Trans-Caledon Tunnel Authority: briefing

Meeting report

WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
14 October 2004
TRANS-CALEDON TUNNEL AUTHORITY: BRIEFING

Chairperson: Ms C September (ANC)

Documents handed out:
Trans-Caledon Tunnel Authority PowerPoint Presentation
Trans-Caledon Tunnel Authority Annual Report (offsite link)

SUMMARY
The Trans-Caledon (TCTA) presented its 2004 Annual Report with some details on the Lesotho Highlands Water Project and the Berg Water Project. Members asked about the projects' water delivery and other impacts on local populations.

MINUTES
TCTA presented its Annual Report and made a brief comment on the National Water Resource Strategy. The presentation was split into two: the board of governance functioning and the project specific activities. It embodied founding information of TCTA, its arrangement in the Water Sector, Liability Management and project areas. The TCTA is involved in two major projects, viz. the Lesotho Highlands Water Project (LHWP) and the Berg River Water Project (BWP).

The Lesotho Highlands Water Distribution extended into various areas such as Northern Cape, Free State, Mpumalanga and other areas. The government of South Africa and the government of Lesotho formed the governing structure. The Berg Water Distribution included the City of Cape Town and other areas.

The projects take into account the local populations in terms of development and as such environmental and social components were attached to activities when implementation was taking place.

The TCTA mentioned its risk management philosophies as funding and implementation. These philosophies take into account the elements that were considered when financing and implementing projects. These elements included how much were being borrowed and how it was being managed.

The TCTA also shed light on its equity employment strategy and presented significant information on its income statement and balance sheet.

The presentation was concluded with elaboration on the Umgeni Water Treasury Management. TCTA briefed the Committee on the various phases of the project and stressed the importance of each phase.

Discussion:
Ms M Ngwenya (ANC) asked about the TCTA briefing on a capacity building plan for Umgeni Water. She wanted to know whether anything had begun in that regards or was it a future plan. She also wanted to know TCTA's financial capacity at the moment.

TCTA responded that it had begun and had worked on eight months of capacity building. TCTA, the presenter asserted would be available at all times to Umgeni Water. TCTA believed in building people skills across institutional boundaries. TCTA had also financed the deficit and refinanced the previous year.

Ms M Manana (ANC) asked whether ordinary people getting water supplies were able to take care of their accounting problems with the payments. She also asked whether skills that were being provided were for ordinary people to be able to look after their own infrastructure so as to avoid no payment.

She mentioned TCTA's debt status and asked when it would be paid so that its projects would be utilised properly. She was also concerned about TCTA's compensation for individuals and communities and wanted to know what the organisation did about situations where those who were to be compensated did not want money for their land, but instead wanted land for land.

The presenter mentioned that TCTA was comfortable with the water pricing model for poor people. TCTA further stated that reduction and increases in demand as well as inflation were factors that determined water pricing and supply. The input of some specific aspects was outside of TCTA control. TCTA sat with stakeholders to view these aspects on an annual basis.

When considering the consultative manner in water pricing and planning of future infrastructure development, this was beginning to take place in the Gauteng area. There was consultative work with the Department of Water Affairs. TCTA then mentioned that Lesotho was going to be paid by 2025.

TCTA further mentioned that skills development was built into the LHWP and this is stated on page 11 of the Annual Report. The organisation stated that it employed a lot of high skills and intelligent people but also considered skills training for grass root people. TCTA tackled its socio-economic responsibilities through its projects.

TCTA stated that on the issue of compensation for individuals and communities in Lesotho, it had established an ombudsman to deal with complaints. It mentioned that land for land was not always feasible and that most of the projects had cash for land in place. It was further stated that there would be those who complained about everything, whether land for land or money for land. This was the reason why the ombudsman was instituted to deal with the situation.

Mr D Maluleke (DA) wanted to know what TCTA stood for. The presenter stated that TCTA stands for Trans-Caledon Tunnel Authority.

Ms T Lishivha (ANC) asked how much money did the TCTA raise and how much did it borrow in financial years 2003 and 2004.

Mr I Mogase (ANC) was concerned that given the fact that unemployment was so high and many people were so poor, how was TCTA going to handle the issue of raising tariffs that was mentioned in the presentation? He was also concerned about whether TCTA charged interest on the long term funding that was mentioned as well.

TCTA asked Members to refer to page 44 of the Water Annual Report. The way the water price was dealt with had been elaborated on that page and also the issue of placing a cap on the flow.

Mr S Simmons (NNP) was concerned about water problems in the Eastern Cape and about building a dam on the southern side of Lesotho. He also wanted TCTA to expand on the charity bond. He further wanted to know about the issue of hydro-electric supply to the rural areas and the issue of uncompleted dams in the Western Cape.

The presenter stated that the project had an electricity component. However, it was a cost responsibility for the government of Lesotho.

The Chairperson was concerned about the enlargement of the projects both in Lesotho and in Cape Town and asserted that it would help to uphold TCTA's public works concept that had a range of different components. She further mentioned that this would lead to poverty alleviation, the inclusion of women and the black population and the community in general.

It was important that building dams not be seen as separate from TCTA's public works concepts. She was also concerned that TCTA's financial report was too complex for the Committee's understanding. She suggested that it was important to make sure that the report took a format that had a direct link and influence in the South African economy. However, she wanted to know the TCTA's reason for using the method that was used and what was the risk factor for using such a method.

She stated that the Western Cape was experiencing water restrictions and wanted to know how would the Berg Water Project contribute to the water situation in Cape Town.

The presenter stated that the bond exchange is similar to what is referred to as the Johannesburg security exchange except that it deals with interest rate products. The bond was put in place for a five-year maturity structure with R200 billion as yield. It would mature in 2016, 2018 and 2020.

In the Annual Report, TCTA had noted that it was going to go for a sustainable utilisation plan process. This means that TCTA was considering what was going to be the after-use process of development potential around the dam and in the projects areas. The Department of Water Affairs and Forestry had put in place a public participation process that was prescribed in the development of the sustainable utilisation plan process and that would be implemented in the next project year.

The Berg Water Project when completed would be able to deliver water and there would not be any water restrictions.

The meeting was adjourned.