Municipal Services Provision: Co-Ordination & Collaboration briefing by Departments of Minerals &Energy, Provincial & Local Gove

NCOP Finance

22 August 2006
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

Finance Select Committee

22 August 2006

Mr T Ralane (ANC) [Free State] and Mr S Shiceka (ANC) [Gauteng]

Documents handed out:
DPLG presentation on Municipal Performance Regulations
DPLG Summary of Expenditure of MIG Funds as at 30 June 2006
DPLG presentation on Profiles of Municipalities with regard to Finance: Bophirima, Ehlanzeni, Eden and Namakwa
Briefing note by the Director General of Provincial and Local Government
Treasury presentation on Co-ordination and Collaboration: Provision of Municipal Services
DWAF presentation on Co-ordination and Collaboration: Provision of Municipal Services
Eskom presentation on Co-ordination and Collaboration: Provision of Municipal Services
DME presentation on Co-ordination and Collaboration: Provision of Municipal Services
DBSA presentation on Co-ordination and Collaboration: Provision of Municipal Services
SALGA presentation on Co-ordination and Collaboration: Provision of Municipal Services (not presented)

The Committee was briefed on co-ordination and collaboration pertaining to provision of municipal services. The Committee had convened the meeting because it had seen some gaps in what Departments were doing. All the Departments that appeared before the Committee were responsible for providing certain services to municipalities. The Committee wanted to look at streamlining services that were delivered to municipalities such that there was no duplication, bickering and finger pointing.

DPLG made the point that municipalities were owed a lot of money by some Departments. This was having a negative effect on service delivery by municipalities. The amount of time taken by municipalities to collect debts ranged from 14 to 1045 days. There were lessons that could be learnt from municipalities that had better collection systems

DWAF had no MECs for Water Affairs and Forestry and had to rely on provincial departments of Local Government. Extensive collaboration and consultation existed between DWAF and several other national departments. These include: DPLG, Treasury, Department of Housing, Department of Health, Department of Education and Department of Minerals and Energy. Formal and informal relationships existed through which extensive debate and discussions took place regarding tactics, strategy development, consultation, briefing and support. There was a need for better links with National Treasury. DWAF was better placed to identify gaps in the funding of infrastructure.

here was a need for more collaboration between the Department of Minerals and Energy and the Department of Housing. There were problems as a result of the unavailability of houses for electrification. Planning seemed to be a major challenge. Some of the projects were approved late by municipalities. In some instances municipalities had committed themselves to projects which ended up not materialising or getting completed in the financial year. There were also problems as a result of the prolonged municipal procurement processes. The sourcing of solar panels for solar home system had been difficult as a result of international demand.

Members were disappointed that the presentation by National Treasury had failed to address the issues of co-ordination, collaboration and assistance to municipalities.

Members complained of the following issues, amongst other:
- Departments owed a lot of money to municipalities and it seemed that there was no willingness to pay the debts.
- There was no evidence of communication and collaboration amongst departments. This resulted in unnecessary duplication of structures and programmes.
- Municipalities had the tendency to ask for loans from the Development Bank of Southern Africa despite having money in their bank accounts and support from national departments.
- The issue of access to free basic services still had to be addressed. It was important to fully engage on who was responsible for providing which service to people.
- Some of the indigent policies of municipalities were not being implemented or were not working properly. There was a need for further discussion on targeting and access to free basic electricity.

Mr Ralane said that the Committee had convened the meeting because it had seen some gaps in terms of what Departments were doing. All of the Departments before the Committee were responsible for providing certain services to municipalities. The Committee wanted to look at the issue of streamlining the services that were delivered to municipalities such that there was no duplication, bickering and finger pointing. He asked Mr Shiceka to preside over the meeting.

Department of Provincial and Local Government (DPLG) presentation
Ms L Msengana-Ndlela (Director General) made the presentation. (See document attached). She focussed on the following issues:
- Implementation Plan for the 5-year Local Government Strategic Agenda (2006-2011).
- Implementation of the Intergovernmental Relations Framework Act
- Municipal Performance Regulations
- Profiles of Municipalities with regard to Finance
- Summary of Expenditure of Municipal Infrastructure Grant (MIG) Funds as at 30 June 2006

The DG said that there were some Departments that owed municipalities a lot of money. The amount of time taken by municipalities to collect raged from a minimum of 14 to a maximum of 1045 days. There were lessons that could be learnt from municipalities that had better collection systems. Municipalities would often argue that their challenges were not the same.

Department of Water Affairs and Tourism (DWAF) presentation
Mr J Sindane (Director General) said that the DPLG was a very key Department for DWAF. DWAF had no MECs for Water Affairs and Forestry and had to rely on provincial departments of Local Government. 72% of the Municipal Infrastructure Grant (MIG) was for water and sanitation. Extensive collaboration and consultation existed between DWAF and several other national departments. These include: DPLG, Treasury, Department of Housing, Department of Health, Department of Education and Department of Minerals and Energy. Formal and informal relationships existed through which extensive debate and discussions took place regarding tactics, strategy development, consultation, briefing and support.

There was a need for better links with National Treasury. DWAF was better placed to identify gaps in the funding of infrastructure. Some of the regulations promoted by Treasury could unintentionally work against or undermine the Department's work. DWAF and DPLG (and not Treasury) had to report on the targets. The Departments might observe some behavioural patterns that might necessitate some kind of intervention. The departments would offend Treasury should they speak directly with municipalities in relation to the observed behaviour and offer some assistance. The Division of Revenue Act (DORA) did not allow this. Someone had to account or report on the failure to meet the Department of Education's (DOE) target in relation to water and sanitation in schools. DWAF had a relationship with DOE but DOE was not responsible for the provision of water and sanitation at schools. This was the responsibility of provincial departments of education. Municipalities could easily provide the service provided the money went directly to them. Some kind of restructuring was needed to ensure better co-ordination and service delivery.

Eskom presentation
Mr I Sokopo (Electrification Stakeholder Manager) and Mr M Ntsokolo (Distribution Division) attended the meeting. Mr Ntsokolo made the presentation. (See document attached). He said that Eskom reported to the Department of Minerals and Energy (DME) and had relationships with various government departments and parastatals. It interacted with organised customers and attended provincial Integrated Development Plans and energy forums.

He said that the Integrated National Electrification Plan (INEP) Business Planing Unit reported to DME. One of its obligations was to make recommendations on the INEP programme to the National Electricity Advisory Committee (NEAC). NEAC was composed of various government Departments and Eskom. The criteria for allocating funds took issues like backlogs, past performance and government priorities and initiatives into account.

There was a National Task Team comprising of DPLG, DME, Treasury, Eskom, the National Electricity Regulator, Department of Public Enterprises and the SA Local Government Association. The Task Team was responsible for determining one national contract on how the free basic electricity programme should work in order to avoid individual negotiations by municipalities. The Team also decided on the national tariff. Municipalities had to determine their indigent policies in relation to who qualified for free basic electricity. In the absence of such a policy, people who had prepaid meters and had meters that were less than 20 amps qualified for free basic electricity. People who had the conventional meter and had a consumption of less than 150 units per month also qualified for free basic electricity. Funds flew directly to the municipalities through the equitable share. Eskom entered into agreements with municipalities that then issued the free electricity. Eskom claimed the money for the electricity from the municipalities as per the national tariff.

Development Bank of Southern Africa presentation
Mr P Baloyi (CEO & MD), Ms J Nhlapo (COO-Development Fund), Mr G Mantashe (Executive Manager-Strategic Initiatives) and Mr A Tadesse (Head-Corporate Strategy) attended the meeting. Mr Tadesse made the presentation. (See document attached)

Department of Minerals and Energy (DME) presentation
Mr Sindane said that t
here was a need for more collaboration with the Department of Housing. There were problems as a result of the unavailability of houses for electrification. Planning seemed to be a major challenge. Some of the projects were approved late by municipalities. In some instances municipalities had committed themselves to projects which ended up not materialising or getting completed in the financial year. There were also problems as a result of the prolonged municipal procurement processes. The sourcing of solar panels for solar home system had been difficult as a result of international demand. This had a negative effect on fast tracking of electrification from an off-grid perspective. Municipal financial year was not synchronised with Eskom's financial year. Municipalities started deliberations on new projects only around June or July and the Councils' resolutions to implement electrification programmes were normally passed around November. Supply of funds was outstripped by the demand for projects. There was a need for more money to deal with the 3, 4 million houses that still had to be electrified. 

He said that the statistics of schools with or without electricity was unreliable. A school could be recorded as not electrified and one could find that it was not electrified because it was in a bad state. Some of the schools were built from mud and others did not have roofs that were suitable for the installation of grid electricity. Most schools, especially in the Eastern Cape were of mud, wood and corrugated iron and were regarded as temporary structures. There was low commitment on ownership and maintenance of the electrical infrastructure installed in schools. This raised the issue of the sustainability of the infrastructure. Most schools were prone to vandalism and theft. There was also the issue of Rehabilitation of infrastructure installed over 12 years ago. One could imagine the state of such infrastructure. Old infrastructure was one of the reasons of the frequent blackouts of longer duration. The quality of supply and network reliability was an issue. One of the criticisms was that the electricity did not meet the thermal needs of households. This included space and water heating. There was a need to find alternative and complementary means of meeting the thermal needs.

National Treasury presentation
Mr Malcolm Booysen (Director: Intergovernmental Relations) made the presentation. (See document attached). He said that it was sad that there was still some misunderstanding by Department of provisions like section 16 of DORA. He had thought that the misunderstanding had been addressed during the hearings on the Division of Revenue Bill. It seemed that the Department were reading the section out of context or only focusing on certain parts. 

Mr Ralane said that Mr Boysen should not deal with section 16 but focus on collaboration and collaboration with other Departments.

Mr Boysen said that some departments had raised the differences in financial years as an issue. The differences had some advantages which outweighed the disadvantages. There were a number of mechanisms to the overcome the disadvantages. National Department would have to finalise their allocations in September or October if the financial years were aligned. The publication of three-year allocations was aimed at facilitating better planning for municipalities. The allocations were 'guaranteed' provided that municipalities maintained good spending patterns. Some presentation had raised the issue of targets and the misunderstanding was that national government alone was responsible for addressing the targets. Municipalities should also contribute in meeting the targets.

Mr Ralane said that the Committee was not interested in Treasury's response to other presentations but wanted its contribution to the topic under discussion.

Mr Boysen said that Treasury played a major role in the budget process by co-ordinating efforts of departments and municipalities. There were a number of stages in the budget process in which municipalities and departments were involved. There was co-ordination and collaboration in some areas but this could be improved especially in relation to the MIG and Housing. It should be noted that MIG and Housing were formula driven whilst other programmes were project driven. It was important to improve planning and identification of priorities during the budget process. The tabling of three-year allocations by municipality was aimed at facilitating improved planning

Mr Shiceka said that this was a beginning of a process that would unfold over time. The Committees would continue to hold bilateral and multilateral discussions with departments to ensure that they worked in a holistic way. It was important to have a co-ordinated approach to service delivery. The Committee still had to call the Department of Transport to appear it because transport was the veins and arteries of the economy of the country.

Mr Ralane said that the Committee was not interested in the departments' understanding of section 16 but the outcomes. The departments should go back and show practical outcomes. DPLG, DME, Treasury and DWAF should do an audit of challenges in relation to implementing section 16 so that it could be amended if necessary. SALGA should collaborate in the audit. The Committees did not want to see unintended outcomes from the legislation. Mr M Robertson (ANC) [Eastern Cape] said that the Committee had noticed from the Report of the Auditor General that municipalities were very slack in sending financial statements. There were 45 outstanding reports and a lot had been submitted late. The DPLG presentation was excellent. The real issue was not how much planning was done but whether there were hands-on people to implement identified projects. The LEDs in the Eastern Cape were totally ineffective. North West provincial departments owed municipalities R88 million. Part of the money had since been paid but a lot could be done by the remaining balance. There was also the Nelson Mandela Metro issue. Bisho owed the metro money for public works. The municipality was sitting on money from traffic fines than had to go to Bisho. There was a stand off and nothing was happening. The prolonged procurement process of municipalities had a serious effect on service delivery.

He said that there were numerous outstanding sewage and sanitation problems. There was a sewage and sanitation problem that had been outstanding for three years in Sinqu. Letters had been written to various departments and municipalities but nothing was done. He asked how water and electricity backlogs would be address. The departments were running ahead building houses with the necessary services whilst old houses had no services. The DME had said that it had a roll over of R70 million that resulted due to the unavailability of houses. He asked the DME to clarify the issue because the backlog was very big.

Ms Msengana-Ndlela welcome the interaction with the Committee and other government departments and institutions. She invited the Committee to work with government departments and institutions in partnership whilst exercising its oversight responsibilities. The local government sphere was very new. The departments were dogged by the stubbornness of poverty and underdevelopment. DPLG would not lament about the problems of the past but would act in order to solve them. It would come back to Parliament to report on what was happening on the ground. She requested Members to take time and look at the approach that the Department was proposing for the next five years and the way in which it worked with different partners. The Committee should use this as the basis for its oversight over the next five years. It was important to look at the issue of sustainability at all times. She also invited the Committee to join the Department in its Imbizo programmes. Before 1995 national government never had the taste and the intensity of working on the ground as it did now.

She said that the Department had analysed the profiles of the different localities. It looked at the municipalities that had the potential to contribute towards economic development. There were municipalities that had grown at a higher level than the national economic growth. There was a need to improve guidance about the LED. Last week the Department had issued a framework and a toolkit for LED. Stakeholders were busy commenting on the framework and the Department intended to finalise it by September. Most people in Sub-Saharan Africa who wanted to know about LED came to SA. SA had started some approaches and it was important to be practical and for the approaches to have some impact. This was one reason why the monitoring and evaluation systems that had been put in place did not only deal with input indicators but also with impact indicators. The national government had recognised the need to improve the performance culture of municipalities.

The programme for local government in the next five years would depend on the collective responsibilities that communities and government had. It was important to enforce the accountability measures and to improve leadership. Co-ordination depended on the functions of leadership.

She said that it was important to look at the issue of collaboration. She agreed that departments should not talk too much about planning. However, they should still confirm their planning frameworks. There was a credible Integrated Development Plan (IDP) process. The act of consolidating infrastructure budgets for municipalities to MIG was an act of co-ordination in itself. The Department could now report on MIG but this was not enough. People should recognise every instance in which there was some progress. It was important to have partnership when moving forward. There were officials from the Institute of Civil Engineering and the Institute of Municipal Finance Officer on the ground in the North West province. This approach was not in place before.

Mr Sindane (DME) replied that the roll over was related to a specific incident. The 2006/07 DORA allowed for some flexibility in relation to the reallocation of money. It illustrated the importance of collaboration.

Mr Sindane (DWAF) replied that he would be surprised if the situation was still the same in Sinqu. He was not saying that everything had been fixed but somebody from DWAF should have gone there and start engaging with the schools. There were various ways in which backlogs could be addressed. The ring-fenced allocation for bucket allocation covered the period until the 2007/08 financial year. The Department was expected to meet the target by December 2007. It was in discussion with Treasury so that the money could be brought forward to enable the Department to meet the target. The Department might fall short of meeting the targets should it continue at the current rate and using the same methods. There might have to be an extra injection of cash and capacity. It was addressing issues like unemployment and skills shortage in its service delivery processes. There might also be a need to look at different methods of delivery and this might come at the expense of some of the things that the Department was trying to do. The Department might end up having to get a highly capacitated company or institution to come and wipe off the backlogs and then address issues like poverty and unemployment differently. The decision would have to be taken at policy level.

Mr Robertson asked all departments to indicate if their budgets spoke to the implementation of the strategic plans. Departments were not talking to each other and each one seemed to be doing its own thing willy-nilly. There was a lot of unnecessary duplication. The major contribution to lack of delivery was communication between departments.

Mr Sindane replied that it was not a perfect process but the Department was trying to ensure that municipalities and the departments spent according to their plans. He understood the concerns around collaborations and communication. It was the structure of the country's governance that was promoting some of the problems. Some of the countries that had similar structures or systems had done away with them. The structure had lasted for about one year in Ghana, two years in Kenya and four years in Uganda. People had felt that the structure was time wasting and had blotted the civil service and led to unnecessary duplications. Sometimes it looked like the best of the worst of the structures. The relationships that were between people far outweighed the laws that they were implementing. Everything hanged on the communication between people who had to deliver the services. Communication was one of the most elusive concepts. He could understand the lack of evidence to support that there was communication.

Ms C September (ANC) said that the Select Committee on Finance was going in the right direction by arranging a meeting like this. The Portfolio Committee on Water Affairs and Forestry could give the Select Committee some insight on some of the issues under discussion. She said that the presentations had given pictures different from those that the Portfolio Committee had seen during its oversight.  Targets had not been met in some instances and this was a course for concern. The Constitution had devolved the provision of services to municipalities but also provided for concurrent powers. The issue was the extent to which the issue of concurrence was compatible with the Intergovernmental Relations Act. Provincial departments were singing from their own hymn sheet as opposed to the five-year plan. Departments had always said that Treasury had some regulations that provided for the manner in which they should report. The regulations had some impact on service delivery. She asked Treasury to comment on this. It was disappointing that Treasury's presentation had not touched on this issue in relation to collaboration.
Mr E Sogoni (ANC) [Gauteng] said that Ms September had indicated that the presentations were different from the signals on the ground. The DPLG presentation had indicated that over 95% of the MIG was spent last year. The devil was in the details. There were municipalities that had not spent their grants. One could not really see how things like Project Consolidate were supporting weaker municipalities that had not spent their grants. Mamusa and Taung municipalities could not spend their MIG and they were the people who needed the funds. He wondered what kind of support was given to them. DORA provided for different kinds of grants. The municipalities within the Bojanala Platinum District Municipality had indicated their needs to the Committee and were of the view that the DBSA should assist them. DORA made provisions for departments to support municipalities but municipalities were asking for support from the DBSA. Where was the problem? Why did municipalities not go to the departments that were supposed to help them? He wondered if DPLG was collaborating with DBSA in relation to capacity building in municipalities. DBSA and DPLG had similar programmes and this raised the issue of collaboration.

Mr Baloyi was tempted to defend the DBSA but this was not the purpose of this forum. The objective was to listen attentively to stakeholders. The key question was how the Department funded municipalities particularly in instances where funding had already been provided by government in terms of DORA. He said that he would prefer to come back to the Committee with a structured response to the issue. There were mitigation circumstances because the DBSA funding came with advisory and capacity building services. The reason why there was confusion around capacity building in municipalities was that there was no distinction being made between capacity building and capacity deployment. The Siyenza Manje Initiative dealt with capacity deployment. There were generic capacity activities in which the DBSA was involved. The Bank had looked at those activities to ensure that it minimised duplication. The Director General of the DPLG could attest to some of the joint initiatives in which the DPLG and DBSA were involved.

Ms Nhlapo replied that the Siyenza Manje Initiative was still very new. It was an element of Project Consolidate based on the principle of hands-on support. The Bank had learnt some lessons in the last four years in which it was involved in capacity building. One of the lessons was that to simply give grants might not be adequate in addressing institutional problems in municipalities. The Siyenza Manje initiative was conceptualised together with Treasury and DPLG. The Bank had been tasked with implementing the programme on behalf of the government. It had used the information that DPLG had put together in the past two years of Project Consolidate. 136 municipalities had been identified and the Bank was starting with those as the basis.

She said that the Bank was giving support and extending Project Consolidate by providing technical support. It had decided to create a niche for Siyenza Manje and this was to look at infrastructure implementation. The support and expertise provided to municipalities were meant to unlock the blockages. Municipalities were facing a lot of challenges in relation to accessing and spending MIG. It would take three to four years to get the situation under control. Sinyenza Manje was ensuring that there was collaboration amongst departments because it involved various departments.

Mr Sindane replied that there were areas that were clear domains of local municipalities in terms of functions. These included water supply and sanitation. Municipalities received money directly from Treasury and topped it up with their own money. The money received by DWAF was targeted to certain activities like looking after dams and canals and some of it was used for monitoring and supporting municipalities. Municipalities normally asked for outside funding when addressing their own areas of capital expenditure. The DBSA could explain why it gave loans to municipalities.

Mr Z Ntuli (ANC) [KwaZulu-Natal] said that he had recently visited Zululand municipality in KwaZulu-Natal. People in Abaqhulusi had argued that electricity was to be supposed delivered by Eskom and others argued that it should supplied be by local government. People had said that it was the duty of the District Mayor to supply water in rural areas and that local municipalities should supply water to urban areas. He asked who decided on who should supply electricity or water to a certain area. There was a lot of acting municipal managers and the trend had continued for some time. He asked what were the reasons for appointing people on acting capacities. This was hindering service delivery because people did not knowing if they were coming or going. DME had referred to indigent policies. He wondered which municipalities had indigent policy. Those that had such policies had not implemented them and those that had been implemented were not working properly.

Mr Sindane (DME) replied that the distribution issues came from the Electricity Act of 1987 and this Act predated the Constitution. The new Electricity Regulation Act took this into account by giving meaning to Schedule 4B issue of electricity reticulation being a municipal mandate. There was a process in Parliament to deal with this. All municipalities were licensed in respect of their distribution business and those that were not licensed were serviced by Eskom.

Mr M Goeieman (ANC) [Northern Cape] said that municipalities were expected to perform yet departments were not playing their roles and did not pay for service rendered by municipalities. He wondered if it was not possible for departments to send a particular amount of money to municipalities in advance just to give an assurance that there would be payment for services. The Committee was informed that departments owed R39 million to municipalities in North West. This was a lot of money and municipalities that were suffering were in that area. There houses that had no electricity or toilets somewhere near Pampierstad. He asked what could be done to ensure that departments paid for their services.

Ms L Mabe (ANC) was disappointed by Treasury’s presentation. Treasury should take its responsibility seriously and should do what it had been requested to do. She had expected the presentation to indicate how Treasury had assisted co-ordination in municipalities so that service delivery was not hampered. One could not have all departments involved in capacity building in the absence of co-ordination because they might end up repeating the same training. Was capacity building done in consultation with other departments? One could have officials spending too much of their time out of office attending conferences, workshops or training on the same topic. DME had indicated that the delays in procuring solar panels were due to international demand. This was related to co-ordination and the question was what had DME and the Department of Science and Technology done to ensure that the challenge was met.

Mr Sindane (DME) replied that there was an immediate problem in relation to solar panels. There was an initiative to partner with a certain entity in order to manufacture solar panels locally.

Mr Sindane said that the departments had tried to co-ordinate capacity building. Capacity building was sometimes sectoral. For instance, DWAF might be interested in sanitation but it would try and ensure that DPLG was involved in the process. This ensured that no two structures arrived at same municipalities to do the same thing. He said that he had met the East Rand Water Care company (ERWAT) and the company had indicated that it had extra capacity on waste water treatment plants and training capacity but it was not being used by municipalities. Sometimes there was a feeling that the resources that were available for capacity building were more than the capacity building needs.

Mr Nkosi said that there was a need to examine the nature of collaboration. At what level did the collaboration take place? It did not help for departments to send junior officials who had no decision-making powers to meetings that were supposed to take the issues of project implementation forward. The collaboration should be taken to a higher level so that decisions taken in meetings could be implemented. Departments should understand that they would have to delegate some of their powers to some forums once they entered into collaboration with other departments. The experience was that the forums were mere forums in which discussions took place. They should have certain powers for them to be meaningful. People had always raised the problem of having functions being delegated to them with no money following the functions. This has to change so that there could be delivery on the delegated functions.

Mr Sindane replied that the sending of junior officials to meetings was a real problem. A person who dealt with cross cutting issues would like to have all departments in attendance at the same time. The reality was that people were wanted in various places at the same time. It was important to ensure that officials did not spend all their time in the office or in meetings. Some kind of balance should be struck. It was important to have senior officials in the meetings but this was not easy to achieve.

Mr Z Kolweni (ANC) [North West] asked what mechanisms were in place to ensure effective and efficient debt collection by municipalities. He also asked if the collaboration between DWAF and other departments was working well in the absence of Waters Affairs and Forestry MECs in the provinces. There were lots of structures that were active in water affairs and forestry and one wondered if their activities were in harmony with what provinces were doing.

Ms Msengana-Ndlela replied that the norm in debt collection was 45 days. The Department was saying that there had been improvements and Namakwa could collect debts in 19 days. Bophirima could collect debts in 14 days. There were experts that had been deployed to areas that could not collect debts within a reasonable period of time.

Mr Sindane replied that that collaboration was working well despite lack of MECs but there was room for improvement. Most Premiers knew of DWAF not because they knew the Minister but because they knew the regional officers in their provinces. Not having an MEC had not been a hindrance but had enabled the Department to use the existing structures to its advantage.

Ms F Nyanda (ANC) [Mpumalanga] said that Eskom had said that they were electrifying households. She asked how Eskom monitored illegal connections. People were connecting free of charge and not paying for the electricity that they had used. Sometimes employees of Eskom were involved in the illegal connections.

Mr Ntsokolo replied that illegal connection was a big challenge that Eskom was confronting everyday. Meter readers were responsible for drawing integrity checks of the metering and the system and reported back to office. The big challenge was on the prepaid meters because they were inside the houses. Access to the houses in order to inspect the meters was the number one problem. People who had bypassed the meters would normally not give access to their houses. Eskom did a low consumption report on a monthly basis. This looked at how much electricity people had purchased and used. Eskom had a very strong disciplinary approach or measures against staff and members of the public who were involved in illegal connections.

Ms S Molokoane (Chairperson: Municipal Finance-SALGA) congratulated the DME for establishing the IDP Engagement Forum. The challenge was for other departments to lend their hands and participate fully in the process. IDPs were frameworks for development at local government. The DME presentation had indicated that there were about two areas where municipalities or beneficiaries could receive free basic electricity. The DME had referred to funding agreements and technical targeting. Municipalities were in favour of service level agreements. The service level agreement was better because it was supported by the Municipal Finance Management Act and the Municipal Structures Act. She asked if technical targeting would be reliable given the high level of migration. It could be assumed that some people were rich and had two or more houses and that this resulted in less usage of electricity. Such people could still receive free basic electricity in terms of the formula. Very poor families could be classified as high consumption families. This could due to the fact that the grandparent was staying with many grand children. Technically, technical targeting could not really indicate if the free basic electricity had gone to the people who were supposed to benefit.

Mr Sindane (DME) replied that the issue of free basic services and targeting was a very involved discussion. A study was conducted to look at approaches to expedient targeting. One was able to identify or target the indigent much better by looking at the demand patterns. The Department believed that this was the cheapest way of targeting. The biggest issue was one of leakage and there could be a lot of leakage if there was no proper targeting. Poor targeting would lead to everybody getting the free basic electricity. The Department believed that technical targeting resulted in less leakage.

Mr Ntsokolo replied that Eskom would like to engage with SALGA on the issue of service level agreements. There was a National Task Team that deliberated on such issues to ensure that there was one uniform approach across all municipalities. The Vryheid municipality might have some answers on the issue of targeting. It was using a very good indigent targeting approach.

Mr Sokopo replied that a high-level universal access plan was on the table. Eskom was busy stream lining its activities so that it could be able to roll out when funding became available. There was a need for a guarantee on up front funding to be able to put infrastructure in place to support the connections. One of the issues was the need for assurance to be able to gear up the industry. There was also the question of material to meet the high number of connections, human capacity and training to undertake a programme of such magnitude.

Mr D Botha (ANC) [Limpopo] said that Members could sit and identify problems but nothing would happen if national departments were not playing their part. There was a problem of co-ordination with district municipalities not informing local municipalities of what was happening.

Mr Shiceka asked if there was a need for a situation where there would be wall to wall water boards. Should the inherited distorted situation in relation to water boards continue? Should the water boards be rationalised so that people benefited?

Mr Sindane replied that one of the exercises that the Department was busy with was the reform of the water boards. DWAF was also in the process of transferring a lot of infrastructure to municipalities. It was looking at the evolution of the Regional Electricity Distributors from very close quarters to see if there were any lessons it could learn. The Department was of the view that water boards should form part of the nucleus of the future regional structures that would supply bulk water. The process was right at the beginning and there was still time for people to make some input on how best they thought the new regional water boards should look like. One approach could be to ground the structures within district municipalities and tailor them to fit in with district municipalities. The Department was open to ideas on how to take the process forward.

Mr Ralane said that it would be useful to look at how the implementation of the Intergovernmental Framework act was progressing. DBSA, Treasury and DPLG should improve performance on the MIG especially in the 29 municipalities that had under performed. DBSA had launched the Sustainable Communities programme and the question was the extent to which it had interacted with other stakeholders. The Committee would still have to look at the issue of skills and capacity given that different departments were involved in these matters. There were various sources of funding and the issue was how departments harnessed all those funding in order to deliver services effectively.

He said that there were no reasons why municipalities did not have Chief Financial Officers given the fact that there was the Municipal Systems Improvement grant (MSIG). Part of the framework of the grant was to provide for the employment of properly qualified people. Parts of the MSIG and local government restructuring dealt with LEDs and this raised the issue of collaboration. Eskom should align its service delivery with IDP as required in terms of section 23 of DORA. Eskom should report to Treasury, DME and municipalities and not to the DPLG. He wondered if there was a gap in DORA that had to be tightened in relation to reporting. There should be an audit of delegations that were not followed by funding so that there could an enquiry on how this had happened.

Mr Shiceka said that there should be follow up on the following issues:
- the Regional Electricity Distributors (REDs) because they affected the financial situation of municipalities.
- Targets set by DME and whether they would be met. The issue of technical targeting should be revisited. There should also be engagement on alternative forms of energy.
- The structures of co-ordination and the allocation of functions between district and local municipalities in relation to basic services.
- The standard of service delivery on the ground. Rural municipalities often did not have electricity during windy weather conditions. 
- There was the issue of Rand Water service agreements that had not been signed by municipalities in Gauteng.
- The seniority of officials sent to meetings that were expected to take decisions was a very serious issue. An organisation should be able to take decisions quickly in order to be effective. It was not desirable to have policies gathering dust on the desk of an individual.

The meeting was adjourned.


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