- Reforms and Financing: Operation Vulindlela has also driven reforms in utility management, financing models, and local government support, with the goal of improving water service delivery across the country.

The Chairperson thanked the Ministry for the responses and emphasized the importance of addressing municipal capacity and project delays. He reiterated the Committee’s commitment to providing oversight and ensuring that the DWS initiatives lead to tangible improvements in water service delivery.

Mr Moore asked about: Blue Drop, Green Drop and No Drop reports, Metros Non-Revenue Water Programme, and blended finance projects.

DDG Mattye responded:

- Blue Drop, Green Drop, and No Drop Reports: DWS plans to continue the rolling two-year program for these reports, with the Green Drop report published in one year and the Blue Drop and No Drop reports in the following year. This ensures continuous monitoring and improvement of water and sanitation services.

- Metros Non-Revenue Water Programme: DWS will give a detailed presentation including the projects on Slide 17 and will update on metro interventions to improve infrastructure.

- Blended Finance Projects: Funding comes from both government and private sector sources. An example is the Olifants River Water Resource Development Project with 50% funding from government grants and 50% from the private sector (primarily mines). This model ensures that the social component such as providing water to underserved communities is covered by government funding, while the private sector funds the revenue-generating component.

The Minister acknowledged Mr Moore’s concerns about the Lesotho Highlands Water Project delays and assured the Committee that DWS would investigate the discrepancies in the information provided. She emphasized the importance of accurate reporting and transparency in managing key infrastructure projects. The Chairperson proposed that the Committee schedule a follow-up meeting to discuss the quarterly reports in detail. He suggested that this meeting could be held virtually within the next few days to ensure sufficient time for discussion.

Ms F Mbiko (DA) raised concerns about: Water losses and Dam safety.

The Deputy Minister’s response included these key points:

Water Losses: DWS has implemented initiatives to address water losses including the War on Leaks program. However, this program faced challenges due to poor conceptualization and execution. A Presidential proclamation has been issued to investigate the program’s shortcomings. Pipe replacement is critical to reducing water loss. Many municipalities have aging asbestos pipes that need to be replaced, but this requires significant funding.

Non-revenue water (water lost through leaks and other inefficiencies) is a national challenge, with some municipalities losing up to 72% of their water. DWS is working with municipalities to improve infrastructure and reduce losses.

Dam Safety: DWS is prioritizing this and has allocated funds to ensure that dams are in good condition. This includes addressing cracks and other structural issues such as those observed at the Bloemhof Dam.

Deputy Minister Mahlobo assured the Committee that the Department’s dams are generally in a low-risk condition, with only a few classified as moderate risk. DWS is working to address these risks and ensure the safety and reliability of water supply.

DDG Mathye added that DWS is conducting regular safety inspections of dams and implementing refurbishment programs to address any identified risks. DWS is also working with private dam owners to ensure compliance with safety standards.

The Chairperson emphasized the importance of addressing water loss and dam safety to ensure reliable water supply. He reiterated the Committee’s commitment to providing oversight and supporting the DWS efforts to improve infrastructure and service delivery.

Mr Nxumalo raised a concern that the presentation claimed that the President had resolved delays in major water infrastructure projects. He questioned if this was accurate, given the ongoing delays in some projects.

The Chairperson clarified that the statement referred to past delays that had been addressed, and further details would be provided in a follow-up report.

Deputy Minister Mahlobo emphasized that DWS had successfully brought several long-delayed projects back on track, including the Umzimbuvu and Clanwilliam projects, which had been delayed for many, many years. He reiterated that DWS is actively monitoring these projects to ensure they meet their deadlines.

Conclusion
The Chairperson thanked the Minister, Deputy Ministers and officials for their detailed presentation. He acknowledged the lengthy discussion on the SONA presentation and suggested that future meetings focus only on one topic to allow for more thorough deliberation.

The Committee agreed to hold a follow-up meeting on Zoom to discuss the quarterly reports.

The Chairperson requested that the revised SONA presentation be shared with Committee members before the next meeting.