2004/2005 Annual Reports: Department and Water Boards: briefings

Water and Sanitation

11 October 2005
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Meeting report

WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE

WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
12 October 2005
2004/2005 ANNUAL REPORTS: DEPARTMENT AND WATER BOARDS: BRIEFINGS

Chairperson:
Ms C September (ANC)

Documents handed out:
Presentation – 12 October 2005 (Letaba Water User Association)
Amatola Water’s role in Service Delivery PowerPoint presentation
Amatola Waters Role in Service Delivery
Department of Water Affairs and Forestry Annual Report 2004-05;
DWAF Annual Hearings (Namakwa Water Board)
Sedibeng Annual Report 2004/2005
Bloem Water
Presentation to Portfolio Committee (Mhlatuze Water) [email
info@pmg.org.za]
Presentation to Parliamentary Portfolio Committee on Water Affairs and Forestry (Magalies Water)
The Role of Magalies Water in Servicae Delivery especially for the Indigent
Presentation To Portfolio Committee: Bushbuckridge Water
Hearings on DWAF Annual Report 2004/10/5

SUMMARY
The Department of Water Affairs and Forestry presented their Annual Report for 2004/05 to the Committee. Their work was divided into four programmes: Administration, Water Resources Management (WRM), Water Services (WS) and Forestry. The Department’s total expenditure for the 2004/05 financial year amounted to R7, 791 billion. The Auditor-General had qualified two of their financial statements.

The Committee posed many questions to the Department, dealing with issues such as the report’s poor reader friendliness and problems regarding the Work for Water programme. The Department would respond to the questions at a later date. The Committee would also make a decision on how to take the matter of the Department’s qualified reports further. This was an issue of great concern to the Committee.

Seven Water Boards also reported to the Committee on their Annual Reports and performance. The Committee discussed issues such as the roll-out of water services and sanitation, BEE, HIV/AIDS programmes, borehole use, training, the role of previously disadvantaged farmers, the gender composition of boards and audit reports by the Auditor-General.

MINUTES
Department of Water Affairs and Forestry briefing
The Director-General of the Department of Water Affairs and Forestry (DWAF), Mr J Sindane, presented their Annual Report for 2004 -2005 to the Committee. They had a comprehensive legislative mandate, including the National Water Act, 1998; the Water Services Act, 1997; the National Forests Act, 1998; the National Veld and Forest Fire Act, 1998 and Section 20 of the Environment Conservation Act, 1989. The Trans-Caledon Tunnel Authority (TCTA), Komati River Basin Water Authority (KOBWA), Water Research Commission (WRC) and 15 water boards were public entities that reported to the Department.

The Department’s work could be divided into four programmes. Programme one, Administration, had two main components: Corporate Services and Financial Administration. The other programmes were Water Resources Management (WRM) and Water Services and Forestry. The WRM’s activities included infrastructure development, water conservation and demand management, raw water pricing strategy, preliminary reserve determinations, and monitoring and improved co-operation with developing countries. Water Services’ activities included the provision of safe drinking water, a capital programme, the eradication of the bucket system and free basic sanitation. Forestry’s activities included payments to land beneficiaries, a national database for veld fire incidents and the National Fire Danger Rating System (NFDRS).

The Department’s total expenditure for the 2004/05 financial year amounted to R7, 791 billion. For the past two years their spending level was approximately 99%. Two of their four financial statements, the Water Trading account and Equipment Trading account, received qualified reports from the Auditor-General. They had developed a turnaround strategy to address their shortcomings.

Discussion
Mr M Sibuyana (IFP) said the Department’s manner of budgeting rendered it impossible for the Committee to do proper oversight and management. He did not hear from them about a monitoring system, which was why they received qualified reports. Unless a monitoring system was built in, oversight visits would always have problems.

Mr J Arendse (ANC) said their report had been very hard to read. It was not user friendly. He asked if the Department would make their report more reader friendly in such a way that it would not be necessary to cross-reference. They ought to consult other departments. Mr V Mabuyakhulu said Members had to take the document to their constituencies, but the people would be unable to interact with the complicated document. Reports had to be simplified. The Chairperson said it would be more useful if they had written the report like a budget.

The Chairperson said Members were acutely aware of Treasury’s regulations for reporting, which told departments what regulations they had to follow. The Department was driven by policies, but there were no mention of them in the report. When the third Parliament had opened, the President said they would be guided by key measurable objectives and targets, which were not listed in the report.

The Chairperson said when the Committee went on oversight visits, they were unable to see how the challenges could be overcome. They could not call their strategic plans achievements. She suggested that their interaction with the Department be changed into a process that would inform the report.

Mr D Maluleke (ANC) said they had observed many problems with the Working for Water programme. He asked if these problems had been addressed.

Mr Maluleke asked what they were doing, in terms of monitoring, to ensure that the Delmas (typhoid) situation would not recur.

Regarding sanitation, Mr Maluleke said that most of the areas they had visited excluded disabled communities, as the facilities did not take them into consideration. He asked what the Department had done to correct this.

On the subject of the Department’s Water Resources Management programme, Mr Arendse asked for the actual performance on their key outputs and service delivery trends. He also asked for the situation by province and how they dealt with challenges.

Mr Arendse asked for clarification on licences for streamflow interventions.

Mr Arendse asked what their commitments to bulk water users and water boards were.

Regarding the agreement between South African and Namibia, Mr Arendse said that he did not remember that the Committee had seen the completed joint feasibility studies. He would like to see them.

Mr Arendse enquired about the Work for Water programme and the cleaning up of alien vegetation.

Regarding the Department’s Water Services programme, Mr Arendse said the report was silent on the challenges faced in providing all citizens with water.

Mr Arendse said they had reported that only 75% of municipalities provided free basic water. He asked what had happened to the other 25%.

The Chairperson said they started their report by saying there had been considerable shifts in the Water Services programme, but they still reported problems with transformation. She asked for details on this matter.

The Chairperson said the water user associations were still lagging behind. She enquired about the targets for them.

The Chairperson asked about intergovernmental relations.

The Chairperson asked if the Department were meeting the objectives and targets of the national water resource strategy.

The Chairperson was concerned because water losses were still being reported. There were also concerns raised about services.

The Chairperson said the Department should explain the absence of the section dealing with engagement with Parliament from the report.

A Member said that 2004 – 05 was the last year that the Department provided water services to municipalities and the Annual Report should have reflected the transfer to the municipalities. The Member also asked what steps had been taken to improve their spending capacity. It was not the first time that they had received qualified audit reports from the Auditor-General.

Mr Maluleke asked why they had submitted the wrong information to the Auditor-General in their financial statements.

The Chairperson said the Department received qualified audit reports all the time. The Committee could decide that they were so unhappy with the statements that they would ask the Minister to explain, or they could ask what they were doing between themselves, the Treasury and the Standing Committee on Public Accounts (SCOPA). The Department had also said they had a turnaround strategy the previous year. The Committee was extremely worried. The Department was not telling the Committee how they were dealing with the financing of the water boards. It was a serious situation. The Committee would have to take a particular decision on the matter.

The Chairperson enquired about the continuation of transformation. She asked if their multiyear plan had had results. She also enquired about an update on their Black Economic Empowerment (BEE) charter, forestry within the Southern Africa Development Community (SADC), and forestry and poverty alleviation.

Mr Sibuyana said their report did not reflect the number of people engaged in mal-administration and asked how they were dealing with the problem. There was also no mention of the equipment they were no longer using.

Ms E Lishivha (ANC) asked why they had difficulty filling senior management positions in their corporate services branch.

The Chairperson asked the Director-General to only respond to issues relating to the reports of the water boards and entities, as all the issues raised could not be answered due to time constraints. The Department would get the opportunity to respond to them on the final day of the hearings. Mr Sindane said that the entities and the Minister interacted. The entities had to submit business plans to the Minister annually, who would then interrogate them. This interaction could be strengthened; Mr Sindane mentioned the possibility of requesting quarterly reports through legislation. The Minister could always invite the entities to meetings. Mr Sindane said there would be more interaction with the entities.

Sedibeng Water Board briefing
Representatives from Sedibeng Water said their long-term strategies for sustainability were contained in their annual report and they had shown progress on all strategic imperatives. They achieved cost savings of 20% on their budget, but their revenue declined by 7% due to a reduction in water demand and unpaid equitable shares. They achieved a net surplus of R13, 8 million. Their maintenance expenditure went one percent over budget and capital expenditure amounted to R14, 2 million.

Sedibeng maintained water quality at class 1 except for periodic colour, iron and manganese concentrations. Water quality could be improved to meet class 1 standards 95% of the time, but the cost implications would be enormous for consumers.

Sedibeng’s average BEE expenditure was 55%. They also promoted BEE participation by training SMMEs and encouraging the establishment of BEE companies. Sedibeng had exceeded their Employment Equity targets.

Customer satisfaction had been maintained through weekly interaction with ward committees and an improved response time and reduction of interruptions. This had led to a reduction in complaints. They also had a customer satisfaction monitoring system in place.

Sedibeng assisted in water and waste-water testing and analysis. They also had an HIV/ Aids awareness campaign and provided anti-retroviral treatment from March 2005. They were also monitoring their discharges. Their corporate social investments had amounted to R1, 5 million and concentrated on food parcels, donations to schools and orphanages and learnerships.

Namakwa Water Board
Mr Hendrik Visser said their scheme existed of an extraction point on the Orange River at Henkriesmond, purification works at Henkries and approximately 130km of pipeline to Springbok. The Namakwa Water Board was a bulk supplier to the Nama Khoi Municipal area. Their total water sales per annum were 1, 9 million kilolitres. Their total income was R7, 4 million, and their total expenditure was R8, 6 million. The Board budgeted for the deficit to keep water affordable to the poor consumers. The deficit was funded through surplus funds.

Originally the Board had eight members, but currently they only had five. The workforce amounted to 32 employees, of which five were women.

The Namakwa Water Board was faced by challenges such as the maintenance of infrastructure, control of pollution that occurred upstream and pumping costs.

Bloem Water
Bloem Water provided bulk services. Their focus was on projects implemented on behalf of the Department of Water Affairs and Forestry and relevant municipalities in Ukhahlamba District Municipal Area (Eastern Cape) and Mangaung Local Municipal Area (Free State). As implementing agent they were responsible for the preparation of business plans, procurement of service providers and ensuring implementation. Their role in service delivery consisted of providing access to water services, community participation and training and empowerment.

In the Botshabelo, Thaba Nchu and Mangaung municipalities, Bloem Water paid R6,1 million in local labour salaries and provided temporary jobs to 226 individuals per month. In the Herschel Rural Water Supply programme total salaries paid to local labour amounted to R9, 84 million, while employing 132 individuals on average per month.

Regarding training and empowerment, Bloem Water had paid R400 000 towards accredited training in the Botshabelo, Thaba Nchu and Mangaung districts and R34 million to local emerging contactors. The Herschel Rural Water Supply programme provided on-site skills training to 9 504 labourers. Total training costs amounted to R500 000. Selected community members were also trained in pump station operation and maintenance.

Discussion
Mr Mabuyakhulu said Sedibeng and Bloem Water were responsible for the roll-out of water services and sanitation in the Free State where there recently had been problems. He asked if they had investigated the issue. Sedibeng’s representative replied that they had done technical audits in most of the areas in the Free State where spontaneous civil action had occurred. These audits looked at infrastructure, after which they had made presentations to the municipalities before the uprisings. After the presentations, the councils were supposed to have made resolutions for Sedibeng to get involved, but the process took a long time. The problems were known before the uprisings, but Sedibeng could not impose themselves.

Mr Mabuyakhulu said Sedibeng had said they encouraged BEE companies, but they did not sindicate if anything had been done. They also seconded people to the local municipalities. He asked how this was done, and at which price. The representative from Sedibeng said they had helped a number of companies. One of them was a security company. They also assisted Dumisa Africa and a number of SMMEs in the industry in Qwa Qwa. Personnel were seconded to Mpulelela where they conducted technical audits. They were seconded for two months free of charge. If the period were extended, they would have to recover costs in the region of R200 000.

Mr Mabuyakhulu asked how many people benefited from Sedibeng’s HIV/AIDS programme. The programme started in their previous financial year. They had an independent organisation look into the matter to protect the confidentiality of their employees. The programme amounted to R3, 3 million.

Mr Mabuyakhulu asked Bloem Water, who made use of boreholes in the Free State, if it was too expensive to make use of streams if there were streams available as boreholes could be unreliable. Bloem Water’s representative said their bulk water supply was mostly extracted from surface water as boreholes were not sufficient.

Ms S Sigcau (UDM) asked Namakwa what had happened to the three members of the board that had left. She also asked why only five of their 32 staff members were female, and if they included the youth and persons with disabilities.

Mr I Mogase (ANC) asked what kind of donations Sedibeng made to schools. Sedibeng answered that they had different corporate social investment packages, and that their donations to schools included sponsoring football kit and cash.

Mr Mogase asked if Sedibeng’s training was accredited and how the community had responded to it. He also asked how many people they supplied with water. The representative said all their training programmes had been accredited and the trainees got certificates upon completion. There had been an overwhelming response to enrol in the programme from employees. They supplied water to an estimated 2, 9 million individuals.

The Chairperson asked how the entities’ relationship with local government was. Sedibeng answered that they had cordial relationships with municipalities, but they still had problems with payments. Bloem Water also had a good relationship with local government that contained regular interaction.

Mhlathuze Water
Mr James Barnard, Financial Manager, said Mhlatuze Water focused on strategic alliances that would provide solutions through sharing of expertise and resources in a sustainable manner. Their competencies included programme management, technical support on management of bulk and retail water and sanitation schemes, water quality management, and corporate governance.

They serviced five areas: City of uMhlathuze (Richards Bay), uThungulu District Municipality, Ilembe District Municipality, uMkhanyakude District Municipality and Zululand District Municipality. Their regional initiatives involved implementing projects for the Department of Water Affairs and Forestry. They had implemented schemes reaching 470 000 people. They were also involved in two projects to reach a further 30 000 people. This project was still waiting approval.

Mhlatuze mentioned the following challenges: lack of sharing experience, unreliable water resources, areas difficult to service, sanitation had not been part of their planning, and seasonal droughts in Mtubatuba. For the way forward, they felt that basic municipal structures needed capacity. A more proactive role should be played by Sector Education and Training Authorities (SETAs) and the Department had to do more work on the free basic water scheme. A new national initiative was needed to encourage consumers to pay for water services above the free limits.

Letaba Water User Association
Mr Louis van Rooyen, Letaba Water User Association’s chairman, said their Management Committee was made up of 14 members, representing irrigators in all three of the climate zones of the association.

Irrigation entitlements consisted of 12, 989 million cubic metres from the Ebenezer Dam, and 105, 028 million cubic metres from the Tzaneen Dam. The Department of Land Affairs owned 29, 83% of the entitlements of the Tzaneen Dam. These entitlements were available to new entrants for irrigation agriculture, but most of these entitlements were under utilised. If land claims were to be settled and the entitlements purchased by the state, the figure could rise to 70%. Previously disadvantaged persons had access to a sizable percentage of irrigation entitlements and this was bound to grow.

The total annual entitlements were 168, 500 million cubic metres, which outstripped the assured drafts[Is this correct? What about "draughts"?] of the three major dams in the area by 50 million cubic metres per annum. Following requests during 1983, the Department of Water Affairs undertook a major study for a fourth major dam in the area – the Nwamitwa Dam. The water this proposed dam would impound could result in an additional 53 million cubic metres of assured draft, which would eliminate the current shortfall. The Letaba Water User Association was concentrating on stabilising the supply of water to all farmers by relentlessly promoting the building of the Nwamitwa Dam.

Amatola Water
Mr Maxwell Sirenya, Chief Executive of Amatola Water, said they were a state owned entity with 242 employees. They rendered bulk water supply services to the Amathole District Municipality and portions of the Chris Hani, Ukhahlamba and Cacadu District Municipalities in the Eastern Cape. They were also the primary provider of bulk water to the local municipalities of Buffalo City, Ngqushwa, Nkonkobe and Amahlati within the Amathole District Municipality. They managed water service assets valued at R250 million that could produce 102, 74 megalitres per day.

Amatola Water contributed directly and indirectly to the target that all South Africans should have access to water supply by 2008. Their primary function of the production and distribution of potable water directly benefited the region and impacted positively on the lives of both the rural and urban poor. Consumers also benefited directly from their capital expenditure program and consumer education and awareness programs. Indirect benefits to service delivery included the provision of capacity to municipalities, the Working for Water programme and training.

Amatola Water had played a less significant role in sanitation when compared to water supply in the past. They had identified the need for more meaningful involvement in this area and were developing their influence in this aspect. Direct benefits to the poor with regards to sanitation came through a project management service, and indirect benefits came through the secondment of staff to assist with the management of the Amathole District Municipality sanitation programme.

Magalies Water
Mr Nick Pretorius, board member of Magalies Water, said they had exceeded delivery expectations in both primary activities of bulk water supply and retail activities of expansion of the reticulation services in partnerships with the municipalities and the Department. They had exceeded Key Performance Benchmarks and targets in areas such as water quality, revenue and debt management. The challenge of cost recovery in the retail environment still existed.

Magalies Water supported the Strategic Water Framework Policy to transform the sector since this would ensure that sector skills, capabilities, attributes and the experiences of Water Utilities could be pooled and leveraged to serve South Africa more efficiently.

Magalies Water had undergone, and continued to undergo drastic transformation in order to align with the objectives of the government and national interests. They had accelerated and exceeded their transformation targets during the year. They had been able to streamline operational activities while still achieving their transformation goals. The Board had also been mindful of the impact of HIV/AIDS and established a HIV/AIDS Committee, Policy and Charter to promote non-discrimination. Voluntary testing, educational campaigns and intensive awareness programs had been undertaken, but the impact on Magalies Water staff were still to be determined.

Mr Jeffrey Ngobeni, Magalies Water’s Chief Executive Officer, described several plans to ensure the water supply target of 2008. These plans included partnering with other Water Boards or Utilities, discussions with farmers, preparing business plans for extension of water services reticulation within villages, and acting as implementing agent for municipalities. Plans to ensure functioning basic sanitation by 2010 meant that Magalies Water had established a central laboratory facility to provide quality monitoring of potable water. They had also entered into partnerships with a number of municipalities for the operation of bulk potable water and sewerage plants.

Magalies Water had assisted municipalities with the implantation of their refurbishment projects. They had also implemented a number of other projects in 2005 in co-operation with local and district municipalities.

Discussion
The Chairperson was dismayed that Mhlatuze Water’s representative had left the meeting before questions could be put to him.

Mr Arendse asked the Letaba Water User Association how many previously disadvantaged farmers were in their area and how many of them were represented on the Board. He also asked if anything was being done to effect the entry of previously disadvantaged farmers in the area. Mr Mogase said he saw that Letaba was an old organisation. He asked for the racial breakdown of their members and how well they were aligned with the government’s performance targets and aims. Mr Mabuyakhulu asked Letaba how much of the water drawn for irrigation went to the previously marginalised community.

Mr Van Rooyen said they now had 14 members, with three from previously disadvantaged communities, including one woman. The Department of Land Affairs or the provincial departments owned 29% of the entitlements. It was not the place of the Water User Association to prescribe on the matter. If restitution was finalised, the figure could rise to 70% of entitlements owned by previously disadvantaged farmers, but the process had not proceeded very far. As entitlement ownership changed over time, the objectives would be met.

Ms Maine said there was a big problem with transformation of the Board. Mr Arendse asked if one had to own land to be able to compete for a seat on the board. Mr Van Rooyen said ownership of a water entitlement did not necessarily mean ownership of land. The Chairperson ruled the issue would be discussed at a later time.

Mr Arendse asked what Amatola’s gender balance and percentage of people with disabilities in the workforce were. Mr Sirenya said the representation of people with disabilities was covered in their Annual Report, which was not yet available. The Report would go to the Department at the end of the month. It was mentioned as a challenge in the report. Disabilities remained a challenge. In their workforce of 240 there was only one partially sighted employee. It was an area they had to pay particular attention to.

Mr Arendse asked Amatola when they saw themselves being less dependent on government funds. Mr Sirenya said they continued to receive assistance from the Department, whose appraisal of their financial statements had been very complimentary.

Mr Arendse asked Amatola if they had ever received a qualified Auditor-General report. Mr Sirenya said in the seven years of its existence, Amatola had not had a qualified Audit Report. They would like to continue in this way. Mr Ngobeni said that in its 35 years of existence, Magalies Water had not had a single qualified audit report.

Mr Arendse asked Amatola if there were any plans to merge dry sanitation with water based sanitation, and if it would be possible to make such a conversion. Mr Sirenya said the technology to make this conversion existed, but financial constraints would render it unlikely. They would need much more water to start with water-based sanitation, so dry sanitation was still the best option.

Mr Arendse asked Magalies Water what their criteria to determine higher classes of consumers were. Mr Ngobeni said the criteria to qualify as high-class consumers did not have anything to do with race, but referred to high volume consumers, such as mines.

Mr Arendse asked Magalies Water, referring to their levels of service, what was meant by the "below" level. Mr Ngobeni said it referred to levels below 200m.

Mr Arendse asked if Magalies Water had the same tariffs for farmers and households, and if farmers used raw or purified water. Mr Ngobeni said they did not sell water to farmers or set prices for farmers.

Mr Arendse asked Magalies Water to elaborate on the rules of raw water use and the licensing of streamflow restrictions. Mr Ngobeni said they would like to engage the Department and farmers to ensure that Magalies Water had water downstream from the farmers. They found that following the drought, the Department had to develop fair operating rules.

Mr Arendse asked if Magalies Water received payment for bulk water as well as connections when they provided water to municipalities. Mr Ngobeni said they paid the Department R65 million a year for raw water. When they passed on the cost to the consumer, they could only add a very small amount. They were not making a profit from serving retail consumers.

Mr Sibuyana said that women in Amatola’s service area complained that they had to walk at night to look for water. He asked if machinery had been installed on the boreholes in the area. He also asked if water was available to the All Saints hospital in the Eastern Cape who could not function earlier because of a lack of water. Mr Sirenya said water provision was the responsibility of the municipality, but they would assist them. The problems of the hospitals had received wide coverage. There was a list of small hospitals that needed water. They had prepared a costing proposal and had sent it to the Department of Health, but they had not heard from them yet.

Ms S Maine (ANC) asked Magalies and Amatola how many females they had on their boards. Mr Sirenya said Amatola’s board had had three female and eight male members, but two female members had resigned. The new board would deal with the matter. Mr Ngobeni said Magalies’ board consisted of five men and five women. Their staff of 430 included 75 women and two disabled persons.

Ms Maine asked if the entities had up to date asset registers and if they had systems in place to maintain assets. She also asked if they had measures in place to combat corruption. Mr Ngobeni said Magalies had a procurement committee, an audit committee and a fraud prevention plan.

The Chairperson asked if the entities had a program for skills development in the municipalities. Mr Ngobeni said Magalies was involved in 17 municipalities where employees would be skilled. They had several programs in place.

The meeting was adjourned.

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