ATC241011: Report of the Portfolio Committee on Water and Sanitation on Quarterly Expenditure Reports and the Municipal Water Debts to Water Boards, dated 17 September 2024

Water and Sanitation

Report of the Portfolio Committee on Water and Sanitation onQuarterly Expenditure Reports and the Municipal Water Debts to Water Boards, dated 17 September 2024

 

The Portfolio Committee on Water and Sanitation (the Committee), having considered the Department of Water and Sanitation (the Department)’sFourth and First Quarter Expenditure Reports for 2023/24 and 2024/25 respectively, and the Report on Municipal Water Debts to Water Boards, reports as follows:

 

  1. Introduction

 

The Portfolio Committee on Water and Sanitation considered thesereports on 27 August 2024. The Committee’s report presents a brief overview of each report as presented including the Committee's critical deliberations, observations, and recommendations/resolutions following the briefing and interactions with the Department.

2.Briefing on Fourth Quarter Expenditure Report for the 2023/24 Financial Year[1]

 

  1. 1. The presentation highlighted key achievements and challenges over the 2023/24 Financial Year. The 2023/24 fourth quarter reported an expenditure of99.8% of the adjusted allocated budget (R21.376 billion) and a 70% achievement of the planned targets. The table below shows a performance summary with a list of targets that were not achieved.

 

Programme

%actual achievement

%budget spent

Areas of underperformance

Strategies to overcome areas ofunderperformance

Administration

69%

99.1%

Implementation of risk management plan.

Reduction of vacancy rate for engineers and scientists.

Implementation of the financial recovery plan.

Expenditure on annual budget.

Reduction of debtor days.

Risk management plan: The risk maturity improvement plan has been deferred to the 2024/25 financial year.

 

Vacancy rate: 122 professional and technical WULA posts were advertised, of which 71 are scientist and engineering posts (80 posts have been filled). The remaining posts are in the process of scheduling the panel approval.

 

Financial recovery and debtor days: The Department is implementing revenue collection measures including an incentive scheme with repayment agreements.

 

Water Resources Management

71%

99.7%

Completion of Record of Implementation Decisions for bulk raw water planning project.

River systems with resource classes and determined resource quality objectives.

New and existing water resource gauging stations/weirs constructed/refurbished.

Bulk raw water projects in preparation for implementation and under construction.

Scheduled maintenance projects are completed as a proportion of planned maintenance projects.

Dam safety rehabilitation projects and conveyance systems under construction.

Water economic regulator gazetted for establishment: draft bill development.

Finalisation of applications for water use authorisation.

Record of implementation decisions, river systems with water resources classes and determined resource quality objectives: the areas of underperformance will be finalised during the 2024/25 financial year.

 

New and existing water resource gauging stations/weirs constructed/refurbished: the areas of underperformance will be finalised during the 2024/25 financial year.

 

Bulk raw water projects in preparation for implementation: the areas of underperformance will be finalised during the 2024/25 financial year.

 

Bulk raw water projects under construction: procurement of required material is underway, and an acceleration plan will be implemented.

 

Completing scheduled maintenance projects: an acceleration plan from contractors is underway.

 

Dam safety rehabilitation projects: An acceleration plan is being implemented to recover lost time.

 

Rehabilitation of conveyance systems: an acceleration plan is implemented.

 

Percentage of applications for water use authorisation finalised within the regulated period: Recruitment of dedicated personnel to process application is underway.

 

Water economic regulator gazetted for establishment: The draft bill for the establishment of the water economic regulator will be finalised during the 2024/25 financial year.

Water Services Management

69%

99.9%

Completion of implementation readiness studies for water and wastewater services projects (RBIG).

Completion of district municipality's five-year water and sanitation reliability plans.

Regional bulk infrastructure project phases under construction (mega) and completed.

Budget for Facility Infrastructure projects completed.

Water services infrastructure grant projects completed.

Replacement of existing bucket sanitation in a formal settlement.

IRS and DM reliability plans: These will be finalised in the 2024/25 financial year.

 

Water services infrastructure projects: the water service authorities will fast-track the contractor appointments.

 

Bucket sanitation backlog: All contractors developed acceleration plans to finalise the bulk sanitation infrastructure. The projects are at various stages of construction in the Free State.

Total

70%

99.8%

 

 

 

  1. 2. The annual procurement from designated groups was reported as follows:

  • Black companies with 50% or more ownership: 35% of procurement expenditure amounting to R3.072 billion with annual procurement expenditure of R8.712 billion

  • Women companies with 50% or more ownership: 34% from the target of 40% amounting to R2.989 billion.

  • Youth companies with 50% or more ownership:11% from the target of 30%,amounting to R932 million.

  • People with disability companies with 50% or moreownership: 1% from a target of 7%, amounting to R94 million.

 

  1. 3. The Department finalised the establishment of four new Catchment Management Agencies (CMAs), namely Limpopo-Olifants, Mzimbuvu-Tsitsikamma, Pongola-Umzimkhulu, and Vaal-Orange during the year under review. It also managed to process the National Water Resource Infrastructure Agency Bill, which was approved by Parliament in May 2024, and submitted to the President for assent. The Agency will, among others, own all the national water resource infrastructure assets and obtain the revenue streams associated with those assets, enabling it to borrow additional funds on the strength of its balance sheet to fund new infrastructure projects.

 

  1. 4. The Department further highlighted and acknowledged unacceptable delays in some of the key infrastructure projects. However, good progress has been made to unblock and accelerate the delayed projects including the Lesotho Highlands Water Project, uMkhomazi Dam, Ntabelanga Dam, Stephen Dlamini Dam, Foxwood Dam and raising the wall of Clanwilliam Dam. The Olifants River Water Resource Development Project which is jointly funded by the government and the mining sector at a tune of R24 billion is currently underway. This project will increase water supply and ensure water security to enable investment in mining. Communities adjacent to the bulk pipelines will also benefit from the project alleviating the concern of communities that have been complaining that bulk water pipelines pass through their villages, yet they remain without water.

 

  1. 5. Department released the results of its Blue, Green and No-drop reports in 2023, as part of its work as the regulator of the water services sector in terms of the Water Services Act. The reports keep the public and stakeholders informed with credible information about the state of water and sanitation services in the country. The drop reports indicated that the performance of municipal water and sanitation services has declined since the last time the drop reports were issued in 2014. The drop reports were provided to all water services authorities, and they were advised as to the causes of the decline and what needs to be done about it. The identified causes include, amongst others, water and sanitation infrastructure being in poor condition due to a lack of maintenance and non-adherence to standard operating processes for drinking water treatment and wastewater treatment.

 

  1. 6. The Department is strengthening its role as the regulator of water services, by developing more comprehensive and stringent norms and standards for water services and standardising its regulatory processes. These include the amendments to the Water Services Act to more clearly separate the roles of Water Services Authorities (ensure that water services are provided to required standards) and Water Services Providers (provide the services) and to enable the Minister to intervene more effectively as the Regulator. The Water Services Amendment Bill went through a public consultation process during the reporting period and will shortly be submitted to the Cabinet for approval for submission to Parliament.

 

  1. 7. The Department is currently dealing with the historical unauthorised, irregular, fruitless and wasteful expenditure incurred mainly between 2015/16 and 2018/19. Unauthorised expenditure emanates from the Bucket Eradication Programme (R292.269 million)and the War on Leaks (WoL) Programme (R348.825 million). The unauthorised expenditure is currently under consideration by Parliament.Projects that are under investigation are the Giyani Water Services Project;Upgrading of the Thukela Goedertrouw Scheme;Support and maintenance of SAP ECC6; War on Leaks Project;Vaal Intervention; Financial advisory services; Desalination Plant Richards Bay;Bucket Eradication Programme;and Usuthu Vaal Emergency works

 

  1. 8. Some of the irregular expenditure cases are currently under investigation by the Department, South African Police Service (SAPS) and Special Investigating Unit (SIU) whilesome of the cases are before the courts of law.The Internal Audit is also investigating some of the reported irregular, fruitless and wasteful expenditure while Human Resource Management is conducting disciplinary hearings on some of these matters.

3.Briefing on the First Quarter Expenditure Report for the 2024/25

 

  1. 1. The expenditure for the period ended 30 June 2024 amounted to R5.089 billion, which is 21.1% of the total original appropriation of R24.075 billion, resulting in unspent funds of R18.985 billion for the remainder of the financial year.  This expenditure is slightly less than the projected expenditure in the first quarter by R91.2 million. This is insignificant because this is the first quarter.

 

  1. 2. The Department highlighted its progress in the attainment of its planned targets over the first quarter.  The Department reports that the processing time of Water Use Licences (WUL) has improved to 70% of applications being processed within 90 days in the first quarter. It further reported that the recruitment of 120 additional technical staff would improve performance on the WUL processing target.

 

  1. 3. The Department gazetted the third revised Raw Water Pricing Strategy (RPWS) on 21 June 2024, for implementation from 1 April 2026. This follows the concurrence of the Minister of Finance. The RWPS was last revised in 2007. In addition, the revised Norms and Standards for municipal tariff setting were gazetted on 27 May 2024, for implementation from 1 April 2026. The public consultation processes for the amendments of the National Water Services and the National Water Bills were finalized.

 

  1.  4. The spending on Regional Bulk Infrastructure Indirect Grants was slow in some provinces due to contractual disputes, work stoppages and community protests. Nevertheless, the Department indicated that community engagement programmes are being implemented to address challenges raised on affected projects. Acceleration Plans are being implemented for projects including the Bucket Eradication Programme, and Vaal River Intervention Project. The Department has also developed an Infrastructure Procurement Strategy including implementation of project management systems to provide support to the Implementing Agents as part of the broader recovery plan for delayed projects.

 

  1. 5. The table below summarises performance indicators together with the areas for underperformance as well as the remedial measures for underperformance.

 

 

 

 

Programme

%actual achievement

%budget spent

Areas of underperformance

Strategies to overcome areas of underperformance

Administration

53%

23.9%

  •  Vacancy rate for engineers and scientists.

  • Training interventions implemented in the department.

  • Safety and security assessments for departmental facilities.

  • Implementation of the financial recovery plan

  • Expenditure of departmental budget.

  • Number of debtor days

  • Implementation of the international relations programme.

Vacancy rate: The Department is finalising the implementation of the organizational structure and abolishing unfunded positions.

 

Training interventions: The approval to deviate from the cost containment measures and implement the training interventions as planned has been obtained. The training not conducted during the quarter will be implemented in subsequent quarters.

 

Safety and security: The assessments will be conducted in subsequent quarters.

 

International relations programme: the implementation of the obligatory engagements has been deferred to the second quarter.

Water Resources Management

77%

47.9%

  • Bulk raw water projects under construction.

  • Water Research Commission (WRC) levy gazette published.

  • Regulations to establish the Ministerial Advisory Committee on Water Sector Social and Economic Regulation.

  • Finalisation of applications for water use authorization.

  • Validation and verification in Limpopo-Olifants water management area.

  • Oversight assessments are conducted for functions devolved to catchment management agencies (CMAs).

  • Planning arrangements for Green Drop assessments.

  • Compliance monitoring with regulatory requirements of dam owners.

  • Performance evaluation of water resource institutions (i.e. 2 CMAs)

Water Research Commission (WRC) levy: The gazette is planned to be published in the second quarter.

Water economic regulator: Finalise the review of the business case that informs the economic regulator bill.

Water use authorisation: Training is underway for recently recruited officials to process applications.

Validation and verification: The properties will the validated and verified in subsequent quarters.

CMA investigated cases assessed: As some CMAs are not operational the department is currently supporting them with conducting inspections.

Green Drop: The procurement process is underway to appoint service providers, and the process will be accelerated.

Compliance monitoring for dam owners: The monitoring of the dam owners will be conducted in subsequent quarters.

Institutions performance evaluation: The annual performance plans have since been received and reviewed.

 

Water Services Management

67%

9.1%

 

  • Completion of implementation readiness studies for water and wastewater services projects (RBIG).

  • Completion of district municipality's five-year water and sanitation reliability plans.

  • Mega regional bulk infrastructure project phases and Budget for Facility Infrastructure (BFI) projects under construction

  • Job opportunities created under RBIG.

  • Water services infrastructure grant projects under construction and completed

Implementation readiness study: the procurement of a service provider to accelerate the finalization of the study is underway.

 

District municipality reliability plans: the procurement process of service providers to accelerate the finalization of the reliability plans is underway.

 

Mega projects under construction: the commencement of the projects will be started when the previous phases have been completed.

 

Budget for facility infrastructure: the project will commence in the subsequent quarter as soon as the contractual arrangements have been finalised.

 

Job opportunities: as soon as the delayed projects are started, the creation of job opportunities will improve.

 

 

Water Services Infrastructure Grant projects under construction: the projects will commence as soon as the planning and design process is finalised.

 

Water Services Infrastructure Grant projects completed: As the delayed start of some projects affected their completion; they will be completed in the subsequent quarters.

 

 

Total

69%

21.1%

 

 

 

 

  1. 6.  The Department provided the same report as the one provided in the fourth quarter report on unauthorised, irregular, fruitless and wasteful expenditure (refer to 2.7 above).

 

 

The Department also reported that water has started to flow through household connections to some villages in Giyani from the construction of the Nandoni to Nsami pipeline, in combination with the refurbishment of the Giyani Water Treatment Works and construction of bulk and reticulation infrastructure.

4.Briefing on Municipal Water Debts to Water Boards

 

The Department categorised the municipal water debts according to the magnitude of impact on the financial viability of the Water Boards. It further acknowledged that the debt is growing at an alarming rate (151% over the last medium term) and it stood at R22.36 billion as of June 2024.

 

  1. Water Boards facing imminent bankruptcy

 

  1. Sedibeng Water was disestablished in 2022 because it was bankrupt due to municipal water debt. Vaal Central (previously Bloem Water) and Magalies Water Boards took over the geographical service areas, staff, assets and liabilities of Sedibeng Water. This transfer of operations to Vaal Central and Magalies Water Boards did not solve the underlying debt problem, and the municipal debt continues to grow.

  2. Vaal Central and Magalies Water Boards face bankruptcy within the next 6 to 12 months if the municipalities don’t start paying their current invoices in full.  These are the municipalities that are heavily impacting Vaal Central Water Board financial viability, Matjhabeng Local Municipality (R6.9 billion), Kopanong Local Municipality (R768 million), Mangaung Metropolitan Municipality (R921 million), Nala Local Municipality (R404 million) and Nama-Khoi Local Municipality (R275 million) while Maquassi Hills (R352 million) and Thabazimbi (R198 million) local municipalities are critically affecting Magalies Water Board.

  3. From July 2024 Vaal Central Water Board did not have sufficient cash resources to pay their operating activities and have stopped paying for their raw water.By paying only essential expenses (salaries, electricity, chemicals etc) Vaal Central Water Board will be able to keep going until approximately May 2025, after which they will be bankrupt and will not be able to deliver water

  4. Continued non-payment of current invoices by these two municipalities alone will result in Vaal Central Water Board going bankrupt, even if all the other municipalities start paying their current invoices in full.

  5. Magalies Water Board has already reached the point where their expenditure exceeds the available bank balance will not be able to pay their operating costs and have stopped paying for their raw water.

  6. By paying only essential expenses (salaries, electricity, chemicals etc), Magalies Water will be able to keep going until approximately June 2025, after which they will be bankrupt and will not be able to deliver any water.

  7. If Maquassi Hillsand Thabazimbi localmunicipalities do not start paying their current invoices to Magalies Water in full, then Magalies Water will go bankrupt, even if all the other municipalities start paying their current invoices in full.

 

  1. Water Boards experiencing cash flow challenges, but not facing imminent bankruptcy

 

  1. Amatola Water and Lepelle Northern Water are both experiencing cash flow challenges due to non-payment by municipalities. As a result, these Water Boards have not been fully paying their current invoices for raw water and over time have accumulated large amounts outstanding to the Department.

  2. An Intergovernmental Framework Relations Act (IFRA) process is in progress between Amatola Water and Amathole District Municipality (R363 million). A settlement agreement for the old debt (as of 30th June 2019) was signed in April 2020 for repayments to be affected over 48 months. Unfortunately, the Municipality is not meeting its payment obligations in terms of the agreement.

  3. Mopani (R345 million) and Sekhukhune (R158 million) District Municipalities are critically affecting the financial viability of the Lepelle Norther Water.

  4. Mopani District Municipality signed a repayment agreement in April 2024 for the municipality to service its current account in full and pay old debt in instalments and is so far adhering to the repayment agreement.

  5. Sekhukhune District Municipality is not paying its current invoices in full. It is paying invoices intermittently. It is in the process of signing a new payment agreement with Lepelle Northern Water.

 

  1. Water Boards experiencing declining payment levels

 

  1. Rand Water and uMngeni-uThukela Water are both experiencing declining payment levels from certain municipal customers. Rand water is mainly affected by Merafong City (R1 billion), Govan Mbeki (R842 million), Emfuleni (R1.2 billion), Randwest City (R584 million), Victor Khanye (R423 million).

  2. Rand Water has entered into a Debt Settlement Agreement (DSA) with these municipalities which some of the municipalities are honouring while others are defaulting.

  3. In recent years, the payment levels of the Gauteng metros to Rand Water have declined - some metros are now not always paying current invoices within 30 days like they used to – nevertheless, Rand Water's main customers (the metros) generally pay their current invoices, which make up +/- 80% of Rand Water sales.

  4. uMngeni-uThukela Water is affected mainly by King Cetshwayo District (R875 million), Ugu District (R390 million) and Msunduzi (R513 million) local municipalities.

  5. King Cetshwayo DM (KCDM) is withholding payment as they are not receiving electricity payments from Umgeni-Uthukela Water (UUW). The outstanding payments to the municipalities are because 95% of the invoices received from KCDM were incorrect or not submitted to UUW at all. UUW has repeatedly requested this to be corrected and has met with KCDM three times to try to rectify this situation with no success.

  6. Msunduzi LM is not fully paying its current account but has committed to settling old debt while Ugu DM is in breach of their Debt Settlement Agreement.

 

  1. Implications of the debts owed by municipalities to Water Boards on service delivery

 

  1. It is worth noting that it is not all municipalities that are not paying. However, if a water board goes bankrupt and stops functioning, it will stop providing water to all its municipal customers, not just the ones who are not paying.

  2. Magalies and Vaal Central Water Boards have already stopped paying DWS for raw water due to a lack of payment from municipalities - non-payment by municipalities to Water Boards therefore threatens the financial viability of the whole water sector, including the viability of the National Water Resource Infrastructure Agency.

  3. Vaal Central and Magalieswater supply to municipalities in the Northern Cape, Free State and Northwest will be negatively affected if the two Water Boards go bankrupt.

  4. Likely, the bankruptcy will not result in an immediate cessation of services – it will probably result in a rapid decline in services over several months, as workers start refusing to work because they are not paid and as the Water Boards become increasingly unable to treat or pump water.

  5. As these two Water Boards cut all non-essential expenditure, they will stop doing maintenance on their infrastructure and their performance will deteriorate

 

  1. Summary of Solutions fromthe Department and National Treasury to Address Municipal Water Debts

 

  1. The Department and Water Boards have recently standardized their operating processes for debt collection, including collaborating with the National Treasury to ensure that equitable share allocations are withheld for municipalities not paying their current invoices; consistent enforcement of water restrictions on non-paying municipalities; and legal processes which will result in judgements against municipalities as a last resort.

  2. These Standard Operating Procedures for credit control and debt collection went through a consultation process with all relevant parties and were adopted by the Water Trading Entity and Water Boards in December 2023.

  3. The Department and National Treasury are finalizing a debt write-off mechanism which will allow Water Boards to write off municipal debt if municipalities establish a good payment record for current invoices.

  4. The Department could apply to the National Treasury to be allowed to redirect infrastructure grant allocations of non-paying municipalities to Vaal Central and Magalies Water Boards. However, with efforts by the Department to reduce under-expenditure on these grants in recent years, the grants are fully committedfor multi-year projects so there is almost nothing to redirect.

  5. The Department has applied to the National Treasury to be allowed to re-prioritise its current 2024/25 budget to bail out these two Water Boards - however, the Department could only find R50 million that could be reprioritized – this amount will not solve the problem; it will delay the bankruptcy by a few months.

  6. These measures do not solve the problem of municipalities which indicate that they cannot and will not pay their current invoices in full.  A more permanent solution should be found.

 

  1. Observationsand Resolutions

 

The Committee appreciated the presentations and made the following observations and resolutionswith respect to all three briefings which are reported under the following themes:

 

  1. Causes of water debt crisis and mechanisms for payment of water debts by municipalities

 

Non-revenue water (water leaks and illegal water connections), weak/ineffective municipal billing, high unemployment and poor economic growth (in former mining towns) are some of the key causes of the increase in municipal water debts. Nevertheless, the poor economic growth due to the closure of mines or other industries such as the closure of mines in Matjhabeng is not solely the reason for nonpayment, the poor governance and lack of leadership at Matjhabeng municipality contribute to poor financial management.

 

The Department is resolving this crisis through negotiations with municipalities, premiers and local government stakeholders such as rate payers' associations. The establishment of an inter-ministerial task team (IMTT) to address the debt crisis and the involvement of provincial departments in physical interventions emphasizes the importance of stakeholder engagement with the South African Local Government Association and Department of Cooperative Governance and Traditional Affairs to find sustainable solutions for municipalities in crisis.

 

The Department indicated that there are no binding mechanisms that the department can use to compel municipalities to pay their debts to water boards. The water boards are forced to resort to credit control measures like restricting water supplies, which is not an optimal solution as it affects paying customers.  Furthermore, the department stated that taking municipalities to court or trying to attach their accounts is also not an ideal approach, as it goes against the spirit of intergovernmental cooperation and relations as outlined in the Constitution. The department emphasized the need to avoid legal disputes between different spheres of government and instead focus on fostering cooperation and acknowledged that this is a challenge the department is grappling with. As for ring fencing water-related budget allocations through legislative amendments the Department indicated that this is the mandate of the National Treasury as the custodian of the Public Financial Management Act, 1999 (Act No. 1 of 1999).

 

The Department is in the process of consolidating a comprehensive report on the municipalities that owe water boards, which will include the agreed-upon payment plans. Once the consultations with all 9 provinces are completed, the department will provide the portfolio committee with a comprehensive report, including the payment plans agreed upon with the municipalities. The Department will monitor the implementation of these payment plans to ensure the municipalities follow through on their commitments.

 

The National Treasury is implementing a Metropolitan Trading System which involves ring-fencing of the revenues from water, and electricity, among others. This initiative may also assist in resolving the municipal water debt. 

 

  1. Preferential Procurement Regulations

 

The latest version of the preferential procurement regulations does not allow for set-asides, unlike the previous version. The current regulations require allocating points for preferences, and the highest-scoring tender must be appointed. The new Public Procurement Act, which has been passed by Parliament but not yet in effect, will allow for set-asides again. The department is developing regulations to implement the new Public Procurement Act, which will help achieve procurement targets.

 

  1. Delayed Regional Bulk Infrastructure Projects

 

The Department has identified delayed projects through its Provincial Heads and is holding quarterly meetings with Mayors and other stakeholders to address the bottlenecks. The CoGTA project management unit and provincial treasury are monitoring grant expenditures in their respective provinces. Late submissions of business plans and hijacking of projects by unauthorized individuals or the so-called construction mafia are some of the causes of delays. The Department has intervened in some cases,suchas Mogale City, to accelerate project submissions and ensure funding is spent. In some instances, water boards are used as implementing agents to accelerate projects, such as in the BulelaMetsiprogramme in the Northwest Province.  This programme is currently being piloted in the Eastern Cape province. These interventions aim to accelerate project implementation and ensure that allocated funding is spent effectively. The department is working to address challenges and ensure projects are completed within the expected timeframes.

 

Some of the bulk infrastructure projects were delayed due to financial unattractiveness as no one was willing to sign off on theofftake agreement. For example, uMkhomazi was delayed for 10 years as eThekwini could not sign off as the project was too expensive. This was resolved when the National Treasury provided 25% to offset the cost which encouraged eThekwini to sign off the offtake agreement.  Ntabelanga Dam which is part of the Umzimvubu project was also delayed and had to be redesigned to make it affordable as a social project funded by the National Treasury. Corruption has also contributed to delays in the implementation of mega projects such as the Giyani water supply project.

 

  1. Universal Water Access

 

The Department notes that while access has improved, the reliability of the service has deteriorated, as indicated by the Green and Blue Drop reports. Access has plateaued at about 90%, with municipalities using their grants to rehabilitate existing infrastructure rather than providing new infrastructure. The department is working with municipalities to prioritize projects using grants to meet the remaining 10% of the population's access needs. The access statistics from Statistics South Africa do not mean that 90% of people have access to an RDP level of service (a tap 200 m away from the household) everywhere in the country; some areas have much lower access, particularly in rural areas, mainly in the former homelands. The department is proposing to upgrade the RDP level of service to having a household connection.

  1. Norms and Standards for Drinking Water Quality

 

The Blue Drop reports show that 29% of systems are physically compliant, 18% scored poorly, 11% are good, and only 3% are excellent. The department has sent letters for compliance to municipalities that scored below average in physical compliance, with 74% of responses received. The Water Services Act, 1997 obligates municipalities to test water quality and inform their constituencies if the standards are not met.  The norms and standards for drinking water quality are based on international standards. The Blue Drop report checks compliance with these standards, which are related to international norms and standards. The department is committed to ensuring that municipalities meet the minimum standards for drinking water quality. The blue drop report compliance notices enable municipalities to improve their compliance efforts with support from the Department.

 

  1. Bucket Eradication Programme

 

The Department is capacitating water service authorities with more technical engineers to oversee projects. Challenges in the Bucket Eradication Program (BEP) include a lack of prior studies, groundwater challenges, and inadequate engineering designs. The department is now doing more in-house engineering designs and project monitoring to improve the BEP. The bucket toilets are forever increasing because of the population growth and proliferation of informal settlements. The Department is exploring dry sanitation options to address the bucket toilets challenge. The BEP will be completed before the end of the 2024/25 financial year in the Free State province.

 

  1. Procurement of water treatment chemicals

 

The wastewater and water treatment chemicals are manufactured by two companies in South Africa. This results in a shortage of stock leading to the import of these chemicals for example Chlorine is occasionally imported due to local supply shortages. The Department of Trade and Industry has since empowered some black-owned companies to manufacture chlorine locally through the black industrialist programme.

 

  1. Municipal Support Programme and Amendment to Legislations

 

The Department outlined its efforts to strengthen its regulatory role by revising norms and standards and amending the National Water Act,1998 and Water Services Act,1997. The department's support for municipalities through grants and the Blue and Green Drop reports, which identify areas for improvement such as appointment of relevant skilled workers in appropriate areas. The Water Services Act,1997 would improve and ensure the timely provision of water services.The amendment would also ensure alignment of the Water Services Act, 1997 with the Municipal Systems Act, 2000 especially sections 63 (Intervention in the provision of water services by the Minister) and 78 (Criteria and process for deciding on mechanisms to provide municipal services) respectively.

 

 

 

 

 

  1. Water Pricing Strategy

 

The revised water pricing strategy would ensure multiyear pricing which would enable customers to budget for water consumption. The revision would also remove price capping which would enable implementation of a full cost recovery tariff for prudent financial management and sustainability.

 

  1. The National Water Resources Infrastructure Agency

 

The benefits of the National Water Resource Infrastructure Agency (NWRIA) include its ability to borrow from the private sector and manage water revenue streams. Water can raise revenue to fund itself. For example, the Trans Caledon Tunnel Authority (TCTA) raise loans in the market to fund projects, these loans are paid back when the project starts selling water. The NWRIA will have a bigger balance sheet than the TCTA meaning it would be able to fund many mega projects at once.

 

  1. Giyani Water Supply Project

 

The first phase of water transfer from Nandoni Dam to Giyani was completed in April 2023 including the refurbishment of the Giyani Water Treatment Plant (increased capacity to 30 megalitres).  Currently, 24 villages are receiving water from this project (some of the villages, Mhlaba Wellem, Homu A&B, Ngobe, Risinga, Mapayeni etc.). This project is set for completion in September 2024. The other villages (31) have been provided water by Mopani District Municipality through boreholes and water tankers since 1994.

 

  1. Makana Water Supply Crisis

 

The Eastern Cape provincial head and the Amatola Water Board are currently resolving the Makana water supply crisis, and meaningful improvement is expected in the 2nd quarter of 2024/25.

 

  1. Under expenditure

 

The under-expenditure during the 4th quarter was mainly due to a government moratorium on the appointment of new staff which required the concurrence of the minister of public administration. This resulted in under expenditure on the compensation of employees.

 

 

 

  1. Unauthorised expenditure

 

The 2017/18 unauthorised expenditure of the War on Leaks Programme is currently under investigation by the Special Investigating Unit (SIU).

 

  1. Water Conservation and Demand Management

 

Gauteng is currently experiencing high water usage and high non-revenue water across its cities.  Municipalities are responsible for conserving water in their areas by among other preventing leaks in their reticulation systems. The Department is currently implementing water conservation and demand management campaigns with civil society, the World Bank and business leaders in eThekwini using the lessons learned from the management of the 2018 drought by the City of Cape Town. The City of Cape Town currently has the lowest average water consumption per capita in the world, which is reported to be below 100 compared to the global average of 173 l/c/d.

 

  1. Recommendations

 

  1. The Committee should invite the National Treasury to brief the Committee on(1) municipal water debts to water boards and measures to address these water debts; and (2) Metropolitan Trading Systems.

  2. The Committee should invite the Department and South African Local Government Associationto brief the Committee on 30 municipalities that are in financial distress and provide an action plan to improve their financial viability.

  3. Within 14 days, the Department should provide a detailed report on the Giyani Bulk Water Supply Project which includes the villages that are currently receiving water from this project.

  4. The Committee Secretary should distribute the current version of the Preferential Procurement Regulations to the members of the Committee.

  5. The Department should provide an Action Plan for the acceleration of the implementation of the delayed infrastructure projects within 14 days.

  6. The Department should provide water quality reports from Water Boards in 14 days.

 

 

Report to be considered.

 

 


[1]Refer for in-depth details to the Department of Water and Sanitation Presentation titled -Overview of the cumulative fourth quarter report of the Department of Water and Sanitation (Vote 41) dated 27 August 2024.