ATC240313: Eleventh Report of the Standing Committee on Public Accounts on its oversight visit to Giyani Water Services Project, from 28 to 31 March 2023, dated 13 March 2024

Public Accounts (SCOPA)

Eleventh Report of the Standing Committee on Public Accounts on its oversight visit to Giyani Water Services Project, from 28 to 31 March 2023, dated 13 March 2024.

 

1. Introduction
   
   The Standing Committee on Public Accounts (the Committee), having undertaken an oversight visit to Giyani Water Services Projects in Limpopo from 28 to 31 March 2023, reports its findings and recommendations to the House as follows:

Delegation

Mr M Hlengwa                   (IFP); Leader of the delegation
Mr S Somyo                     (ANC)
Ms T Siweya                    (ANC)
Ms A Beukes                    (ANC)
Mr RA Lees                       (DA)                
Mr Muthumba                    (EFF)

Apologies

Ms B Zibula                       (ANC)
Mr B Hadebe                     (ANC)
Ms B van Minnen   (DA)

Support Staff

Mr B Kali                           (Secretariat)
Ms N Nkabinde                  (Secretariat)

Ms N Cenge(Content Adviser)

Ms R Mokhatla(Committee Researcher)
Mr L Balfour                      (Committee Assistant)
Ms F Ndenze                     (Parliament Communications Officer)
 

 

Department of Water and Sanitation delegation

Ms. Lucy Kobe                  Provincial Head
Mr Xolani Zwane                DDG

 

SIU delegation
 

Mr Nelson MathabaManager: Forensics
Ms Zandile MkhariPrincipal Forensic Investigator
Mr Papi HlungwaniProject Manager
Mr Seth MsimangaProvincial Head

AGSA delegation

Mr Andries SekgethoBusiness Unit Leader
Ms Gladys Mokoena

Mr Katlego Mohlala            Technical specialist

Ms Asa Ramaofisi Manager

Ms Jolene Pillay                Manager

Mr Songezo MaqulaManager

Mr Tendani Mafunyiswa     Manager

 

1.  Background
   
   The Committee held several engagements with the Department of Water and Sanitation due to negative audit outcomes with findings on non-compliance with legislation such as the Public Finance Management Act (PFMA), Act No. 1 of 1999, related to inadequate expenditure management that has resulted in rising irregular expenditure as well as poor consequence management against officials who had incurred irregular expenditure as reported by the Auditor General of South Africa (AGSA). The Committee has been dealing with the issues associated with Giyani since 2016, during the 5th Parliament. The Special Investigating Unit (SIU) investigated approximately 34 allegations. The SIU also briefed the Committee on the investigations relating to the Limpopo Water Services Projects. Most of the irregular expenditure of approximately R9.0 billion is linked to implementing agencies, for example, the Giyani Water Services Project implemented by Lepelle Northern Water (LNW).

The Giyani Water Services Project was initiated in August 2014 to improve the quality of life for 55 villages in the region by providing clean running water to the villagers. Of the 55 villages, 27 were serviced by bulk water distribution while the remaining 28 got water through the usage of boreholes.

There are a number of interlinked components that the project consists of, namely; the Nandoni-Nsami Bulk Supply Line, the upgrades to the Giyani Water Supply Network and the Reticulation in Giyani to the 55 villages. The project intended to phase out the boreholes and have a complete bulk water distribution to the 55 villages. Additionally, it aimed to refurbish and upgrade the existing infrastructure, which has been in a state of ruin and prone to vandalism and leaks. Corroded pipes often burst, leaving residents without access to water for extended periods or forcing them to obtain it from alternative sources while repairs are underway.

 

The Giyani Water Project was initially earmarked to be completed in 2017. However, since its inception in 2014, the project has been riddled with delays as a result of tender irregularities and alleged corruption. As such, the project has been the subject of a number of augmentations and investigations.  

History of engagements on the Department of Water and Sanitation affairs since the August 2019 oversight visit

Date	Agenda
13 November 2019	Non-tabling of the 2018/19 annual report
11 March 2020	Follow-up meeting on the non-tabling of the 2018/19 annual report
26 May 2020	Hearing on the Department of Water and Sanitation’s progress on investigations on irregular expenditure in the Department and Water Boards
05 June 2020	Briefing by the AGSA on the 2018/19 audit outcomes of the Water and Sanitation portfolio (Department of Water and Sanitation, Water Boards, and entities)
19 June 2020	Briefing by the Special Investigating Unit on the Department of Water and Sanitation related investigations
08 June 2022	Briefing by the Special Investigating Unit on its investigations into the Department of Water and Sanitation and Water Boards
31 August 2022	Briefing by the AGSA of South Africa on the audit outcomes of the Water and Sanitation portfolio for the 2020/21 financial year
14 September 2022	Hearing on the audit outcomes of the Water and Sanitation portfolio for the 2020/21 financial year
18 October 2022	Hearing on the Department of Water and Sanitation audit outcomes – 2020/21 financial year (continuation), deviations and expansions
19 September 2023	Hearing on unauthorised expenditure due to overspending in the Bucket Eradication Programme in 2016/17 and the War on Leaks in 2017/18
14 November 2023	The Department of Water and Sanitation (DWS), Lepelle Northern Water, and the Special Investigating Unit (SIU) to receive an update on the infrastructure projects

 

1.  Objectives
   
   Based on these incidents, the Committee decided to conduct an oversight visit to the Giyani Water Project site to probe the:
   
   3.1 Continued non-compliance and breach of the PFMA;
   3.2 Impact of the non-compliance;
   3.3 Causes of weak internal controls; and
   3.4 consequence management.

 

1. Nandoni-Nsami Pipeline Project

The project was initiated during the 2009/10 financial year, following the failure of infrastructure and continued drought conditions that affected the yield of both Nsami and Middle Letaba dams which were the primary source of water to Giyani and resulted in the genesis of the project. Mopani District Municipality with the Department of Water and Sanitation (DWS) took a decision to source water from Nandoni dam to augment water supply deficiencies in Giyani with a budget of R284 million using the National Transfer Fund. Tthe Mopani District Municipality was responsible for implementation and management of this project. The Department appointed LNW as an Implementing Agent through a directive in August 2014 inclusive of the Giyani Water Services Project. The LNW appointed LTE Engineers on a turnkey contract (engineering, procurement and construction (EPC contract) to design, construct, and commission the project to address water and sanitation challenges in Giyani.

 

The project entails the construction of two (2) bulk water pipelines to provide water to Giyani and the greater Malamulele areas, as well as a pump station at the Nandoni water treatment works (WTW) to supply water to the raw water pipeline. In 2018, LTE Engineer’s contract was terminated due to irregularities, and the DWS Engineering Services were appointed as interim consultants. In 2020, Isiphethu Engineers were appointed to supervise Vharanani Contractor. Isiphethu was approved to do adaptive planning to cater for other amenities e.g. pump stations and reservoirs, that were not part of the original scope of work, inclusive of the potable water pipeline to Malamulele to service 14 villages.

This resulted in a further delay to the envisioned completion date. Temporary connections on river crossings were done to render the system functional by mid-April 2023, whilst construction of permanent structures is in progress. Installation of raw water pumps is in progress and is intended to be completed by 30 April 2023 according to the department. Mobile pumps are provided to fill the pipeline and test the system whilst the installation of permanent pumps is in progress.

 

1. Giyani (Nsami) Water Treatment Works Upgrade and Refurbishment Project

 

The project was initiated in 2012 by the Mopane District Municipality with the aim to upgrade the Giyani (Nsami) WTW from 30 mega liters (ml/d) to 36.7 ml/d through the Municipal Infrastructure Grant (MIG) with a budget of R77 million. Tangos Engineers were appointed to supervise BMK and Mopicon Contractors, but the project was subject to various delays.

 

In 2014 LNW was directed by the Minister of DWS to intervene, following which the LTE engineers on the turkney EPC contract were appointed to design, construct, and commission the project to address the water and sanitation challenges in Giyani. The Project was completed and commissioned in November 2014; however, the plant was only for four months due to structural construction defects.

 

A new business plan for the Giyani WTW was submitted in August 2022 where Phase 1 is the Refurbishment of the existing 30ml/d and phase 2 is the Upgrading of the WTW to 40 ml/d. At the time of the oversight visit the plant was reported to be operating at 17ml/d due to water rationing as a result of the project. The entire refurbishment project was reported to be December 2023. Phase 2 was reported to still be in the planning stage and with construction expected to commence in April 2023 for a duration of 24 months.

 

1. Giyani Reticulation Project

 

The Giyani reticulation programme was initiated in August 2022 with the aim to complete the service value chain by extending the supply from bulk pipelines to household level. The department reported that Phase 1 of this project entails the reticulation of 24 villages, which has commenced, and 37 contractors are to be appointed through the Water Services Infrastructure Grant (WSIG) funding. Phase 2 of the project entails the reticulation of 31 villages and has been recommended for approval and will only be implemented in the 2024/25 financial year with 43 contractors to be appointed.

 

1. Findings
    

During the oversight tour, the committee visited a number of the Giyani Water Services Project sites in a number of villages to ascertain the actual progress of the project. Over and above the interactions with DWS and the project officials, the committee also engaged with community members and construction site workers. The following overarching findings which have adverse consequences for the success of the project and maladministration of state funds were made, among others.

 

7.1 Project progress and management:

1. Based on the various site visits, the reported progress on the various projects does not corroborate what is happening on site. The project is already 11 years late and over R3.8 billion has already been spent relative to the R284 million initially budgeted for the project.
2. Contractors that were at the various sites appeared to have recently started/resumed work. In some instances, site workers reported that they had just been appointed on the day the Committee was visiting the construction site.
3. Water rationing was reported to be on account of the project in progress, however there are a lot of water leakages identified on various sites which have a severe impact on the water supply, and there has been no evidence of how the water leakages are managed.
4. At the water purification plant, the water being pumped is more than the plant can process due to system failures, leading to overflowing/spilling which is water wastage.
5. Construction failures such as the one at the water purification site that cost R77 million are a major hindrance to the project. The department reported that the construction is awaiting demolition.
6. Incorrect pipes were initially installed at the Nandoni dam pump station costing the district municipality millions of state funds.
7. During load shedding, pumping is severely affected at the WTW sites. The generators cannot support all the pump stations.
8. The construction of the top slab to seal the water Canal was not done. Contractors were on site, and it appeared that work commenced due to the Committee visit.
9. The Canal from Nandoni is therefore not operational and there is no water flow servicing the plant from the Canal. Middle Letaba is also dry therefore there is also no water there.
10. A lot of villages are still dependent on boreholes. We were taken to selected households where standpipes (taps) have been instated in the yards. The taps appeared to be newly installed. The taps are not metered.
11. The project makes use of independent consultants. Government engineers are not used, reportedly due to the scope of the project.
12. There is poor project management and oversight by the DWS as evidenced by all the challenges surrounding the entire project.

 

7.2 Supply Chain Management:

1. A concern was raised about the same contractor being used for many if not all the reticulation projects – HWA Engineers and Project Managers.
2. The tender is being split into segments to avoid the 30% threshold. This split is being used to accommodate funding.
3. There is no clarity on whether contactors who have failed in the past are excluded from tendering under different names.

7.3 Consequence Management:

1. There is no evidence of sound consequence management in upon inquiry by the Committee, among others.
2. The turnaround time on fixing ailing infrastructure such as boreholes can take 4 years, and no one is held accountable.
3. R77 million was spent on a project that resulted in construction failure necessitating the structure to be demolished there is no clarity who was held accountable and what the repercussions are.

7.4 Community safety and concerns:

1. The water Canal site is not safety compliant and poses a major hazard for children who live around the Canal construction site. The site was not cordoned off with any construction tape or structures.
2. The installation of a fence to secure the Canal was only done during the Committee’s visit after community members complained to the Committee about the hazard.
3. At Ngobe village there is no water. There are 5 boreholes and only 3 are operational. Community members complained that there are 10 water tankers and only two of them are servicing the area, resulting in community members being without water for days on end.
4. At Mopani village they are faced with the same challenges and there are 5 water tankers servicing the area.
5. At Bambeni village community members complained that they still use boreholes. Even the households where standpipes have been connected, the connection is still to the boreholes. The project officials advised that the bulk of the standpipes will be linked to the reticulation.
6. At Homu village the Committee heard of complaints of how the water that is being drawn from the main lines is sold to them at ridiculous prices to the community members. This has now become a major business opportunity.
7. Boreholes are also damaged and not repaired by those who are entrusted to maintain them, resulting in community members having to travel to neighboring villages to fetch water. In one village a borehole was damaged by contractors during drilling in 2019 and is still not fixed in March 2023. The Committee was advised that will be fixed by the 03 April 2023.
8. Complaints that the social facilitator does not have engagements with the community members pertaining to this project.

 

1. Meeting with Department officials, Mayor, Mopani Municipality, Councilor, and

      Lepelle Northern Water Board Chairperson

On the last day of the oversight visit, the delegation met with the DWS officials, LNW Board Chairperson, and Mopani Municipality to discuss matters observed on site in the Giyani Water Project, and to probe further into other matters pertinent to the Committee’s oversight visit.

 

1. Recommendations
    

The Committee recommends as follows:

 

9.1       The effectiveness of governance arrangements should be strengthened in line with good governance principles to enhance the effectiveness of internal audits by addressing findings and recommendations in a timely manner.

1.        The development of a detailed action plan aimed at addressing poor procurement planning and governance structures.

9.3       Compile early warning reports listing contracts that will soon expire and ensure that new tender processes are initiated in a timely manner.

9.4       Ensure that concrete measures are in place to address the implementation of consequence management for officials who contribute to irregular expenditure.

9.5       The total expenditure to be revisited to determine the full extent of the non-compliance which led to irregular expenditure.

9.6       Quarterly reporting by the department on the progress of the project against planned targets to ensure that the project is not stagnant.

 

1. Conclusion
   
   The Committee has serious concerns regarding the high level of irregular, fruitless, and wasteful expenditure, and the gross disregard for procedures, rules, and regulations such as the PFMA, Treasury Regulations, and other relevant legislation.

All reports of investigations, findings, and actions taken on irregular, fruitless and wasteful expenditures must be forwarded to the AGSA, SIU, and the Committee. This must become mandatory and a norm for the department and all public entities. The AGSA must report on this aspect in the Annual Report of the Department.

Section 38 (1)(g) of the PFMA states that on the discovery of any unauthorised, irregular, or fruitless and wasteful expenditure, the accounting officer must report immediately in writing, giving particulars of the expenditure to the relevant Treasury. Section 86 (1) states that an accounting officer is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years if that accounting officer wilfully or in a grossly negligent way fails to comply with a provision of section 38, 39 or 40.

The Committee further resolves that the Executive Authority submits quarterly progress reports on the implementation of the above recommendations to the National Assembly, the first of which is due in 60 days after the adoption of this report by the House.
 

 

Report to be considered.