ATC200608: Report of the Deliberations of the Portfolio Committee on Human Settlements, Water and Sanitation on Budget Vote 41, 2020/21 Annual Performance Plan and Strategic Plan: Water and Sanitation And Entities, Dated 7 June 2020

Human Settlements, Water and Sanitation

REPORT OF THE DELIBERATIONS OF THE PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS, WATER AND SANITATION ON BUDGET VOTE 41, 2020/21 ANNUAL PERFORMANCE PLAN AND STRATEGIC PLAN: WATER AND SANITATION AND ENTITIES, DATED 7 JUNE 2020

The Portfolio Committee on Human Settlements, Water and Sanitation (the Portfolio Committee), having considered Budget Vote 41, 2020/21 Annual Performance Plan and 2020 – 2024 Strategic Plan of the Department of Water and Sanitation and its Entities, that of, the Water Research Commission (WRC), the Trans-Caledon Tunnel Authority (TCTA), and two (2) Catchment Management Agencies (Inkomathi-Usuthu Catchment Management Agency and Breede-Gouritz Catchment Management Agency), reports as follows:

1. Background

The Portfolio Committee on Human Settlements, Water and Sanitation considered Budget Vote 41, the Annual Performance Plan and Strategic Plans/Corporate Plans of the Department of Water and Sanitation and Entities in May 2020. Budget Vote 41: Water and Sanitation, 2020/21 Annual Performance Plan and Strategic Plan of the Department of Water and Sanitation was held on 26 May 2020; the Trans-Caledon Tunnel Authority and Water Research Commission on 28 May 2020 and the two Catchment Management Agencies on 26 May 2020.

2. Introduction

The supremacy of the Constitution of the Republic of South Africa founded on the values of human dignity, the achievement of equality and the advancement of human rights and freedoms is the foundation of South Africa’s democracy. This supremacy requires that all other South African legislation must adhere to making provisions for the state to respect, protect, promote and fulfil the rights in the Bill of Rights.

Section 24 and 27 of the Bill of rights in the Constitution grant specific rights to access to sufficient water, and environment not harmful to health and well-being and the environment from degradation. The right to basic sanitation is not an explicit constitutional right, but the right to sanitation could be derived from the right to a clean environment, read together with the right of access to clean water.

The Constitution provides for three spheres of government and sets out the functions of these three distinctive, interdependent and interrelated spheres. The principles of cooperative governance provide that all interactions between the three spheres of government must play out in a coordinated and cooperative manner.

Since South Africa is a water scarce country, the budgetary, legislative, policy and regulatory framework placed much emphasis on water scarcity and the effective management of national resources, coupled with the need to rectify historical inequities and promote justice and equality in the availability and use of water resources.

In addition to the Constitution and relevant pieces of legislation such as the National Water Act, the Water Services Act and the Water Research Act, the work of the Department is strongly linked to the national, such as the National Development Plan, Medium-Term Strategic Framework and international obligations such as the United Nations Sustainable Development Goals[1] to meet the requirements of the provision of clean water and dignified sanitation to all citizens in South Africa.

3. Legislative Mandate

South Africa’s status as a water-scarce country is reflected in the formulation of the legislative framework pertaining to water. This legislation has placed emphasis on water scarcity and the effective management of national resources coupled with the need to rectify historical inequities and promote justice and equality in the availability and use of water resources. The three principle sources of national water legislation are the Constitutions of South Africa, No 108 of 1996, the National Water Act, No 36 of 1998 and the Water Services Act, No 108 of 1997.

The Department’s legislative mandate, in the National Water Act, is to ensure that the country’s water resources are protected, managed, used, developed, conserved, and controlled by regulating and supporting the delivery of effective water supply and sanitation. This is done in accordance with the requirements of water-related policies and legislation that are critical for delivering on the people’s right to have access to sufficient food and water, growing the economy, and eradicating poverty.

The main aim of the Water Services Act is to assist municipalities to undertake their role as Water Services Authorities, and also to look after the interests of the consumer. It also clarifies the role of other water services institutions, especially water services providers and water boards. According to the Act, it is the responsibility of Water Services Authorities to ensure access to both water supply services and sanitation services.

The executive power to deliver water and sanitation services falls, in terms of the Constitution, on local government. The statutory legislative framework for effective management of local government consists of the Local Government: Municipal Structures Act, No 117 of 1998, the Local Government: Municipal Systems Act, No 32 of 2000, and the Local Government: Municipal Finance Management Act, 56 of 2003.

4. National Priorities for Water and Sanitation as set out in the National Development Plan and Medium-Term Strategic Framework

4.1 The National Development Plan 2030 Vision

The National Development Plan 2030 Vision is for investment in a strong network of economic infrastructure designed to support the country’s medium- and long-term economic and social objectives. This economic infrastructure is a precondition for providing basic services such as electricity, water, sanitation, telecommunications and public transport, and it needs to be robust and extensive enough to meet industrial, commercial and household needs.

4.2 Medium Term Strategic Framework (MTSF)

The Medium-Term Strategic Framework (MTSF) sets out the actions that government will take and targets to be achieved. The MTSF is an implementation plan and monitoring framework for achieving the National Development Plan (NDP) 2030 priorities.

4.2.1 Overview of work of the Department for the 2014 – 2019 Medium-Term Strategic Framework

An assessment of the work of the Department for the 2014 – 2019 Medium-Term Strategic Framework period by the Department of Planning, Monitoring and Evaluation[2] in respect of the water and sanitation sector, encompassed the following:

South Africa has more than 500 government-owned dams with a total capacity 37 000 million cubic metres (mᵌ). Government has made significant strides in reducing the backlog in access to potable water that it inherited in 1994. By 2017, over 88% of the 14.8million households had access to potable water.

However, the development and maintenance of bulk-water systems particularly in the past 5 years, have become a major challenge in many parts of the country, at times aggravated by droughts, the impact of climate change and rapid urbanisation. A number of bulk water infrastructure projects have been complete.

A number of water treatment works with linked distribution and reticulation systems have been completed in every province. An emergency acid mine drainage neutralisation project was also implemented in the Witwatersrand region.

National Government has also supported Water Services Authorities to deliver improved water and wastewater services through the establishment of new funding mechanisms and related allocations through the Regional Bulk Infrastructure Grant (RBIG), the Municipal Infrastructure Grant (MIG) and the Water Services Infrastructure Grant (WSIG). The Equitable Share is targeted to subsidise the operations and maintenance costs for water services infrastructure in municipalities.

However, the problems and challenges in the sector have multiplied. Institutions have weakened with loss of skills and weakened governance. Local-level investment in water infrastructure has either been too low or characterised by poor planning and excessive prices. Maintenance of existing water infrastructure remains a challenge, which increases the risk of sustainable water supply into the future. In fact, the SA Institute of Civil Engineering rates water infrastructure across the country as at risk of failure.

4.2.2 Imperatives for the Medium-Term Strategic Framework, 2019 – 2024 for the water and sanitation sector

Over the next five years, the work of the Department of Water and Sanitation will be closely monitored by the MTSF 2019 – 2024 and the seven priorities that emanate from it. These include:

Priority 1: Capable, ethical and developmental state;
Priority 2: Economic transformation and job creation;
Priority 3: Education, skills and health;
Priority 4: Consolidating the social wage through reliable and quality basic services;
Priority 5: Spatial integration, human settlements and local government;
Priority 6: Social cohesion and safe communities
Priority 7: A better Africa and world.

In addition to being a five-year implementation plan, the MTSF 2019-2024 is also an integrated monitoring framework. It promotes alignment, coordination and, ultimately, full integration of all development planning instruments into an integrated framework, bearing results without duplication, role conflict or development contradictions, as well as better coordination of implementation through the district based delivery model.

As a five-year building block towards achieving Vision 2030, all national sector plans, provincial growth and development strategies, municipal integrated development plans, departmental strategic plans and annual performance plans must be aligned to the MTSF 2019-2024.

4.2.3 Priorities of the Department of Water and Sanitation aligned to the Medium-Term Strategic Framework, 2019 – 2024

The implications for the Water and Sanitation sector over the Medium-Term Strategic Framework, 2019 – 2024 for the Department of Water and Sanitation is to provide a leading and supporting role for the water and sanitation sector as an enabler for economic transformation and job creation (Priority 2), as well as provision of basic services (priority 5).

The growth potential GDP and the economy is affected by the state of infrastructure as well as a sustainable source of water supply. According to the Global Competiveness Index of 2019, South Africa ranked 87th out of 141 countries for reliability of water supply. Water resources are a critical component of the country’s ecological infrastructure system that needs to be managed and protected. In 2018, 89 per cent of households had access to piped or tap water in their dwelling and 83 per cent of households had access to improved sanitation services.

5. Department of Water and Sanitation – Strategic Plans and Annual Performance Plans

5.1 Strategic and Performance Plans

The focus of Strategic Plans must be on issues that are strategically important, linked to and flowing from various plans developed within institutions to fulfil their mandates, especially Performance Agreements between the President and Ministers and Service Delivery Agreements entered into in terms of the broad strategic outcomes.

Operational issues such as an institution’s finances, supply chain management, information systems or human resources can be considered strategic priorities if they have to be addressed to facilitate improved performance. Similarly, if an institution delivers services inefficiently, improving productivity would be a legitimate strategic priority.

An Annual Performance Plan (APP) sets out what the institution intends doing in the upcoming financial year and during the Medium Term Expenditure Framework (MTEF) to implement its Strategic Plan. The document sets out performance indicators and targets for budget programmes, and sub-programmes where relevant, to facilitate the institution realising its goals and objectives set out in the Strategic Plan.

5.2 Consideration by the Department in drafting its Strategic Plan and Annual Performance Plan aligned to Budget Vote 41

5.2.1 Situational analysis of the Department as delineated in the Annual Performance and Strategic Plan

The planning process toward developing of the Strategic Plan and Annual Performance Plan had to take into consideration the current situation in South Africa. Statistics have shown that three (3) million households do not have access to reliable drinking water; and 14.1 million people did not have access to safe sanitation. 41 per cent of municipal water did not generate revenue; and 35 per cent of water was lost through leakages, representing an annual loss of R9.9 billion. In terms of wastewater treatment works, 44 per cent of water treatment works were in a poor or critical condition, with 11 per cent being dysfunctional. A funding gap of R33 billion is needed each year for the next ten (10) years which had to be closed through improved revenue generation and reduced costs, as articulated in the National Water and Sanitation Master Plan. The lack of funds for the National Master Plan must be considered and monitored by the Portfolio Committee. Another critical issue within the scope of work of the Department is the serious challenge posed by debt owed to water boards by municipalities; debt owed by Department to water boards and Entities, which impedes and impacts on the financial functioning of the various role-players in the entire water value chain.

There are six major water use sector, namely, irrigation, urban use, rural use, mining and bulk industrial, power generation and afforestation. Studies done by the Department show that the vast majority of water in South Africa is used in agriculture, with over 60 per cent of all available water going into the sector for irrigation. As much as 30 per cent of water in South Africa is for urban and rural use (including domestic use), while the rest is split among industrial, power generation and afforestation uses. Only 5 per cent of water was used by black farmers.

The 2019 national demand for water requirements was 10 233 million m³/a, with the current reliable national yield of surface water at an acceptable assurance of supply at approximately 10 137 million m³/a. This meant there was a national deficit of 96 million m³/a -- in other words, the demand was exceeding supply. Although there was a national deficit, there were certain areas with surpluses, and water was transferred through the transfer schemes to service the demand areas. However, South Africa was facing a projected 3 per cent water deficit by 2040 if it did not successfully implement the planned measures.

5.2.2 Interventions to assist with COVID-19 pandemic

The COVID-19 pandemic exposed the lived realities of citizens without adequate access to potable water and decent sanitation in certain parts of the country. As part of its constitutional mandate, and urgency to respond to the impact of the pandemic, the Department established a Water and Sanitation Command Centre which had started operating on 23 March 2020. This emergency water and sanitation intervention had provided water tanks to vulnerable communities, water tankers to supply tanks with water, and health and hygiene material distributions. The interventions were funded with reprioritised RBIG funding of R306.5 million, and had registered the following progress:

Water storage tanks were delivered to a total of 158 municipalities and districts between 28 March and 3 May 2020.
196 Ml of water had been delivered by water tankers over the same period, at a daily average volume of 8.3 Ml.

To sustain the COVID-19 emergency water and sanitation intervention, a further R625.6 million of grant funding would be reprioritised. This funding would be used to continue supplying tanker services in interim, implementing a tanker dependency reduction strategy, source development in the areas where storage tanks were installed, convert tanks to rudimentary water supply schemes, and initiate an asset transfer process to relevant water services authorities.

IT SHOULD BE NOTED THAT THE IMPLICATIONS OF THE COVID-19 PANDEMIC MAY REQUIRE ADJUSTMENTS TO THE BUDGET OF THE DEPARTMENT OF WATER AND SANITATION AND ITS ENTITIES.

5.3 Sector priorities for the Department of Water and Sanitation as outlined in the Strategic Plan and Annual Performance Plan

The sector priorities for the Department of Water and Sanitation over the Medium-Term Expenditure Framework period relate to the following:

5.3.1 Water resources management, infrastructure planning and development

The water and sanitation master plan details the requirements for appropriate investment into water resources and services, and sets targets for adequate water conservation and demand management. To support the implementation of the master plan, the Water Infrastructure Development programme is expected to receive allocations amounting to R41.6 billion over the MTEF period.

These allocations will provide funding to the regional bulk infrastructure grant, the water services infrastructure grant and transfers to the Water Trading Entity for the development of key water infrastructure. Funding in the regional bulk infrastructure grant and the water services infrastructure grant for new and existing projects amount to R33.2 billion over the medium term. Funding from these grants will be used to implement 2 mega projects and 26 large regional bulk infrastructure projects. Over the medium term, 280 small regional bulk and water services infrastructure projects will be implemented.

To address water infrastructure backlogs and improve operational sustainability, over the medium term, the department will continue to plan and maintain infrastructure. Related activities will be carried out in the Water Planning and Information Management programme, spending in which is expected to increase at an average annual rate of 7.6 per cent, from R907.9 million in 2019/20 to R1.1 billion in 2022/23. To continue funding short term and long‐term interventions in new and existing projects, the Water Trading Entity will receive transfers amounting to R7.2 billion over the medium term. Projects include acid mine drainage operations in Gauteng, phase 2D of the Olifants River water resources development project, the Mokolo‐Crocodile River water augmentation project, the raising of Tzaneen Dam, the Umdloti River development project, and the raising of the Hazelmere Dam.

5.3.2 Regulating water services

Over the period ahead, the department plans to reintroduce regulatory quality valuations on the provision of water services. These valuations are intended to measure the level of compliance with the green drop and blue drop standards. Accordingly, the department plans to assess 963 waste water in 2020/21 and 1 010 water supply systems in 2021/22. To improve equitable access to water resources, the department plans to process 80 per cent of the water use licence applications it receives within 120 days. In addition, the department plans to assess and determine the resource quality of the uThukela River system. These activities will be carried out in the Water Sector Regulation programme, which is expected to receive allocations amounting to R1.3 billion over the medium term.

The policies are aligned to departmental policies with the national (National Development Plan and SONA 2020, among others), regional, continental and global development agenda.

6. Budget Vote 41: Department of Water and Sanitation and Entities

6.1 Main Account and Water Trading Entity

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; Programme 4: Water Sector Regulation.

It should be noted that the financial and non-financial performance of the Main Account and Water Trading Entity are audited by the Auditor-General South Africa. The Water Trading Entity, together with the Trans-Caledon Tunnel Authority are key to the development of sustainable water and sanitation infrastructure for the country.

6.2 Overview and Analysis of Budget Vote 41: Water and Sanitation and Annual Performance Plan 2020/21

6.2.1 Overview of the Main Account

As can be seen from table 1 below,[3]the overall budget of the Department increases from R16 467.4 billion in 2019/20 to R17 216.4 billion in 2020/21. This represents a nominal increase of R748.8 million (4.55 per cent), but a little increase of R23.2 million (0.14 per cent) in real[4] terms.[5]

Table 1. Budget Allocations
Programme	Budget				Nominal Rand change	Real Rand change	Nominal % change	Real % change
R million	2019/20	2020/21	2021/22	20222/23	2019/20-2020/21		2019/20-2020/21
Programme 1: Administration	1 836,2	1 976,5	2 114,9	2 192,8	140,3	57,0	7,64	3,10
Programme 2:Water Planning and Information Management	907,9	1 026,4	1 088,1	1 129,9	118,5	75,2	13,05	8,29
Programme 3: Water Infrastructure Development	13 287,0	13 795,8	13 643,0	14 160,0	508,8	- 72,6	3,83	-0,55
Programme 4: Water Sector Regulation	436,3	417,5	424,4	442,3	- 18,8	- 36,4	-4,31	-8,34
TOTAL	16 467,4	17 216,2	17 270,4	17 925,0	748,8	23,2	4,55	0,14

Table 1 above shows that Programme 3: Water Infrastructure Development dominates expenditure under this Vote, consuming 80 per cent of the total allocation to the Vote. This is followed by Programme 1: Administration (11.5 per cent); Programme 2: Water Planning and Information Management (6 per cent) and Programme 4: Water Sector Regulation (2.4 per cent). It is worth noting that Programme 1: Administration and, Programme 2: Water Planning and Infrastructure Management are the only two programmes that experience positive significant real increases of 3 and 8.3 per cent, respectively. The significant real increase experienced by these 2 programmes is in line with the Department’s plans to strengthen integrated planning and regulatory oversight during the year under review. Whilst Programme 3 and 4 appear to be the priority programmes of the Department, they are the only programmes that experienced a significant decrease in real terms. This is a concern as the Department plans to among others, assess 963 wastewater treatment systems in 2020/21. This target could not be achieved in 2018/19 and was revised in 2019/20 APP due to among other budgetary constraints.[6]

6.2.2 Overview of the Water Trading Entity[7]

The Water Trading Entity was established in 1983 for the management of water infrastructure and resources, and the sale of raw water. It was converted into a trading entity in 2008 in terms of the Public Finance Management Act, 1999. Over the medium-term, the Entity will continue to focus on maintaining existing water resource infrastructure, to support the long-term sustainability of water resources, and supplying bulk water to strategic users such as large industrial companies to stimulate and support economic development. Over the period ahead, the Entity anticipates the completion of three (3) raw water projects (Tzaneen Dam; Clanwilliam Dam and Hazelmere Dam). Spending on these projects is expected to increase at an average annual rate of 8.7 per cent, from R12.8 billion in 2019/20 to R16.4 billion in 2022/23.

Capital expenditure is expected to increase at an average annual rate of 10.5 per cent, from R1.6 billion in 2019/20 to R2.2 billion in 22/23. Revenue is expected to increase at an average annual rate of 9.6 per cent, from R14.7 billion in 2019/20 to R19.3 billion in 2022/23. Revenue from the sale of raw water is expected to increase at an annual average rate of 10.7 per cent, from R11.9 billion to 2019/20 to R16.1 billion in 2022/23. Revenue derived from transfers from the Department of Water and Sanitation amounts to R7.2 billion over the medium-term. These funds will be used to finance the Trans-Caledon Tunnel Authority.

It is worth noting that the Department has organised its expenditure into four programmes, which are outlined below with their respective budget allocations.

Programme 1: Administration

The purpose of this programme is to provide strategic leadership, management and support services to the Department. The programme also develops and promotes international relations on water resources management with neighbouring countries.

This Programme, which consumes 11.5 per cent of the overall departmental budget, is allocated R1 976.5 million in the 2020/21 financial year, up from R1 836.2 in 2019/20. This reflects a nominal rand increase of R140 million, which translates into a nominal percentage change of 7.6 percent. In real terms, the budget allocation to this programme increased by R57 million or 3.4 per cent between 2019/20 and 2020/21.

Four sub-programmes under this Programme experience real increases, with the most significant increases experienced by the Financial Management and Project Management Unit sub-programmes, refer to figure 2. In this regard, the Department intends to implement its financial recovery and turnaround plan while ensuring that it spends its entire budget as it has failed to do so in the past two years.[8] This is also a priority as the Department has been plagued by financial management challenges such as unqualified audits, unauthorised, wasteful and fruitless expenditure for the past four years. Although PMU receives second largest portion of the programm1 budget allocation, it has no targets in the APP.[9]

Programme 2: Water Planning and Information Management

The purpose of this programme 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. This is done by developing a knowledge base and implementing effective policies, procedures and integrated planning strategies for water resources and water services.

This Programme, which constitutes 6 per cent of the overall departmental budget, is allocated R1 026.4 million in the 2020/21 financial year, up from R970.1 million in 2019/20. This reflects a nominal rand increase of R118.5 million and a nominal percentage change of 13 percent. This translates into a real rand increase of R75.2 million or 8.3 per cent between 2019/20 and 2020/21. As mentioned earlier, this is one of only two of the Department’s programmes that experienced significant real increases.

Expenditure under this programme is dominated by sub-programme 4: Water Information Management, consuming 56 per cent of the total budget allocated to the Programme, refer to figure 3. This is in line with the Department APP which among other, seeks to review and maintain four (4) water resources monitoring programmes on Ground Water, Surface Water, NCMP and NEM, and implement River Eco-Status Monitoring Programme at 83 rivers during the year under review. It also plans to maintain six (6) water and sanitation information systems, (namely NIWIS, HYDSTRA, NGIS, WMS, GIS, and FMFS) and refurbish Liverpool gauging station this financial year.[10]All these activities entail or hinge on water information management.

In as far as the Policy and Strategy is concerned, the Department intends to submit a draft National Water and Sanitation Bill for cabinet approval and table it to Parliament in the 4th quarter. It also intends to develop and adopt the National Water Resources Strategy 3 during the year under review.[11]

Programme 3: Water Infrastructure Development

The purpose of this programme 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 appears to be the priority Programme of the Department, as it receives the highest allocation of the entire departmental budget, refer to figures 1 and 4. Briefly, this programme has received R13 795.8 billion in the 2020/21 financial year, which constitutes 80 percent of the overall departmental budget. However, this Programme that reflects a nominal rand increase of R508 million over the 2019/20 financial year, indicating a nominal change of just 3.8 percent. In real terms, the budget allocation to this Programme decreases by R72.6 or 0.55 per cent between 2019/20 and 2020/21.

The regional bulk water infrastructure grant and water services infrastructure grant sub-programmes seem to be the priority sub-programmes under this programme, consuming 49 per cent and 30 per cent of the overall allocation to this programme, as shown in figure 4 above. Water Services Infrastructure Grant provides for, amongst others, the construction of new infrastructure and the rehabilitation of existing water and sanitation infrastructure through the grant transfer of water services schemes to water service institutions. The allocation prioritises the poorest district municipalities. In this regard, the Department intends to replace 10 798 bucket sanitation systems at formal settlements in the Free State (10 202) and Northern Cape (596) with adequate sanitation services by the 2nd quarter of 2020/21.

In addition, the Department plans to undertake the following mega projects, among many others – Mokolo and Crocodile water augmentation project phase 2A (MCWAP) in Waterberg District in Limpopo province. The allocation for this project for the current year is R263 750 million. The total cost for this project is R11.9 billion. The current stage of the project is at Environmental Impact Assessment stage.

Programme 4: Water Sector Regulation

The purpose of this programme is to ensure the development, implementation, monitoring and review of regulations across the water supply value chain in accordance with the provisions of the National Water Act (1998) and the Water Services Act (1997).

This programme is allocated R417.5 million in the 2020/21 financial year, which constitutes 2.4 per cent of the overall departmental budget. This reflects a nominal rand decrease of R18.8 million from the 2019/20 financial year, indicating a significant nominal change of 4.3 per cent. In real terms, the budget allocation to this programme decreases by R36.4 million or 8.3 per cent between 2019/20 and 2020/21. This Programme receives the smallest allocation of the overall departmental vote. It is therefore unfathomable in light of the priorities for the medium term especially the one on regulating water services, which among others, seeks to improve turnaround time for water use licence applications to 120 days. This target alone will require a lot of human and financial resources during the year under review.[12] For example, regulation need to be developed to factor in the 120 days and the circumstances under which this timeframe will be applicable.

Apart from the water use licences, the Department intends to gazette two catchment management agencies in Breede-Gouritz, and Vaal areas; conduct green drop assessments at 963 wastewater treatment systems and finalise the business case for the establishment of the National Water Resources and Water Services Agency, among many other targets.[13]

In conclusion, the budget allocation for 2020/21 has increased by R23.2 million when compared to the 2019/20 financial year. The PMU sub-programme under the Administration appear to have no planned targets on the APP despite having an allocation in budget for the year under review. Regulation of water services is a government priority which would be achieved through the development and adoption of the NWRS-3, and the tabling of the NWS bill to Parliament during the year under review. It is also worth noting that a total of 10 798 bucket toilets systems will be eradicated in the FS and NC.

Lastly, the shortage in funding for infrastructure development is a cause for concern. For example, the estimated cost of the mega infrastructure projects is around R132 billion and the available budget is R3.2 billion, which is about 2.4 per cent. This means it will take decades to fully achieve the infrastructure development targets.

6.3 Entities supporting the work of the Department of Water and Sanitation

The Entities supporting the work of the Department of Water and Sanitation are:

6.3.1 Trans-Caledon Tunnel Authority

The Trans-Caledon Tunnel Authority was established in 1986 as a specialised liability managemententity, and it derives its mandate from the National Water Act, 1998. It is responsible for financing andimplementing the development of bulk raw water infrastructure and providing treasury managementservices to the Department and water boards. The authority also plays an important role in providingfinancial advisory services (structuring and raising project finance, debt management and tariff settings), project implementation services, and other technical support to the Department and water boards.

The TCTA was currently busy with the following project – acid mine drainage (AMD) short-term interventions in five (5) provinces; the uMhomazi Water Project, the Berg River Voelvlei Augmentation Scheme and the Mzimvubu Water Project, amongst others.

The TCTA as a DWS entity was funded through Budget Vote 41. This specific budget vote’s aim was geared towards ensuring the availability of water resources to facilitate equitable and sustainable socio-economic development and ensure universal access to water and sanitation services.

The TCTA had a clear transformation strategy in place that covered procurement policies, employment opportunities for the previously disadvantaged, black economic empowerment, localisation, skills development and study opportunities.

The TCTA has thus far funded and implemented the following projects – infrastructure project in Lesotho for the Lesotho Highlands Water Project; Berg River Project; Vaal River Eastern Subsystem; Phase 2C of the Olifants River Water Resources Development Project; and funding and implementation of the Komati Water Scheme Augmentation Project.

The economic impact of these TCTA projects were significant. Phase 2 of the LHWP that fed the Vaal River System supported 50-60% of South Africa’s GDP. The uMkhomazi Water Project that was part of the uMgeni System provided water services to 5 million Kwazulu Natal citizens whereas the Berg River Voelvlei scheme that formed part of the Western Cape Supply Chain supported between 10-13% of South Africa’s GDP.

The TCTA had experienced problems with some projects. The Olifants River scheme that costed about R6, 6 billion had stalled. The project had been placed on hold due to mines not signing the off-take agreements. The TCTA was busy exploring alternative funding avenues such as the Development Bank of Southern Africa (DBSA).

6.3.2 Breede-Gouritz Catchment Management Agency

The Agency plays a key role in the use, protection and development of water resources in the Breede-

Gouritz water management area. The goals and budget outlined in the Annual Performance Plan are illustrated in the table below:

Goals

Budget

1. To ensure the legal use of water, where the target was to comment on 90 per cent of land use planning and rezoning applications. To manage water use, there is a plan to sign on off 3 700 water registrations; and validation and verification letters being captured, dealing with backlogs, issuing 400 audit reports for water use compliance, and completing 20 water quality compliance reports of municipal wastewater treatment works that discharge into water resources.

2. To create awareness and promote integrated water resources management (IWRM), training of 25 000 learners and stakeholders.

3. Water allocation reform would be focused on historically disadvantaged individuals and resource-poor farmers,

4. Strategic support would be directed at broad-based black economic empowerment (BBBEE) initiatives.

The proposed budget for the year under review is R68.1 million, increasing to R85.2 million by 2023/4.

The current cost of employment was set at R44.2 million, and Goods and Services at R21.9 million. Included in Goods and Services was R2.3 million for river rehabilitation, R2 million for rainwater harvesting tanks, and R877 128 for verification and validation of water use.

56.81 per cent of the budget would be funded through augmentation from the Department, and included the transfer of water to the Berg-Olifants Water Management Area.

The balance of the budget (43.19 per cent) would be funded through direct billing and collection of water resource charges.

6.3.3 Inkomati-Usuthu Catchment Management Agency

The Agency plays a key role in the use, protection and development of water resources in the Inkomati

Usuthu water management area. The vital attributes of the Agency’s water management area were

agricultural use, industries, mining, forestry, nature conservation and tourism, trans-boundary water

resources, and strategic source waters. The key projects, and budgets underpinning the work of the Agency for the 2020/21 financial year are:

Key projects

Budget

Preventing and remedying water resource pollution through integrated water quality management; verification of existing lawful water use; river system operations – river operations and rainfall data loggers; verification of existing lawful water use; billing of water users for water resource management; technology support through information technology software and hardware; implementation of a groundwater strategy; water use authorisations and clean river campaign.

The budget for the current year was R156.8 million, increasing to R165.9 million and R175.6 million over the next two years. The Water Trading Entity’s current contribution would be a grant of R106 million, and R47.2 million for water resource charges. The balance would be income generated from interest.

The key challenges facing the Agency were the implications of the Schedule 3 delegation, the need for redress and equitable access through the transformation of water allocation, insufficient water use charges, and climate change impacts, which would affect water quality and availability, storage infrastructure, matching supply with demand, solid waste management, and disaster and risk management.

6.3.4 Water Research Commission – 2020/21 Annual Performance Plan and proposed Budget

The Water Research Commission was established in terms of the Water Research Act, 1971, and is listed as a schedule 3A public entity. The commission’s mandate 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 WRC served a broad range of government departments such as Science and Innovation, the environment, agriculture, public enterprises and trade and industry amongst others.

He added that Covid-19 had already affected the WRC as well. The strategic plan would have to be changed and research had been adversely affected as well. The suspension of the academic calendar had also impacted the work of the WRC.

The WRC also had a significant portfolio of community based projects. Community based projects have all stalled as a result of the lockdown. The major impact areas of the WRC were water security, proper sanitation, food security, energy security and water quality.

The commission’s total budget for 2020/21 is R332 million; R349 for 21/22 and R364 million for 22/23 over the medium-term expenditure framework. On financial matters, the inflationary impact on the income and expenditure budgets over the planning period had been pegged at around 5% in line with the National Treasury 2020 MTEF technical guidelines. The levy income had been impacted by the consumption volumes which in general had shown declined trends.

6.3.5 Water boards

Water boards derive their mandate from the Water Services Act, 1997 and categorised as national Government business enterprises in terms of schedule 3B of the Public Finance Management Act, 1999. The primary activity of water boards is to provide bulk water and sanitation services to water serviceinstitutions in the designated areas in which they operate. Although the water boards do not receive funding from the voted amount, the Department uses water boards as implementing agents for bulk water projects in their areas of jurisdiction.

Please note that the financial reporting period of water boards are aligned with that of the municipalities, and therefore, submissions of annual performance plans, proposed budgets and strategic plans are tabled in Parliament at the end of June each year. Once these are tabled, the Portfolio Committee would then undertake oversight of the projected budgets, targets and indicators highlighted in documents.

7. Observations and Recommendation

The Portfolio Committee, after deliberating on the inputs by the Department and its Entities makes the following recommendation:

7.1 Implementation of the Annual Performance Plan

The Portfolio Committee noted the impact of COVID-19 and the interventions by the Department in combating the spread of this virus. For example, distribution of water tanks, water tankers, drilling and refurbishment of boreholes and other water, sanitation and hygiene interventions. The committee further noted complaints around the distribution of water tanks that they remain empty in some areas. The Portfolio Committee notes that this will negatively affect the implementation of the Annual Performance Plan 2020/21 in its current form. There will be a need to revise the Annual Performance Plan during the course of the financial year. In this regard, the Portfolio Committee requested the Department to table the revised Annual Performance Plan 2020/21 by 31 August 2020.

7.2 Financial and Supply Chain (Procurement) Management

The Portfolio Committee raised a number of issues in relation to the capacity of the internal audit committee and the Department to deal with supply chain management and procurement transgressions; irregular expenditure, accruals and payables, overdraft and loans, corruption and other related financial malfeasance in both main and water trading accounts that pose challenges to the functioning of the Department and its Entities. In this regard, it is recommended that the Department should develop a financial and supply chain management plan for both Main and Water Trading Accounts that clearly outlines how these issues will be managed and prevented during the year under review. This plan should be presented to the Portfolio Committee by 30 October 2020.

7.3 Oversight of COVID-19 interventions

Although the Portfolio Committee commended the Department of Water and Sanitation and Entities on its interventions in assisting communities with limited or no access to water with tanks, tankering and drilling of boreholes, the Portfolio Committee has to undertake oversight on whether the use of RBIG toward COVID-19 interventions complied with the Public Finance Management Act in respect to supply chain management and procurement processes. To this end, the Portfolio Committee recommends that the Minister should undertake efficient oversight on how the Regional Bulk Infrastructure Grant was utilised on interventions toward COVID-19 pandemic, more especially in compliance with the Public Finance Management Act.

7.4 Programme 4: Water Sector Regulation budget decrease

The Portfolio Committee noted with concern the decrease in budget for Programme 4 which in real terms, decreases by R36.4 million or 8.3 per cent between 2019/20 and 2020/21. This Programme receives the smallest allocation of the overall departmental vote. It is therefore unfathomable in light of the priorities for the medium term, especially the one on regulating water services, which among others, seeks to improve turnaround time for water use licence applications to 120 days. This target alone will require a lot of human and financial resources during the year under review. For example, regulations need to be developed to factor in the 120 days and the circumstances under which this timeframe will be applicable.

Apart from the water use licences, the Department intends to gazette two catchment management agencies in the Breede-Gouritz and Vaal areas; conduct green drop assessments at 963 wastewater treatment systems and finalise the business case for the establishment of the National Water Resources and Water Services Agency, among many other targets.

In this regard, the Portfolio Committee recommends that the Department should address this concern during the revision of the Annual Performance Plan and report accordingly when presenting the revised Annual Performance Plan.

7.5 Capacity of Department to develop essential legislation and policies

The Portfolio Committee raised concerns about the uncertainty in respect of the capacity of the Department to develop essential legislation and policies; such as the finalisation of the Water and Sanitation Bill; the National Infrastructure Agency and the Independent Economic Regulator determining tariff tariffs, and the challenges in light of the prolonged period it takes to finalise and/or implement policies and legislation, required urgency as these issues have been with the Department and Entities, for a number of years. The Portfolio Committee recommends the Department prioritizes the finalization and implementation of essential legislation and policies.

7.6 Challenges related to infrastructure grant funding

The Portfolio Committee noted the challenges of infrastructure grant funding and lack of intergovernmental relations associated with infrastructure development. Currently there is a lack of practical synergy between municipal and departmental infrastructure grants. However, the Portfolio Committee welcomes the introduction of the District Development Model which calls for One Plan, One Budget implemented jointly by all spheres of government. In this regard, the Portfolio Committee commends the Department for taking a leading role in water and sanitation issues in the District Development Model initiatives across the country. It is therefore recommended that the Department provides quarterly reports on district development model initiatives where it is participating starting from fourth quarter of 2020/21.

7.7 Budget allocation for the implementation of the National Water and Sanitation Master Plan

The Portfolio Committee noted that the implementation of the newly developed National Water and Sanitation Master Plan will cost in excess of R900 billion, among other issues associated with the Master Plan, such as development of provincial master plans to align with the national master plan. To this end, there seems to be lack of information on costing and implementation of this plan. In this regard the Portfolio Committee recommends to the Minister of Finance and the Department that a sound costing of the implementation of the National Water and Sanitation Master Plan which among others should include the identification of funding sources for the implementation of the master plan and associated activities by 26 February 2021.

7.8 Municipal debts

The Portfolio Committee notes with concern the ever-increasing municipal debt owed to water boards for bulk water supply. The Department and Water Boards are unable to collect this debt on due dates; and in some instances, the municipalities do not have capacity to pay as they serve poor communities particularly in rural areas. Furthermore, the Committee notes the efforts of the Inter Ministerial Task Teak (IMTT) to assist municipalities to find ways to pay for the outstanding debts to water boards. However, the committee has learnt, during a briefing in October 2019, which these efforts have resulted in insignificant results as the debts kept growing. In this regard, the Portfolio Committee recommends to the IMTT to develop a collection mechanism that will be mutually beneficial to both the Department and municipalities and should provide a report to the Committee by 30 November 2020.

7.9 Transformation of the water sector

Transformation of the water allocation to support historically disadvantaged individuals, especiallyblack farmers had not yielded the desired output. Transformation in the water sector is non-negotiable; therefore, the Portfolio Committee recommends that this must be prioritised and fast-tracked by the Department and its Entities and a report should be provided to the Committee by January 2021.

7.10 Diversity of water mix and costs of desalination

The Portfolio Committee observed that the Department is overlooking the potential of desalination as a source of water supply in its water supply mix as majority of water supply sources are surface and groundwater based. It is therefore recommended that the Department should consider desalination as a source of water for coastal areas. The Department should prepare a report in conjunction with the WRC on the feasibility of supplying coastal areas with desalinated water by 26 February 2021.

7.11 Contribution of the Department and Entities toward the triple challenges

The Portfolio Committee highlighted issues that required further attention on the work of the Department and Entities with regard to addressing the triple challenges of poverty, unemployment and inequality. The Portfolio Committee recommends that the Department prioritizes programmes with a clear emphasis on 30% set-aside for women, youth and persons with disabilities through targeted action plans.

7.12 Filling of vacant posts

The Portfolio Committee noted the vacancy rate 14% as reported, and the fact that short-listing has been done for the Chief Financial Officer position. In this regard, the Portfolio Committee recommends that the Department should fill all critical vacant positions in the Department, particularly the Director General and Chief Financial Officer, by 31 January 2021.

7.13 Financial and non-financial performance of the TCTA in the 2018/19 financial year

The TCTA presentation was silent on the findings and recommendations made by the Auditor-General in respect of its financial and non-financial performance in the 2018/19 year under review. The Portfolio Committee recommends that TCTA should provide an addendum on the way in which they will implement the findings and recommendations Auditor-General in relation to the Lesotho Treaty between Lesotho and South Africa, as well as financing and budgeting between the two countries.

7.14 Trans-Caledon Tunnel Authority

The Portfolio Committee noted with concern the financial implications and costs incurred to the Lesotho Highlands Water Project due to border closure as a result of COVID-19 lockdown restrictions. The Portfolio Committee further noted the 2018/19 TCTA’s qualified audit opinion which among others negatively affects TCTA credit rating which would ultimately affect TCTA borrowing ability and current status of credit agreements. In addition, the Portfolio Committee appreciates the agreement between TCTA and its creditors that they will not exercise their rights to call for full payment of all loans in the event that TCTA gets qualified opinion. In this regard, the Portfolio Committee notes the agreement between TCTA, AGSA and their Lesotho counterparts to address areas of qualification together. It is therefore, recommended that the Department, TCTA and AGSA provide progress report to the Portfolio Committee on quarterly basis, starting from January 2021.

7.15 TCTA Project Delays

The Portfolio Committee noted with concern the delays on the implementation of Crocodile River Augmentation Scheme which was a consequent of delays in negotiations around the size of pipes that had to be installed. In the regard, the Portfolio Committee recommends that the TCTA provides a report on all project delays and their impacts on socio-economic development programmes. The report should among others include remedial actions as well. The report should be provided to the Committee by January 2021.

7.16 Eradication of bucket toilets

The Portfolio Committee notes the Department’s plan to replace 10 798 bucket sanitation systems at formal settlements in the Free State (10 202) and Northern Cape (596) with adequate sanitation services by the 2nd quarter of 2020/21. In this regard, the Portfolio Committee recommends that the Department should also prioritise eradication of bucket toilets in the Eastern Cape Province and should provide a plan for eradication of bucket toilets systems in the Eastern Cape which among others should indicate the number of bucket toilets, budget and time frame for eradication by January 2021.

7.17 Polluter Pays Principle

The Portfolio Committee raised a concern about the devastating pollution of water resources. It further acknowledges that polluter must pay the repair costs and these costs include, among others, cost to the environment, costs to human health and wellbeing, and the costs of reducing or preventing any further damage to water resources and the environment. In this regard the Portfolio Committee recommends that the Department should enforce the polluter pays principle without fear or favour and provide quarterly reports to the committee starting from February 2021.

8. Conclusion

The Report on the deliberations of the Portfolio Committee on Human Settlements, Water and Sanitation on Budget Vote 41, 2020/21 Annual Performance Plan and 2020 – 2024 Strategic Plan of the Department of Water and Sanitation and its Entities was considered and duly adopted with amendments on the 07 June 2020.

[1]At the conclusion of the Millennium Development Goals in 2015, the United Nations General Assembly adopted the 2030 Agenda for Sustainable Development, which announced the Sustainable Development Goals (SDGs). Goal 6 deals with the right to water and sanitation for all. Goal 6: ‘Ensure availability and sustainable management of water and sanitation for all”.

6.1 By 2030, achieve universal and equitable access to safe and affordable drinking water for all.

6.2 By 2030, achieve access to adequate and equitable sanitation and hygiene for all, and end open defecation, paying special attention to the needs of women and girls and those in vulnerable situations.

[2]Information that follows was sourced from: Department of Planning, Monitoring and Evaluation, ‘Twenty Year Review, South Africa, 1994 -2014: Rural Transformation” and ‘Toward a 25-Year Review, 1994 – 2019.

[3] National Treasury (2020a).

[4] That is, considering inflation.

[5] The information that follows was sourced from a research paper compiled by Mr T Manungufala, entitled ‘Analysis of Budget Vote 41: Water and Sanitation, Parliament of South Africa, April 2020.

[6] Department of Water and Sanitation (2020a)

[7] Estimates of National Expenditure, Budget Vote 41: Water and Sanitation, National Treasury, 2020

[8] Department of Water and Sanitation (2020b)

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Ibid.

[13] Ibid.

Documents