ATC150519: Report of the Portfolio Committee on Water and Sanitation: Consideration of the 2015-2016 Strategic Plans, Annual Performance Plans and Budget Allocation of the Department Of Water and Sanitation, Vote 36 And The Entities, namely Trans-Caledon Tunnel Authority, the Water Research Commission, Catchment Management Agencies and Water Boards, dated 13 May 2015

Water and Sanitation

REPORT OF THE PORTFOLIO COMMITTEE ON WATER AND SANITATION: CONSIDERATION OF THE 2015-2016 STRATEGIC PLANS, ANNUAL PERFORMANCE PLANS AND BUDGET ALLOCATION OF THE DEPARTMENT OF WATER AND SANITATION, VOTE 36 AND THE ENTITIES, NAMELY TRANS-CALEDON TUNNEL AUTHORITY, THE WATER RESEARCH COMMISSION, CATCHMENT MANAGEMENT AGENCIES AND WATER BOARDS, DATED 13 MAY 2015

1. Background

The Portfolio Committee on Water and Sanitation (the Portfolio Committee) having considered the request of the National Assembly to consider and report on the Strategic Plans, Annual Performance Plans (APPs) and budget allocations of the Department of Water and Sanitation (the Department) and the Entities (the Entities), tabled by the Minister of Water and Sanitation, and in terms of the Public Finance Management Act of 1999 (PFMA), as well as the Money Bills Amendment Procedure and Related Matters Act, 2009 reports as follows:

2. Introduction

The Portfolio Committee considered the Strategic Plans for the period 2015/16 to 2016/17 and the Annual Performance Plans for the 2015-2016 financial year of the Department of Water and Sanitation and the Entities reporting to it. The Entities comprise Trans-Caledon Tunnel Authority (TCTA); Water Research Commission (WRC); Catchment Management Agencies (CMAs); and Water Boards, namely, Amatola Water, Bloem Water, Lepelle Water, Magalies Water, Mhlatuze Water, Overberg Water, Rand Water, Sedibeng Water and Umgeni Water.

The Portfolio Committee has further also considered the adequacy of financial and skills resources for the implementation of these plans and interrogated the allocation received by the Department and the entities from National Treasury, the trends over the Medium Term Expenditure Framework (MTEF) both in terms of allocations and expenditure and, in the instance of the Entities, in terms of revenue collected.

This report details the findings and recommendations of the Portfolio Committee after engaging the Department and the Entities.

3. Work of the Department and its Entities aligned to Government Priorities

A central component of the interrogation of the work of the Department and the Entities is the extent to which the Department and the Entities translated its mandate to align it with the prescripts of the Constitution, 1998, Government priorities and its legislative mandate, such as the National Water Act, 1998 and the Water Services Act, 1997. The translation and alignment of government priorities by the Department and its Entities, as envisioned in the National Development Plan, and Millennium Development Goals (MDGs) and post 2015, Sustainable Development Goals (SDGs), are operationalised in the following Outcomes as contained within Government’s Medium-Term Strategic Framework (MTSF):

Outcome 6: An efficient, competitive and responsive economic infrastructure network;
Outcome 7: Vibrant, equitable and sustainable rural communities and food security for all;
Outcome 9: Responsive, accountable, effective and efficient local government system);
Outcome 10: Environmental assets and natural resources that are valued, protected and continually enhanced; and
Outcome 11: Create a better South Africa and contribute to a better and safer Africa and the world.

Chapter 4 of the National Development Plan (NDP) highlights various outcomes emanating from Government’s Medium-Term Strategic Framework. With regard to water and sanitation, the work of the Department of Water and Sanitation is contained within Outcome 6 (an efficient, competitive and responsive economic infrastructure) as well as Output 4 (maintenance and supply availability of our bulk water resources ensured). The Department has devised a number of indicators over the medium term to contribute to goals and visions in the National Development Plan. These relate to:

Establishing a national water resources infrastructure agency;
Developing a comprehensive investment programme for water-resource development, bulk-water supply and wastewater management, assessing requirements to achieve universal access, and prioritise a new dam on the Umzimvubu River;
Finalising the future institutional arrangements for the management of water resources;
Establishing regional water and wastewater utilities to support municipalities;
Carrying out reviews of existing water allocations in areas where new users are seeking access;
Urgent review of water and sanitation norms and standards together with the financial provisions to meet these;
Devising s dedicated national programme to provide support to local and sectoral efforts to reduce water demand and improve water-use efficiency in the agricultural sector; and
Investigating and implementing water re-use and desalination projects.

In addition to the above initiatives to meet the goals outlined in the NDP, the Department of Water and Sanitation is also a critical stakeholder in the Presidential Infrastructure Coordinating Committee (PICC). The PICC has categorised strategic integrated projects for all future key infrastructure development in South Africa. Within the National Infrastructure Plan, Strategic Integrated Plan 18 (SIP 18) is relevant to the water and sanitation sectors. SIP 18 talks to water and sanitation infrastructure, which is to provide for a 10-year plan to address the estimated backlog of adequate water to supply 1.4 million households and 2.1 million households to basic sanitation. The project will involve provision of sustainable supply of water to meet social needs and support economic growth. Projects will provide for new infrastructure, rehabilitation and upgrading of existing infrastructure, as well as improve management of water infrastructure.

3.1 Revised strategic goals and strategic objectives

To ensure that the Department’s five-year Strategic Plan, and Annual Performance Plan are geared toward national water security and sustainable universal access to water and sanitation services, linked with the longer-term NDP timeframe of 2030, the Department through the hosting of a Water and Sanitation Summit from 30 July- 1 August 2014, engaged with a range of stakeholders, and thereafter, together with its Entities revised and finalised specific Strategic Goals and Strategic Objectives, which are to ensure:

An efficient, effective and development oriented sector leader;
Equitable and sustainable water and sanitation services; and
Protection of water across the value chain.

3.2 Organisational environment

During the 2014/15 financial year, the Department finalised its review of its organisational structure. This required the incorporation of the sanitation function and the streamlining of the activities of the regional offices (previously under the Regional and Implementation budget programme). All planning activities have been integrated, with water resources and water services infrastructure integrated in one programme, and all regulation functions incorporated within the regulation budget programme.

A separation has been made of the activities that have been funded through the fiscus and those through the Water Trading Entity. In an effort to implement the Institutional Reform and Realignment, the Department undertook a rigorous exercise to separate its functions from those of the Catchment Management Agencies (CMAs). In the absence of all fully nine (9) established CMAs, the departmental provincial offices established proto-CMAs, with the anticipated establishment to fully fledged CMAs. This separation is now prominent within the WTE section. The establishment of all CMAs will see a reduction in the budget and departmental staff over the next three to five years as functions and staff are transferred to the CMAs.

4. Expenditure trends in relation to strategic outcome oriented goals

Over the medium-term, the spending by the Department is estimated to increase from R16.3 billion in 2015/16 to R18.2 billion in 2017/18. The projected spending of the Department over the medium-term shows that Programme 3: Water Infrastructure Development is allocated R12.4 billion, which is 76 per cent of the total allocation to the Vote. The emphasis on investment in water infrastructure development over the medium term period reflects South Africa’s intent to build a strong network of economic infrastructure designed to support the country’s medium- and long-term economic and social objectives. This investment in infrastructure within the water sector is a precondition for providing basic services such as water and sanitation to meet industrial, commercial and household needs.

Bulk Water Supply

The increase in the Water Infrastructure Development Programme is mainly driven by the development of bulk water infrastructure, which includes funds allocated for the construction of new dams and rehabilitating and repairing existing bulk infrastructure, including wastewater treatment infrastructure, in line with government’s renewed emphasis on infrastructure development. The Department has 229 funded bulk water supply and wastewater treatment infrastructure projects in various stages of the project cycle. The projects are aimed at increasing and securing the provision of water, and at eradicating service delivery backlogs. The projects provide mostly pipelines and treatment plants to connect dams with reticulation systems. This infrastructure investment will be funded in the Water Infrastructure Development programme, which is expected to grow by 16.7 per cent over the medium term.

21 of the 229 projects are mega infrastructure projects (total project cost of at least R1 billion), 10 of which are in the construction phase. Projected expenditure is R9.1 billion over the Medium Term Expenditure Framework period, and approximately 1 million people are expected to benefit. There are 60 large infrastructure projects (total project cost of less than R1 billion), of which 34 are in the construction phase. The projects are expected to benefit over 2 million people, and expenditure is projected at R10.9 billion over the MTEF period. Of the department’s 148 small infrastructure projects (total project cost of less than R250 million), 50 are in the construction phase. Expenditure on these projects is estimated at R7.1 billion over the MTEF period. The focus over the medium term will be on completing 76 new regional bulk water supply schemes.

In terms of 2015/16 allocations, the WTE (responsible for bulk water infrastructure) has allocated R1 175.0 billion for operations, maintenance and refurbishment of national water resources schemes. The Strategic Plan of the Department of Water and Sanitation highlights the various stages of infrastructure projects for the fiscal years 2014/15- 2016/17.

Interim and Basic Water Services

The Department plans to provide interim and basic water services to 266 000 households over the medium term. The interim and basic water services include providing water from tankers, boreholes, standpipes and pipelines, and refurbishing water treatment works that are no longer working. Costs are projected at R9.2 billion over the medium term through the Municipal Water Infrastructure Grant.

Sanitation solutions

During the medium-term, the Department will focus on the reduction of rural sanitation backlogs targeting existing households where bulk-dependent services are not available. It is anticipated that the departmental spending will increase on sanitation services by R1.6 billion over the MTEF, due to the shifting of the sanitation function from the Department of Human Settlements.

Over the MTEF, the Department plans to provide 40 070 households with sanitation services at a projected cost of R353.2 million through the Rural Household Infrastructure Grant. For the 2015/16 financial year, the Department plans to replace 88 127 bucket sanitation with adequate sanitation services in formal settlements. The Department further plans to eradicate the sanitation backlog in 12 596 rural households through the Rural Household Infrastructure Grant.

5. Overview of programme descriptions, resource considerations and selected performance indicators

Policy developments, legislation and other factors affecting expenditure within the Estimates of National Expenditure expand the scope and quality of information on government’s spending plans. Details of measurable objectives, outputs, output performance measures or service delivery indicators are provided as another step forward to setting ‘measurable objectives’ for each expenditure programme, in line with the PFMA.

To systematically attain the goals of the Department, the Department has categorised its work into the following five (5) programmes: Administration, Water Planning and Information Management, Water Infrastructure Development, Water and Sanitation Services and Water Sector Regulation.

Within the planning phase of allocations delineated for each programme, the Department, with its Entities devised specific objectives and targets for each of its programme. The objectives and targets are discussed under each programme in this report.

5.1 Overview of budget allocations over the medium term

The budget allocations over the medium term, reflected in the table below shows that the overall budget of the Department has increased from R12 939.7 billion in 2014/15 to R16 315.5 billion in 2015/16. This represents a nominal increase of R3 506 8 (27.1 per cent), but only R2 753.5 billion (21.3 percent) in real terms.

Programme	Budget				Nominal Rand change	Real Rand change	Nominal % change	Real % change
R million	2014/15	2015/16	2016/17	2017/18	2014/15-2015/16		2014/15-2015/16
Programme 1: Administration	1 499.8	1 526.2	1 686.2	1 744.0	26.3	- 43.6	1.76 per cent	-2.90 per cent
Programme 2: Water planning and Information Management	855.1	808.7	860.0	885.1	- 46.4	- 83.4	-5.43 per cent	-9.76 per cent
Programme 3: Water Infrastructure Development	9 268.5	12 435.8	13 063.3	14 731.7	3 167.3	2 597.7	34.17 per cent	28.03 per cent
Programme 4: Water and Sanitation Services	1 136.4	1 444.6	496.8	527.7	308.1	242.0	27.11 per cent	21.29 per cent
Programme 5: Water Sector Regulation	179.9	231.3	255.3	316.4	51.4	40.8	28.56 per cent	22.68 per cent
TOTAL	12 939.7	16 446.5	16 361.5	18 204.8	3 506.8	2 753.5	27.10 per cent	21.28 per cent

The projected spending of the Department over the medium-term shows that Programme 3: Water Infrastructure Development is allocated R12.4 billion, which is 76 per cent of the total allocation to the Vote. This is followed by Programme 1: Administration (9.2 per cent) and Programme 4: Water and Sanitation Services (9 per cent). Whilst Programme 1: Administration, experiences a real decrease of 3 per cent, the other two priority programmes, i.e. Programme 3: Water Infrastructure Development and Programme 4: Water and Sanitation Services, experience significant real increases of 28 per cent and 21 per cent, respectively.

5.1.1 Programme 1: Administration

The Administration programme provides policy leadership, advice and core support services, including finance, human resources, legal, Information, Communication and Technology (ICT) and management services, communication and corporate planning.

This Programme is allocated R1 526.2 million in the 2015/16 financial year, which constitutes 9.2 per cent of the overall departmental budget. This reflects a nominal rand increase of R23.6 million from the 2014/15 financial year, indicating a nominal change of just more than 1.8 per cent. The Corporate Services; Office Management and International Water Support sub-programmes received higher increases compared to the other sub-programmes.

Increases on these sub-programmes is earmarked for the establishment of a joint Water Commission and the development of international water resource management plans for shared water resources with Mozambique, Botswana and Swaziland. The increase is further earmarked to strengthen the regulatory function by revising, completing and submitting the National Water Amendment Bill to Parliament by March 2016, and the National Water and Sanitation Bill by end 2015/16 financial year.

To effectively undertake this component of its work over the medium term, the Department has identified the following strategic objectives with the requisite budget to attain effective service delivery:

Reducing the vacancy rate for engineers and scientists as well as develop skills through the graduate trainee programmes;
Engaging in stakeholder management and community participation programmes, media relations, marketing and advertising campaigns;
Developing the National Water and Sanitation Bill;
Establishing strategic partnerships with African and other countries; and
Implementing short-term and long-term solution projects as well as development of a proposal for environmental levy for the mining sector.

2 Programme 2: Water Planning and Information Management

The Water Planning and Information Management Programme ensures that the country’s water resources are protected, used, developed, conserved, managed and controlled in a sustainable manner for the benefit of all people and the environment by developing a knowledge base and implementing effective policies, procedures and integrated planning strategies for both water resources and water services.

This Programme is allocated R808.7 million in the 2015/16 financial year, which constitutes 4.9 per cent of the overall departmental budget. This reflects a nominal rand decrease of R46.4 million from the R855.1 million allocated to the Programme in the 2014/15 financial year, indicating a nominal change of just over 5.4 per cent. This translates into a real rand decrease of R83.4 million or 9.8 per cent between 2014/15 and 2015/16. The reason for the increase in spending between 2011/12 and 2014/15 is attributed to the development of reconciliation strategies and feasibility plans at different levels of completion containing comprehensive assessments of water supply and demand within catchment areas. Once these reconciliation strategies as well as feasibility plans are completed within the 2014/15 financial year, the amount in this programme for 2015/16 also decreases.

The Water Planning and Information Management Support (WPIMS) and Water Ecosystems sub-programmes received a higher increase compared to the other sub-programmes. Consequently, the WPIMS sub-programme is the fastest growing sub-programme over the medium term, due to the need to provide for the highly specialised engineering and scientific activities and projects, and for software licence and system developments required to maintain monitoring and information systems.

Determining the needs for Water Resources and Infrastructure Development through reconciliation strategies, feasibility and all town studies;
Undertaking through data capturing, monitoring, information systems and information analysis;
Undertaking through reserves determination, resources classification and quality objectives; and
Developing Water Services Bulk Master Plans and Water Services Development Plans and Water Conservation and Water Demand Management.

5.1.3 Programme 3: Water Infrastructure Development

The purpose of the Water Infrastructure Development Programme is to develop, rehabilitate and refurbish raw water resources and water services infrastructure to meet the socio-economic and environmental needs of South Africa.

This is the priority Programme of the Department. It is allocated R12 435.8 million in the 2015/16 financial year, which constitutes 76 per cent of the overall departmental budget. This reflects a nominal rand increase of R3 167.3 million over the 2014/15 financial year, indicating a nominal change of just over 34.2 per cent. In real terms, the budget allocation to this Programme increased by R2 597.7 million or 28 per cent between 2014/15 and 2015/16.

The Water Services Infrastructure sub-programme receives a higher increase compared to other sub-programmes. The higher increase within this sub-programme over the MTEF period is to implement the community infrastructure water projects, of which 49 municipalities have been prioritised by the Department of Water and Sanitation.

The Department of Water and Sanitation, in its reporting of budget votes delineates the voted funds of Vote 36 to that of the Water Trading Entity (WTE). Transfers from Vote 36 are given to the WTE to carry out the mandate of Programme 3: Water Infrastructure Development. Whilst the Water Trading Entity reports to the Department, the Water Trading Entity can also increase its revenue, to undertake its work, by selling bulk water to mines and local government. The Water Trading Entity is also able to raise loans for big projects at favourable rates.

To effectively undertake this component of its work over the medium term, the Department and Water Trading Entity has identified the following strategic objectives with the requisite budget to attain effective service delivery:

Infrastructure Development: Implement new augmentation projects and betterment of existing dams;
Regional Bulk Infrastructure: Develop bulk infrastructure, community infrastructure and refurbish infrastructure schemes; and
Operations and Maintenance: Implement dam safety rehabilitation, rehabilitate conveyance projects and develop asset management plans.

The focus of the Water Trading Entity over the medium term will be on improving the provision of bulk water through the development of new water infrastructure, and the operation, maintenance and refurbishment of existing infrastructure for water resources. The entity’s ongoing focus is on developing new water resources, thereby making sufficient water available to all users. This is directly linked to the objectives of the National Development Plan, which highlights the needs for a comprehensive water management strategy, including an investment programme for water resource development, bulk water supply and wastewater management for major centres. It is further supported by outcome six of government’s 2014-2019 medium term strategic framework (an efficient, competitive and responsive economic infrastructure network.)

Revenue for the entity is generated from raw water charges and transfers received from the Department of Water and Sanitation. Total revenue over the medium term is expected to increase by 7.4 % due to the completion of dams and bulk distribution systems, increasing the availability of water and therefore the amount of water sold. As a result, the implementation of new water resources infrastructure programme will account for 58.1 % of the entity’s total projected expenditure over the medium term.

Expenditure on new water infrastructure is expected to accelerate the completion of the De Hoop Dam, the raising of the Tzaneen, Clanwilliam and Hazelmere Dam walls; and phases 1 and 2 of the Mokolo augmentation project which is expected to increase the value of assets of the entity’s balance sheet to R118.9 billion in 2017/18. Expenditure in this area will decrease over the MTEF period, due to Cabinet approved budget reductions of R3.9 billion. The entity plans to rehabilitate 12 projects under the operations, maintenance and refurbishment of national water resources schemes programme in each year over the medium term, resulting in expenditure increasing at an average annual rate of 7.5 %. In addition, the entity plans to rehabilitate 16 dam safety projects to meet dam safety regulations.

Expenditure on interest, dividends and rent on land is expected to increase over the medium term due to higher royalty fees to be paid to the government of Lesotho for water delivered to South Africa, and the payment of interest on debt not capitalising during construction projects.

The WTE has 4205 funded posts, of which 3694 were filled and 511 were vacant at the end of November 2014. Personnel numbers were expected to remain constant over the medium term and as a result, expenditure on compensation of employees is set to increase moderately, by 4.1 % over this period due to inflationary adjustments.

The challenges faced by the Water Trading Entity resulted in the formulation of two critical performance indicators over the medium term. The WTE undertakes to reduce the number of days for outstanding debts owed by municipalities (R1.912 billion), as well as to increase expenditure on refurbishment and betterment of infrastructure.

5.1.4 Programme 4: Water and Sanitation Services

The purpose of the Water and Sanitation Services Programme is to ensure the provision of sustainable water and dignified sanitation services, including implementation support and advocacy.

This Programme is allocated R1 444.6 million in the 2015/16 financial year, which constitutes 9 per cent of the overall departmental budget. This reflects a nominal rand increase of R308.1 million from the 2014/15 financial year, indicating a nominal change of just over 27 per cent. In real terms, the budget allocation to this programme increased by R242 million or 21.3 per cent between 2014/15 and 2015/16.

The National Sanitation Services sub-programme receives the highest allocation of the total budget for this programme, compared to other sub-programmes, refer to Figure 2. The spending focus over the medium term will be on the eradication of the bucket system in formal areas and the provision of water and sanitation services by facilitating sector collaboration, and coordinating intergovernmental relations on the provision of these services as and when required. This is in line with the SONA 2015 in that the bucket eradication programme will create a number of job opportunities for local communities.

Financially supporting resource poor farmers and installing rainwater harvesting tanks for household productive use; and
Replacing bucket sanitation in formal settlements and eradicate sanitation backlog in rural households.

5.1.5 Programme 5: Water Sector Regulation

The purpose of the Water Sector Regulation Programmes is to ensure the development, implementation, monitoring and review of regulations across the water supply chain in accordance with the provisions of the National Water Act, 1998 and the Water Services Act, 1997.

This Programme receives the smallest allocation of the departmental budget, that is, R231.3 million, in the 2015/16 financial year. This constitutes a mere 1.4 per cent of the overall departmental budget. The allocation to the Programme reflects a nominal rand increase of R51.4 million from the 2014/15 financial year, indicating a nominal change of just over 28 per cent. In real terms, the budget allocation to the Water Sector Regulation Programme increased by R40.8 million or by 22.7 per cent between 2014/15 and 2015/16.

Establishing institutions, namely catchment management agencies, regional water utilities and infrastructure agency to enhance sustainability in water provision;
Processing and finalising applications for water use;
Developing the raw water pricing strategy and establishing economic regulation;
Conducting dam safety evaluations and monitoring compliance of water users such as mines, industry and agriculture;
Assessing water supply systems compliance with drinking water standards and wastewater treatment collector systems compliance with effluent standards; and
Investigating reported on non-compliant cases.

6. Overview of the work of the Entities reporting to the Department

6.1 Water Research Commission (WRC)

The mandate of the Water Research Commission (WRC) is to conduct research on water by determining needs and priorities for research, stimulating and funding water research, promoting the effective transfer of information and technology, and enhancing knowledge and capacity building in the water sector. Research is informed by government policies, needs, and international trends.

The strategic goals over the medium term are to focus on research projects in the following four areas:

Water resources management, which pays particular attention to research projects on water resources assessments and development, impacts on water resources, the protection of water resources, and policy and institutional arrangements;
Water linked ecosystems, which focuses on ecosystem processes, ecosystem management and use, and ecosystem rehabilitation;
Water use and waste management, which investigates water services, water supply and treatment technology, sustainable municipal wastewater management and sanitation, industrial and mine water management and sanitation, and health and hygiene; and
Water utilisation in agriculture, which pays particular attention to fostering water efficient production methods, wood and timber production, poverty reduction and wealth creation, and resource protection and reclamation.

Selected performance indicators of the Water Research Commission include the following:

To enhance knowledge through new research;
To increase emphasis on projects that have a direct impact on the lives and livelihoods of communities through water related interventions and build sufficient capacity to assist with the post-project sustainability of those interventions;
To enhance economic development in communities by supporting small, medium and micro-enterprises (SMME’s) in the water research and development sector; and
To focus on growing involvement of previously disadvantaged individuals by increasing the number of project leaders from the designated groups.

The WRC has two primary sources of income: the water research levy, receivable in terms of the Water Research Act, 1971; and leverage income, which is from research commissioned by clients. The total budget allocation of the WRC for 2015/16 is R295.6 million from the Department of Water and Sanitation. However, the WRC anticipates its total expenditure of R311.334 million for the 2015/16 financial year, which will be generated from levies and leveraged income.

The expenditure focus for 2015/2016 is reflected in the following programmes and projects: Water Resource Management R48.7 million; Water linked ecosystems R26.8 million; Water Use and Waste Management R50.2 million; Water Utilization in Agriculture R37.4 million; Empowerment Fund R2.7 million; and Other leverage funded projects R64.4 million.

Between 2010/11 and 2013/14, spending on compensation of employees decreased from R44.9 million to R37.5 million as the 2010/11 figure included the once-off buy-out of post-retirement medical aid liability of R12.4 million. Over the medium term, spending on compensation of employees is expected to increase, mainly to provide for inflation adjustments as personnel numbers are expected to remain constant over this period. The commission had a funded establishment of 59 posts, all of which were filled as at 30 November 2013.It was reported that for the 2015/2016 financial year, the WRC had created 14 new positions of which one (1) has been filled.

6.2 Trans-Caledon Tunnel Authority

The Trans-Caledon Tunnel Authority (TCTA) is a specialised liability management entity. It finances and implements bulk raw water infrastructure within an acceptable risk framework and in the most cost-effective way to benefit water consumers. The TCTA also plays an important role as an advisor in the water sector in the areas of project initiation, the restructuring of treasury activities and the review of water tariff methodologies.

The strategic goals of the TCTA over the medium term are to:

Participate in key water sector initiatives, which are focused on the sustainability of the water sector;
Contribute to the development of knowledge in the sector;
Implement projects in support of the government’s transformation agenda;
Raise finance for the construction of infrastructure and manage debt in the most effective way;
Construct infrastructure on time, within budget and in line with appropriate standards and in a sustainable way; and
Build and maintain human capital that is fully empowered to deliver on the vision and mission of the organisation.

The National Development Plan envisages universal access to sufficient, and safe water and decent sanitation by 2030 for socio-economic growth, which is in line with Outcome 6 (an efficient, competitive and responsive infrastructure network) of government’s 2014-2019 medium term strategic framework. The TCTA supports these policies by financing and implementing bulk water infrastructure, as well as providing support to other institutions such as water boards and water use associations, which enables them to deliver on their mandates and contribute towards Outcome 9 (a responsive, accountable, effective and efficient developmental local government system). The TCTA will contribute towards these objectives through the coordination of roles related to national water and sanitation infrastructure, and thereby offer vast potential to address the spatial imbalances by raising the level of service delivery and quality across the country, particularly in areas that are underserviced or un-serviced.

The TCTA received a 23.6% annual increase in revenue between 2011/12 and 2014/15, as a result of increased construction activities on projects, which brought in tariff revenue for the Department of Water and Sanitation for projects that had been completed. The Trans-Caledon Tunnel Authority’s revenue decreased to R6.824 billion in 2015/16 from R8.775 billion in 2014/15. The decline over the medium term at an average annual rate of 8.4% is as a result of as a number of major construction projects nearing completion.

The spending focus over the medium term will be on implementing capital projects, servicing current debts, and appointing consultants services to various projects. Expenditure is expected to grow at a slower rate over the medium term as projects near completion.

The TCTA has an establishment of 218 approved funded posts, of which 194 were filled and 24 were vacant at the end of September 2014. The TCTA intends to fill the vacant posts over the medium term to enable it to achieve government outcomes.

6.3 Established Catchment Management Agencies

Catchment Management Agencies (CMAs) are established in terms of Chapter 7 of the National Water Act. They are responsible for managing the water resources at a catchment level in collaboration with local stakeholders (with a specific focus on involving local communities in the decision making process). Other components of the work of the CMAs are to work toward meeting of basic human needs, promoting equitable access to water and facilitating social and economic development. The CMAs are listed as Schedule 3B entities in the PFMA and to date, the existing CMAs are the Inkomati-Usuthu CMA and the Breede-Overberg CMA.

The Inkomati-Usuthu Catchment Management Agency’s only source of funding is a direct grant from the Department. The spending focus over the 2015/16 period will mainly focus on the following:

Prevent and remedy water pollution as enshrined in Sections 19 and 20 of the National Water Act;
Water quality monitoring;
Water Use Authorisation and associated compliance;
Billing of water users;
Employee related costs;
River operations and stakeholder participation; and
Capacitation.

In terms of their baseline budget, there was an increase from R55.4 million in 2014/15 to R76.7 million in 2015/16. Employee related costs, which is allocated 60% of the budget of the Inkomati-Usuthu CMA, increased from R31.7 million in 2014/15 to R45.9 million in 2015/16. Goods and services rose from R19.4 million in 2014/15 to R26.2 million in 2015/16. Repairs and maintenance dropped from R2.1 million in 2014/15 to R1.8 million in 2015/16. Capital outlay increased from R741 553 in 2014/15 to R1.4 million in 2015/16. There was a nominal decrease in board related costs from R1.272 in 2014/15 to R1.216 in 2015/16.

The funding for the work of the Breede-Overberg Catchment Management Agency is derived in the form of a direct grant from the Department. Strategic objectives include: Water Resources Planning; Water Use Management; Institutional and Stakeholder Relations; Water Allocation Reform; Water Resources Protection; Information Systems; Strategic support and Management and Governance.

In terms of their baseline budget, there was an increase of 16% from R40.7 million in 2014/15 to R47.3 million in 2015/16. Employee related costs, increased by 31% from R17.5 million in 2014/15 to R22.8 million in 2015/16. Goods and services rose by 13% from R12.4 million in 2014/15 to R14 million in 2015/16. Repairs and maintenance decreased by 22% from R322 260 in 2014/15 to R250 000 2015/16. Capital outlay decreased from R9.4 million in 2014/15 to R9.1 million in 2015/16. There was a 16% increase in board related costs from R981 171 in 2014/15 to R1 million in 2015/16.

6.4. Consolidated Water Boards

Water boards derive their mandate from the Water Services Act (1997) and are categorised as national government business enterprises in terms of Schedule 3B of the Public Finance Management Act (1999). The primary activity of a water board is to provide bulk water and sanitation services to water services institutions in the designated areas in which they operate. Historically, water boards were established in areas with significant urban development, but rural areas have since been included. The services provided by water boards have also expanded over time to include the provision of retail water and sanitation services on behalf of municipalities, as well as management services and training. In 2014, the Minister of Water and Sanitation reduced the number of water boards from 12 to 9 as part of an institutional realignment of the sector and a reform measure to increase efficiency. In line with this, Botshelo and Pelladrift have been incorporated into Sedibeng Water, and Bushbuckridge Water has been incorporated into Rand Water.

Water boards are self-funded legal entities that have their own governance structures and assets. The National Development Plan envisages that, by 2030, all South Africans will have access to affordable, sufficient and safe water and decent sanitation, which is in line with Outcome 6 of Government’s 2014-2019 Medium Term Strategic Framework (an efficient, competitive and responsive economic infrastructure network). In contributing to achieving the goals of the plan, the boards will continue to assist the Department of Water and Sanitation to build bulk water infrastructure to enable them to provide bulk water and sanitation services in their areas of operation. Operational costs for the provision of bulk treated water will comprise the boards’ main expenditure over the medium term, as well as capital spending on bulk infrastructure required to meet the projected increases in water demand. The carrying value of assets is expected to grow to R42.7 billion over the medium term, as the boards are projected to invest R17.3 billion in capital infrastructure over this period. In providing bulk treated water, the boards’ largest spending items are energy costs for pumping water, raw water costs, staff costs and chemical costs. Thus, increased expenditure over the medium term is a result of high energy costs related to electricity price increases, and pumping requirements related to the volume of water and the distance over which it is pumped. Increased expenditure on compensation of employees over the medium term is a result of wages increasing at a higher rate than inflation, as well as an increase in the number of staff required to provide support services to municipalities.

Revenue collected by the boards is derived mainly from the sale of bulk water, sanitation, and other services to Water Service Authorities in their areas. It is expected that revenue from the sale of bulk water will increase at an average annual rate of 10.8 per cent over the medium term framework. The increase is due to increased water demand by municipalities and expansion in the boards’ areas of operation.

The Portfolio Committee, in its deliberations noted that the Water Boards, presented draft Strategic Plans due to the difference in closure of financial statements. Water Boards financial year ends end-June of each year. This was accepted by the Portfolio Committee who requested that once Water Boards completed their Strategic Plans, these would be presented at a later stage in the year.

7. Portfolio Committee Findings and Resolutions

This section summarises the Portfolio Committee’s observations, in engagements with the Department and the Entities as detailed in the sections above. The Portfolio Committee resolved that its findings, highlighted below, will form the basis of its oversight on key challenges related to the work of the Department and its Entities.

7.1. Department of Water and Sanitation

7.1.1. Alignment of targets and indicators to the Medium Term Strategic Framework of Government and the National Development Plan

The Portfolio Committee noted the critical factors informing the setting of targets and indicators, as presented, especially the constitutional imperatives and legislative mandates, the Medium-Term Strategic Framework of Government, National Development Plan 2030; the alignment of work to Government Outcomes; Obligations and commitments stemming from Multilateral Water Agreements and other International instruments such as the Millennium Development Declaration; and the obligations and priorities stemming from the 2015 State of the Nation Address.

7.1.2. Spend versus impact of Departmental programmes for last and current financial years

It was reported that in terms of Departmental spend, the preliminary figures amount to 84% of spending budget compared to 99% of the previous year. One of the reasons for a decrease in spending over the two years is that the transfer of the sanitation component and the inclusion of the budget was transferred on 1 November 2014. If the Department excluded the percentage of the budget related to sanitation, specifically the budget for bucket eradication, the Department would amount to a 93% spend for the current financial year. However, these are still preliminary figures as the books for the Department had not closed at the time of reporting to the Portfolio Committee. In terms of the impact of departmental spend for the current financial year, this information would be included in the Annual Report of the Department which would be tabled by September of this year.

7.1.3. The percentage of the budget allocated to maintenance

It was noted that there is historical underspending within the Department of Water Affairs, and later Department of Water and Sanitation of 50% year on year in relation to maintenance of infrastructure. Currently, the maintenance spend of the Department is not doing well. One of causes of not spending optimally, is the absence of maintenance contracts in place, and mainly reactively addressing problems of maintenance of all infrastructure. Engagements are currently underway for a rolling maintenance plan to ensure that infrastructure does not fall into disrepair

7.1.4. Challenges noted with optimal spending of transfers by municipalities through Municipal Water Infrastructure Grant (MWIG)

The funding is split into two (2), with one (1) direct transfer and other still managed by the Department. The direct transfers to municipalities is based on stringent performance and quarterly reports submitted and meeting the requirements in terms of Division of Revenue Act (DORA) with categorisations of municipalities falling within Schedule 5 and Schedule 6.

Due to challenges experienced, the issue of Schedule 6 came into effect, and those municipalities allocated under Schedule 6 that show improved performance are moved to Schedule 5, which allows the municipality to undertake all work using the Municipal Water Infrastructure Grant (MWIG).

With regard to the capacity of municipalities, the Department noted that there were challenges in respect of the capacity of municipalities. The Department cited an example of the Madibeng Local Municipality which was just placed under Administration in terms of Section 139(b) of the Constitution, which speaks to Provincial intervention in local government with the North West Provincial Government. The Magalies Water Board has been given the directive by the Minister for Water and Sanitation to intervene at the Madibeng Local Municipality in terms of water and sanitation services.

7.1.5. The varying costs of the Umzimvubu Project

The Umzimvubu Project has been on the books of the Department since 1968. The project is now in the process of design and the projected costs will increase incrementally over the MTEF, dependent on the phase the project is in. The Department will be allocating more funds to the project.

The current estimated costs are in excess of R2 billion for the first phase. This amount also depends on the social and commercial component of the project. . All capital costs for programmes must be recovered via a tariff that is set, and if there is a commercial uptake, the Department negotiates with the commercial up-takers to then make contributions towards capital costs. The Department in relation to the Umzimvubu Project is currently not at that stage yet, as the feasibility and design of the dam will decide upon where the various portions of the project will be funded from.

The challenge with the Umzimvubu project is that there is no commercial uptake, and it is therefore a purely social programme which services domestic use. All the funds must be recovered from the fiscus to fund this project, which poses a challenge in working at balancing the costs for this huge capital project. The future sustainability of the Umzimvubu Project is being explored by possibilities are being explored through public-private partnerships, with a specific focus on energy generating projects.

7.1.6. Differing costs for the budget of the Hazelmere Dam from the initial budget projected over the Medium-Term Expenditure Framework

Figures for this project changed from the initial budgeted amount of R262 million. Whilst this amount was allocated and budgeted for, the market costs increased due to changes in engineering technology. This resulted in changes to the mechanical sluice gates used previously to use of a new technology, the bio-piano key system, which was the first to be implemented in South Africa. The rationale for the shift in systems at the Hazelmere Dam is based on international experiences which showed that dam structures or systems fail on the mechanical side. The new system is used to allow for increased spill over of water, particularly in the event of floods.

This new system also required additional stabilisation of the dam through concrete than previously envisioned, which also contributed to the increased cost.

7.1.7. Promotion of Black businesses (‘Coloured’, Asian and African) in massive infrastructure and service delivery projects

In respect of the promotion of black industrialists, this was a programme largely driven by the Department of Trade and Industry. In respect of the water sector, there has not been much transformation. Key infrastructure and capital projects are still driven largely by three or four big (White) companies. There was a need, in the broader context of economic transformation, to work closely with the Department of Trade and Industry and other stakeholders and empowerment groups, to ensure that black business are incubated with larger companies to begin economic transformation in the promotion of black business.

7.1.8. Percentage of foreigners employed by the Department of Water and Sanitation

Whilst the Public Service Act allows departments to recruit specialised skills where the capacity does not exist in the country, the Department of Water and Sanitation will work closely with institutions of higher learning to ensure that over the long term period, adequate skills and human resources are available in the water and sanitation sector.

7.1.9. Sanitation solutions in formal, informal and rural areas

It was reported that there are still villages in South Africa that do not receive water, and that there is a proportion of the South African population which remains unserved. However, plans are underway to deliver services to those who do not have access to water and sanitation. Statistics which provide information on achievements and challenges of the Bucket Eradication Programme in formal dwellings as well as specific provinces are available and these shall be forwarded to the Portfolio Committee.

At present, the Department is not rolling out the bucket eradication programme in informal settlements as this number is a ‘moving target’ with estimated costs in the billions to implement, and this places undue pressure on the current fiscus. A coordinated approach has been identified for a collaboration between the Department of Cooperative Governance and Traditional Affairs and the Department of Water and Sanitation in dealing with this “moving target” called “informal settlements”.

7.1.10. Job creation

The Annual Performance Plan has very specific projects which indicate how many jobs are created through capital projects. Whilst some projects were in the construction phase, local labour was sourced, and these projects often have a duration of between three and five years. On completion of the project, the jobs comes to an end, but local labour is left with skills acquired through on the job training, which can be used to secure further jobs elsewhere.

7.1.11. Accountability of officials for various programmes if targets not met

The Department undertakes its assessment of its work and attainment of targets on a quarterly basis, whereby progressive and performance assessments are undertaken. There exists a need to implement very robust performance monitoring systems in order to monitor non-compliance and non-performance. This provides an early mechanism to detect official’s non-compliance and low performance in relation to targets set for the work of the Department.

7.1.12 Targets aligned to objectives

The Portfolio Committee stressed to the Department and its Entities the importance of uniformly creating indicators and targets which are easily monitored and evaluated.

7.1.13 Outcome of Blue and Green Drop assessments

The Portfolio Committee noted that water quality assessed as part of the Blue Drop programme and wastewater treatment assessed as part of the Green Drop programme, reflects limited outcomes. One of the challenges facing municipalities in attaining high scores in these assessments could be the lack of training, capacity shortages, and most importantly, the lack of process controllers at many of these schemes and systems.

7.1.14 Status of the Mokolo Crocodile Project

It was reported that the Mokolo Phase 1 project would be completed by November 2015.

7.2. Water Research Commission (WRC)

7.2.1. Impact of the research conducted by the Water Research Commission (WRC)

The research that it conducts also promotes and creates technologies which are tested and used by various stakeholders, especially in the sanitation space.

7.2.2. Placement of students who receive bursaries from the Water Research Commission (WRC)

The recipients of the bursaries primarily end up working for the private sector as the salaries within that sector are a lot more competitive. Members raised serious concerns on this issue arguing that state funds were used to fund these bursaries. There needed to be an agreement in place with the recipients of the bursaries so that they worked in the water sector, at national or local level for a period of time. The Portfolio Committee tasked the Director General to address this issue with the urgency it deserves given the demand of such skills in the local municipalities.

7.2.3. The work of the WRC to address engineering and scientific skills shortages

The WRC worked very closely with institutions of higher learning in this regard and were in negotiation with these institutions to recruit students and to devise curriculum which would fill the skills gap.

7.3. Trans Caledon Tunnel Authority (TCTA)

7.3.1. Mandate of the TCTA

The mandate of the TCTA is to facilitate water security through the planning, financing and implementation of bulk raw water infrastructure, in the most cost effective manner that benefits water users. Furthermore, the TCTA provides bulk raw water through the building of dams and pipelines but does not purify water. The TCTA works closely with the market including commercial stakeholders and public entities such as Eskom, SASOL and the mining and industrial sector particularly in respect of the assurance of water supply. In this regard, the TCTA works towards making the water sector financially viable. Operation and maintenance contracts are outsourced back to the Department of Water and Sanitation.

7.3.2. Mechanisms in place to penalise polluters

The penalties meted out against polluters is within the scope of the necessary pieces of legislation which defines ‘polluter pays principle’ on compliance issues. Penalties meted against polluters as well as remediation of polluted areas require serious engagement with all relevant stakeholders in terms of conviction and the impact it has on the lives of affected citizens.

7.3.3. Acid Mine Drainage (AMD) and the role of the TCTA

The main focus of the TCTA is to neutralise AMD and discharge it into the river system, whilst the feasibility study for a long term solution is being undertaken. To reduce polluted water to river systems, the TCTA will treat water to levels which will no longer pollute rivers, and which can be used for drinking. There is evidence that since the TCTA started releasing water into the Western Basin, fauna and flora has improved.

7.3.4. Measures in place to facilitate job creation of a permanent nature

When looking at job creation, the focus of the TCTA is on the backward and forward linkages of job creation within specific projects. The TCTA tries to leave a legacy where the skills acquired through the project can be used elsewhere.

7.4. Catchment Management Agencies

7.4.1. Measures in place to decrease water pollution in rivers around the country

In respect of pollution, very good work was done in the last year alone with 29 notices and 31 directives being issued to polluters. There are currently five criminal cases with the South African Police Services. It was noted that there are challenges with the National Prosecuting Authority investigating crimes of an environmental nature which in turn make it very difficult to prosecute these types of crimes

7.4.2. Basis for increase in staff costs in the Inkomati-Usuthu CMA

The Inkomati-Usuthu CMA reported that their current staff complement was 55 people and is anticipated to grow to 70 in the 2015/2016 financial year, which is the reason for the increase in staff costs.

7.5. Water Boards

7.5.1. Recovery of outstanding debt from municipalities by Water Boards

The water boards noted that a detailed report of the defaulting municipalities would be forwarded to the Portfolio Committee. Currently, municipalities owe Water Boards R2.1 billion.

7.5.2. The number of permanent placements of graduates of the Rand Water Academy

Rand Water Academy is a needs driven institution, which is based on the needs required by municipalities and other organs of state in the water sector. When called upon by municipalities on a short term basis, Rand Water works with them to identify local graduates who are taken on by the Academy, which provides training. There are contracts in place whereby the graduates are permanently placed in municipalities, thereby providing permanent solutions to the short term interventions being made with municipalities.

7.5.3. The role of Rand and Magalies Water Board in interventions at the Madibeng Local Municipality

It was reported that Rand Water only supplies part of the intervention at Madibeng with Magalies providing the other. However, a written response to the issue would be provided to the Portfolio Committee within two weeks.

7.5.4. Regulation regarding the water tariffs set by Water Boards across the country

Whilst the Water Services Act provides the function and form of the Water Boards, the Portfolio Committee requested a template which provided uniform information on the way in which Water Boards determined water tariffs. It was currently difficult to monitor if one did not have a composite reflection of tariffs determined by all water boards.

7.5.5. Rand Water’s interventions to address and avoid a repeat of last year’s water interruptions and shortages in Gauteng

Rand Water has been given the go ahead by National Treasury to explore hydropower to reduce energy requirement from Eskom by 10%. Rand Water is further trying to become more efficient in its energy and reduce energy consumption by trying to diversify the source of power across the power supply value chain. This would be split across Eskom as well as independent energy producers.

7.5.6. Gender Equity

The Portfolio Committee noted with concern that women are not well represented within the water boards’ management structures. The Portfolio Committee recommended that water boards should come up with plans to ensure that there is gender equity within their management structures.

8. Recommendations

The Portfolio Committee concluded its deliberations on the Strategic Plans, Annual Performance Plans and budgets of the Department, and its Entities and recommended to the Minister of Water and Sanitation that the following be undertaken:

8.1. Targets and indicators aligned to national imperatives

The Portfolio Committee in its engagement with the goals, objectives and targets outlined for a particular programme on an annual basis and quarterly basis, requires insights into how the budget was effectively prioritised for a specific function, with a broad goal of ensuring effective water and sanitation services to the citizens of the country. In its oversight function, the Portfolio Committee will monitor the performance by the Department and its Entities on targets and objectives defined for each of its programmes.

8.2. Standardisation of timeframes of submission of strategic and annual performance plans

The Portfolio Committee recommended that the Department of Water and Sanitation, together with National Treasury and the Department of Cooperative Governance and Traditional Affairs, begin to relook at the financial and strategic planning of the national Department to that of Water Boards and Municipalities. On the one hand, national Departments work on a financial year which concludes end-March each year, whilst water boards adhere to the financial timeframe of municipalities, which concludes end-June each year. This poses a problem in alignment of oversight by the Portfolio Committee.

8.3. Standardisation of tariffs

In South Africa, there are many different players in the provision of water and sanitation services. This ranges from the Department of Water and Sanitation; the Catchment Management Agencies, Water Services Authorities, Water Services Providers and Water Boards. Individual water charges vary across South Africa. Due to the large number of links in the water supply chain that are regulated in different ways and by different entities, final charges vary. The final charges paid by water service end-users incorporate a number of different elements that are themselves regulated in different ways and by different entities.

Since 1994, there have been continued efforts to reform and realign the water value chain so that it can efficiently achieve government’s objectives. These include ensuring equitable access to water and sanitation, the sustainable use of water for optimum social and economic benefit, and ensuring the sustainability of water resources and water services delivery, as outlined in the NWRS of 2004 and 2013. As part of this process, the Department of Water and Sanitation is looking at pricing, financing and economic regulation reforms in the water sector. The Portfolio Committee will monitor the progress of reforms in the water and sanitation sectors at all levels, and in this regard will also require quarterly reports from the Department and its Entities.

8.4 Establishment of water regulator

The Department and its Entities to provide progress reports on the development of a regulator that regulates the entire water value chain.

8.5. Review of legislation

Whilst the Portfolio Committee noted the importance and urgency of drafting policy, regulations, legislation and protocols, it argued that the substantive content was not necessarily aligned to the implementation thereof. The Department and relevant stakeholders were requested to ensure that the provisions found in legislation, regulation, protocols and policy documents are framed such that there are reasonable expectations in executing the mandate by relevant stakeholders.

8.6. Accreditation of certification of short term skills development training

The Department of Water and Sanitation and its Entities work with the Department of Labour to facilitate accreditation certificates to those workers who finished short-terms skills development training.

8.7. Service charges and operational and maintenance costs

Whilst South Africa has made good progress in improving access to environmental services (water, sanitation and waste management), further investment is necessary to continue this progress and improve access to, and quality of services. A key obstacle is the inadequate level and design of service charges, which do not cover operational and maintenance costs. There has been limited implementation of the increasing block tariffs required by legislation. In this regard, the Portfolio Committee will be monitoring the challenges experienced by the Department and its Entities toward addressing this issue.

8.8. Polluter pays principle

“Polluter pays principle” states that whoever is responsible for damage to the environment should bear the costs associated with it. However the extent to which this is enforceably applied differs from sector to sector. The Portfolio Committee therefore requests the relevant stakeholders at national and provincial level to consistently apply the principle so as to ensure continuous progress in reaching water quality across the country.

8.9. Establishment of all nine (9) Catchment Management Agencies

A report providing details on the establishment of outstanding water catchment agencies in line with the Second National Water Resource Strategy was noted and supported.

8.10. Water Resources Management

Water resources management – a national responsibility implemented through regional offices is not adequately integrated with the provision of water services, which is a municipal responsibility. The Portfolio Committee recommended that the Department and the Entities engage on the challenges within the broad water value chain to ensure that all citizens have access to water and sanitation services, irrespective of limitations of institutional arrangements.

8.11. Strategic Integrated Projects

As part of the programme of stimulating and creating jobs, government has developed a programme of 18 Strategic Integrated Projects (SIPs) largely focused on infrastructure development. The majority, if not all, have strong implications for water, requiring water availability for economic development, or the availability of potable water. The Portfolio Committee recommended that the Department and the Entities must therefore ensure that the water related elements of the projects are integrated into the project plans and are dealt with effectively. To enable the success of the SIPs programme, the Portfolio Committee recommends that the following issues must be urgently addressed – review of water use rights, implementation of water allocation reform, water build programmes and water pricing.

8.12. Challenges at the municipal level in relation to the delivery of water services

The Department, together with the CMAs and TCTA is responsible for water resources, bulk water services infrastructure and catchment or national water management, while local government has the constitutional obligation to provide water and sanitation services within their areas of jurisdiction. However, there are many challenges at the municipal level in relation to the delivery of water services. These challenges, include poor maintenance and refurbishment of infrastructure resulting in increasing interruptions in supply and high levels of unaccounted for water; poor management of wastewater treatment works resulting in deteriorating raw water quality; slow delivery of sanitation services; and unaffordable technology choices in some areas. The challenges are further compounded by the inadequate cost recovery in the water services sector. If, as the Department maintains that it is assisting local government institutions in improving on this component of its work, could the Department provide a progress report of the efficacy and sustainability of these initiatives?

8.13. Spending of Municipal Infrastructure Grant on water services

Despite the significant funding of water services, inter alia, the equitable share and the Municipal Infrastructure Grant (MIG), there is considerable evidence that a very low proportion of the equitable share is actually spent on water services. In addition, billing and cost recovery are generally poor, with some areas in essence, not being billed at all. As a result, daily operations and especially longer term maintenance of infrastructure are significantly underfunded. The result of poor municipal water management increases the demand of water quantities while decreasing raw water quality, both of which have major implications for water resources management, with associated financial and regulatory implications. The Portfolio Committee recommends that the Department and Entities engage with the Department of Cooperative Governance and Traditional Affairs and National Treasury, as well as local government institutions to address these challenges to ensure that in the long term, the work of the Department in relation to water resources management is not compromised.

8.14. Intergovernmental coordination

The role of both the Department and Water Boards in supporting local government with providing water services has been under the spotlight, and must be enhanced in the coming years. Intergovernmental coordination remains a significant challenge, as is seen through the lack of integration of water into/with other sector plans, and through poor coordination, between Departments. The Portfolio Committee recommends that the Department and Entities give further consideration to these challenges and provide a progress report on how it would assist in this regard.

8.15. Water use licensing

Water use licensing to support sustainable social and economic development is a critical challenge and the Portfolio Committee recommends that the Department provide a progress report on the status of water use licensing.

8.16. Regional bulk infrastructure projects in construction during the 2015/16 financial period

In interrogating the list of the regional bulk infrastructure projects in construction during the 2015/16 financial year as contained in the Annual Performance Plan of the Department, the Portfolio Committee recommended that the Department supply details around each project. The Portfolio Committee also noted that in relation to these projects, it will undertake oversight to verify the status and stages of identified projects in the course of the year.

8.17. Equitable Supply of Water

The Portfolio Committee raised concerns that after 20 years, there are still communities without access to water across the country. Equity issues in terms of water allocation are a serious issue in this country. The Department was requested to submit a detailed water reform strategy to address this matter.

8.18. Breakdown of all infrastructure grants related to the water sector

In relation to the infrastructure breakdown in terms of the grants provided by the Department, the Portfolio Committee required the progress, achievements and challenges and more specifically, the role of the Department as sector leader and regulator on improving some of the challenges.

8.19. Acid Mine Drainage

The Trans Caledon Tunnel Authority (TCTA), was in 2011 mandated by government through the Inter-Ministerial Committee, on Acid Mine Draining (AMD) to provide a short term solution to the AMD challenge experienced in the Gauteng region. Significant progress has been made since then. It is therefore imperative that the Department provides a progress report on AMD on a quarterly basis.

8.20. Capital Investment in new water and sanitation infrastructure

In respect of capital investment in new water and sanitation infrastructure for the entire value chain, including the refurbishment of existing infrastructure, this was estimated at R570 billion in 2012/13 over a period of ten years, but in 2013/14 this figured increased to R670 billion for the next ten years. This figure is growing at an annual rate of R100 billion therefore in 2015/16 it is estimated to be at R870 billion. These figures are further likely to change over the course of the medium-term expenditure framework. The Portfolio Committee therefore requests the Department and the entities to give a breakdown on the proposed budget and projects for the medium term in this regard.

9. Conclusion

The Portfolio Committee concluded its deliberation on the Strategic Plans, Annual Performance Plans and budgets of the Department, and its Entities and resolved to:

Support the plans as tabled;
Support the approval of Budget Vote 36.

Report to be considered.

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