Umgeni Water Board Annual Report

Water and Sanitation

02 November 2004
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WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
3 November 2004
UMGENI WATER BOARD ANNUAL REPORT

This is an edited version of a report produced by kind courtesy of Contact Trust: www.contacttrust.org.za.

Chairperson:
Ms C. September (ANC)

Documents handed out:
Umgeni Water Board 2003/2004 Annual Report ( available at:
www.umgeni.co.za )
Umgeni Water Board written response to questions raised at this meeting

SUMMARY
Umgeni Water Board presented their 2003 /2004 Annual Report to the Committee.

MINUTES
Ms Ruth Bhengu, Chairperson, presented the Umgeni Water Board's Annual Report 2003/2004 (see attached above). The Chief Executive Officer, Ms Gugu Moloi; the General Manager for Corporate Services, Ms P Maphoshe; and the General Manager for Finances, Ms N Gevers, also assisted with the questions.

Discussion
Mr J Arendse (ANC) congratulated the Umgeni Water Board on their good work in sanitation. He asked how their work impacted on the Millennium Goals Programme, whether Umgeni still dealt with water reticulation, whether Umgeni had assets that should be in the hands of government, and whether there were forums where Umgeni could engage local government about the raised issues.

Mr M Sibuyane (IFP) said Umgeni should educate the Committee about its finances and the system used to collect debts. He asked whether Umgeni helped the municipalities with sanitation.

Mr I Mogase (ANC) asked about the methods used to collect debts.

Ms M Ngwenya (ANC) asked whether the restructuring of the balance sheet had resulted in better performance. She also asked whether there were enough human resources within Umgeni to execute its responsibilities, and whether the Board covered rural areas.

Ms Bhengu responded that Umgeni had had a challenging past. There had been negative publicity, their finances had been in chaos, and management had been transferred to the Trans-Caledon Tunnel Authority (TCTA). Some of the Board's members had wanted to leave. It had had problematic relationships with municipalities. The situation had since improved, and they no longer had such internal conflicts. Umgeni's approach to dealing with sanitation was guided by government policy and the principles of the Reconstruction and Development Programme (RDP).

The General Manager for Corporate Services, Ms P Maphoshe, added that in the previous year's briefing to this Committee, Umgeni had reported that 300 people would be retrenched. However, through consultations with the unions and creativity on their part, the number had been reduced to 40 employees. Umgeni had a social plan to deal with the impact of retrenchment on the 40 affected employees, including retraining and re-employment.

Ms N Gevers, General Manager for Finances, responding on debt collection, saying that Umgeni applied a 'good credit process' with its customers. The largest customers were Ethekwini and Umsunduzi municipalities. They had commissioned J.P. Morgan financial consultants to do an analysis and evaluation of their financial systems on a 30 - 50 years basis. The initial scenario was 60% fixed debt and 40% floating. Currently the ratio was 30:70. She also said they did not need to employ more people as they could always utilise the Expanded Public Works Programme employment initiative.

In response to other general strategic issues, Ms Gugu Moloi, the Chief Executive Officer, said there was a need for sober reflection on what was happening in KwaZulu-Natal. Municipalities there were self-centered and unconcerned about what was happening to the areas around their own. There was a need for a comprehensive integrated programme for KwaZulu-Natal and all its municipalities. To address the historic tensions between the Water Boards and the municipalities, Umgeni had drawn a concept plan document that could be made available to the Committee. Umgeni could not go directly into rural areas due to the legislation. However, R500 million had been allocated to assist with the provision of water in the rural areas. Umgeni was also looking at ways of investing the profits they had made during this financial year.

Mr T Ramphele (ANC) asked about the origins of the R40 million savings. He also asked how much success could be attributed to the restructuring of the balance sheet, how sustainable their tariff structure was, and which costs had been reduced. He also requested clarification of the organisational structure of Umgeni and the procurement of Black Economic Empowerment (BEE) projects.

Ms C September (ANC) said because Umgeni had simply restructured its short-term debt into long-term debt. She wanted to know the risk involved in that arrangement and what impact the volatility of the Rand could have on the interest rate. All the various Water Boards that had come before the Committee had talked about difficulties around tariffs. She asked whether Umgeni thought there should be a national debate around tariffs policy. She also asked Umgeni if it had a long-term plan to 2015, for example.

Mr V Mabuyakhulu (ANC) questioned Umgeni's capacity to deliver water services in KwaZulu-Natal. He had visited some rural areas where people had to wait for up to three days for water. He had had to cancel some of his meetings in order to attend to the situation with the local mayor. He asked Umgeni whether they had identified areas for building dams, and for more details on their 'concept plan'.

Mr Simmons (NNP) complimented the Umgeni team for having been able to get out of a difficult situation. He asked Umgeni to explain more about carrying other schemes' debt.

Ms G Moloi responded that Umgeni was not the only Water Board in KwaZulu-Natal, and the problem was that they were not co-operating. They had not had a single meeting together in the province.

The Chairperson reminded the meeting that another committee was waiting outside so they had to wrap up the discussion. Ms Moloi proposed sending written answers to questions that had not been answered.

The meeting was adjourned.



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