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ATC181017: Budgetary Review and Recommendation Report of the Portfolio Committee on Water and Sanitation, dated 17 October 2018

Water and Sanitation

BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON WATER AND SANITATION, DATED 17 OCTOBER 2018
 

The Portfolio Committee on Water and Sanitation (hereinafter the Portfolio Committee), having considered the performance (financial and non-financial) of the Department of Water and Sanitation (hereinafter the Department), as detailed in Vote 36 of the 2018 Estimates of National Expenditure, Strategic Plans 2017-2020/21 and its Entities (Water Research Commission, Catchment Management Agencies, and Trans-Caledon Tunnel Authority),  as detailed in the 2016-2017/18 financial year reports as follows:

 

1.  INTRODUCTION

 

The Portfolio Committee met on 9, 10 and 11 October 2018 to receive substantive presentations from the Department of Water and Sanitation (DWS) and its Entities. The Portfolio Committee on Water and Sanitation, in undertaking oversight of the financial and non-financial performance of the Department, and its Entities, namely, Water Research Commission (WRC), the Trans-Caledon Tunnel Authority (TCTA), Breede-Gouritz Catchment Management Agencies (BGCMA) and Inkomati-Usuthu Catchment Management Agency (IUCMA) over the medium term, but specifically for the 2017/18 financial year undertook the following:

 

  • Ascertained and analysed the extent to which the Department and Entities complied with the legislative, budgetary, policy and constitutional mandate to ensure that the country’s water resources are protected, used, developed, conserved and controlled by regulating and supporting the delivery of effective water supply and sanitation. 

 

This entails adhering to the requirements of the Public Finance Management Act, 1999 and other relevant National Treasury guidelines and regulations. It is worth noting, that the mandate of the Department is derived from the National Water Act, 1998 (Act No 36 of 1998), the Water Services Act, 1997 (Act No 108 of 1997) and the Water Research Act, 1971 (Act No 34 of 1971). 

 

The Portfolio Committee on Water and Sanitation was particularly concerned by the lack of critical and constructive oversight of water boards in respect of their obligations under the National Water Act, 1998 and Water Services Act, 1997.  The definition of what constitutes an ‘emergency’, as reflected in the Public Finance Management Act, 1999, reads as follows:

 

  • The Public Finance Management Act, Number 1 of 1999 regulates the management of finances in national and provincial government.  It sets out the procedures for efficient and effective management of all revenue, expenditure, assets and liabilities.  It establishes the duties and responsibilities of government officials in charge of finances.  The Public Finance Management Act, 1999 establishes the duties and responsibilities of government officials in charge of finances. The Act aims to secure transparency, accountability and sound financial management in government and public institutions.

 

2.  BACKGROUND

 

The Constitution of the Republic of South Africa, 1996 empowers the National Assembly, through its Portfolio Committees, to ensure that executive organs of the state to the national sphere of government are accountable to it.  It further empowers the National Assembly to maintain oversight of the national executive within a particular sector, which for the purposes of this report, is water and sanitation. The Money Bills Procedure and Related Matters Amendment Act (Act No 9 of 2009) sets out the process that allows the Parliament of the Republic of South Africa to make recommendations to the Minister of Finance to amend the budget of a national Department.  In October of each year, portfolio committees must compile the Budgetary Review and Recommendation Report (BRRR) that assesses service delivery performance against available resources, evaluate the effective and efficient use and forward allocation of resources, and may make recommendations toward the use of resources.

 

3.  ALIGNMENT OF STRATEGIC PRIORITIES OF GOVERNMENT AND THE DEPARTMENT OF WATER AND SANITATION AND ITS ENTITIES

 

Currently, the policy drivers of institutional reform in the water and sanitation sectors are the National Development Plan, Outcomes reflected in the Medium-Term Strategic Framework (MTSF), and the National Water Resources Strategy.   The National Development Plan (NDP) Vision 2030 notes the centrality of water for social and economic development in South Africa for job creation, poverty alleviation and investments in infrastructure projects.   It calls for the establishment of a water infrastructure agency, water management institutions and water resources strategy, amongst other strategic priorities. 

 

The translation and alignment of government priorities by the Department and its Entities, as envisioned in the National Development Plan (NDP), and operationalised in within Government’s Medium-Term Strategic Framework (MTSF) outcomes, are as follows:  Outcome 4:  Employment; 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; Outcome 11:  Create a better South Africa and contribute to a better and safer Africa and the world; and Outcome 12:  Public service. Chapter 4 and 13 of the National Development Plan (NDP) highlights various outcomes emanating from Government’s Medium-Term Strategic Framework (MTSF).  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 bulk water resources ensured).

 

4. OVERVIEW OF THE WORK OF THE DEPARTMENT OF WATER AND SANITATION – KEY POLICY DEVELOPMENTS, BUDGET ALLOCATION, STRATEGIC PLANS AND ANNUAL PERFORMCE PLAN[1]

 

The Department identified and delineated four (4) programmes to undertake its work for the period under review. The myriad of challenges confronting the Department over the medium-term as seen over the last three years in respect of the following reflects a ‘frightening’ picture for the water and sanitation sector in the future. The following challenges were highlighted by the Department of Water and Sanitation:

 

  • The non-attainment of an unqualified audit opinion or a clean audit opinion;
  • Overall percentage performance of the Department is at 52 per cent in 2017/18, which is the same as was in the 2016/17 financial year;
  • Lack of or poor management and leadership;
  • Ongoing issues relating to accruals, payables, commitments, invoices, irregular expenditure, unauthorised expenditure and fruitless and wasteful expenditure;
  • Flouting of basic accounting principles, National Treasury Regulations and prescripts of the Public Finance Management Act, which in effect, demands whether the Department is serious about its constitutional mandate;
  • The slow pace of creating job opportunities in the water and sanitation sector;
  • Increased use of implementing agents and consultants to undertake major bulk water projects; and
  • The Department’s classification as a going concern; and Qualified audit opinions for the Main Account and Water Trading Entity of the Department of Water and Sanitation.

 

To effectively optimise its work, the Department has two accounts, under which it operates.  The Main

Account is the appropriated funds from the fiscus, and the Water Trading Entity.  Funding for the Water

Trading Entity, to undertake operations and maintenance as well as development of new infrastructure,

comes from revenue that is generated from raw water charges in terms of the water pricing strategy.   The Water Trading Entity also receives augmentation from the fiscus, via the Department through Programme 3: Water Infrastructure Development.  The Department of Water and Sanitation, as part of its systematic financial and non-financial planning of work over the medium-term organised its work into four programmes – Programme 1: Administration; Programme 2: Water Planning and Information Management; Programme 3: Water Infrastructure Development; and Programme 4: Water Sector Regulation.

 

4.1 Key policy developments and legislative changes[2]

 

The Department set out to undertake the following legislative developments and amendments for the period under review:

 

  • Development of the Water and Sanitation Policy Framework;
  • Development of the National Water and Sanitation Act;
  • Review and Implementation of the National Water and Sanitation Resources and Services Strategy (NWSRSS); Review of the Water Research Act; Review of the water pricing strategy; Development of the Funding Model; and Development of the National Water and Sanitation Master Plan.  

 

The Department, however in the period under review, failed to achieve majority of these targets with the exception of the Draft National Water and Sanitation Master Plan.

 

4.2 Overview and analysis of achievements of strategic oriented outcome goals[3]

 

This section compares the strategic outcome oriented goals of the Department with those of Government to assess alignment and general performance.  In aligning its plans with the Medium-Term Strategic Framework (MTSF) objectives, the Department set out to achieve five goals. These are:

 

  • Goal 1 - Enhanced and protected water as a resource across the value chain;
  • Goal 2 - Equitable access to reliable sustainable and acceptable water resources and water and sanitation services;
  • Goal 3 - An enhanced contribution to socio-economic development and transformation by the sector;
  • Goal 4 - An efficient, effective and development oriented water and sanitation sector; and
  • Goal 5 - Sound cooperative governance and an active and engaged citizenry.

 

To this end, the Department achieved these goals as follows: Goal 1 (60%); Goal 2 (40%); Goal 3 (50%); Goal 4 (50%); and Goal 5 (100%). From the statistics, it becomes clear that the Department performance is average across all goals, with the exception of Goal 5, which is fully achieved. This is of serious concern, as the Department failed where it matters most on Goal 3, which deals with socio-economic development and transformation. This means that water allocation reform is far from being realised and that inequality in respect of equitable access to water and its benefits will continue. 

 

5. OVERVIEW OF ACHIEVEMENTS AND CHALLENGES OF THE DEPARTMENT OF WATER AND SANITATION FOR THE 2017/18 FINANCIAL YEAR

 

For the year under review, the Portfolio Committee in its engagement with the Department and its Entities noted the achievements of the Department and its Entities, but was also disturbed by the systemic challenges, which showed a trend over the medium-term.

 

5.1 Achievements

 

During the 2017/18 financial year, the departmental annual performance report reflected the following achievements: 

 

5.1.1 Programme 1: Administration

 

The graduate training programme is essential to the recruitment, training and development of young professionals to address the twin challenges of skills shortage and succession planning in the Department.  Since its inception in 2007, the Learning Academy has awarded 842 bursaries in the science and engineering fields in 22 South African universities.  Of the 842, 410 were in engineering, 350 in sciences and 43 studied quantity surveys. 

 

On the Annual International Relations Programme, South Africa entered into training agreements, with Japan. Four (4) young people were trained in Japan.  Three (3) received Masters in Engineering and one (1) in International Relations.  South Africa received support to the value of R55 million from the Japan International Cooperation Agency (JICA). South Africa also received support from Belgium to the value of R2 million to support a pilot project on sanitation technologies in Alannah Bay Municipality. There is cooperation between South Africa and Botswana, who jointly monitor and manage the water quality and aquatic weeds in the upper Limpopo River; and there is cooperation between South Africa and Lesotho, in terms of the Lesotho Highlands Water Project.

 

5.1.2 Programme 2: Water Planning and Information Management

 

Government is faced with the challenge of protecting water resources on the one hand and the need to utilise water for social and economic development on the other hand.  The protection of water resources is essential to ensure water availability for current and future human use.  The National Water Act, 1998 (Act Number 36 of 1998) specifies a series of measures intended for such purposes. The water resource classes and resource quality objectives are examples of these measures.  For the period under review, the water resource classes and resource quality objectives for the Mvoti-Mzimkhulu river systems were determined.  This brings the total of protected water resources to eight (8) with the gazetting of the Upper Vaal, Lower Vaal, Middle Vaal, Olifants, Olifants-Doorn, Inkomati and Letaba at the beginning of the 2017/18 financial year.

 

For the period under review within Programme 2: Water Planning and Information Management, the Department of Water and Sanitation also highlighted the following:

 

  • The completion of bulk water supply and sanitation services infrastructure project plans;
  • The record of implementation decision was finalised for four (4) water augmentation projects – namely, Foxwood Dam, uMkhomazi water project, Phase 2A of the Mokolo-Crocodile (West) Augmentation Project and Berg-River-Voȅlvlei Augmentation Scheme;
  • An integrated planning approach between the development of water services and water resources is essential.  It is also important to support the realisation of 90 per cent (90%) reliable services by 2019 as required by government’s outcomes approach; and
  • The development of a 5-year reliability master plans for seventeen (17) municipalities within three (3) priority district municipalities.  These master plans provide a framework for the reliable implementation of water and sanitation services at local level and pipeline projects. 

 

 

 

 

5.1.3 Programme 3: Water Infrastructure Development

 

During the period under review, the Department continued with the provision of water storage and regional bulk infrastructure that assist municipalities with the connection to the resources.  A number of strategic water resource infrastructure projects, such as the Hazelmere Dam were implemented.  A number of water services infrastructure projects were implemented during the period under review.  Under the Regional Bulk Infrastructure Programme (RBIP), eleven (11) projects phases that were under construction, were completed.  A further forty-seven (47) projects were completed under the Water Services Infrastructure Grant.

 

5.1.4 Programme 4: Water Sector Regulation

 

For the period under review, the Department used various regulatory instruments to safeguard the interests of all water users, whilst also ensuring that the quality of water resources is protected.  To support this, the department formulated a draft concept note for the development of the Water Sector Regulatory Framework and Integrated Regulation Information System.  The objectives of this exercise are to develop a regulatory framework that will oversee the work of the water sector; and allow for the alignment and integration of the regulatory information management systems.

 

Furthermore, the Department for the period under review, also noted the following achievements in this programme:

 

  • Implementation of various mechanisms to curb and/or mitigate the contamination of the water resources resulting from various water users.  One such mechanism was the development of a mine water management strategy for the Crocodile (West)-Marico River System catchment area.  The coal, metal and mineral mining operations in the Limpopo water management area (WMA) were assessed;
  • As stipulated in the National Water Act, a user must apply for a water licence for any new water use that is not listed in schedule 1 or not covered by a general authorisation.  The regulations published during the previous financial year required the Department to finalise applications for water use within 300 days.  For the period under review, the department’s efficiency in processing applications has improved such that some water use licence applications could be finalised in less than 300 days;
  • A total of 712 water users were monitored for compliance with the legislative requirements;
  • The Executive Authority approved the business case for the establishment of an independent Economic Regulator as well as its proposed consultation schedule; and
  • During the period under review, a decision was taken to establish a single Catchment Management Agency (CMA).  A Government Gazette on the establishment of the single Catchment Management Agency (CMA), was published for public comment.  However, the establishment of a single CMA has been reviewed and negotiations with labour unions are under way.

 

5.2 Challenges

 

Whilst the Portfolio Committee recognised the achievements of the Department for the year under review, the following key challenges, among others, were highlighted in the 2017/18Annual Report:

 

  • Qualified audit opinions for both the Main Account and Water Trading Entity;
  • Irregular appointments of senior departmental officials, as contained in the “Report on an investigation regularity of the appointment of Deputy Directors-General at the Department of Water and Sanitation, compiled by the Public Service Commission, February 2015”;
  • An inability to reconcile accounting procedures in relation to accruals, payables, commitments, irregular and fruitless expenditure, and incorrect invoicing, amongst others;
  • Lack/no consequence management of transgressions by departmental officials; and
  • Non-compliance to the supply chain management prescripts, which lead to increasing cases or irregular expenditure.

 

6. OVERVIEW OF BUDGETARY ALLOCATIONS FOR THE 2016/17 AND 2017/18 FINANCIAL YEAR[4]

 

The Portfolio Committee noted that over the 2016/17 financial year, the final appropriations amounted

to R15 524 597 billion with actual expenditure of R15 635 428 billion.   For the 2017/18 financial year, the Department was allocated an amount of R15.6 billion, spent R15.1 billion, with an unspent amount

of R501 million. The Department spent 96.8 per cent compared to 100.7 per cent in 2016/17. 

 

6.1 Departmental spending as at 31 March 2018 – Main Account and Water Trading Entity

 

6.1.1 Main Account

 

The Department of Water and Sanitation, as part of its systematic financial and non-financial planning of work for the year under review organised its work into four (4) programmes, that is Programme 1: Administration; Programme 2: Water Planning and Information Management; Programme 3: Water Infrastructure Development and Programme 4: Water Sector Regulation.

 

The table below reflects the financial performance and economic classification of the Department:

Programme

Final appropriation

Actual expenditure

Variance

Percentage spent

 

R’000

R’000

R’000

%

Administration

        1 649 851

          1 998 676

     (348 825)

           12 1.1%

Water Planning and Information Management

           738 252

             653 262

          84 990

             88.5%

Water Infrastructure Development

      12 844 465

        12 146 247

        698 218

             94.6%

Water Sector Regulation

           374 881

             308 053

          66 828

             82.2%

Total

      15 607 449

        15 106 238

        501 211

             96.8%

Economic classification

 

 

 

 

Current payments

        3 151 211

          3 546 893

     (395 682)

           112.6%

Compensation of employees

        1 568 248

          1 535 641

          32 607

             97.9%

Goods and services

        1 571 419

          1 999 708

     (428 289)

           127.3%

Interest and rent on land

             11 544

               11 544

           -

           100.0%

Subtotal on current payments

        3 151 211

          3 546 893

        395 682

           112.6%

Transfers and subsidies

        8 420 569

          8 185 674

        234 895

             97.2%

Payment for capital assets

        4 035 669

          3 373 671

        661 998

             83.6%

Total

      15 607 449

        15 106 238

        501 211

             96.8%

Source: Department of Water and Sanitation, Annual Report 2017/18, pages 199 to 203

 

The under spending of R32 607 million in Compensation of Employees is mainly due to the vacant posts across all four (4) programmes.  The Department however, noted that it is in the process of reviewing the organisational structure. The overspending on Goods and Services is mainly due to the following payments, which were not budgeted for: War on Leaks Programme payments totalling R523 million; and the Polokwane Strategic Intervention Project totalling R166 829 million.

 

In as far as transfers and subsidies are concerned; R234 895 million could not be transferred during the year under review, mainly for the Regional Infrastructure Grant (RBIG) R35 998 million; Water Services Infrastructure Grant (WSIG) R24 227 million; Water Boards R76 154 million; and Komati Water Basin Authority (KOBWA) R86 254 million. The following municipalities – Cederberg with an amount of R4 613 million; Witzenberg with an amount of R13 372 million and Umzinyathi with an amount of R18 013 million, failed to comply with the prescripts of the Division of Revenue Act (DORA), which led to non-transfer of the Regional Bulk Infrastructure Grant funds by the department.

 

6.1.2 Water Trading Entity

 

The total operating deficit for the Water Trading Entity in 2017/18 financial year amounted to R572 million.  The revenue from the sales of water reflected an increase of eight (8) per cent when compared to the previous year; refer to the table below for details. However, liquidity remains a challenge for the Water Trading Entity (WTE) as it moved from 0.70:1 in 2016/17 to 0.80:1 in the 2017/18 financial year.  The table below reflects the revenue and expenditure for the period under review:

 

   

2018

R’000

  

2017 Restated

R’000

  

Change

  

% change

Revenue

  

12 647 195

 

11 663 972

 

 983 223

 

18.5%

Revenue from exchange transactions

  

10 990 552

  

10 162 582

  

 827 970

  

8.1%

Revenue from non-exchange transactions

  

1 656 643

  

1 501 390

  

 155 253

  

10.3%
                 

Expenditure

  

13 219 858

 

15 428 772

 

(2 208 914)

  

-188.0%

Employee benefit costs

  

1 191 130

  

 924 382

  

 266 748

  

28.9%

Operating expenditure

  

4 027 197

  

5 212 574

  

(1 185 377)

  

-22.7%

Repairs and Maintenance - Property, plant and equipment

  

 31 432

  

 480 943

  

( 449 511)

  

-93.5%

Impairment on financial assets

  

1 355 097

  

2 240 016

  

( 884 919)

  

-39.5%

Finance cost

  

4 656 241

  

4 627 737

  

 28 504

  

0.6%

Depreciation, amortisation and impairment

  

1 922 158

  

1 833 361

  

 88 797

  

4.8%

Loss on disposal of fixed assets

  

 36 603

  

 109 759

  

( 73 156)

  

-66.7%
                 

Surplus /(deficit) for the year

  

( 572 663)

  

(3 764 800)

  

3 192 137

  

206.5%

Source: Department of Water and Sanitation, Annual Report, 2017/18

 

7. ANALYSIS OF THE FINANCIAL STATEMENTS AND THE AUDITOR-GENERAL’S REPORT

 

The Department has two main accounts, namely, the Main Account and the Water Trading Entity. The analysis of financial statements is done per account.  This section focuses on contingent liabilities, unauthorised, irregular, fruitless and wasteful expenditures, among many other issues.

 

7.1 Main Account – Qualified Audit Opinion

 

The Auditor-General indicated that there is material uncertainty relating to the going concern or financial sustainability of the Department.  This accounted for the accruals and payables to the value of R2.005 billion, as at 31 March 2018.  Consequently, the Department will not be able to start any new projects in the medium-term. 

 

The table below provides information and analysis of the Main Account Financial Statements as audited by the Office of the Auditor-General:

 

Items

2017/18

2016/17

2015/16

Comments

Audit opinion

Qualified

Qualified

Unqualified

The Department has regressed in this regard.  The reasons for the qualified opinion are that amongst others, the financial statements for auditing were not prepared in all instances, in accordance with the prescribed reporting framework; nor were they supported by full and proper records, as required by section 40(1)(a) and (b) of the Public Finance Management Act.  Material misstatements of disclosure items identified by auditors in the submitted financial statements were corrected, but the uncorrected material misstatements and supporting records that could not be provided resulted in the financial statements receiving a qualified audit opinion.

Fruitless and Wasteful Expenditure

R16.1 million

R59 million

R64 million

The Department entered into contracts with implementing agents to construct capital infrastructure on an emergency basis. A system of control, that includes proper project management and costing techniques in line with construction norms and standards, was inadequate to ensure that value for money was received.  To this extent, the Department’s processes to ensure that all fruitless and wasteful expenditure is identified and disclosed were inadequate.  As a result, the Auditor-General was unable to confirm the completeness of fruitless and wasteful expenditure disclosed and could not confirm it by any alternative means.  Consequently, fruitless and wasteful expenditure is understated as disclosed on this table.  The Auditor-General was unable to determine the full extent of the understatement as it is impracticable to do so.

 

Items

2017/18

2016/17

2015/16

Comments

Irregular Expenditure

R1.6 billion

R4.1 billion

R2.4 billion

The majority of this expenditure emanates from unjustified deviation from Supply Chain Management (SCM) processes for infrastructure projects. These relate to sanitation infrastructure projects, in Northern Cape and Free State, which constitute more than R1.5 billion of the total irregular expenditure.

Unauthorised Expenditure

R526 million

R406 million

R3.7 million

This was as a result of overspending on the vote or main division within a vote during the year under review.  The other reason for this unauthorised expenditure is the expenditure incurred not in accordance with the purpose of the vote or main division.  The War on Leaks programme and Goods and Services budget toward infrastructure planning services (bucket eradication programme) are the incidents that resulted in this finding during the year under review

Contingent liabilities

R19.3 billion

R22.1 billion

R22.4 billion

The majority of these liabilities relate to foreign guarantees for mega projects.  For example, the Lesotho Highlands Water Project with a guarantee of around R21 billion.

Commitments

R7.1 billion

R9.1 billion

R10.8 billion

These arise from the multi-year contractual arrangements that will be paid over several years.

 

7.2 Water Trading Entity

 

The Water Trading Entity received a qualified audit opinion for the year under review.  This is a recurring poor performance as the reasons for qualified opinion are similar to those raised in 2016/17.  For example, the Auditor-General was unable to obtain sufficient appropriate audit evidence for the carrying amount to assets under construction and related impairment, as the Entity did not have adequate systems in place to reconcile the carrying amount of assets under construction to the specific assets under construction.   

 

 

 

 

 

 

The table below provides an analysis of the Water Trading Entity Financial Statements as per the Report of the Auditor-General:

 

Items

2017/18

2016/17

2015/16

Comments

Audit opinion

Qualified

Qualified

Qualified

The financial statement submitted for auditing were not fully prepared in accordance with the prescribed financing reporting framework and supported by full and proper records, as required by section 40(1)(a) and (b) of the Public Finance Management Act.  Material misstatements of non-current assets identified by the auditors in the submitted financial statements were corrected and the supporting records provided.  The material misstatements and/or supporting records that could not be provided related to property, plant and equipment, liabilities and disclosure items, which resulted in the financial statements receiving a qualified audit opinion.

Fruitless and wasteful expenditure

R534 million

R489 million

R1.2 million

This expenditure continues to grow due to similar issues that were raised in the previous financial year.  In the main, this expenditure is driven by losses, and abnormal costs incurred on internal and external project, such as the Mopani emergency project, legal costs and SAP licences.

Irregular expenditure

R4.8 billion

R3.2 billion

R54.5 million

Goods and Services were rendered by the supplier and paid for without a valid written signed contract; award to non-compliant tax supplier; and contract

extension without proper delegation are some of the causes of irregular expenditure provided in the Auditor-General’s report.

Contingent liabilities

R108 million

R35 million

R46.3 million

These relate to legal claims against the Department.

Commitments

R1.6 billion

R2 billion

R2.9 billion

Capital commitments – acquisition of property, plant and equipment contracted but not provided for in financial statements.

Revenue

R10.99 billion

R10.2 billion

R9.4 billion

This revenue mainly accrues from the sale of raw water.

 

Apart from the asset register for property, plant and equipment, the Auditor-General raised similar issues to those raised on the Main Account, such as weak leadership, financial sustainability and financial liabilities, amongst others.

 

8.  OVERVIEW AND ASSESSMENT OF PROGRAMME PERFORMANCE – MAIN ACCOUNT AND WATER TRADING ENTITY[5]

 

The general performance of the Department is summarised below in terms of each programme and followed by an assessment of each programme’s performance with specific reference to key targets that were not achieved. It is worth noting from the outset that the country and the region experienced below normal rainfall during the 2015/16 summer rainfall season, resulting in the meteorological, hydrological, socio-economic and agricultural drought. The drought persisted into 2016/17 and to the beginning of 2017/18 financial year. It is undeniable that these conditions negatively affected the water sector across the value chain, with almost all provinces having been declared drought disaster area at some point during the afore-mentioned period. However, some provinces have since recovered from the drought with the exception of the Western Cape Province, which only came out of danger around September 2018. A number of measures had to be implemented to mitigate the drought impact for the water sector. To a certain extent, this affected the Department’s performance in achieving its strategic outcome oriented goals. Notwithstanding the drought impacts mentioned earlier, the performance of the Department for the year under review can be described as average, as it has achieved 52 % of its planned targets, refer to the below table for details on delivery of planned targets.

 

Overview of Programme Performance

Programme

Planned Targets

Achieved Targets

Percentage Achieved (%)

1

14

9

64

2

15

10

67

3

24

6

25

4

20

13

65

TOTAL

73

38

52

 

The worst performer is Programme 3: Water Infrastructure Development, which only managed to achieve a mere 25 per cent of its total targets.  This serious lack of service delivery in terms of bulk water infrastructure projects and other related services.

8.1 Programme 1: Administration

    

The purpose of Programme 1 Administration is to provide policy leadership, advice and core support services, including finance, human resources, legal, information and management services, communication and corporate planning. The programme failed to achieve unqualified audit opinion and to spend 100% of the allocated budget.  The failure to achieve these targets resulted in the non-realisation of the strategic objective 4.3 (an efficient, effective and high performing organisation) for this programme. It is also worth noting that the Department is not performing efficiently and effectively in this Programme.

 

8.2 Programme 2: Water Planning and Information Management

   

The purpose of Programme 2 Water Planning and Information Management is to ensure 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 strategies, both for water resources and water services.   This the best performing programme as it has management to achieve 67% of its planned targets. Notwithstanding this performance, the targets that were not met would negatively affect water and sanitation service delivery in the future. This is the case because planning informs prioritisation of projects.

 

8.3 Programme 3: Water Infrastructure Development

 

The purpose of Programme 3 Water Infrastructure Development is to develop, rehabilitate and refurbish the raw water resources and water services infrastructure to meet the socio-economic and environmental needs of South Africa. This is the worst performing programme and it is getting worse. This is despite the fact that some of its planned targets were adjusted during the year under review. Some of the adjusted targets were not achieved.  The targets that were not met in this programme for the 2017/18 financial year are, among others: bulk raw water project ready for implementation and mega water and wastewater projects ready for implementation.  In short, the poor performance on this programme means the strategic objective on the adequate water availability and enhanced provision of sustainable and reliable water supply and sanitation services. The work of this programme is at the centre of water service delivery. Therefore, there is likelihood of service delivery protests, wherever these projects have been stalled.

 

 

 

8.4 Programme 4: Water Sector Regulation

 

The purpose of this Programme: Water Sector Regulation is to ensure the development, implementation, monitoring and review of regulation across the water value chain in accordance with the provisions of the National Water Act (1998) and the Water Services Act (1997). This is programme is the second best in terms of performance as it has achieved 65% of its planned targets. However, the majority of its planned targets were found to be unreliable and not specific. Therefore, this type of performance by this programme means that equitable water allocation would remain a pipedream. On the other hand, freshwater ecosystems would continue to be threatened by Acid Mine Drainage due to the failure of the Department to assess mine water management technologies.

 

8.5 Overview of financial and non-financial performance of the Department

 

Briefly, some of the key targets that were not met are as follows: Development of the Draft National Water and Sanitation Resources and Services Strategy; Gazetting of three Catchment Management Agencies; Gazetting of 2 Regional Water and Wastewater Utilities; Green Drop and Blue Drop Assessments; Development of the business case for establishment of the Independent Economic Regulator; Gazetting of business case for the establishment of the National Water Infrastructure Authority; and Water Pricing Strategy.

 

In conclusion, the Department’s performance is stagnant when compared to the achievement of targets in the period under review with the 2016/17 financial year. The Department achieved 52% in 2017/18, which is the same as in 2016/17. Yet, the Department has managed to spend virtually its full budget and even overspent in the 2016/17 financial year. This begs the question whether the Department is able to provide value for money in terms of service delivery. Moreover, it casts doubt on the ability of the Department to manage its financial affairs efficiently and effectively. This view finds support in the Auditor-General’s audit opinion, which indicates that the Department has regressed and that the number of findings against the Department is getting worse. This is because of a complete breakdown in leadership and management. The Department also faces financial uncertainty, as it can no longer be classified as a going concern for the reasons provided above.

 

 

 

 

 

9. OVERVIEW OF PERFORMANCE (FINANCIAL AND NON FINANCIAL) OF ENTITIES REPORTING TO THE DEPARTMENT OF WATER AND SANITATION

 

9.1 Water Research Commission[6]

 

The Water Research Commission was established in terms of the Water Research Act, 1971, following a period of serious water challenges in South Africa.  It was deemed to be of national importance to generate new knowledge and promote the country’s water research.  The Water Research Commission operates and accounts for its activities in accordance with the Public Finance Management Act, 1999 and is listed as a schedule 3A public entity.  The Water Research Commission reports directly to the Minister of the Department of Water and Sanitation. 

 

In relation to the Water Research Commission’s financial performance, the Water Research Levy is the Commission’s main source of revenue.  For the period under review, the Water Research Commission had a total income (including levy and leverage income) of R295 million.  The higher than anticipated levy income for 2017/18 was mainly due to higher water consumption volumes than anticipated. For the period under review, the Water Research Commission counted several performance highlights, which included:  New tools that were developed during the year under review, which included a mobile phone application for the control of Blackfly outbreaks in the Lower Orange River; A device to assess the condition of bulk water pipelines, while several new sanitation technologies were demonstrated in the Eastern Cape; and the Development of a web-enabled mine-water management vulnerability assessment tool to facilitate resource protection; The National Industrial Water and Wastewater Surveys also gained momentum this year; The biennial symposium, held from 18 to 20 September under the theme, ‘Adaptation to the new normal’.  The symposium addressed questions such as what the new research agenda be amid increasing water scarcity, how to design research programmes in a way so that all stakeholders are included, how to extract information from the pockets of excellence already in existence around the world; and How to organise for increased international collaboration. The Water Research Commission received a clean audit for the year under review.

 

9.2 Catchment Management Agencies

 

Catchment Management Agencies are established in terms of Chapter 7 of the National Water Act.  They are responsible for managing water resources at a catchment level in collaboration with local stakeholders (with a specific focus on involving local communities in the decision-making), regarding meeting of basic human needs, promoting equitable access to water and facilitating social and economic development.

 

9.2.1 Inkomati-Usuthu Catchment Management Agency

 

The Inkomati-Usuthu Catchment Management Agency[7], established in terms of section 78 of the National Water Act 36 of 1998 performs water resource management in the Inkomati-Usuthu Water Management Areas as prescribed in the National Water Act.

 

The following were attestations to the operations and the legal mandate of the Inkomati-Usuthu Catchment Management Agencies during the 2017/18 financial year: Strategic workshops for management and the various divisions were organised; The filling of critical posts in the core and support divisions to ensure efficiency in the Compliance, Monitoring and Enforcement, River Systems Operations and Planning; as well as the Water Resource Utilisation; The expansion of the support services division to cater for the SAP system which demanded separation of duties to improve internal control and ensuring accountability and to prevent fraud in the finance and supply chain divisions; The taking over of the billing (water resource management charges) function from the Department on 1 November 2017; Improvement in the information systems of the Agency and links to those of the Department and Water Authorisation and Registration Management System (WARMS) and Systems Application Programming (SAP).

 

The System Application Programming (SAP) is the largest vendors of Enterprise Resource Planning (ERP) software and related enterprise applications. The company's ERP system enables its customers to run their business processes, including accounting, sales, production, human resources and finance, in an integrated environment. It also facilitates the effective use of resources, including manpower, machines and production capacities[8]; and Development of a Master Systems Plan and related policy to enhance information technology applications in the Agency. The tariffs rose from 2.50 cmᵌ to 2.86 cmᵌ, resulting in an increase of 14.4 per cent from 2017/18 to 2018/19.  The internal rate of revenue increased from 1.63cmᵌ to 1.74 cmᵌ to 1.74 cmᵌ, which translated into a 7 per cent increase from the prior year. The Inkomati-Usuthu Catchment Management Agency received an unqualified audit opinion.

 

 

 

 

9.2.2 Breede-Gouritz Catchment Management Agency

 

The Breede-Gouritz Catchment Management Agency[9] was established in 2014 (Government Notice 412, 23 May 2014) by extending the boundary and area of operation. The mission of the Agency is of a pioneering catchment management system that empowers stakeholders to engage in consensual and adaptive decision-making, to achieve reform, and to promote persistent social, economic and environmental justice across the Agency.

 

The decision-making environment of the Agency, including delegated functions, enables collaborative action towards equity, sustainability and efficiency in a continually evolving socio-economic system. The Agency manages the resources adaptively, cooperatively and progressively to achieve social, economic and environmental justice, and promote healthy living.[10]


The Agency's functions are to: investigate and advise interested persons on the protection, use, development, conservation, management and control of the water resources in its water management area; develop a catchment management strategy; coordinate the related activities of water users and of the water management institutions within its water management area; promote the coordination of its implementation with the implementation of any applicable development plan; promote community participation in the protection, use, development, conservation, management and control of the water resources in its water management area; prevent and remedy effects of pollution; and control emergency incidents in respect of water resource pollution or potential water resource pollution.[11]

 

In as far as the achievement of targets is concerned; the Breede-Gouritz Catchment Management Agency has achieved all its targets for the year under review. With regard to water resource planning, the target was to develop a Catchment Management Strategy (CMS) during the year under review. This was accomplished as planned. In summary, water resource planning involves development of the Breede-Gouritz Catchment Management Strategy, as well as conducting other assessments and actions that supports the monitoring, control and management of water resources in the Water Management Area. The Breede-Gouritz Agency received an unqualified audit opinion.

 

 

 

 

 

9.2.3 Trans-Caledon Tunnel Authority

 

Trans-Caledon Tunnel Authority[12] still made progress on the planning and implementation of several projects, and attained some vital milestone across the portfolio of government’s developmental priorities.  The projects relate to the Olifants River Water Resources Development Project – Phase 2B; the Mokolo-Crocodile Water Augmentation Project – Phase 2A; Acid Mine Drainage; the Berg-River-Voȅlvlei Augmentation Scheme; and the uMzimvubu River Water Project.

 

The tariff billing for the current financial year was higher than the previous financial year due to increased volumes.  However, the cash receipts for the year were not adequate to reduce the department’s outstanding balance.  The department’s debtors balance increased from R2.5 billion in the 2016/17 financial year to R3.2 billion in the current year as Trans-Tunnel Tunnel Authority continued to experience delays in receiving payments from the Department of Water and Sanitation. The Trans-Caledon Tunnel Authority (TCTA) received an unqualified audit opinion for the year under review.

 

10. PUBLIC SERVICE COMMISSION

 

During August 2014, the Public Service Commission was requested by the former Minister of Water and Sanitation, Ms N Mokonyane, to conduct an evaluation of the processes and procedures followed since 2012 in the appointment of the following Deputy Directors-General in the Department of Water and Sanitation.  The following officials were implicated – Ms Z Mathe; Ms D Mochotlhi; Advocate Singh; Mr M Mofokeng; Ms O Fundakubi and Mr J Mahlangu.

 

The report by the Public Service Commission, February 2015, should be carefully considered by the Department and Executive Authority; and necessary steps be taken against the flouting and transgressions relating to appointments of senior officials in the Department. 

 

11. ISSUES RAISED BY MEMBERS OF THE PORTFOLIO COMMITTEE ON WATER AND SANITATION

 

11.1 Bonus payments

 

The Department paid performance bonuses to fifty-two (52) staff members levels 9-12, worth R3.5 million and R28.4 million to 2 093 critical occupational staff during the year under review (refer to pages 155 – 161 of the Annual Report of the Department). The total of bonuses paid is R31.9 million.   Overall, the performance of the Department was dismal.

 

11.2 Material uncertainty relating to the Department’s ability to continue as a going concern

 

The Auditor-General, based on its scrutiny of the financial statements of the Main Account and the Water Trading Entity, indicated that there is material uncertainty relating to the going concern of the financial sustainability of the Department.  This is ascribed to an overdraft of R119 million; a cumulative unauthorised expenditure of R933 million; accruals and payables to the value of R2.005 billion as at 31 March 2018.  Consequently, the Department will not be able to start any new projects in the medium-term.  In this regard, the Department must provide details on its financial sustainability.  It should also explain how it plans to address the material uncertainty.

 

11.3 Irregular expenditure amounting to R933 million

 

In light of the recurrent nature of irregular expenditure, findings for both accounts, it seems there is complete neglect of flouting of financial management and supply chain management procedures and rules in the Department.  The Department should explain why this is the case and what plans have been put in place to address these problems.  It should be noted that irregular expenditure provides opportunities for corruption if it goes against compliance and procurement rules such as appointing a service provider that is non-tax compliant and expensive.

 

11.4 Qualified audit opinions for both accounts

 

The Water Trading Entity and Main Account received a qualified audit opinion.  The Water Trading Entity did not adequately review the useful life of Property, Plant and Equipment at each reporting date in accordance with the Standards of Generally Accepted Accounting Practice, GRAP 17.  This implies that the R95 billion worth of assets reported this year is not a reliable figure.

 

11.5 Issues pertinent to Programme 3 and Programme 4: Water Infrastructure Development and Water Sector Regulation

 

These programmes have performed dismally.  It is therefore imperative for the Department to provide Parliament with a plan to address this problem and explain the causes of under-performance.  The poor performance is a recurring issue for these programmes.  Almost all infrastructure projects are, as a result of, poor performance in Programme 3.  The work of these programmes is directly linked to the mandate of the Department.  It is therefore problematic that these two (2) programmes are performing poorly.  The lack of regulation and regulatory enforcement threatens water resources, as pollution and over-utilisation would go unchecked.  The Department must provide a clear plan on how it plans to address the poor performance.

 

11.6 Fruitless and wasteful expenditure

 

The Department’s fruitless and wasteful expenditure is growing.  The expenditure could have been prevented had the accounts payable to, amongst others, ESKOM and Municipalities, been paid by the due date.  This expenditure is also due to self-created emergency projects, such as the Mopani Project and purchase of SAP at abnormal exorbitant costs.  All these issues could have been avoided.

 

11.7 Claims against the Department

 

The legal claims against the Department for the year under review was recorded at more than R100 million for both the Main Account and the Water Trading Entity.  These claims are growing every year. 

 

11.8 Use of consultants

 

The Department spent R143.9 million on consultants during the year under review.  Of interest to the Portfolio Committee are the following factors:

 

11.9 Poor performance of the Department and Adjustment of the Annual Performance Plan

 

The Department performed very poorly by only achieving fifty-two (52 per cent) of its total targets.  This is despite the fact that some of the planned targets were adjusted (reduced in number and complexity) during the year under review.  This means that the performance for the 2017/18 financial year is worse than the 2016/17 financial year.  Unless there is some kind of intervention, the Department is heading toward crisis mode.  According to the Office of the Auditor-General, poor performance seems to be as a result of a lack of strategic planning and performance management; procurement and contract management; expenditure management; leadership; financial and performance management in the Department.

 

 

 

12. FINDINGS OF THE PORTFOLIO COMMITTEE ON WATER AND SANITATION OF THE DEPARTMENT OF WATER AND SANITATION AND ITS ENTITIES[13]

 

For the 2017/18 financial year, the Portfolio Committee undertook briefings, workshops and oversight of the Department and Entities, as well as attended meetings of the Standing Committee on Public Accounts and Select Committee on Appropriations.  The Portfolio Committee noted and highlighted the following systemic challenges, which were similar for the 2016/17 financial year, confronting the Department of Water and Sanitation over the medium-term:

 

12.1 Financial management of the Department

 

  • The financial fiscal challenge plaguing the Department was of concern to the Portfolio Committee on Water and Sanitation.  These relate to the following:

 

  • The material uncertainty relating to the going concern or financial sustainability of the Department relating to irregular expenditure; and qualified audit opinion for both accounts;
  • Use of consultants, whilst the Department has an over-inflated staff component.  This begs the question of the value of permanent employees;
  • The rationale for payment of performance bonuses, since the Department has not performed well; and
  • The reasons for the adjustment of the Annual Performance Plan, with respect to approval and adjustment of targets.

 

12.2 Public Service Commission Report

 

  • That the Minister of Water and Sanitation be requested to facilitate that corrective action be taken in terms of the Disciplinary Code and Procedures for Members of the SMS against the_
    • Person(s) in the Department responsible for record-keeping for failing to adhere to section 13 of the Archives Act, section 38 of the Public Finance Management Act and Public Service Regulation 1/V11/H and 2/C during the filling of the relevant Deputy Directors-General posts;
    • Members of the Shortlisting and Selection committees that are employed within the Department of Water and Sanitation/Public Service that incorrectly shortlisted (and recommended) the appointment of Ms Mathe, Mr Singh, Mr Mofokeng, and Ms Fundakubi in that they did not meet the minimum appointment requirements in respect of Deputy Directors-General posts they were appointed in;
    • That the Minister of Water and Sanitation be requested to comply with section 5(7)(a) of the Public Service Act, 1994 (as amended), by correcting any action or omission purportedly made in terms of the Act (that is, the irregular appointment of Ms Mathe, Ms Mochotlihi, Mr Singh, Mr Mofokeng and Mr Mahlangu); and
    • As far as the involvement of members of the Executive are concerned in the irregular appointment of Ms Mathe; Ms Mochotlhi; Mr Singh; Mr Mofokeng; Ms Fundakubi and Mr Mahlangu, that the Minister of Water and Sanitation be requested to refer the matters to the Public Protector, South Africa for further handling.

 

12.3 War on Leaks Programme and Drop a Block Programmes

 

The Department indicated that it would provide a full report on the spending of this project to the Portfolio Committee in writing, and should be held accountable for timeous reports.

 

12.4 Progress and funding in respect of the construction of the uMzimvubu Dam

 

The uMzimvubu Dam is currently still at the design phase. There were cost escalations for the Giyani Emergency Interventions; and funding had to be redirected towards this project resulting in delays in the uMzimvubu Dam.

 

12.5 Investment in Quality of and Access to Water and Sanitation Infrastructure[14]

 

South Africa has made good progress in improving access to environmental services (water, sanitation and wastewater treatment management).  However, 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 in relation to water and sanitation infrastructure.  There has been limited implementation of the increased block tariffs, required by legislation.

 

In respect of the pivotal role accorded to public investment in the National Development Plan, National Treasury argued that for the Department’s critical role in water and sanitation infrastructure, the following key questions around infrastructure and its proper financing should be raised on all projects:

  • What are the financing needs of infrastructure?
  • How much scope is there for private participation?
  • How much fiscal space do governments have in undertaking these infrastructure projects?

 

The non-implementation of bulk water infrastructure projects or augmentation projects due to budget constraints reflect poor planning and costing processes within the Department and Entities.  Examples of non-implementation of planned projects include the following – Olifants River Water Resource Development Projects Phase 2D and 2E; Mokolo River Augmentation Phase 1 and 2A; and the uMzimvubu Water Project.

 

12.6 Compliance to legislation and predetermined policy priorities

 

12.6.1 Catchment Management Agencies

 

The Portfolio Committee has repeatedly requested information on the establishment of all nine (9) Catchment Management Agencies as required by the National Water Act.  However, the Department only supplied information at the briefing of the Annual Report, and maintained that National Treasury had opposed the further establishment of Catchment Management Agencies due to labour disputes and financial non-viability of the future of agencies.  National Treasury has subsequently mooted the idea of one regional catchment management agency.

 

12.6.2 Establishment of Proposed Institutions

 

Establishment of an Independent Economic Regulator, National Water Infrastructure Agency, Regional Water Utilities, National Water Master Plan and Drafting of the national Water and Sanitation Bill

 

Between 2014 to date, the Department proposed and committed to develop a National Water and Sanitation Ten-Year Master Plan, the National Water Infrastructure Agency, Regional Water Utilities and completion of the draft Water and Sanitation Bill. 

 

The Portfolio Committee, in its engagements on the above issues has repeatedly requested timeframes for the establishment of the above-mentioned institutions and completion of critical policies and legislation to support the work of the water and sanitation sectors in South Africa.

 

 

12.7 Cooperative governance of water and sanitation services management and delivery

 

The Portfolio Committee noted the many challenges at the municipal level in relation to the delivery of water services.  These challenges include poor maintenance and refurbishment of infrastructure, which resulted in increased 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 service; and unaffordable technology choices in some areas.  The challenges are further compounded by the inadequate cost recovery in the water services sector. 

 

12.8 Challenges related to the effective functioning of the Department’s internal controls and audit committee

 

The material findings relating to commitments, accruals, irregular expenditure and fruitless and wasteful expenditure, as well as non-compliance of legislation and supply chain management raises concerns around the internal controls within the Department.  Financial statements are bodies of information to be utilised during the year, and if internal controls are ineffective in the course of the year, decisions will be taken based on information that is not credible and reliable as it should be.

 

12.9 Lack of oversight by the Department over Implementing Agents

 

The main concern by the Auditor-General in this regard was the lack of supply-chain management issues in the use of implementing agents.  The use of water boards as implementing agents was initially utilised on an emergency basis, but over time, it has become the norm for the Department to use mainly water boards as implementing agents to undertake work on its behalf. 

 

This was particularly disturbing to the Office of the Auditor-General as the Department is not only using implementing agents for emergency issues, but according multi-year projects to the water boards.  This has resulted in irregular expenditure, which raised questions around the standard practice of oversight of and compliance by the implementing agents to supply chain management issues by the Department.

 

12.10 Input by previous Statistician-General on integrated approach to planning

 

The Portfolio Committee, in its engagement with Statistics South Africa in the 2016/17 period, and which is still relevant today, concurred with the Statistician-General, Mr P Lehohla, who noted that many government departments were not utilising the impressive base of statistics generated by the institution, and this impacts on the quality of plans that will be rolled out.  The importance of an integrated approach to planning if incorrectly undertaken, may lead to a fragmented approach to the developmental agenda, with some areas highly developed in some areas, limited or under-developed in other areas, which could lead to discontent amongst communities. [15]

 

In respect to the water and sanitation sector, the Statistician-General noted that “ineffective planning, and conniving and collusion at various sectors eroded the gains made in access to water and sanitation services”[16] in South Africa.  The correlation between ineffective planning and inadequate skills pool stymies and derails developmental plans on water and sanitation infrastructure. 

 

12.11 Impact of climate change on environmental ecosystems

 

South Africa entered the climate change arena relatively late, only ratifying the Framework Convention

on 29 August 1997.  As party to this Convention, the country is required to report on national emissions

and is encouraged to consider climate change issues in domestic, social, economic and environmental

policy-making.  On 31 July 2002, South Africa ratified the Kyoto Protocol, the county is nonetheless

committed to reducing its carbon emissions.

 

13. RECOMMENDATIONS

 

The Portfolio Committee, having engaged with the Department of Water and Sanitation and its Entities, recommends as follows:

 

13.1 The Minister of Water and Sanitation and the Minister of Finance should ensure that:

 

13.1.1 The Department of Water and Sanitation, in consultation with National Treasury  and Department of Cooperative Governance and Traditional Affairs (CoGTA) where necessary, urgently develop and implements a financial recovery plan for the improvement of the Department’s financial position and service delivery performance.  The recovery plan should, amongst other things, include the following components:

  • A review and strengthening of governance and monitoring mechanisms;
  • A review of internal controls and delegations regarding financial management;
  • A review and implementation of expenditure management systems in all areas of spending;
  • A review of the Supply Chain Management practices and implementation of proper controls and risk management practices;
  • A review and implementation of efficient revenue management and debt recovery systems to maximise effective revenue generation and revenue performance;
  • A review of all liabilities, long and short-term, and conclude payment arrangements with creditors; and
  • A review of the Water Infrastructure Development Unit to ensure that skills and capabilities are aligned to the infrastructure value chain for ensuring value for money in infrastructure spending.

 

13.2 The Portfolio Committee was particularly concerned by the lack of oversight by the Department in respect of their obligations under the National Water Act, 1998 (Act Number 36 of 1998); the Water Research Act, 1971 (Act Number 34 of 1971), and the (Act Number 1998 and Water Services Act (1997).

 

13.3 National Treasury considers secondment of the Government Technical Advisory Centre officials to assist the Department of Water and Sanitation with the development and implementation of a financial recovery plan.

 

13.4 The Department of Water and Sanitation applies the appropriate sanctions as per Chapter 10 of the Public Finance Management Act, for all financial misconduct.

 

13.5 In respect of the damning findings of the Public Service Commission on the irregularities of appointments of senior departmental officials, the Portfolio strongly advised that the Department of Water and Sanitation undertake a comprehensive skills audit of its employees at the national Department and at provincial level.

 

13.6 The Department of Water and Sanitation must provide quarterly reports to Parliament on the following issues:

 

  • The material uncertainty relating to the going concern of financial sustainability of the Department related to fruitless and wasteful expenditure, irregular expenditure, and qualified audit opinion for both the Main Account and Water Trading Entity; and
  • The Department must provide evidence of consequence management for poor performance and strategies to improve performance.  The Department must provide well-articulated plans to address the management and leadership shortcomings that were identified.

 

13.7 The Department must, as a matter of urgency, provide details to relevant parliamentary committees on all infrastructure projects (past, present and future) within a period of one month.

 

13.8 The Department must provide information on the timeframes for the establishment of an Independent Water Utilities; Finalisation of the National Water Master Plan; and finalisation of the Drafting of the national Water and Sanitation Bill.

 

13.9 The Department must provide quarterly reports on internal controls and the work of the Audit Committee.

 

13.10 The Department must provide quarterly reports on progress made on its oversight over implementing agents.

 

13.11 The Department must provide written and up-to-date information on the use of statistics, data, and the manner in which previous recommendations from various water and sanitation sectors, were implemented.

 

13.12 A comprehensive briefing on the climate change negotiations, and other related matters should be presented to Parliament on a quarterly basis.

 

13.13 Implement retention strategy or policy for personnel trained using the funds of the Department. Furthermore, once training is concluded, personnel should be retained for the duration of their training period.

 

13.14 Cooling-off period: The Department of Water and Sanitation should craft and implement a policy which prevents former officials doing business with the Department for a specific time period.

 

13.15 All water infrastructure and water waste infrastructure should be declared a National Key Point.

 

13.16 A need exists to fully capacitate and resource Chapter 9 institutions so as to give them leverage to enforce the recommendations.

 

13.17 The Water Trading Entity urgently needs to complete its reconciliation strategy in alignment with the Trans Caledon Tunnel Authority

 

13.18 The Department to submit quarterly progress reports in respect of the Bucket Eradication Programme.

_________________________________________________________________________________

14. REFERENCES

 

Department of Water and Sanitation, Annual Report, 2016/17

 

Department of Water and Sanitation, Annual Report, 2017/18

 

National Treasury, 2018 Estimates of National Expenditure, Vote 36

 

National Treasury, 2017 Estimates of National Expenditure, Vote 36

 

Constitution of the Republic of South Africa, 1996

 

National Water Act, No. 36 of 1998

 

Water Research Act, No 34 of 1971

 

The Public Finance Management Act of 1999 (as amended by Act 29 of 1999)

 

Presentations by the Department and Entities to the Portfolio Committee on Water and Sanitation on 4 and 5 October 2017

 

Presentations by the Department and Entities to the Portfolio Committee on Water and Sanitation on 9, 10 and 11 October 2018

 

Water Research Commission, Annual Report, 2017/18

 

Trans-Caledon Tunnel Authority, Annual Report, 2017/18

 

Inkomati-Usuthu Catchment Management Agency, Annual Report, 2017/18

 

Breede-Gouritz Catchment Management Agency, Annual Report, 2017/18

 

Report of the Workshop of the Portfolio Committee on Water and Sanitation, 14 – 16 September 2016, Gauteng
 

Report of the Portfolio Committee on Water and Sanitation on briefings held by the National Planning Commission at a Workshop of the Portfolio Committee, 14 – 16 September 2016.  One of the presentations was by Mike Muller (2012), ‘The role of water in development, Commissioner, National Planning Commission’

 

Report of the Workshop of the Portfolio Committee on Water and Sanitation, 14 – 16 September 2016

 

in Gauteng.  One of the presentations was by the Statistician-General of South Africa, Mr P Lehohla

 

 

 

 

Report to be considered.

 

 

[1] The information that follows was sourced from the Department of Water and Sanitation, Annual Report, 2017/18; Strategic Plan of the Department 2017/18

[2] The information that follows was sourced from the Department of Water and Sanitation, Annual Report, 2017/18; Strategic Plan of the Department 2017/18

[3] The information that follows was sourced from the Department of Water and Sanitation, Annual Report, 2017/18; Strategic Plan of the Department 2017/18

[4] The information that follows was sourced from the Department of Water and Sanitation, Annual Report, 2017/18; Strategic Plan of the Department 2017/18

[5] The information that follows was sourced from the Department of Water and Sanitation, Annual Report, 2017/18; Strategic Plan of the Department 2017/18

[6] The information that follows was sourced from the 2017/18 financial year Annual Report of the Water Research Commission

[7] The information that follows was sourced from the 2017/18 financial year Annual Report of the Inkomati-Usuthu Catchment Management Agency

[8] The information above was sourced from http://searchapp.techtarget.com/definition/SAP

[9] The information that follows was sourced from the Annual Report, 2017/18 – Breede Gouritz Catchment Management Agency

[10] Sourced from http://national government.co.za/Inkomati-Usuthu Catchment Management Agency

[11] Sourced from http://national government.co.za/Inkomati-Usuthu Catchment Management Agency

[12] The information that follows was sourced from the 2017/18 financial year Annual Report of the Trans-Caledon Tunnel Authority

[13] The information that follows emanated from inputs made by Members of the Portfolio Committee on Water and Sanitation during briefing sessions by the Department and Entities in the 2016/17and 2017/18 financial year

[14] The information that follows emanates from a Report of the Workshop of the Portfolio Committee on Water and Sanitation, 14 – 16 September 2016 in Gauteng

[15] The information that follows emanates from a Report of the Workshop of the Portfolio Committee on Water and Sanitation, 14 – 16 September 2016 in Gauteng.  One of the presentations was by the Statistician-General of South Africa.

[16] These sentiments were articulated by the Statistician-General to the Members of the Portfolio Committee at its workshop in Gauteng on 14 – 16 September 2016

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