ATC160506: Report of the Portfolio Committee on Water and Sanitation: Consideration of the 2016-2017 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, and Catchment Management Agencies, dated 4 May 2016

Water and Sanitation

REPORT OF THE PORTFOLIO COMMITTEE ON WATER AND SANITATION:  CONSIDERATION OF THE 2016-2017 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,  AND CATCHMENT MANAGEMENT AGENCIES, DATED 4 MAY 2016

 

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 National Treasury allocations to the Department, the revised Strategic Plan for the period 2015/16 to 2019/20, and the Annual Performance Plans for the 2016/17 to 2018/19 financial years of the Department. The Entities of the Department comprises, the Trans-Caledon Tunnel Authority (TCTA); the Water Research Commission (WRC); Catchment Management Agencies (CMAs) namely Inkomati-Usuthu and Breede-Gouritz Catchment Management Agencies. The TCTA and WRC presented their respective Corporate Plans for 2016/17 to 2019/20 financial years. The CMAs presented their respective Annual Performance Plans (APP) for 2016/17 financial year.  This report details the findings and recommendations of the Portfolio Committee after engaging the Department and the Entities on the 6th and 7th April 2016.

 

 

 

 

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, is further envisioned in the National Development Plan, Medium Term Strategic Framework 2014 to 2019 (MTSF), phased out Millennium Development Goals (MDGs) and the post-2015 Sustainable Development Goals (SDGs). 

 

3.1 National Development Plan

 

The Department has devised a number of indicators over the medium term to contribute to the broader goal and vision as highlighted in the National Development Plan:

 

• Establishing a Water and Sanitation Infrastructure Agency;
• Developing a comprehensive investment programme for water-resource development, bulk-water supply and wastewater management;
• Assessing requirements to achieve universal access to water and sanitation services;
• 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;
• Reviewing and completing water and sanitation norms and standards, together with the financial provisions to meet these;
• Devising a 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.

 

 

 

 

3.2 Outcomes as per the Medium-Term Strategic Framework (MTSF)

 

These 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.

 

The realisation of these Outcomes are reflected in the work of the Department through its five (5) programmes, which are further highlighted in the sections relating to respective programmes (sections 5.2 to 5.5).

 

3.3 Role of the Department in the Presidential Infrastructure Coordinating Committee

 

In addition to the above initiatives to meet the goals outlined in the NDP as well as the Outcomes highlighted in the Medium-Term Strategic Framework, 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 improving management of water infrastructure

4.  Budget allocations over the medium-term in respect of strategic outcome oriented goals

 

To systematically attain the goals of the Department, the Department 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. The Department of Water and Sanitation, in its reporting of budget votes delineates the voted funds of Vote 36 (Main Account) 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 WTE reports to the Department, the WTE can also increase its revenue to undertake its work, by selling bulk water to mines and local government.  The WTE is also able to raise loans for big projects at favourable rates.

 

4.1 Overall allocations over the medium-term expenditure framework

 

Over the medium-term, the spending by the Department is estimated to decrease from R15 746.6 billion in 2015/16 to R15 245.2 billion in 2016/17. This represents a nominal decrease of R501.4 million (3.18 per cent), but only R1 445.3 billion (9.18 per cent) in real terms (taking inflation into account). Table 1 below reflects the nominal and real percentage change of budget allocations over the medium-term.

 

Table 1: Overall Budget Allocation

Programme	Budget				Nominal Rand change	Real Rand change	Nominal % change	Real % change
R million	2015/16c	2016/17	2017/18	2018/19	2015/16-2016/17		2015/16-2016/17
P1: Administration	1 487.5	1 659.5	1 691.9	1 778.4	172.0	69.3	11.50	4.66
P2: Water Planning and Information Management	744.0	841.8	856.3	904.5	97.8	45.7	13.15	6.14
P3: Water Infrastructure Management	11 815.8	11 696.4	12 779.2	13 757.9	-  119.4	-  843.6	-1.01	-7.14
P4: Water and Sanitation Services	1 414.7	701.9	379.3	380.4	-  712.8	-  756.3	-50.39	-53.46
P5: Water Sector Regulation	284.6	345.6	331.6	338.5	61.0	39.6	21.43	13.92
TOTAL	15 746.6	15 245.2	16 038.3	17 159.7	-  501.4	- 1 445.3	-3.18	-9.18

 

4.1.1 Core issues and priorities in relation to allocations

 

Given the constraints on the fiscus as well as the little increase in allocation over the medium-term as depicted in the Table 1 above, the Department has had to ensure that focus and priority is given to the core issues defined in the mandate, namely:

 

• Delivering on time and quality in respect of Water Resources Infrastructure;
• Planning for and addressing water demand management;
• Ensuring water quality enforcement and ecosystem protection; and
• Driving the delivery of water and sanitation services and addressing water sanitation backlogs.

 

In this regard and to align its work to the core issues noted above, the Department, during its strategic planning sessions, considered the following as critical priorities to guide its work over the medium-term:

 

• Dealing with issues around equity by prioritising water use licensing; ;
• ‘Intensifying’ the use of conditional grants in local communities through support to the five (5) pillars of the ‘Back to Basics’ Programme;
• Reconsidering and ensuring alignment of the mandates and focus areas of the directorates of the Department and the Entities;
• Ensuring that the Department focuses on its mandate for policy, regulation and providing leadership to the sector;
• Building the capacity through the use of agencies/entities as implementation agents – consideration to be given to the establishment of a Water and Sanitation Infrastructure Agency, as an entity of the Department;
• Considering the merging of certain Water Boards, where necessary, in view of the capacity constraints and the governance costs associated with separate Boards;
• Strengthening supply chain processes/models and budget prioritisation to ensure supportive supply chain processes;
• Devising a strategic demand management plan in line with master plans that resolve multi-year project issues;
• Managing budgets  in line with approved master plans; and
• Enhancing governance, control and internal operations so as to get the basic right and achieve a clean audit outcome in the near future for the Main Account and Water Trading Account.

 

4.2 Overall budget allocations over the medium term within programmes and plans of the Department

 

Over the medium-term, the budget by the Department is estimated to decrease from R15 746.6 billion in 2015/16 to 15 245.2 billion in 2016/17.  Over the medium term, the Department will continue to focus on water infrastructure, including raw water infrastructure such as dams and canals, bulk infrastructure, such as treatment works, and water services infrastructure, such as reservoirs and pipelines to households.  This work is mainly budgeted for in Programme 3: Water Infrastructure Management, which constitutes an average 78.1 per cent of the Department’s total budget over the medium term.  In 2014/15, there was an underspending in the Regional Bulk Infrastructure Grant due to delays in finalising implementation plans by newly appointed implementing agents.  All infrastructure projects have since been consolidated under Programme 3: Water Infrastructure Management, to coordinate their management.

 

In addition, a portion of the Regional Bulk Infrastructure Grant has been converted to a direct grant to municipalities, totalling R5.8 billion over the Medium Term Expenditure Framework (MTEF) period, as a Cabinet approved reprioritisation within the grant.  This allows municipalities which are functioning well to take full responsibility for their infrastructure grants, and frees up the Department to use the indirect component of the grant to complete infrastructure projects on behalf of low capacity municipalities.  Infrastructure projects are funded by transfers funded through the WTE, the Regional Bulk Infrastructure Grant, and the new Water Services Infrastructure Grant.  For technical reasons, in the 2016/17 financial period, the Municipal Water Infrastructure Grant, the Water Services Operating Subsidy Grant and the Rural Household Infrastructure Grant will be merged into a single grant, the Water Services Infrastructure Grant, which will be used for reticulation and off-site solutions in municipalities with low capacity.

 

The Department will also replace the bucket sanitation system, improve its regulatory function and continue with efforts to provide drought relief to affected communities.

 

4.3. Overview of programme descriptions, financial resource considerations, outcomes and selected performance indicators and targets

 

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.

 

4.3.1 Programme 1:  Administration

 

Programme 1: Administration 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 659.5 million in the 2016/17 financial year, which constitutes 10.1 per cent of the overall departmental budget. To effectively undertake this component of its work over the medium term, the Department has identified the following strategic objectives and targets with the requisite budget to attain effective service delivery:

 

• Ensuring targeted percentage of procurement budget to be spent on qualifying small enterprises and exempted micro enterprises – 30 per cent (2016/17); 50 per cent (2017/18) and 70 per cent (2018/19);
• Working toward an efficient, effective and high performing organisation – an unqualified audit outcome on the financial and non-financial performance data from 2016/17 onwards, with progressive work toward a clean audit for both the Main Account and Water Trading Entity;
• Supporting the national water and sanitation agenda with targeted and sustained African and global cooperation – approved 5-year Africa and global international relations programme in 2016/17; annual analysis of the implementation of the approved African and global international relations programme in 2017/18 and annual analysis of the implementation of the approved Africa and global international relations programme in 2018/19; and
• Supporting the water and sanitation developmental agenda to ensure informed and empowered communities and responsive government at all spheres – this will include an annual assessment of progress against the Partnerships, Communications and Stakeholder Relations Programme over the medium-term.

 

4.3.2 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 R841.7 million in the 2016/17 financial year, which constitutes 5.5 per cent of the overall departmental budget. 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:

 

• Ensuring the maintenance of a reliable equitable water supply by completing a record of decisions for seven raw water projects by March 2018;
• Generating information that is used to inform decisions on programmes for water management by improving the monitoring of water resources through the implementation of the water monitoring strategy in prioritised catchments by March 2017;
• Ensuring the protection of water resources by implementing an integrated water quality management strategy and determining resource quality objectives for eight (8) river systems by March 2018;
• Measuring the health of the ecosystem by continuously monitoring 98 rivers while completing up to six climate change vulnerability assessments for hydro climatic zones by March 2018; and
• Auditing water service authorities within 27 priority district municipalities on their delivery of water and sanitation, as referenced in water services development plans and developing investment frameworks for the 27 priority district municipalities by March 2018.

 

To ensure the realisation of Outcome 10, the Department, within Programme 2:  Water Planning and Information, plans to develop and maintain a national water and sanitation master plan with a ten-year (10) year horizon.

 

4.3.3 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 programme has received the highest percentage of the entire departmental budget of the Department. This programme has received R11 696.4 billion in the 2016/17 financial year, which constitutes 76.7 per cent of the overall departmental budget. 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:

 

• Completing bulk water supply and sanitation services infrastructure projects to ensure adequate water availability and enhanced provision of sustainable and reliable water supply and sanitation services – 287 in 2016/17; 159 in 2017/18 and 149 in 2018/19;
• Assessing annually the National Asset Management Plan to ensure safe, reliable and sustainable water supply and water and sanitation services – the approved National Asset Management Plan targeted for 2016/17; and annual assessment on the implementation of the approved National Management Master Plan for the two outer years; and
• Expanding economic opportunities to create jobs for historically excluded and vulnerable groups through infrastructure projects – targets set at 4 512 for 2016/17; 3 500 for 2017/18 and 3 500 for 2018/19.

 

To ensure the realisation of Outcomes 6 and 9, the Department will continue to focus on the development of bulk raw water and water services infrastructure, within Programme 3: Water Infrastructure Development.  The medium-term budget for this programme constitutes an average of 78.1 per cent of the Department’s total budget, with the plan to complete over 500 small, large and mega projects over the medium term. 

 

4.3.4 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 R701 945 million in the 2016/17 financial year, which constitutes 4.6 per cent of the overall departmental budget.   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:

 

• Supporting the provision of water use in households and food production through the installation of 4200 rainwater harvesting tanks over the medium term;
• Supporting targeted rural development initiatives by financially supporting up to 3009 resource poor farmers over the medium term;
• Improving access to basic sanitation and ensure human dignity by eradicating bucket services in formal areas by March 2017; and
• Enhancing the provision of water and sanitation services by facilitating sector collaboration and coordinating intergovernmental relations on the provision of these services when required.

 

To ensure the realisation of Outcome 9 over the medium-term, the Department plans to, within Programme 4:  Water and Sanitation Services, eradicate the sanitation backlog in over 26 000 rural households and replace bucket sanitation in formal settlements.

 

4.3.5. 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 is allocated R345.6 million in the 2015/16 financial year, which constitutes 2.3 per cent of the overall departmental budget.  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:

 

• Improving efficiency and effectiveness in the delivery of water and provide dignified sanitation by establishing nine catchment management agencies and nine regional water utilities by 2017/18;
• Ensuring the equitable allocation of water resources for social and economic development over the medium term by processing 80 per cent of water use authorisation applications within 300 working days from the date of receipt;
• Strengthening regulation by implementing monitoring programmes for drinking water quality, wastewater quality and mine water quality whilst implementing measures in catchments with potential for acid mine drainage on an ongoing basis;
• Coordinating and monitoring compliance with standards, license conditions and regulations across all sectors to ensure that water resources are protected on an ongoing basis;
• Ensuring the effective enforcement of compliance with water legislation by monitoring, conducting investigations and providing legal support in cases of unlawful water use on an ongoing basis; and
• Creating an enabling environment for water regulation by revising the water pricing strategy and developing an economic regulation strategy by 2017/18.

 

To ensure the realisation of Outcome 10, the Department within Programme 5:  Water Sector Regulation, will develop a water and sanitation services regulatory tool that will assess the compliance of water users such as the mining, industry, agriculture sectors, as well as water service authorities.  Furthermore, plans are underway in finalising the institutional arrangements for water resource management by establishing all nine (9) Catchment Management Agencies and nine (9) wall-to-wall regional water and wastewater utilities.  The Department will also strengthen its regulatory function by finalising the pricing regulations for the full cost recovery of water schemes and continue with the process of establishing a water regulator.

 

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

 

5.1 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:

 

• Shortening the innovation value chain;
• Improving knowledge management;
• Mobilising innovative resources; and
• Increasing the internationalisation of South African water and sanitation service science and technology.

 

 

 

 

 

The selected performance indicators of the Water Research Commission include the following:

 

• Enhancing knowledge through new research;
• Increasing emphasis on projects that have a direct impact on the lives and livelihoods of communities through water related interventions;
• Building sufficient capacity to assist with the post-project sustainability of those interventions;
• Enhancing economic development in communities by supporting small, medium and micro-enterprises (SMME’s) in the water research and development sector; and
• Focusing 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 2016/17 is R293.3 million.

 

In respect of expenditure focus for the 2016/17 financial year, the largest allocation of the budget is the funding of Research and Development of an allocated amount of R198. 5 million. The remainder of the budget is allocated to fixed costs at R9.2 million; running costs at R11.3 million; human resource costs at R68.3 million; corporate expenditure at R2.9 million and capital expenditure at R2.5 million.

 

5.2 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 following strategic goals of the TCTA over the medium term, underpin their work:

 

• Delivering Ministerial directives relating to the planning, financing and implementation of bulk raw water infrastructure, in accordance with specifications and within agreed timelines and budget;
• Ensuring that all project activities to facilitate social transformation and build sustainable communities is undertaken by providing jobs and empowering women, youth and the disabled;
• Operating the business and its projects and processes in a cost effective manner, conscious of the imperatives of public finance management;
• Building the knowledge and capability of the organisation to support other water institutions, in pursuit of greater efficiencies in overall water management and water services delivery; and
• Ensuring the continuous availability of high calibre human capital for delivery on organisational mission into the future.

 

The National Development Plan envisages universal access to sufficient, and safe water and decent sanitation by 2030 for socio-economic growth. In line with this, the Trans Caledon Tunnel Authority will focus on the coordination of the national water and sanitation infrastructure strategic infrastructure project, which aims to address spatial imbalances by raising the level of service delivery in terms of access to and the quality of services in the under-serviced areas. TCTA will provide technical support to other sector institutions to enable them to deliver on their mandate, and contribute to Outcome 6 (an efficient, competitive and responsive economic infrastructure network) and Outcome 9 (a responsive, accountable, effective and efficient developmental local government system) of government's 2014-2019 Medium Term Strategic Framework.

 

In terms of its transformation strategy, the TCTA is expected to contribute through the following means:

 

• Developing skills;
• Creating jobs and employment of local labour within the area within which the infrastructure project is taking place;
• Alleviating poverty through the provision of employment;
• Providing economic opportunities to previously disadvantaged individuals through preferential procurement; and
• Developing black business through enterprise development, particularly women, youth and persons with disabilities.

 

Over the medium term, TCTA will focus on planning the second phase of the Lesotho Highlands Water Project, and finding a short term solution to Acid Mine Drainage in the Witwatersrand in Gauteng. These activities are expected to drive an increase in total expenditure at an average annual rate of 10.4 per cent over the medium term, driven by expenditure in Goods and Services, related particularly to operational and maintenance costs. TCTA plans to improve business processes over the medium term to deliver projects in a timely and cost effective manner through improving key internal processes, such as the turnaround time of the procurement of goods through increased efficiency. For projects where construction is completed, TCTA ensures the debt is managed over the lifetime of the project and repaid in such a manner that the tariff remains constant in real terms, ensuring the affordability to the user. The TCTA has 199 funded posts of which 158 are filled, and the vacant posts are expected to be filled over the medium term.

 

The TCTA received an 81.5 per cent annual increase in revenue between 2015/16 and 2016/17 from R4 369 billion to R7 931 billion. This is attributed to the Lesotho Highlands Phase 2 project, which is expected to start during the medium term.

 

By far, the biggest infrastructure project which TCTA will be engaging in within the 2016/17 financial year is the Mokolo Crocodile Water Augmentation Project, which has an estimated budget of R1.4 billion. Other major infrastructure projects the TCTA will be engaging in over the medium term, include the Vaal River Eastern subsystem with an estimated budget of R335.4 million; the Mooi-Mgeni transfer scheme, with an estimated budget of R184.3 million and Acid Mine Drainage projects on the Witwatersrand at R203 million.

 

5.3 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-Gouritz CMA.

 

The only source of funding of the Inkomati-Usuthu Catchment Management Agency’s (IUCMA) is a direct grant from the Department. The spending focus over the 2016/17 period will mainly focus on the following:

 

• Preventing and remedying water pollution as enshrined in Sections 19 and 20 of the National Water Act;
• Monitoring water quality network toward an integrated water quality management framework;
• Verifying lawful water use and associated compliance;
•  Finalising compulsory licensing, where necessary, to achieve Water Allocation Reform;
• Maintaining river flow and rainfall data loggers to support river operations; and
• Billing of water users (Water Resource Management charges).

 

In terms of their baseline budget, there was an increase from R76.7 million in 2015/16 to R79.3 million in 2016/17. Employee related costs of IUCMA, increased by 3 per cent from R45.9 million in 2015/16 to R47.3 million in 2016/17. In terms of the budget for Goods and Services, this increased by 12 per cent from R26.2 million in 2015/16 to R29.2 million in 2016/17. The greatest decrease in the budget is attributed to Repairs and Maintenance, which decreased by 59 per cent from R1.8 million in 2015/16 to R773 thousand in 2016/17. The capital outlay also decreased by 30 per cent from R1.4 million in 2015/16 to R1.03 million in 2016/17. The budget for Capital Outlay decreased by 1 per cent from R1.22 million in 2015/16 to R1.21 million in 2016/17.

 

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

 

In terms of their baseline budget, there was an increase of 1 per cent from R47.3 million in 2015/16 to R47.8 million in 2016/17. Employee related costs, increased by 11 per cent from R22.8 million in 2015/16 to R25.5 million in 2016/17. Goods and Services dropped by 20.4 per cent from R22.9 million in 2015/16 to R18.2 million in 2016/17. The repairs and maintenance decreased by the largest percentage by 80 per cent from R250 000 in 2015/16 to R50 000 in 2016/17. The capital outlay increased from R358 656 thousand in 2015/16 to R3 million in 2016/17, a budget increase of 736 per cent.  There was a 4 per cent increase in board related costs from R1 million in 2015/16 to R1.04 million in 2016/17.

 

6.  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 section below therefore provides a synopsis of statements made by Members of the Portfolio Committee (highlighted in bold), and the responses by the Department and Entities to the issues raised. 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.

 

6.1. Responses by the Department of Water and Sanitation issues raised by Members

 

6.1.1. Withholding by National Treasury of equitable share funding from defaulting municipalities

 

The Department noted that cost recovery needs to be done in a holistic manner, and that hybrid solutions to the problem of debt recovery from municipalities need to be sought. An example used was that in some instances, certain municipalities in using the Integrated Development Plans (IDPs) reflect high numbers of indigent residents. However, once audits of these were conducted, some of these numbers had been exaggerated. There needs to be greater collaboration with the Departments of Cooperative Governance and Traditional Affairs and National Treasury in this respect.

 

Some of the measures in place include the use of the Regional Bulk Infrastructure Grant (RBIG). Experience in the payment of drought relief funding has shown that in some cases, funds are only distributed at a later stage. As an interim measure in such cases, the RBIG can be used in emergency situations.

 

6.1.2 Debt owed by municipalities and water boards to the Water Trading Entity

 

During the budget vote briefings, the Chief Financial Officer for the WTE noted that there is an outstanding debt of R3.1 billion owed by municipalities and water boards. The recovery of this debt will be paramount if the WTE is expected to fulfil all its targets. It was stipulated that if R2.9 billion is not recovered from municipalities and water boards, the WTE, would be unable to meet its targets over the medium term. Furthermore, it will be necessary for the WTE to reprioritise its programme priorities.

 

6.1.3. Investigation of new water technologies by the Department

 

There are strategic water partnerships in place to investigate new technologies in respect of efficient water use. The Water Research Commission is one such strategic partner, and has come up with scientific evidence of more efficient water use and recycling. The Coca Cola Company was cited as one such example wherein the Company uses steam rather than water for the cleaning of bottles as a way to reduce water usage.  However, there needs to be greater incentives for more efficient water use.

 

6.1.4. Extent of creation of sustainable job creation opportunities through infrastructure projects

 

 In terms of the sustainability of job opportunities in respect of infrastructure projects, dam construction typically takes five years, and the job opportunities last for the duration of the project. Within this time, the Department aims to maximise the utilisation of local labour and skills transfer, particularly in the areas of general building work, masonry, as well as welding up to artisan level. In instances where the skills development has progressed to artisan level, these trained persons are taken to other sites. However, the Department stressed the importance of investing and utilising skills of local people in communities for localised projects. If these are unavailable or limited, skilled artisans are brought onto the project from outside the area, with the proviso, that these skills are transferred to local community members.

 

6.1.5. Reasons for projection of construction of dams over a three (3) to five (5) year period

 

Dam construction typically takes three to five years and this is translated in the MTEF through projections. The projections for dam construction is small at the beginning of the MTEF cycle whilst the feasibility studies are conducted. However, once the project commences, the construction phase and materials are procured and these costs increase exponentially.

 

6.1.6. Functions and capacities of the internal construction unit within the Department

 

The Department is in the process of establishing a Water and Sanitation Infrastructure Agency. The configuration thereof and the transfer of human capital will take some time, but it is envisaged that the Trans Caledon Tunnel Authority will be merged with the Infrastructure Unit within the Department. The Department indicated that the Portfolio Committee would be briefed in full about the development and establishment of the Water and Sanitation Infrastructure Agency.

 

6.1.7. Reasons for the 50 per cent reduction in the maintenance budget of the Department

 

Previously, R1 billion was budgeted for in respect of maintenance. Historically, there has been a 50 per cent underspend in terms of maintenance. The Department attributed this underspend to previous lapses and weaknesses in the planning process of the Department. Previously, maintenance budget was based on estimates. These planning weaknesses in maintenance costs, within the Department, have since been resolved. The Department has submitted planning documents to National Treasury to motivate the incremental increase of the maintenance budget of the Department.

 

 

6.1.8. The efficiency of the Department’s internal regulator in determining water tariffs and whether plans are underway to establish a national regulator for water

 

 The Department’s internal regulator is effective. The establishment of the national water regulator issue arose out of the National Development Plan. The Minister has yet to make a determination in this respect. However, the Department does not necessarily want to model this regulator on the National Energy Regulator because water is regarded as a human right, while energy is not. Therefore, the National Water Regulator would have to consider this aspect of water.

 

6.1.9. Progress made in the transformation of the Catchment Management Agencies

 

The transformation of the Catchment Management Agencies (CMAs) are part of the realignment and adjustment process of the previous Minister for Water and Environment. The decision in the past was for the establishment of nineteen CMAs, which has since been reduced to nine. The Department is moving forward with caution in this respect, particularly in contentious issues around labour placement so as to ensure a smooth transition. Furthermore, the CMAs were initially intended to authorise water use licenses, but given the custodial mandate of the Minister in this regard, this function has been centralised and is only granted by the Minister. The CMAs will therefore play a processing role in respect of water use licensing through their accounting officers, that is, the Chief Executive.

 

6.1.10. Plans in place to attain an unqualified audit opinion status for the Main Account of the Department

 

The Department responded that plans are underway to move the Main Account to an unqualified status. In this regard, the Department has strengthened budget monitoring as well as appointing staff with the right skills in the audit committees of the Department to take this process forward.

 

 

 

 

6.1.11. Interventions by the Department in respect of water shortages in communal/rural areas and its impact on livestock

 

The supply of livestock rests with the Department of Agriculture, Forestry and Fisheries, and further support is provided by the Departments of Rural Development and Land Reform, Cooperative Governance and Traditional Affairs, as well as the private sector.

 

6.2. Responses by Water Research Commission (WRC) to issues raised by Members

 

6.2.1 Desalination technologies as a means to augment water shortages

 

 The core of desalination technologies is based on research conducted in the 1970s which requires upfront capital.

 

6.2.2 Skills development for the benefit of the public sector

 

The issue of skills development is a complex one. The WRC is also exploring options to train people, not only from the university environment, but also from the college environment as well. An example was cited of the partnership with the Agricultural Research Council and their extension officer programme, which empowers and provides extension officers with water management skills. There is no shortage of people, but a shortage of mechanisms to skill people with the appropriate water management skills.  The current backlog of technical skills within the country needs to be dealt with in a sustainable way.

 

6.2.3 Extent to which research of the WRC is disseminated and extent to which the water losses in the country are quantified

 

The South African Weather Services (SAWS) has a monthly, as well as daily advisories in respect of rainfall, which provides a real time water balance. The WRC is working towards a collaboration with the SAWS in this respect, and this will provide a dual platform for reports and web-based interaction. The WRC is hopeful that the web-based interaction will go live soon as an experimental version. This will be a really important planning tool. The expectation is that it could possibly extend to public use by 2016/17. The WRC is furthermore working closely with the Agricultural Research Council and mining sector in terms of reports which may require different kinds of inclinations and projections.

 

The Institute for Security Studies has developed a model whereby the plotted water schemes are being built in the planning phase, by using 2035 timeframes. It has been established that by 2035, the country will be in a water deficit of 1.1 cubic million litres. This gap needs to be addressed and the WRC has already completed extensive work in respect of water losses through water leaks and many of the solutions in this regard, have already been developed.

 

6.2.4 Measuring the quality of drinking water in South Africa and technologies which contribute towards water sensitive cities

 

 Thirteen (13) countries in the world have conducted surveys to quantify tap water quality within an urban environment. The Water Research Commission is assisting with the research in determining how to ‘do more with less’ water.

 

6.3. Responses by Trans Caledon Tunnel Authority (TCTA) to issues raised by Members

 

6.3.1 Extent to which the TCTA has shown cultural sensitivity to the removal of graves on the sites of infrastructure projects

 

TCTA reported that they are fully cognisant on the sensitive issue of relocation of graves.  To address this issue, TCTA has secured the assistance of the South African Heritage Resource Agency to guide them in this particular matter.  This is to ensure that the relocation of graves are done to the satisfaction of communities, with all cultural activities observed to ensure that by the time the dam is fully operational, there are no gaps in this regard.

 

6.3.2 Long term strategies in terms of Acid Mine Drainage

 

Cabinet has issued a timetable in respect of long-term Acid Mine Drainage (AMD) strategies, and TCTA has made their own contribution to the Minister in this regard. TCTA acknowledged that new technologies will be developed in the fields such as reverse osmosis and in the interim, lessons are being learnt as more acid mine drainage treatment plants become operational. However, it was noted that the current model of using the Vaal River system to dilute treated AMD water is not sustainable in the long term.

 

6.3.3 Provision of houses by the TCTA

 

It was noted that in the interest of improving the lives of relocated communities for the better, the provision of houses was not sufficient, as these houses end up being used for rental income by the new homeowners. The next stage is the development of entrepreneurial skills within affected communities through the provision of employment, which further enable skills development. An example was cited of an infrastructure project in Mooirivier whereby the TCTA made provision for 42 houses, as well as the promotion of business through aquaculture, due to the good fishing in those areas.

 

6.3.4 Increasing costs for Lesotho Highlands Water Project Phase 2

 

 The costs for the Lesotho Highlands Water Project (LHWP) project have increased substantially since the feasibility stage of the project. Costs projected at 2008 have increased at an alarming rate. The political climate in Lesotho cannot be discounted as a contributing factor towards the escalation of costs. Further cost drivers include the cash flow shifts year on year, as well as the re-costing of the major components of the project. Costs are expected to escalate even further when this project goes out to tender. Measures in place include the provision of a large contingency fund, which should mitigate some of the cost escalation to a reasonable amount.

6.3.5 TCTA construction unit and extent to which there is coordination with the construction unit within the Department

 

With the move toward the establishment of the Water and Sanitation Infrastructure Agency, the construction work of major projects will reside within this unit. The Water and Sanitation Infrastructure Agency is still a work in progress, and the Minister is still looking at the appropriate model for this agency.

 

 

6.3.6 Progress made with respect to the raising of the Clanwilliam dam wall

 

There are delays in respect of the raising of the Clanwilliam Dam wall project, but R2.2 billion has been set aside toward the completion of the project. However, it will take eight months to draw up the tender document, and may still be delayed as the country moves into a rainy season.

6.3.7 Skills development legacy of the TCTA with local communities at the conclusion of infrastructure projects

 

More than fifteen (15) young people have been employed within the organisation. TCTA tries to facilitate employment opportunities with other construction companies. The TCTA further provides bursary programmes, not just to university programmes, but also for college level programmes in the interests of promoting careers for young people within the water sector.

 

6.4. Catchment Management Agencies

 

6.4.1. Responses by Inkomati-Usuthu Catchment Management Agency (IUCMA) to issues raised by Members

 

6.4.1.1 Water supply interruptions in Barberton

 

The dam level at Barberton stood at 10 per cent and after intervention by the Inkomati-Usuthu Catchment Management Agency (IUCMA), dam levels were restored to 15 per cent. However, it was noted that water supply challenges were also attributed to issues regarding reticulation, which was the responsibility of the municipality.

 

6.4.1.2 Unresolved issues relating to Hangston Farm

 

The Hangston Farm issue revolved around issues raised by Mr Masego in accessing water for irrigation use.  Mr Masego complained about not receiving water from the dam that is situated on a neighbouring farm. However, the owner of the neighbouring farm argues that he has legal water rights and is entitled to the water that he is abstracting from the dam. This results in Mr Masego not receiving his allocation. The IUCMA would attend to this issue during the 2016/17 financial year and report back to the Portfolio Committee.

 

6.4.1.3 Reasons for high board related costs

 

This was attributed to a directive, which required that board members be paid a stipend which was paid on a monthly basis as opposed to being paid per meeting. This process also included alignment and standardisation of board related costs.

 

6.4.1.4 Reasons for high accommodation, telephone and legal costs

 

IUCMA concurred that the accommodation related costs were high, but also noted that part of the cost drivers in this respect was attributed to rental for satellite offices in sub-catchment areas. However, the IUCMA is negotiating with traditional authorities in this regard.

 

In respect of high telephone costs, these relate to roaming charges and variable charges due to the fact that the IUCMA operates over a trans-boundary area. However, National Treasury will be taking over negotiations for all cell phone contracts, which should standardise telephone costs.

The high legal cost was attributed to an amount which was budgeted for under legal fees. This case has since been resolved.

 

6.4.1.5 Resolution mechanisms for issues of non-compliance relating to pollution

 

The IUCMA noted that they had already taken municipalities to court over five water treatment plants, which had failed resulting in spillage of raw sewer and resulted in contamination. The challenge is that the capacity to prosecute in terms of environmental law, is limited. However, the Department is trying to find solutions in dealing with local government on this matter.

 

 

 

 

 

 

 

6.5. Responses by Breede-Gouritz Catchment Management Agency (BGCMA) to issues raised by Members

 

6.5.1 The reasons for annual performance targets set in terms of percentages, which are difficult to measure

 

The Breede-Gouritz Catchment Management Agency (BGCMA) reported that where targets are demand driven, it is difficult to predetermine targets in terms of numbers. The Department noted that they would work with BGCMA in addressing this matter.

 

6.5.2 Mechanisms in place to address illegal water use by farmers

 

It was reported that cases of illegal water use are reported and dealt with through the intervention of the Department of Water and Sanitation. The Department said that a consolidated report on the matter would be brought before the Portfolio Committee and submitted in writing.

 

6.5.3 High board related costs

 

The BGCMA noted that an annual figure of R1 million was budgeted for toward board related costs. However, following a directive from the Minister to pay board members a monthly stipend, this has been changed to a monthly stipend.  The execution of this matter needs to be unpacked further to ensure that the implementation of this directive is not incorrectly applied.

 

7.  Recommendations

 

7.1 Department of Water and Sanitation

 

With the establishment of a monitoring and evaluation unit in the Department, the Portfolio Committee acknowledged the improvement of systems to improve financial and non-financial performance of programmes and sub-programmes.  However, as part of its oversight function over Executive action of monthly and quarterly monitoring to execute its financial and non-financial performance, the Portfolio Committee will monitor the following:

 

7.1.1 Systematic implementation of expenditure in respect of the infrastructure grants on a monthly and quarterly basis;

7.1.2 Scrutiny of detailed plans to prevent unauthorised expenditure and under spending in the future;

7.1.3 Extent to which the Department strengthens the capacity of the Internal Audit Committee (human and financial resources) so as to ensure that the unit is the mainstay of evaluating the financial work of the Department, and to provide early warning risk reports to the Executive;

7.1.4 Examine whether a previous recommendation by the Portfolio Committee to allow for the rollover by National Treasury for the Bucket Eradication Programme was extended to allow the Department to meet its targets from December 2015 to June 2016;

7.1.5 Adherence by the Department and Entities to budgetary variation caps for all infrastructure projects as required by the Public Finance Management Act and National Treasury Regulations;

7.1.6 Ensuring that all critical vacant positions, especially in relation to Occupational Sector Dispensation (engineers and scientists) are filled;

7.1.7 Plans and programmes for improving compliance of waste water treatment works;

7.1.8 Evaluating the efficiencies of transfers by the Department to departmental agencies, public corporations and private enterprises;

7.1.9 Scrutinising Executive action at national level to improve the regulatory and compliance environment of water and sanitation in South Africa;

7.1.10 Monitoring the issuing of water use licenses and water allocations to ensure equity and equitable distribution of water to previously disadvantaged individuals and communities; and

7.1.11 Scrutinising collaborative engagement through the Intergovernmental Relations Framework, between National Treasury, and Departments of Cooperative Governance and Traditional Affairs, Water and Sanitation to work out a strategy or plan to address the debt owed by municipalities.

 

 

 

 

7.2 Trans-Caledon Tunnel Authority

 

7.2.1 To monitor the TCTA in terms of the submission of their BEEE strategy in terms of job creation and use of construction companies

 

7.3 Catchment Management Agencies

 

7.3.1  To monitor and scrutinise the oversight of the Department of Water and Sanitation in relation to its oversight of Catchment Management Agencies, particularly on issues of non-compliance for environmental transgressions by municipalities within the catchments; and

7.3.2 To receive a full briefing or written report from the Department and CMAs on National Treasury guidelines on payment/stipend of board members for work undertaken.

 

7.4 Water Research Commission

 

7.4.1 The WRC to disseminate research policy papers to all members of the Portfolio Committee;

7.4.2 An oversight visit should be organised to visit the WRC office to assess their work;

 

8.  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.