ATC13108: Report of the Standing Committee on Appropriations on a follow-up oversight visit to the provinces of Limpopo and Mpumalanga for 22 to 26 July 2013, Dated 17 September 2013

Report of the Standing Committee on Appropriations on a follow-up oversight visit to the provinces of Limpopo and Mpumalanga for 22 to 26 July 2013, Dated 17 September 2013

The Standing Committee on Appropriations, having undertaken a follow-up oversight visit to the provinces of Limpopo and Mpumalanga from the 22 to 26 July 2013, reports as follows:

1. Introduction

The Standing Committee on Appropriations (the Committee) undertook a second follow-up oversight visit to the Limpopo and Mpumalanga provinces from 22 to 26 July 2013. The aim of the visit was to follow-up on a similar visit which was undertaken by the Committee in the years 2010 and 2011. The objective of the oversight visit was the need to determine the extent of progress in respect of various projects done by the Department of Water Affairs (DWA). These are the Nandoni Water Treatment Works and Distribution Network (Thohoyandou, Limpopo), and the Inyaka Water Treatment Works (Bushbuckridge, Mpumalanga).

The visit had been informed by ongoing interactions between the Committee and DWA during the in-year monitoring of its expenditure. The Committee observed that there remain recurrent challenges in the effective expenditure of budgets earmarked for water infrastructure projects. Furthermore, a key concern was the efficacy of the alignment in the planning and implementation of water services infrastructure linking the DWA, Water Boards and various stakeholders within the three spheres of government. Therefore, the Committee took a decision to conduct a workshop on 23 July 2013 with the relevant stakeholders, i.e. Department of Water Affairs, Limpopo and Mpumalanga Regional Branches of the Department of Water Affairs, Department of Cooperative Governance and Traditional Affairs, National Treasury, South African Local Government Association, Vhembe District Municipality, Ehlanzeni District Municipality, Water Research Commission, Lepelle Northern Water Board, and Rand Water Board. The objective of the workshop was for the Committee to get a full understanding of the challenges experienced in the delivery of water services where the two projects, i.e. Nandoni and Inyaka, were situated. This workshop was held at the Porche-Villa Hotel in Thohoyandou, Limpopo. The aforementioned workshop was followed by site visits as follows:

• Vuwani to Valdezia pipeline (24 July 2013);
• Vuwani Reservoir and Pump Station (24 July 2013);
• Nandoni Water Treatment Works (24 July 2013); and
• Inyaka Water Treatment Works (25 July 2013).

2. Delegation

The delegation was as follows: Hon E M Sogoni (Chairperson); Hon R J Mashigo; Hon JP Gelderblom; Hon G T Snell; Hon AT Mfulo; Hon L Yengeni; Hon L Ramatlakane; and Hon SM van Dyk. The delegation was accompanied by the following parliamentary officials: Mr D Arends (Committee Secretary); Mr T Masoeu (Content Advisor) Mr P Dlomo (Committee Researcher); and Ms N Chaso (Committee Assistant); and Mr E Bacon (Personal Assistant to Hon AT Mfulo)

The Committee met with the following stakeholders at the workshop and the various sites during the oversight visit:

National and Regional Departmental Officials: Ms T Mbasa; Ms Z Y Mathe; Mr F Smith; Ms M Maraka; Mr M Rex; Mr RL Tloubatla; Mr M Mavhungu; Mr N Oswers; Mr R Hill; Mr V Monene; Ms C Williams; Ms L Mokhuisi; Ms P Nkgudi; Mr M Jethro; Ms N Mello; Mr R Masibigiri; Mr M Tshilidzi; Ms N Mavuso; Ms S Moshidi; Ms R Edward; Ms MG Nyavani; Mr P du Toit; Ms M Komape; Mr D Mabada; Mr M Nekhudzhiga; Ms MM Ramadikela; Ms L Sefora; Mr S Thwala; Mr TS Magado; Mr M Mulaudzi; Mr E Kubayi; Ms M Matiso; Ms C Mashaba; Ms L Kobe; Ms P Ramunenyiwa; Mr F Guma; Mr S Ratau; Mr B Ramanyimi; Mr D Mokome; Mr T Manyama; Ms M Musekene; Mr HA Mabuza; Ms M Matiso; Mr K Siziba; Ms S Siwele; and Ms L Mokoena

National Treasury: Mr M Mulaudzi

Department of Cooperative Governance and Traditional Affairs: Mr G Mthethwa; Mr W Haydenreich; Mr K Bologo (MISA); Mr P Polasek (MISA); Mr Dladla (MISA); Mr K Katsidzira (MISA); and Mr TJ Makayela (MISA)

Limpopo Department of Cooperative Governance, Human Settlements and Traditional Affairs: Mr MS Molepo

Mpumalanga Provincial Treasury: Mr M Madike; and Ms L Manonyane

Mpumalanga Provincial Department of Cooperative Governance and Traditional Affairs: MEC SPD Skhosana; and Mr D Ntombela

Vhembe District Municipality: Cllr MR Lucy; Cllr PE Bvumbi; Cllr K Nemaranzhe; Cllr C Nkanyami; Mr MT Makumule; Mr EF Chauke; Mr MJ Hwasie; Mr TE Masakoma; and Mr M Muthu

Ehlazeni District Municipality: Cllr P Monareng; and Mr Shrinivasan

Bushbuckridge Local Municipality: Cllr R Khumalo (Executive Mayor); Cllr PT Selowe; Cllr M Sesekani; Cllr D Makhubele; Cllr S Nxumalo; Mr L Mathebula; Mr E Ngomane; Mr E Mashava; and Mr P Zingeni

Bushbuckridge Water Board: Mr V Gouws; Mr M Radingwana; Mr R Mnisi; Mr M Makhavhu; and Ms SR Madisha

SALGA: Mr MV Suzan; Ms L Siswana; and Mr L Morifi

Lepelle Northern Water Board: Mr N Nokepia and Mr S Mpamonyane;

Water Research Commission: Mr J Bhagwan and Dr S Pillay

Rand Water Board: Mr M Ndlela and Mr M Mdlopane

3. Terms of reference

Section 27 (1) (b) in Chapter 2 of the Constitution of the Republic of South Africa provides that every citizen has a right to access sufficient and clean drinkable water. The Constitution gives national and provincial government authority to regulate local government in terms of water services. It further gives them the obligation to support and strengthen the capacity of local government to provide services.

In the 2010 State of the Nation Address (SONA), His Excellency President Zuma stated “the government shall not falter until each and every community in our nation has clean potable water because our water supply forms a strong backbone to all social and economic development initiatives”. The National Development Plan 2030 identifies water as a “strategic resource critical for social and economic development”. Furthermore, the National Development Plan states that water and sanitation services are a priority for basic community services and thus their sustainable management is critical for community health, development and economic activity.

Given the declaration by the President of the Republic of South Africa and the strategic importance of water provision in building sustainable communities, the Committee sought to look into ways to enhance alignment and the utilisation of resources in the operations of institutions in the water sector through a workshop engagement identifying challenges and possible solutions; and to ascertain the extent of water service provision in the communities of Limpopo and Mpumalanga.

Table 1 below provides the budget allocations of the Nandoni Pipeline Construction (Limpopo) and the Inyaka Water Treatment Works (Mpumalanga) projects since 2011/12 up to 2013/14 financial years.

Table 1: Allocations for Nandoni Pipeline Construction and Inyaka Water Treatment Works

Programmes and Projects R’000	2011/12	2012/13	2013/14	2014/15	Total
Nandoni Pipeline Construction	203,000	317,000	230,000	0	750,000
Inyaka Water Treatment Works	136,800	0	10,455	0	145,255

National Treasury (2011, 2013)

4. Workshop on Water Services Delivery

The Committee held a workshop on 23 July 2013 with institutions in the water sector for a comprehensive assessment of the water delivery value chain. The following stakeholders were invited to the workshop; i.e. Department of Water Affairs, Limpopo and Mpumalanga Regional Branches of the Department of Water Affairs, Department of Cooperative Governance and Traditional Affairs, National Treasury, South African Local Government Association (SALGA), Vhembe District Municipality, Ehlanzeni District Municipality, Water Research Council (WRC), Lepelle Northern Water Board, and Rand Water Board.

4.1. Department of Water Affairs Submission

The Department in its submission outlined progress and interventions made in improving water delivery through its Nandoni Water Bulk Distribution System and the Inyaka Water Scheme.

The Nandoni Water Bulk Distribution System in Thohoyandou, Limpopo commenced in 2009 and the completion date was originally set for 2010. This water project was one of 24 water schemes in the Vhembe District Municipality. The Nandoni Bulk Distribution System was established to secure sustainable water supply in Vhembe Region and it covered the following supply areas (population in brackets):

· Kutama Sinthumule and Makhado (89 749);

· Vondo (Thohoyandou and Vuwani) (325 577);

· Malamulele East and West (300 644); and

· Mhinga/Lambani (25 621).

The table below depicts the progress of the construction of the Nandoni Bulk Water Distribution Scheme:

Table 2: Construction stages of components of Nandoni Pipeline

No.	Project name	Project description	Construction percentage to date	Projected completion date
1	NN20B rising main	250 mm diameter x 10.1 km (capacity of 24 ℓ/s)	95 %	August 2013
2	NR6 rising main	700 mm diameter x 18.8 km (capacity of 400 ℓ/s)	95%	September 2013
3	NR6 reservoir (Vondo)	capacity of 16 Mℓ	95%	September 2013
4	NR5 Reservoir (Mavambe)	capacity of 5 Mℓ	95%	November 2013
5	Mavambe pump station	capacity of 800 ℓ/s	95%	November 2013
6	Mavambe to Vuwani rising main pipeline	800 mm diameter x 31.6 km (capacity of 800 ℓ/s)	70%	November 2013
7	NR7 Reservoir (Vuwani)	capacity of 5 Mℓ	95%	December 2013
8	Vuwani pump station	capacity of 896 ℓ/s	70%	November 2013
9	Vuwani to Valdezia rising main pipeline	900 mm diameter x 30.3 km (capacity of 896 ℓ/s)	45%	December 2013
10	Valdezia reservoir	capacity of 16 Mℓ	80%	December 2013

DWA reported that the bulk water distribution system would be completed by December 2013. This scheme would supply water into the Vuwani and Valdezia reservoirs and the Vhembe District Municipality’s schemes needed to transport the water from these reservoirs to the communities.

DWA had a number of water intervention programmes in the Vhembe District Municipality which include the Accelerated Community Infrastructure Programme (ACIP), Regional Bulk Infrastructure Programme (RBIG), Water Services Operating Subsidy (O&M and Refurbishment), Municipal Water Infrastructure Grant (MWIG) and the Municipal Infrastructure Grant (MIG). These interventions were earmarked to address water services backlog of 158 427 households from a total 315 953 households in the Vhembe District Municipality. In particular, of the 158 427 household water services backlogs, 66 187 was due to the lack of access to water as a result of functionality problems (i.e. refurbishment/operations and maintenance), 45 050 required water extension to existing infrastructure, 40 942 had access to water infrastructure but no water due to source problems whilst only 6 248 had no formal water infrastructure.

The following challenges were reported with regards to the Nandoni pipeline project:

· NN20B pipeline has been completed and tested, however the reservoir which was constructed had leaks;

· Completion of the NR6 pipeline was delayed due to high humidity which affected lining and coating;

· Project programme was delayed due to persistent rainfall; and

· Cash flow problems had been experienced by some contractors which delayed the implementation of the projects.

The following measures were underway in addressing the stated challenges:

· DWA was repairing the reservoir and the estimated completion date was 31 August 2013;

· The contractor utilised a blowing fan method to eradicate accumulated humidity in the pipes;

· The contractors needed to submit revised programmes by 26 July 2013 to the Department for review; and

· The Implementing Agents needed to ensure the appointed contractors have financial security.

DWA in its presentation also outlined the progress on the Inyaka Water Treatment Works and gave an overview of the Acornhoek, Sathale, Edinburgh, Sand River, Thulamashe, and Hoxane water supply schemes. The Inyaka Water Treatment Works in Mpumalanga commenced in 2008 and the completion date as indicated in the previous oversight visit of the Committee in 2011 was May 2013. The Inyaka Water Treatment Works was intended to provide a secure source of water for domestic, municipal and industrial users in the Bushbuckridge area. The Inyaka Water Scheme, once completed would utilize 88 existing reservoirs and was earmarked to supply 116 villages numbering 98 161 households. The water scheme, at the date of the visit supplied 30 014 or 31% of the total 98 161 households.

The Inyaka Water Treatment Works comprised of four Phases of which Phases 1 & 2 of the water treatment plant which process 50 000 m3/day (50 ML/day) were constructed at Maviljan in Bushbuckridge and were operational. The 3rd and 4th Phases were intended to safeguard the domestic water supply to communities and would be capable of providing an additional 50 000 ML/day and were in the process of being constructed The envisaged completion dates for the 3 ^rd and 4 ^th phase was August 2013 after which the capacity would increase to 100 000 ML/day. These two phases (Phase 3 & 4) were at an overall completion stage of 99 per cent at the date of the site visit and progress was as follows:

· Raw Water Pump Line (96%);

· Inlet Works (100%);

· Flocculation Channels x 2 (99%);

· Settling Tanks x 2 (99%);

· Sand Filters x 2 (99%);

· Clearwater Tank (100%);

· Reservoirs 20Ml x 2 (99%);

· Sludge Ponds x 2 (99%);

· Extension of Administration Building (100%); and

· Access Road (100%).

The table below depicts the expenditure trends of the Inyaka Water Treatment Works. These costs included Value Added Tax.

Table 3: Overview of Inyaka WTW budget and expenditure

Project Phase	Expenditure	Project Status
Phase 1	R 93,76 m	Completed
Phase 2	R 120,56 m	Completed
Phase 3 & 4	R 482,57 m	Projected final amount – 91% spent
2008/2009	R 44,73 m	Completed
2009/2010	R 120,81 m	Completed
2010/2011	R 85,81 m	Completed
2011/2012	R 77,66 m	Completed
2012/2013	R 102,64 m	Completed
2013/2014	R 48,42 m	Projected
2014/2015	R 0,0 m	Projected
2015/2016	R 2,5 m	Projected (Retention)
Raw Water Line	R 31,63 m	70% spent
Mechanical & Electrical	R 50,09 m	60% spent

The following challenges were reported with regards to the Inyaka Water Scheme project:

· The household backlog and non-functional infrastructure which stood at 69 per cent or 68 147;

· Unauthorized connections;

· Insufficient supply due to inadequate infrastructure and increased demand;

· High water losses;

· Unreliable electricity supply; and

· Inadequate water storage capacity.

The Committee was informed that Phases 3 and 4 of the project had lost a total of 266 days of work. This was attributed to 155 days lost as a result of rain since September 2008 and 111 days lost due to industrial action in 2009. It was reported that the non-availability of material also contributed to delays.

DWA outlined its intervention project in the Bushbuckridge Local Municipality (BLM) in partnership with COGTA and Rand Water. The project aimed to improve the pace of developing and constructing water reticulation systems in the area. The project scope included the design and installation of pipelines, yard connections, pressure valves, valve chambers and general refurbishment. The project execution plan has been completed and a service provider appointed.

DWA reported on a number of challenges experienced in the roll-out of the intervention and these included the need for coordinated Water Master Plans (WMP) at Water Service Authority (WSA) level, lack of compliance to infrastructure funding grant criteria / conditions, lack of co-funding by WSA’s on infrastructure programs and dependency on external technical expertise and lack of internal capacity in WSA to manage infrastructure programs.

It was stated that some of the measures instituted in order to address these challenges and improve performance included the need to implement Water Related By-laws, maintain assets registers related to water infrastructure, maintain operations and maintenance plans, implement water conservation and water demand management, WSA’s to ensure skills transfer by external service providers, the need for benchmarking of systems and processes across WSA’s and to improve the Department’s monitoring and evaluation regulatory oversight on the Municipal Infrastructure Grant (MIG).

4.2. Ehlanzeni District Municipality Submission

The Ehlanzeni District Municipality (EDM) in its submission outlined various challenges affecting water service delivery in the district and made recommendations on addressing same. Bushbuckridge Local Municipality was the water service authority and the Bushbuckridge Water Board was the water service provider in the Bushbuckridge Local Municipality (BLM) and the Nsikazi area in the Mbombela Local Municipality. The EDM outlined a number of challenges affecting water delivery which included insufficient budget for operations and maintenance (O&M), the need to develop underground water sources, availability of materials; poor or outdated water master plans; lack of institutional, managerial, operations and maintenance capacity at all levels of government; and inadequate asset management planning.

Based on the stated challenges, the EDM made a number of recommendations which included the prioritization of MIG funds by municipalities for bulk water supply; municipalities to ring fence operations and maintenance funding; councillors to adopt the “Siyabhadala Manje” campaign and encourage communities to pay for (all) services and the adoption of a comprehensive approach to planning and co-ordination of infrastructure.

4.3. Vhembe District Municipality Submission

In its submission, the Vhembe District Municipality (VDM) indicated that the district was 98.9% rural with only 1.1% being urban and that deterioration of infrastructure was high largely due to limited budgets and capacity. The VDM was the WSA and provided bulk water supply. The WSA indicated that there existed good working relations with sector partners i.e. DWA, the four local municipalities, COGTA (Municipal Infrastructure Support Agency/MISA) and the Limpopo Department of Cooperative Governance, Human Settlements and Traditional Affairs. The district was wholly dependent on grant funding. In particular, the bulk distribution pipeline network was funded through the MIG grant and the VDM stated that it had spent 100% of its MIG allocation in the past two financial years.

In its submission, the VDM outlined a number of challenges which included delays in the completion of Nandoni Bulk lines; the 4 schemes (i.e. Nandoni, Vondo, Xikundu and Malamulele East) received no operation and maintenance budget from DWA and staff allocated to the schemes were not funded by DWA; there was a critical shortage of skilled process controllers; the DWA staff transfer process brought in large numbers of personnel (mostly unskilled) resulting in an unsustainable salary bill; insufficient grant funding for operations and maintenance; and the vandalism of water equipment.

The VDM highlighted following interventions intended to address the above reported challenges and these include:

· Memorandum of Understanding (MoU) signed with DWA for the DWA Construction Division to construct the Valdezia to Mowkop pipeline;

· The VDM was in the process of embarking on ways to increase cost recovery as follows:

- Billing accounts for water services were separated at Local Municipality and in 2012/13 financial year the District collected R20 million; and

- Draft Revenue Enhancement strategy was in the process of being developed.

· MOU signed with MISA to deploy 22 Artisans (Electrical, Mechanical, plumbing and brick layers) and 34 Process Controllers (water & waste water);

· Pipe condition survey in the process of being undertaken which should impact positively on revenue collection;

· Conversion of Technical Services Department to Water Services Department for the said department to have a special focus on water;

· The District installed a high lift pump of bigger pumping capacity at Albasini water treatment works and managed to fill the Mowkop reservoir to capacity daily; and

· The district upgraded a borehole in Mutoti village and constructed a rising main to existing reservoir and the Mutoti community received water 24 hours.

The VDM made the following recommendations to the Committee:

· DWA should expedite completion of Nandoni bulk water network;

· DWA to provide O&M budget and staff to operate and maintain Nandoni, Vondo and Xikundu schemes (schemes over R100 million);

· Funding was required to replace the 33 km long Albasini to Mowkop reservoir bulk pipe line; and

· O&M grant from DWA to be increased in line with scheme requirements.

4.4. South African Local Government Association

The South African Local Government Association (SALGA) in its submission reported that it was working in collaboration with the Department of Water Affairs and WSAs to ensure that communities received essential services like water and sanitation. SALGA indicated that a number of challenges had been experienced and these included the finalisation of technical reports, slow spending on MIG, delays in the registration of projects and the lengthy process of funding roll-overs.

SALGA reported that the delayed approval of technical reports by the DWA had a negative impact on municipal spending, especially regarding MIG. It was reported that a workshop had been held with DWA in the 2012/13 financial year to address this matter. In addition to the technical reports, it was stated that projects had to be registered before commencement with the respective Provincial Departments of Cooperative Governance and Human Settlements. The point was made that these registrations took long in certain instances and these delays derailed the municipal planning cycle. These challenges had a knock-on effect as they often resulted in requests by municipalities for roll-over funds.

4.5. Department Cooperative Governance – Municipal Infrastructure Support Agency (MISA)

The Municipal Infrastructure Support Agency (MISA) in its submission indicated that the Vhembe District was selected for the first phase of MISA support since it formed part of the 23 districts prioritized by Cabinet following the July 2011 Cabinet Lekgotla. An assessment was also done to some of the water works following the flooding that had occurred in early 2013. The agency identified areas in plant design; and operations and maintenance as requiring support.

One of the major challenges identified which was within the support mandate of MISA was the absence of technical capacity due to a lack of skilled personnel in the Vhembe District Municipality . MISA has now committed to support the district with some of the required personnel – artisan plumbers, artisan electricians, artisan bricklayers, artisan carpentry, water and waste water operators

The Vhembe district owned 22 regional water schemes that required a considerable amount of skills to operate and maintain for the sustainable supply of safe drinking water to communities and the business sector. MISA reported that it had committed the following artisans to assist the Vhembe District Municipality and they are to commence working on 1 August 2013.

Table 4: MISA committed support

Trade	Requested number of artisans
Water Plant Operators	17
Waste Water Plant Operators	17
Electricians	5
Mechanical	7
Plumbers	7
Carpentry	2
Brick layers	1
Total	62

MISA indicated that there was an agreement with the VDM that the above mentioned support staff should be appointed by the district on a permanent basis after two years. MISA will pay the salaries of the artisans during the first two years.

4.6. Presentation by Lepelle Northern Water

Lepelle Northern Water (LNW) in its presentation indicated that its primary activity was to provide bulk water services to other water services institutions such as municipalities and mines. LPW indicated its readiness to support water provision in the Limpopo Province through the following measures, namely:

· LNW stated that it is ready to operate and maintain all the above R100 million water schemes in Limpopo at any given period;

· Business Plan for funding was submitted to National Treasury through DWA to operate and maintain all the above R100 million schemes in the Limpopo province;

· The LNW Water Board had a pool of 500 learnerships ranging from artisans to Process Controllers for both Waste Water Treatment Works and Water Treatment Works; and

· South African National Accreditation System (SANAS) Accredited laboratory for both water & sanitation.

In terms of its financial viability, the LNW reported as follows:

· LNW boasted total assets of R876 million consisting of R449 million of fixed assets and the balance being investments and working capital;

· The debt/equity ratio stood at 0.18 as at end of June 2012. Notwithstanding this gearing level the board continued to make surpluses and invested these in the refurbishment and upgrading of its infrastructure;

· The surplus generated throughout these past years was through increases in sales and major improvements in operating efficiencies while tariffs were kept to affordable levels; and

· LNW has built a solid financial base and will continue this trend all things being equal.

LNW in its submission requested that Cabinet finalise the decision on the transfer of the over R100 million water distribution schemes to it and that it be appointed in the interim to run these schemes so as to prevent further dilapidation of the schemes.

4.7. Water Research Commission

The Water Research Commission (WRC) in its submission emphasised the importance of selecting appropriate and sustainable water technologies and highlighted trends in the financial viability of Water Service Authorities in executing their mandate. The WRC indicated that while WSAs were under pressure to comply with strict and very high standards and regulations, the overall water sector needed to acknowledge the limited resources available in the WSA delivery environment and thus foster an environment where it was possible to attain effluent quality and management; and sustainability.

A study on the appropriateness of the choice of wastewater technologies implemented by Water Service Authorities in 18 treatment plants was conducted across the country. In the report of the said study which was published in December 2012, the WRC found that that the m ore complex and potentially costly level of technology enjoyed higher preference compared to the low/medium levels of technology, there was insufficient attention to long term cost and capacity to operate and maintain high level technologies (i.e. lack of skills, cost of expansion, repairs and capital cost of new systems) and the existing trend to upgrade to a higher technology level rather than resolve the process limitations and optimise existing systems.

Findings from the study also indicated that technology options and license applications in the water sector were strongly driven by consultants. In the case of lower capacity municipalities, project decisions were driven from consultants, often without investigating alternative options or sustainability of recommended technology and consultants often recommended technologies which they were familiar with and not necessarily those most suitable to the specific municipality.

With regards to financial viability, the WRC outlined key trends in cost recovery and tariffs in the water sector. Water Boards purchase bulk water from DWA and set bulk water tariffs in areas where they provide bulk water services. The WRC found that bulk water tariffs have increased steadily over the years and varied widely due to the availability of water, distance distribution, raw water quality and costs. WRC reported that a possible future consideration may be the initiation of reforms aimed at price regulation. Furthermore, if inefficiencies were detected by WSA in bulk water provision they should not pass on this cost to consumers.

Mhlathuze Water was found to be the cheapest whilst Sedibeng Water was the most expensive and others such as Rand Water, Lepelle Northern Water, Bloem Water, and Amatola Water were also high. Local municipalities facing high bulk water tariffs charged consumers high retail tariffs. The Local Government Equitable Share (LGES) funding in combination with collected water revenues was not adequate to cover bulk water expenses in some municipalities such as BLM and Mafikeng. Cost recovery was critical for sustainability though the main challenges reported by the WRC were the setting of tariffs below cost and the limited collection of tariffs in rural areas.

4.8. Deliberations on the Workshop

The Committee welcomed inputs from all stakeholders and emphasized the need for frank and critical assessment of areas requiring improvement by all stakeholders in their specific roles in the water delivery value chain. The Committee viewed it necessary for all stakeholders to clearly identify challenges so that it may be able to intervene and unblock bottlenecks impeding the delivery of water services to communities. In particular, the Committee noted the revision of targets from earlier presentations made by the Department to the Committee and was concerned at the attainability of the current stated targets.

A key consideration by the Committee was possible cost overruns that may emanate from delays in the completion of projects. The Committee stated that in the past, significant funds had to be made available due to projects not meeting contracted projects schedules. Furthermore, the Committee cited examples of past performance where spending patterns showed that budgets had been spent but less than 10% of the pre-determined objectives were attained. The Committee pointed out that problems of cash flows from contractors need not impact on the Department’s projects as payments were only for work completed. The Department responded that there will not be additional funding required for the current projects for which completion dates have been revised and that it was in the process of putting measures in place to ensure that expenditure was aligned with the attainment of pre-determined objectives.

The Committee noted that in a number of projects due for completion, the progress-to-date was indicated as being at an advanced stage with over 90% completed. In particular, the Committee raised concerns on whether the completion target date of December 2013 was realistic. The Department indicated that projects at an advanced stage (i.e. over 90%) were normally only awaiting the quality assurance process to be finalized. The Committee made reference to the reported court case between the Department of Water Affairs and a service provider regarding the production of the Nandoni pipeline and clarity was sought on the progress of same. The Department responded that the litigation matter was at the High Court.

The Committee was concerned with the performance of the internal construction unit of the department and its working relationship with the Department. In particular, one contract, W0497 WTE , had three contractors (including the internal construction unit) and the Committee sought clarity on the process of issuing tenders to internal and external service providers and the allocation of responsibilities within the said contract. A key concern was that the internal construction unit was outsourcing work that it was meant to complete. The Department indicated that at present, budgets were allocated to project managers in the internal construction unit and Service Level Agreements (SLAs) were in the process of being developed between the Department and the internal construction unit. Furthermore, the Department indicated that in the past it had been unable to impose penalties for non-compliance to project timeframes by the internal construction unit but assured the Committee that this would no longer be the case in the next financial year.

The Committee pointed out the need for enhanced integration in the planning and implementation of water projects. The Committee highlighted that one of its major concern was the end result following the completion of pipelines. A central point of emphasis was that the completion of pipelines by the Department of Water Affairs should overlap with the completion of reticulations systems by the local authorities thus ensuring simultaneous access to water by communities. The Committee indicated that there were a number of grants supporting water provision infrastructure (Regional Bulk Infrastructure, Municipal Infrastructure Grant, Municipal Water Infrastructure Grant (MIG), etc whose funding frameworks stipulated conditions for alignment and integration and yet alignment remains a recurring challenge.

MISA indicated that one of the ways that may enhance the level of alignment in the delivery of water services was the increased participation of all stakeholders in the Integrated Development Plan Process (IDP). Furthermore, MISA reported that there were MIG forums which sought to integrate the work of all stakeholders in the rollout of basic services infrastructure.

The Committee noted that the issue of illegal connections to water sources by farmers in the Vhembe region had been raised as a significant drain of the already limited water resources in the area. The Committee was concerned at the level of transformation of the agricultural sector and their involvement in appreciating the scarcity of water resources in the area. The VDM indicated that transformation in the agricultural sector in the region was less than 5% and that they are currently engaging local farmers with regards to illegal connection.

The Committee noted that in many instances the Department cited the lack of capacity of local government to implement water projects as a major challenge. The Committee emphasized that the Constitution provided that national government and provincial government should support municipalities in executing their mandates. In addition, the Committee was concerned at the capacity and readiness of Water Boards to deliver water services and support local government institutions. Therefore, the Department should not seek to deliver only on bulk water infrastructure without due regard to the final reticulation systems that are required to provide water to communities. The Committee stated that the Department should exercise leadership in the water sector and also seek solutions together in partnership with other stakeholders such as COGTA.

The Department indicated that whilst there were challenges of project management capacity at local government level, similarly there was limited project management capacity internally within the Department. In many instances, large projects amounting to billions of rands were managed by only one official. The Department indicated that while many Water Boards do have capacity there was work underway in the realignment of all Water Boards to respond more swiftly to the demand for water.

The Committee noted the research findings showing the prevalence of consultant-driven use of high technology intensive approaches to the roll-out of water infrastructure in especially rural municipalities with low revenue bases. The Committee pointed out to the Department the need for a comprehensive skills development plan that would ensure that following the completion of all water infrastructure projects in the Limpopo and Mpumalanga provinces, there will be a skills base to draw on for long term operations and maintenance.

The Committee welcomed the study findings of the WRC and sought clarity on whether the Commission’s research papers were factored into the planning processes of the Department of Water Affairs. The Committee viewed the findings on the sustainability of newly built water infrastructure and disparities in the water tariff charges as critical considerations in the medium term planning framework of the DWA. The Department reported that the information produced by the WRC has not yet been filtered into its planning processes but that it was in the process of establishing an implementation forum to ensure to that its findings filtered down to implementing officials. The Committee expressed concern at the fact that the Department commissioned the WRC to conduct studies, yet it had no mechanisms in place to ensure that the findings and recommendations of such studies were thoroughly considered in water sector planning and project implementation.

5. Projects Visits

5.1. Nandoni Bulk Water Distribution Network (Valdezia Pipeline)

On 24 July 2013, the Committee undertook a site inspection of the Valdezia pipeline and reservoir. The Valdezia pipeline and reservoir was scheduled for completion in December 2013 and was earmarked to supply water to the Valdezia village, the Mowkop Reservoir and Waterval/Elim area. The Committee emphasised the need for the Department to set targets that were realistic and to furnish the Committee with reports on any possible challenges that may impede on the successful attainment of targets. The Committee viewed the submission of timeous information to itself as critical in allowing the Committee to intervene and mobilise support where necessary.

The Department listed the following as some of the challenges that may impact on the attainment of the December 2013 deadline:

· Negotiations were ongoing with private landowners for access to land which was situated along the route of the Valdezia pipeline. The Department indicated that funds were in place for the purchase of the private land, a legal opinion report has been drafted on the land matter and it envisaged finalisation of the land matter within 2 months;

· The performance of contractors was not satisfactory. The Department indicated that there were recurring challenges in joint ventures between established contractors and emerging and smaller contractors;

· There were shortages in the number of specialist welders for the pipeline construction. The Department indicated that the steel pipes were different from PVC pipes and that contractors specialising in the steel pipe installation were few and thus various sites where steel pipe installation was in progress had to share the same contractors; and

· Rain and other natural disasters may impact on the set completion date of the project.

The Committee was of the view that the Department may not be able to respond to these challenges speedily in order to ensure that completion date targets were reached. In particular, the Committee enquired about the existence of a Project Gantt Chart which would illustrate the amount and types of resources which would be required for the project to meet targeted completion dates. The Committee pointed out that the Gantt chart will assist the Department in planning properly around any potential challenges to the successful completion of the project.

The Committee viewed the lack of a readily available Gantt chart on the revised completion dates for the project as indicative of poor planning by the Department. The Department responded that the Gantt Chart would be revised and undertook to furnish same to the Committee. The Committee viewed the lack of specialist welders for the construction of the pipeline as a significant challenge. The Committee pointed out that there was a need for short-term and long-term skills plan by the Department to address the challenge of specialist skills.

The Committee sought clarity on the target date for access to water by the surrounding villages once the pipeline and reservoir have been completed. The Department reported that a MOU has been signed between the Department and the VDM in order for the former to assist with the water reticulation systems subsequent to the finalisation of the bulk water infrastructure (i.e. bulk pipeline and reservoir). The VDM reported that it had placed reticulation systems in neighbouring villages but had insufficient funding for the bulk pipe from Valdezia to Mowkop and needed an additional R400 million for the construction of the Mowkop pipeline.

The Committee commended all stakeholders for the undertaking to deliver in an integrated manner water services to the communities in the Vhembe District Municipality. The Committee further requested a costed works programme for the construction of the pipeline from the Valdezia reservoir to all envisaged beneficiaries.

5.2. Inyaka Water Treatment Works

On 25 July 2013, the Committee undertook a site inspection of the Inyaka Water Treatment Works. On site, there was a joint presentation led by the Mpumalanga Provincial Department of Cooperative Governance and Traditional Affairs (MCoGTA). The MCoGTA indicated that the presentation was a joint effort between provincial government, the DWA, the Bushbuckridge Local Municipality and the Rand Water Board. In its submission, the MCoGTA indicated that tap water provision in the Mpumalanga province has increased from 58.2% in 1996 to 71.7% in 2011 while tap water access in the Ehlanzeni District Municipality had increased from 48.3% in 1996 to 57.8% in 2011.

Some of general challenges reported by MCoGTA in its submission on general water access in the province and the EDM included the inconsistent water supply (e.g. rationing and no supply for many days), high water losses and illegal connections, limited supply of electricity, ageing infrastructure, inadequate bulk water infrastructure (storage), poor cost recovery due to an inadequate billing system and insufficient technical capacity. Storage was highlighted as a key challenge as many reservoirs in the area were originally designed with the intention for use for farming irrigation and thus unsuitable for facilitating regular access to water for household use by communities.

With regard to the Acornhoek Bulk Pipeline, the pipeline project had commenced in August 2011 and was originally scheduled for completion for August 2012. The revised completion date for the pipeline project was 31 July 2013. It was reported that the original contract budget was R130.2 million but due to the delays in completion, the budget this year has increased to R155.3 million. The reported number of jobs created was 92 and all were young people with 30% being women. It was reported that a number of challenges were experienced during the construction of the Acornhoek Bulk Pipeline and these included delays in the delivery of pipes to site, 180 days delay due to rain, community unrest, unexpected deep excavation to remove the Glass-Reinforced Polyester (GRP) pipes, leaking flanges found on existing air valve chambers, leaking flanges at existing scour valve chambers and continual vandalism.

The MCoGTA indicated that Bushbuckridge Municipality had been placed under administration in terms of section 139(1) (b) of the Constitution of the Republic of South Africa. As such the powers of the Executive Mayor and Municipal Manager of the municipality had been assigned to an administrator. It was further reported that a MOU had been signed between the Minister of Water and Environmental Affairs and the Premier of the Mpumalanga Province with a view to accelerating water implementation in the province. It was reported that the Rand Water Board has been appointed to implement the intervention at the Bushbuckridge, Msukaligwa and Emalahleni Local Municipalities. In addition to this, the Mpumalanga Economic Growth Agency (MEGA) had been assigned to support eight municipalities in the province for the implementation of bulk water and sanitation infrastructure. The point was made that 70 per cent of the province’s CAPEX had been allocated towards the delivery of water and sanitation services.

In the joint submission, the MCoGTA indicated that one of the key objectives of the intervention between the Department of Water Affairs, Department of Cooperative Governance and Rand Water was to improve the delivery of water services in the municipality by developing and constructing water reticulation systems and to connect municipal customers to the water supply. The number of villages to be reticulated between May 2013 and February 2014 as per the project scope were 40. The project scope included the design and installation of water reticulation pipelines with associated pipe fittings; yard connections; pressure reducing valves; gate valves; valve chambers; customer meters; and refurbishment of selected bulk infrastructure. It was reported that the service provider implementing the project had been appointed in June 2013 and that the project execution plan had been completed.

The Committee commended the Mpumalanga Province, DWA, MCoGTA, district and local municipalities and all stakeholders involved in the project for their integrated approach towards the delivery of water services to communities in the Ehlanzeni District Municipality and the Bushbuckridge Local Municipality in particular. The Committee emphasised that the DWA needed to play a leading role in the water sector and in the fostering of partnerships to ensure accelerated water delivery.

The Committee expressed concern at the challenges affecting cost recovery and enquired whether there were mechanisms in place to ensure that the matter is addressed. In addition to this, clarity was sought on whether Eskom has provided assurance that there would be a steady supply of electricity in the region so as to ensure that the project on supplying water to communities succeeds. The MCoGTA responded that it had developed a comprehensive revenue enhancement strategy to address the loss of income and stated that there were ongoing discussions with Eskom regarding the supply of electricity. The Committee noted the indication by MCoGTA that the current debt owed by BLM to Bushbuckridge Water Board was R300 million and indicated that in its previous oversight visit to the Inyaka Dam in 2011 the debt amounted to R190 million.

In respect of the projected completion date for the Inyaka Water Treatment Works, clarity was sought on whether any expected delays, for instance, as a result of rain have been factored in and whether there were measures in place to ensure that these delays do not impact significantly on the completion dates. The Committee was concerned at the attainability of the reported completion date of August 2013 for the Phases 3 and 4 of the Inyaka Water Treatment Works. The Committee sought clarity on the alignment of expenditure as opposed to actual work completed on site (i.e.99% construction versus 91% of budget spent). The DWA indicated that the mechanical and electrical works were complete on Phase 3 and 4 and only the environmental inspection process was outstanding. Furthermore, the outstanding payment amount for the Phase 3 and 4 included the processing of payment certificates and a final insurance amount which will only be paid to the contractor once the construction is operational and no defects detected.

The MCoGTA indicated that the Premier and MCoGTA have committed to the February 2014 completion date for access to water by communities in the BLM. The DWA also reported that a lack of funding could be an obstacle to the achievement of the targeted date of February 2014 and that there was a R250 million shortfall at present although all stakeholders are to look into their finances to cover this shortfall. The Committee requested that the Department furnish it with a comprehensive project implementation plan for the intervention to supply water to communities by February 2014 in the Bushbuckridge Local Municipality.

The Committee pointed out the need for all stakeholders to indicate clearly on any material risks that may affect the completion of the Inyaka Water Treatment Works. The Rand Water Board indicated that the main risks identified included water metering, operations and maintenance in the long-term by the BLM once the intervention was complete and the future supply of electricity. The MCoGTA highlighted financial viability and the retaining of the financial and technical skills in the municipality. Furthermore, expenditure on the infrastructure grant funding allocated to the BLM needed to be improved (2012/13 Municipal Infrastructure Grant total expenditure was only 60%).

6. Findings

The Standing Committee on Appropriations made the following findings:

6.1. The revised completion dates for the Nandoni Distribution Network and the Inyaka Water Treatment Works were December 2013 and August 2013 respectively.

6.2. The Department of Water Affairs was still in the process of finalising negotiations with private land owners whose land was along the route of the Nandoni Distribution Network (Valdezia) pipeline. The DWA indicated that the land matter in the Valdezia pipeline construction area should be finalised with two months.

6.3. The Committee noted the significant increase in the personnel expenditure for operating water schemes in the Vhembe District Municipality and the lack of skilled personnel in its water schemes.

6.4. Half the households in the Vhembe region do not have access to piped water and a significant portion of the backlogs in access to water emanate from the lack of operations and maintenance of water infrastructure.

6.5. The Committee found the lack of an integrated skills plan by the Department of Water Affairs as a major concern. There was no skills plan in place to address the need for specialist welders at the Nandoni pipeline project.

6.6. The Department of Water Affairs and the Mpumalanga Department of Cooperative Governance and Traditional Affairs committed to the completion target date of February 2014 for reticulation systems which will ensure continuous (24 hour) water access for communities in the Bushbuckridge Local Municipality.

6.7. The Committee welcomed the Memorandum of Understanding on providing water services concluded between the Minister of Water Affairs and the Premier of the Mpumalanga Province and commends the coordination of work by the Mpumalanga Department of Cooperative Governance and Traditional Affairs, National Department of Cooperative Governance and Traditional Affairs and the Department of Water Affairs in rolling out water services infrastructure in the Bushbuckridge Local Municipality.

6.8. The existing reservoirs in the Inyaka Water Scheme supplying the Bushbuckridge area were originally designed for farm irrigation systems and will need to be upgraded to ensure water from the reservoirs is suitable for household consumption and thus accessible to the surrounding communities.

6.9. The Committee welcomed the intervention of Rand Water Board and Mpumalanga Economic Growth Agency in upgrading the existing water reservoirs and water pipelines the Bushbuckridge Local Municipality and thus accelerating the rollout of water infrastructure.

6.10. There was a significant increase in the debt owed by the Bushbuckridge Local Municipality (BLM) to the Bushbuckridge Water Board which was reported as R190 million in the Committee’s 2011 oversight visit and is now at R300 million.

6.11. The Committee welcomed the work undertaken by the Water Research Council. The Committee noted that the findings of studies and research activities undertaken by the Water Research Commission were not integrated in the planning activities of the Department of Water Affairs and thus found limited expression in the implementation of water projects.

6.12. There was a need to enhance planning for the delivery of water services at local government level and that generally there was a lack of Water Master Plans in Water Service Authorities.

6.13. There were Service Level Agreements being developed between the Department of Water Affairs and its Internal Construction Unit and the agreements would include the imposition of penalties for poor performance.

6.14. Poorer municipalities were likely to adopt consultant-driven high technology water infrastructure solutions in their areas of jurisdiction due to a lack of internal technical capacity. The adoption of expensive technologies in municipal water systems will pose a significant financial and skills burden on the sustainability of operations and maintenance of these water schemes.

7. Recommendations

The Standing Committee on Appropriations, having taken the deliberations with the abovementioned stakeholders into consideration, recommends as follows:

7.1. That the Minister of Water and Environmental Affairs should ensure the following:

7.2. That the Department of Water Affairs submit a detailed progress report for the construction of the Nandoni pipeline, inclusive of the targeted dates for the completion of the reticulation of water from the Nandoni bulk water distribution system to communities. This report should be inclusive of possible challenges that could delay progress.

7.3. That the Department of Water Affairs consider the development of a comprehensive skills plan for its entire water infrastructure programme.

7.4. That the Department of Water Affairs submit a report on the litigation case on the Nandoni Distribution Network.

7.5. The Department of Water Affairs consider developing an operational mechanism in its planning and implementation procedures to incorporate the outcomes of the study and research activities of the Water Research Commission.

7.6. That the Department of Water Affairs consider extending partnership agreements such as the concluded Memorandums of Understanding (MoUs) between Mpumalanga Province and the Department of Water Affairs, to other provinces as well, so as to expedite the rollout of water services infrastructure.

7.7. The Department of Water Affairs consider putting in place measures to ensure that capacity for operations and maintenance of water infrastructure is in place following the installation and completion of the bulk water infrastructure in the Nandoni Water Scheme (Vhembe District Municipality) and Inyaka Water Scheme (Ehlanzeni District Municipality).

8. Conclusion

All the requested reports as set out in section 5 above need to be submitted to the National Assembly within 60 days of this report being adopted in the House.

Report to be considered.