31 March 2010.
During the year under review, the Department has made some strides in ensuring that the priorities of government as articulated in the Medium-Term Strategic Framework (MTSF) 2009-2014 are achieved. The main focus was the rolling out of the Water for Growth and Development Framework (WfGDF) which was approved by Cabinet in 2008.
The WfGDF is a comprehensive response to the challenges facing the country in terms of long term water security while at the same time responding to the economic needs of the country. The Department undertook massive mobilisation and consultation of key stakeholders around, giving expression to the notion that water is central to all developmental initiatives. Successful mobilisation and consultation took place through the Provincial Water Summits that were led by the Minister. Through these provincial consultations, Provincial Action Plans were developed to facilitate that the WfGDF gets integrated into the respective Provincial Growth and Development Strategies PGDSs.
The Department has embarked on the process of conducting studies on "Reconciliation Strategies" in various parts of the country to be able to address future water demands in a way that does not compromise the social, economic and ecological needs of the country. The Department has, during the year under review, completed three reconciliation strategies (for the Crocodile West, Vaal and KwaZulu-Natal coastal areas), to secure continued water supply to those areas at an appropriate level of assurance for various users.
Monitoring of our resources is critical to ensure that we have reliable data in terms of water quality and availability. It also enhances our ability to plan and manage the resource. In this regard, a total of 900 guaging stations were monitored and maintained at acceptable levels to ensure that the information is available to support sustainable management of water resources.
During the year under review, we have also concentrated on ensuring availability of water resources for meeting reserve requirements and the needs of all water users on a sustainable basis.
As part of improving water allocation, 16% of water licenses were issued to historically disadvantaged individuals (HDIs) and a further 18% backlog of licenses was eradicated.
As a sector regulator, the Department has a role to ensure the provision of water services to the South African population. During the year under review, the Department provided support to 168 Water Services Development Plans (WSDPs) for various municipalities, as well as to seven provincial plans.
The Department conducted an assessment on the quality of drinking water under the Blue Drop programme, and a total of 23 out of 50 drinking water systems were awarded Blue Drop certificates. The Green Drop programme, which focuses on assessing the quality of Waste Water Treatment Works (WWTW), was also undertaken and resulted in 32 out of 60 WWTW being awarded certificates of compliance.
An achievement of 92% and 95% was recorded on the completion of the schemes under construction and the maintenance programmes, respectively, to ensure that the country's water resources infrastructure is adequate to equitably provide water to users. The operations of water resources infrastructure aimed at meeting the supply of bulk raw water supply achieved 95% level of assurance of supplier to different users.
The Department intends to undertake a Legislative review of the current water related legislation. The Water Services Act, 1997 (Act 108 of 1997) requires significant reviewing to ensure alignment with the provisions of the Municipal Systems Act, 2000 (Act 32 0f 2000) and the Municipal Finance Management Act, 2003 (Act 56 of 2003). While The National Water Act, 1998 (Act 36 of 1998) provides a legal framework for the progressive realisation of the right to access sufficient water, there is however a need to review the act to ensure that there is equity in the allocation of water; to improve water resources management; and to streamline the regulatory processes.
The Department is in the process of reviewing the National Water Resource Strategy (NWRS). Since the publication of the 1st Edition of NWRS was in 2005, five years have elapsed; and it is therefore required that the NWRS be reviewed. This review provides an opportunity to ensure that water is at the centre of planning and supports the broad national economic and social development goals through the Water for Growth and Development Framework WfGD) without compromising long-term sustainability of water resources.
The Department is developing a methodology and framework to establish an Economic Regulator. This methodology/framework for the effective economic regulation of the entire water value chain is intended to ensure the alignment of legislation and furthermore to develop an operational model in order to deal with current challenges resulting from the growing imbalance between supply and demand for water in South Africa.
A revision of the current water pricing strategy aims to improve the financial viability of government's bulk raw water business.  The current provision to cap annual water tariff increases and exclude categories of users from paying the "Return on Assets" related tariffs results in annual deficits.  Appropriate pricing of water is necessary to ensure that this scarce resource is valued by all citizens.
Department of Water Affairs plans to complete seven new bulk raw water augmentation projects to support sustained economic growth and meet the growing social water needs.  These projects will increase the asset value of government water works with an estimated R21, 8 billion.
A huge backlog has developed on the regional bulk water and sanitation infrastructure owned by municipalities, including water treatment and waste water treatment plants.  Surveys done jointly with local government estimate the backlog at R60 billion.  The Department has budgeted R5, 4 billion over the next four years to reduce this backlog and this excluded budget by local government.
The Dam Safety rehabilitation Programme which commenced in 2005 will be continued and planned rehabilitation works will be completed at 25 dams.  A similar programme has been started to rehabilitate water conveyance infrastructure. With these two programmes, the backlog is expected to be decreased by R 4 billion in the next four years using funds allocated from the fiscus and from revenue collected from the sale of water.
The Department acknowledges that there is backlog in finalising Water Use Authorisation Applications and further acknowledges the urgency to deal with and clear the backlog. The Department has embarked on the "Letsema" initiative which to date (end of the 09/10 Financial Year) has been rolled out to three of the regions/provinces. Applications which are 7 months and older are considered to be part of the backlog.
I wish to take this opportunity to express my sincere appreciation of the Minister and Deputy Minister - for their continued guidance and leadership; the Portfolio Committee; the NCOP on Water and Environmental Affairs - for its continued support to the Department; and the members of top management and management committees, including all officials who demonstrated full dedication and commitment in ensuring that the Department delivers on its mandate quite firmly and effectively.
30-01 Apr 2010 1.
"A dynamic, people-centred Department, leading the effective management of the nation's water resources, to meet the needs of current and future generations".
We are service and delivery oriented. We strive to get it right the first time, every time, on time - ensuring that our citizens are provided with water services they deserve.
We lead our sector and enable our partners with knowledge and capacity to ensure that all water services are delivered.
We are committed to innovation and use cutting-edge technology as a catalyst of positive change, connecting our people and enabling them to work anywhere, anytime.
We are a Department with a heart that values our investment in our people. We provide them with a caring and trusting environment that encourages personal development, and is a breeding ground for talent.
Water Services Act, 1997 (Act No.
The objective of the Act is to provide for the rights of access to basic water supply and basic sanitation by setting national standards and norms. Section 156, read in conjunction with Part B of Schedule 4 of the Constitution of the Republic of South Africa (Act No.108 of 1996) gives the Executive Authority the responsibility to support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions.
National Water Act, 1998 (Act No.
The objective of the Act is to ensure that South Africa's water resources are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner for the benefit of all persons. The Act provides that the National Government, as the public trustee of the nation's water resources and acting through the Minister of Water and Environmental Affairs, has the power to regulate the use, flow and control of all water in the Republic.
Water Research Act, 1971 (Act No.
To provide for the promotion of research in connection with water issues and, for that purpose, to establish the Water Research Commission and Water Research Fund, the Minister of Water and Environmental Affairs appoints members of the Commission and exercises executive oversight with regard to the Commission.
The institutions reporting to the Minister include: the Catchment Management Agencies (CMAs); the Trans-Caledon Tunnel Authority (TCTA); the Water Research Commission (WRC); and fourteen (14) Water Boards.
The Catchment Management Agencies (CMAs) are established in terms of Chapter 7 of the National Water Act, 1998 (Act No. 36 of 1998) and are classified as Schedule 3A public entities in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended. Their main responsibility is to manage water resources at catchment level in collaboration with local stakeholders, with a specific focus to involve local communities in the decision making processes, in terms of meeting basic human need, promoting equitable access to water and facilitating social and economic development.
The TCTA was established in terms of the National Water Act, 1998 (Act No.
(Act No. 1 of 1999) (PFMA), as amended. It is responsible for the development of bulk raw water infrastructure and also provides an integrated treasury management and financial advisory services to water boards. Some of the mega projects that the TCTA is responsible for are: the Lesotho Highlands Water Project (LHWP); the Berg Water Project (BWP); and the Vaal River Eastern Subsystem Augmentation Project (VRESAP). By virtue of the relevant notice of establishment, the Department has delegated its project execution role and the National Treasury has delegated its borrowing powers to the TCTA.
The WRC was established in terms of the Water Research Act, 1971 (Act No. 34 of 1971) and is classified as a Schedule 3A public entity in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999), as amended. Its mandate includes the promotion of co-ordination, co-operation and communication in the area of water research and development, funding water research according to priorities, promoting effective transfer of information and knowledge, and ensuring capacity building in the water sector.
Water boards are established in terms of the Water Services Act, 1997 (Act No. 108 of 1997) as organs of State. The primary activity of water boards is to provide water services to other water services institutions within their respective service areas. They may perform other activities under conditions set out in section 30 of the Water Services Act, 1997 (Act No. 108 of 1997). The water boards are regulated by the Minister in terms of both the Water Services Act, 1997 (Act No. 108 of 1997) and the PFMA, 1999. Water boards submit, on an annual basis, shareholder's compacts (business plans) and policy statements to the Minister a month before the beginning of the new financial year. In as far as business plans are concerned, the Minister may direct water boards to change these in order to meet all the requirements of the Water Services Act, 1997 (Act No. 108 of 1997).
In terms of the National Water Act, 1998 (Act No. 36 of 1998) existing irrigation boards are expected to transform into WUAs that will be inclusive of all affected stakeholders in their areas of operation. The membership of the irrigation boards previously consisted of commercial farmers and was based on water allocation which was connected to title deeds on land, with the previously disadvantaged groups not having access. The current arrangement requires that the previously marginalised sectors should be represented in the WUAs, including domestic water users receiving water through the WUAs' infrastructure, local government institutions, historically disadvantaged farmers, aspiring farmers and environmental concerns.
These are smallholder irrigation schemes that existed in the former homeland areas where raw water supply and agricultural activities were managed by government or state-owned development organisations. Smallholder farmers farm mostly on communal land, which belongs to the State. Land allocation is administered by the tribal authority through the issuing of Permission to Occupy (PTO) certificates, which is in modern terms not regarded as valid security for production loans at financial institutions, since there is no basis upon which banks can repossess and sell land to recover losses on bad debt.
The WUAs are co-operative associations of water users established in terms of the National Water Act, 1998 (Act No. 36 of 1998) to undertake water-related activities for the mutual benefit of all its members and also manage local water infrastructure, for example irrigation water supply schemes. WUAs play an important role towards the implementation of poverty alleviation and food security programmes. There are thirteen WUAs, namely Tulbagh; Kabous River; Northern Sandveld; Krom Antonies; Wolsel; Onrus; Duivenhoks; Kweekvallei; Oukloof; Sekhukhune; Tubatse; Ilanga; and Tshiping.
The aim of the Department of Water Affairs is to ensure the availability and supply of water at national level, facilitate equitable and sustainable social and economic development, and ensure universal and efficient supply of water services at local level.
During the year under review, the Department sought to pursue the strategic goals and objectives listed in Table 5. As far as possible, these objectives were aligned to the legislative mandate referred to in paragraph 1.4 above and the Medium Term Strategic Framework.
The purpose is to provide leadership in policy development and advice and core support services through effective implementation of various systems and processes relating to financial management, human resources, communications, legal services, information management, as well as organisational performance management. It comprises various key sub-programmes, namely Corporate Services, Financial Management, Chief Operations Officer, Ministry (offices of Minister and Deputy Minister), and these are further broken down into sub-programmes mentioned below.
Human resources provide human resource services and solutions which are targeted at adding value and improving business performance through people.
Communication services is responsible for the promotion of th effective profiling of the Department, public awareness, education and communicating the work of the Department to the public and stakeholders.
Legal services is responsible for the provision of effective legal support to maximise the Department's pursuance of its mandate.
Gender and disability is responsible for ensuring that Departmental programmes and strategies are aligned to the national gender policy.
Administration is responsible for the provision of a safe and secure physical environment and appropriate logistical support.
Information services provide ICT support and solutions and oversee the management of IT operations.
Supply chain and asset management is responsible for the effective management of the supply chain management system and assets as required by the Public Finance Management Act,1999 (Act No.1 of 1999) (PFMA) as amended. It also develops and implements policies and procedural guidelines in relation to procurement and asset management.
Revenue and debtors management is responsible for the management of the revenue generated through the Water Trading Entity, billing management, debt management, billing and collection of the Water Research Levy on behalf of the Water Research Commission.
Financial accounting and reporting is responsible for ensuring efficient management of daily financial operations, which include the classification, recording and reporting on financial accounting activities in accordance with Generally Recognised Accounting Practices (GRAP).
Management accounting is responsible for financial planning, implementing costing models to enhance overall financial performance and budget compilation.
Budget and planning is responsible for linking annual budgets to government priorities, provide guidance on budgeting processes, as well as the monitoring of expenditure against budget.
Financial management is responsible for ensuring improvement with regards to financial management processes and systems.
Office of the Director-General (DG) is responsible for providing administrative support to the DG and secretariat services to the Department.
Executive support is responsible for rendering administrative support services to the DG and the Minister, which entails the handling of correspondence between the Minister and the DG as well as the handling of priority enquiries and correspondence.
Policy coordination and stakeholder management is responsible for coordinating the Department's strategic liaison with Parliament and Cabinet, Cluster Committees, departmental entities and stakeholders.
Corporate planning is responsible for coordinating and facilitating the development of strategic and business plans as well as monitoring the implementation thereof through recording quarterly progress and annual reports.
External transformation is responsible for providing strategic direction, support and advice on the transformation policy, strategy development and for facilitating and monitoring the implementation of the transformation roadmap of the Department.
Internal audit is responsible for providing an independent, objective assurance and advisory services designed to add value and improve the Department's operations. Internal audit supports the Department to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.
Risk management is responsible for the formulation, facilitation and coordination of risk management activities, ensuring that best practice is adopted and business continuity plans are put in place to mitigate the identified risks.
The 2010 FIFA World Cup Project Unit is responsible for the coordination of all activities directed at supporting host cities to provide safe drinking water for the 2009 Confederations Cup and 2010 FIFA World Cup events and also mobilise national teams' participation in the Green Goal Campaign through tree planting at various locations throughout the country as well as represent the Department in all 2010 FIFA World Cup Forums, e.g. the 2010 Inter-Ministerial Committee (IMC); the Technical Coordinating Committee (TMC); and the Host Cities Forum.
Implementation of six empowerment initiatives aimed at promoting, inter alia gender mainstreaming and women empowerment.
Improvement in the signing of performance agreements and completion of performance assessment, particularly at senior management level.
Implementation of the workplace skills plan which resulted in the provision of various training interventions with regard to employees and also prospective employees who were provided with bursaries to pursue studies in the technical fields to address the skills shortage in the Department.
A manual system for managing the performance of the Department was developed in the form of policy and procedure manuals. Although these are considered as interim measures while an automated monitoring and evaluation system is being developed and expected to be finalised towards the end of the 2010/11 financial year, it is expected that the Department will improve on the development of performance measures and indicators and set realistic targets within which proper monitoring and evaluation of what has been achieved against the set targets can take place. This issue was previously raised in the Auditor-General's report as an emphasis of a matter which required serious attention.
A system aimed at improving the interaction between the Department and the statutory committees was developed and implemented. Although it is manually based, the Department is able to track down all questions received from various Parliamentary committees and also improve on turnaround times with regard to responses.
In order to ensure effective and efficient management of the Department, various governance structures were established and approved by the Minister to ensure that decisions are taken and implemented accordingly. This includes clarifying the distinct roles and responsibilities for each of these structures.
Key senior management posts were filled within the finance, corporate services and chief operations office branches to enhance the capacity to deliver services as required by the Department's legislative mandate.
2010 FIFA World Cup technical coordinating committees to ensure the successful hosting of the event and continuous dissemination of information relating to the status of the quality of drinking water in each of the host cities.
About 90% of the milestones contained in the financial improvement plan was implemented to ensure that issues raised by the Auditor-General in the 2008/09 audit report do not recur.
Various policies relating to asset management were implemented throughout the Department. The Departmental Asset Register is continually maintained by conducting monthly reconciliations; as a result the Asset Register is reconciled and reliable.
There has been a tremendous improvement in the billing system. About 80% accuracy in the billing system was achieved which will ultimately result in an increase in the collection of revenue from water users. Inability to reduce the number of days for the collection of debts remains an ongoing challenge but an effort will be made to improve on this in the new financial year.
In the past the Department could not pay invoices within the prescribed 30 days. The Department has placed more effort in ensuring that invoices are paid within 30 days, as stipulated by the PFMA.
The Department has embarked on a project to develop a contract management system in an effort to improve the monitoring of contracts. The contract management system will be rolled-out during the 2010/11 financial year. This system will enable management to identify at any stage of the year, the current contracts, the date of commencement, the date of expected completion, the initial value of each contract, variation orders approved (date and value), the amount already paid in respect of each contract since the date of commencement, the remaining period and the amount still available.
In order to facilitate an advanced understanding of the Department's business processes, the Department has, during the year under review, decided to invite the audit team to attend sessions addressed by each chief directorate and facilitated by Finance, before the commencement of the audit process. During these sessions the business processes of each chief directorate were explained to the audit team and questions for clarification responded to. This exercise was a huge success as the audit queries and questions raised during the audit process were of a high standard which should help the auditing process.
The functions in respect of Forestry and Sanitation were transferred to the Minister of Agriculture, Forestry and Fisheries and the Minister of Human Settlements respectively. According to the determination letters that were signed by the Minister of Public Service and Administration, the Sanitation function was transferred to the Department of Human Settlements with effect from 1 December 2009 and the Forestry function to the Department of Agriculture, Forestry and Fisheries with effect from 23 March 2010.
The Strategy on the Management of HIV/AIDS in the Workplace has not been finalised but various initiatives were implemented as part of supporting the national strategy on HIV/AIDS. This will receive serious attention in the next financial year to ensure that the Department clearly demonstrates its commitment to fight the pandemic.
There was inadequate funding for the implementation of various information technology initiatives aimed at enhancing the Department's capacity to deliver. As a remedy to this challenge, priority will be given to the funding of the master systems plan in the new financial year.
The automated monitoring and evaluation system which was scheduled to be developed during the reporting period, is still outstanding. The development of this system will intensify in the new financial year and is expected to be completed in March 2011.
A climate survey to measure the perceptions of the public towards understanding the value of water could not be conducted due to inadequate funding. Alternative means of gathering data will be implemented in the new financial year to get feedback from the public.
The slow recruitment process and difficulty in getting suitable candidates to fill critical positions has negatively impacted on the reduction of the vacancy rate which was targeted at 10%. This will be improved through the review of the recruitment process as well as the cleaning of PERSAL information to ensure the accuracy of post establishment information.
The Department has not been able to achieve the 1% target of employing people with disabilities because of not getting suitable candidates for vacant positions The Department will continuously interact with organisations representing people with disabilities to ensure that candidates with the necessary skills can be identified to fill vacant positions.
The purpose of the programme is to ensure that the country's water resources are used, developed, conserved and managed in a sustainable and equitable manner for the benefit of all people. It comprises two main sub-programmes, namely National Water Resources Infrastructure (NWRI) and Water Management, and two of the six branches of the Department, the brach: Policy and Regulation.
Equitable supply is responsible for covering policy, planning and regulatory functions required to ensure reliable and equitable supply of water for sustainable economic and social development, including the eradication of poverty. This includes assessing available water in particular areas and developing strategies to enable supply to meet demand.
Sustainable supply is responsible for the provision of reliable and equitable supply of bulk water, water conservation and demand management, as well as the Working for Water (WfW) and Working on Fire (WoF) programmes for sustainable economic and social development, including the eradication of poverty.
Protection policies covers policy, planning and regulatory functions required to ensure the protection of water resources, such as developing a system for classifying water resources as required by the National Water Act,1998 (Act No. 36 of 1998).
Protection measures initiates and supports the implementation of measures to protect water resources, such as pollution protection measures or ensuring sufficient water for the aquatic ecosystem to function properly.
Institutional regulation provides policy and strategy support for developing and establishing effective water management institutions (CMAs and WUAs), and includes revenue collection from water use charges.
Institutional development ensures that effective water management institutions are developed in the regions.
Strategic alignment ensures that internal policies and strategies of the Department are consistent and aligned with relevant external policies and legislation. It develops and maintains monitoring and information systems, and promotes capacity building among water resource management practitioners and stakeholders.
Stakeholder empowerment is responsible for developing empowered, skilled and representative staff and capacitates stakeholders and the general public to achieve integrated water resource management.
African cooperation is responsible for promoting integrated water resource management globally, and particularly in Africa in support of the New Partnership for Africa's Development (NEPAD).
Water resource administration provides management and administrative support services to the programme in the national office.
Water resource support provides support services to the programme in the regions, namely human resources, financial management and general administration.
Operations of water resources provides for the augmentation of the Water Trading Entity to ensure the effective management of water resources and the sustainable operation and management of bulk water infrastructure.
structure, as well as the rehabilitation of existing infrastructure to ensure safety and functionality of departmental dams and related infrastructure.
The Vaal River Eastern Sub-system Augmentation Project was declared operational in June 2009. After a capital investment of R2.5 billion, water can now be conveyed through a large pipeline from the Vaal Dam to a distribution point near Secunda to ensure the provision of additional water to Eskom and Sasol at the high level of assurance of supply required for strategic industries.
Completion of 38% of the Olifants River Water Resources Development Project (ORWRDP): this relates to the construction of the new 20 kilometre road (R555) which was relocated around the De Hoop Dam basin and opened for traffic in June 2009. Furthermore, a Project Charter was established to set socio-economic targets that would promote the optimisation of benefits for the local citizens of the Sekhukhune District and this Resulted in providing job opportunities to 1200 local workers.
The Department commenced with planning and design work for the implementation of four major water augmentation projecta listed in Table 4, for which construction will only take place in the new financial year.
Implementation of the Dam Safety Rehabilitation Programme which resulted in the rehabilitation of eighteen dams to ensure sustainability of water supply, limiting water losses and increasing the spillway capacity to ensure the protection of the dams as part of disaster management. As a result, R324 million was spent and 4 169 decent jobs were created during the year under review.
Since 2007 to date, the Department has rehabilitated 24 river canals that supply the Voëlvlei Dam with water and this work is scheduled to be completed by 2011.
A total of seven provincial water summits were held as part of the consolidation of the Water for Growth and Development Framework, with specific focus on sectors such as agriculture and rural development, domestic as well as economic development.
Under this programme, the Department identified the need for the desalination and recycling programme in coastal towns such as Bitou, Knysna, George as well as Mossel Bay. These towns are now expected to introduce purification processes that can utilise sea water as a source for their potable water supplies.
The Department implemented the Blue Drop Certification Programme which resulted in the issuing of twenty three (23) Blue Drop certificates to the systems in various municipalities. The 2010 FIFA World Cup host cities' Blue Drop Certification Report on Drinking Water Quality released in March 2010 rated all our host cities as excellent.
The Green Drop Report was finalised with thirty two (32) waste water treatment works (WWTW) attaining Green Drop status as part of the incentivised regulatory approach.
The Department managed to reach an agreement with the Minister of Justice and Constitutional Development to dedicate four courts for environmental and water related cases in the areas of the Johannesburg South Regional Court; the Durban Regional Court; the Nelspruit Regional Court; and the Hermanus District Court.
The Department assessed all integrated development plans (IDPs) of municipalities to ensure that water resources and water services issues are fully catered for and given the necessary priority. Furthermore, continuous technical support was provided to municipalities with regards to planning and the development of water services development plans (WSDPs).
Support to 360 poorly resourced farmers, ranging from bulk water distribution infrastructure for irrigation to subsidising operation and maintenance payments billed by water users associations, were provided. Furthermore, about 2 544 water tanks were provided to 500 households as part of the contribution to both the Comprehensive Rural Development Programme and War on Poverty Campaign.
The programme continued to experience a shortage of dedicated technical personnel such as climate change specialists, water plant superintendents, artisans, technicians and engineers. In order to overcome this challenge, various interventions will be put in place such as the implementation of the Occupation Specific Dispensation (OSD) aimed at recruiting and retaining scarce skills, and the implementation of the graduate development programme wherein prospective employees are provided with financial assistance in the form of bursaries to pursue their studies in technical fields relating to the Department's functions, thereafter placing them in relevant positions.
The drought situation in the Southern Cape and the Algoa System was a serious challenge during the reporting period. The Department will ensure that such situations are carefully managed. Timely interventions will be implemented to ensure that there is adequate water supply.
Poor water quality negatively affected irrigation farmers. A two-year cleaning programme for canals will be developed and implemented as part of water resource protection.
The Department has not been able to convert any of the planned three dams from single to multi-purpose use due to the delay in the finalisation of the strategy for the conversion. The draft strategy will be finalised in the next financial year (2010/11).
The Climate Change Response Strategy has been delayed due to a shortage of personnel. A directorate focusing on climate change issues has been created and the rest of the required personnel will be appointed in the next financial year.
Strategy, 2004 will only be finalised in the next financial year (2010/11). However, an inception report was completed.
The target of 205 set for the issuing of water licences to HDIs was not achieved due to capacity constraints. However, a project team that is fully resourced has been established to ensure that all backlogs relating to the water licence applications are eradicated during the next financial year.
The final Compliance Management Strategy will only be approved in the next financial year, but an extensive consultation process was undertaken.
Only 25% of the 40% target of cases relating to compliance and enforcements identified were addressed. The reason for underachievement relates to the shortage of suitable personnel. The Department has established a directorate focusing mainly on this function to ensure that the compliance, monitoring and enforcement programme is implemented effectively.
Only 23 out of 50 water systems achieved Blue Drop certificates as this was the first report produced. Indications are that more systems will be assessed in the 2010 Blue Drop certification process as the participation of more municipalities during assessments was encouraging. The Department will enhance its efforts through continued engagement with respective water services authorities and providers to improve the efficacy of monitoring programmes. Also the South African National Accreditation Service (SANAS) as well as the National Laboratory Association (NLA) will be engaged to improve the credibility of laboratory results.
Only 449 out of 850 Waste Water Treatment Works (WWTWs) were assessed. Only 32 WWTWs out of 60 achieved Green Drop certificates due to shortages in appropriately skilled staff, the capacity of the plants as well as lack of funding for operation and maintenance of waste water treatment infrastructure. An action plan to address identified challenges and resource plans will be developed in conjunction with the relevant authorities. Also, the Department will support the Department of Cooperative Governance and Traditional Affairs (CoGTA) in the implementation of its turnaround strategy.
A lack of technical capacity to deal with reserve determinations was a challenge during the reporting period. However, suitable personnel at director level were appointed in the last quarter of the financial year (2009/10).
The delay in the finalisation of the institutional re-alignment project contributed largely to the slow process of establishing new CMAs and WUAs. The project will be adequately funded and carried out in the new financial year.
Poor commitment from countries that the DWA has identified to have relations with has resulted in delays to finalising agreements. This will be improved in the new financial year.
Inability to implement some signed agreements because of insufficient funding will be rectified through the mobilisation of funds in the new financial year.
The purpose of this programme is to ensure that all people in South Africa have access to adequate, sustainable, viable, safe, appropriate and affordable water services and use water wisely.
Policies ensure the basic supply of water and sanitation services for improved quality of life and poverty alleviation.
Water and sanitation services support the development of infrastructure for basic water supply and sanitation services at the regional level to improve quality of life and alleviate poverty.
Water sector policies provide a framework for the effective and sustainable delivery of water services to underpin economic and social development.
The Africa initiative promotes the programme's activities to achieve the United Nations Millennium Development Goals and the World Summit on Sustainable Development targets in Africa, and supports the New Partnership for Africa's Development (NEPAD). African participation promotes and supports policies to achieve the United Nations Millennium Development Goals in Africa.
Water services administration provides support services at the national level, including human resources, financial management and general administration.
Water services support provides support services at the regional level, including human resources, financial management and general administration.
Operations of water services ensures the reliable and sustainable supply of water for basic use and economic development. While this function is still with the Department, it is a temporary arrangement and will be phased out as the transfer programme is completed.
Water sector support supports the delivery of sustainable water services at the regional level to underpin economic and social development.
Institutional policies supports effective water services institutions.
Institutional support provides support at the regional and local level to ensure effective water services institutions.
Transfer policies guides the transfer of operations and maintenance functions and water services schemes for effective local operations and management.
Transfer of functions implements the transfer of water services schemes for water services institutions to ensure effective local level operation and management.
The target for 2009/10 was to serve 1.5 million people with basic water supply. During the year under review, basic water supply was provided by local government to 1.07 million people. Out of a population of 49.9 million people (based on a 2001 Census figure updated to the end of March 2010) there are currently 1.65 million people with no access to a basic level of water supply and a further 1.98 million people that have access to a water supply that does not meet the basic services standard. Since 1994 access to water supply infrastructure in the sector has improved from 59% to 97% (improved supply) of the population. This percentage includes all people that benefit from access to infrastructure, including those that receive services below basic supply levels.
"Access to water supply infrastructure" includes people served to higher than basic RDP levels of service as well as those with "access to basic services but below RDP service levels". The figures only reflect infrastructure provided and do not reflect quality of ongoing service provision. Water supply backlog figures are based on the 2001 Census and updated using information obtained on projects that have been implemented across the sector. Population figures are based on Statistics South Africa (STATS SA) mid-year estimates and have been adjusted to reflect annual population growth. The information on how many people were served is based on input from the Department of Water Affairs (DWA) and the Department of Cooperative Governance and Traditional Affairs (CoGTA) which excludes the delivery through municipalities' own funding or any other resources. Should this be considered, the delivery figures may increase.
The target set by local government for the 2009/10 financial year was to serve 300 000 households with basic sanitation. During the year under review, 1.6 million people (377 000 households) received access to basic sanitation services. (Please refer to the notes below Table 8). In 1994 only 49% of the population had access to basic sanitation. By 2009/10 this had increased to 79%, which reflects 3% growth from the previous reporting period.
The figures only reflect infrastructure provided and do not reflect quality of ongoing service provision. Sanitation supply backlog figures are based on the 2001 Census and updated using information obtained on projects that have been implemented across the sector. Population figures are based on STATS SA mid-year estimates and have been adjusted to reflect annual population growth. The "People served April 2009 - March 2010" information provided in Table 8 is based on input from DWA and CoGTA and excludes delivery through municipalities' own funding or any other resources.
It should be noted that although the sanitation function was moved to the Department of Human Settlements (DHS) after the April 2009 elections, DWA remains the sector leader for sanitation.
The bucket eradication programme was established in February 2005 and December 2007 was set as the national target for the eradication of the bucket system in established settlements that existed prior to 1994. At that stage, the bucket backlog was 252 254.
By September 2009, 244 258 buckets had been removed since the inception of the programme. During the year under review, 1 048 buckets were removed, leaving a backlog of 7 996 buckets in the Free State, Eastern Cape and Northern Cape Provinces.
It must be noted that the national target has not been met due to delays caused by the excavation of hard rock, slow performance of contractors and the fact that some projects had to wait for the completion of sewer networks and pump stations before the buckets could be removed.
Currently, 86.1% of South African households have access to Free Basic Water (FBW). This represents a 0.5% increase from the previous reporting period. A total of 97.6% of Water Services Authorities (WSAs) are implementing the FBW services programme. Presently, 86.55% of poor households are benefiting from this service. "Poor households" refer to households earning less than R800 per month, except for the combined income of people who receive social grants. Of the 5.84 million poor households in South Africa, 5.05 million continue to receive FBW.
The schools and clinics programme started during the 2007/08 financial year and the target for completion was set as the end of 2009/10. By March 2010, the clinics target was met and handed over to the Department of Health.
The schools water and sanitation programme target is to serve 1 061 schools with water and 1 113 schools with sanitation by the end of the programme. During the year under review, 641 schools were served with sanitation and 672 with water supply.
However, the backlog of schools that have never been served with water services would not have been eradicated as 1 727 would still not have water and 706 would still be without sanitation services. Additional funding is needed to eradicate this backlog.
The Department commenced with the Blue Drop Certification Programme (an incentive-based drinking water quality regulation approach) in 2008. The second Blue Drop Report was released at the end of the financial year and depicted a major improvement in the sector. A separate report was released during Water Week on the status of drinking water quality management in the 2010 FIFA host cities. This report indicated excellent compliance with all Blue Drop criteria.
During the year under review, DWA continued to provide municipalities with the electronic water quality management system (eWQMS) but also intensified the prominence of its regulatory systems (termed the Blue Drop System). This system allows the Department to engage with the general public on the quality of tap water through access to a search-engine based web-page called "My Water". The Blue Drop System (and My Water) had a record 121 000 visitors in February 2010. With the inception of the "My Water" concept in June 2009, the system had about 9 000 visits.
The Department improved its own regulatory ability regarding drinking water quality by strengthening ties with the Drinking Water Inspectorate in the United Kingdom (UK). Eight DWA officials were exposed to the regulatory approaches in England and Wales. This visit preceded the second round of local Blue Drop assessments that were strengthened by the assistance of a seasoned UK-based drinking water inspector.
DWA's direct involvement in the World Health Organisation (WHO) Regulation Network for drinking water quality regulators ensured that the locally developed Blue Drop Certification Programme was ratified internationally.
The World Health Organisation (WHO) introduced a Water Safety Plan concept which forms the basis for international drinking water quality management. Through the Blue Drop process, the number of Water Safety Plans implemented in South Africa increased from 9 to 154 during 2009. This is a major improvement in ensuring that the catchment-to-consumer drinking water quality management principle is entrenched in South Africa.
The national average of drinking water quality compliance improved from 93.3% to 97.5% (as per the Blue Drop 2010 Report) based upon the microbiological compliance with SANS 241 of all samples analysed over the period of 2009. While this is most encouraging, the Department identified the need to improve monitoring programmes of some smaller municipalities.
The Green Drop Certification Programme was initiated as a twin project to the Blue Drop Certification Programme, focusing on waste water services management. The Green Drop approach was discussed in detail on two occasions with the Environment Agency in the UK and was well received.
The Green Drop Report was completed for 53% of conventional municipal waste water systems and was augmented by a national risk-based assessment that covered all municipalities and informed targets for the improvement of waste water services management in general. The risk-based targeted approach provided for a uniform waste water management performance measurement system. A risk profile was forwarded to each municipality which informed their integrated development planning (IDP) process towards turnaround and improvement. This process was also used to initiate a risk abatement project in the Berg River catchment in the Western Cape; two British Water specialists assisted with the formulation of site specific waste water risk abatement plans. The Development Bank of Southern Africa (DBSA) joined the Department to ensure the deployment of engineers to struggling municipalities.
The report revealed many gaps that require improvement as about 55% of waste water systems scored below 50% in compliance. However, pockets of excellence exist in six municipalities over a spectrum of metro and smaller municipalities.
The local government self-assessment survey reflects water services authority views on drinking water quality and service quality. In terms of the survey, 54% of WSAs achieved acceptable service quality. This is similar to the previous reporting period. (Service quality indicators include "the existence of a customer service system, appropriate levels of staffing, equipment, resources, funding and most importantly the ability to respond to customer call-outs within 24 hours"). The self-assessment indicated that lowest compliance to adequate service quality standards occurred in the Eastern Cape and North West Provinces respectively. No significant improvement in compliance was evident provincially.
The 2009/2010 municipal tariffs reflect the outcome of a survey among all local municipalities which obtained tariff information from 236 out of a total of 237 local municipalities. All tariffs quoted are VAT inclusive and the information includes the actual volume blocks used by municipalities. Also captured are the raw water and bulk water tariffs which influence the determination of the municipal retail tariffs.
The national average domestic water tariff for 2009/10 (including VAT) is R5.82 for the 6 kilolitre to 20 kilolitre (kl) block, R7.24 for 20 kilolitre to 60 kilolitre and R8.80 for usage above 60 kilolitre.
The highest domestic water tariffs are in Gauteng, KwaZulu-Natal and the Western Cape. The higher tariffs in Gauteng and Western Cape are generally associated with the high cost of water supply over vast distances (via inter-basin transfer schemes). The Western Cape, and to some extent also Gauteng and KwaZulu-Natal, have a steep rise in their block tariffs, indicating a demand management approach. The lower tariffs are associated with areas that have a high level of poverty and low levels of affordability, notably the Eastern Cape, Limpopo, Mpumalanga, North-West and Northern Cape Provinces.
In comparison to the 2008/09 financial year, municipal domestic water tariffs, the national average tariffs for 2009/2010 increased by 13.6% for the 6 to 20 kl block, 13.1% for the 20 to 60 kl block and 16.9% for the >60 kl block. The national increases are above the corresponding Consumers Price Index (CPI) of 9.5% year-on-year to March 2009.
Eastern Cape municipalities on average showed the highest tariff increases with high end users being penalised the most. The sharp increases are mainly due to the ongoing drought in the region, but also due to a low base thus bringing the tariffs in line with other provinces.
Free State municipalities are the second highest. Considering that this province had the lowest tariff increases in the previous year (negative corrections) it is in line with the national average increase over two years. The province is still reflecting some of the highest tariffs in the country, partly due to water distribution costs, but mostly due to high levels of non-revenue water losses.
Western Cape also increased water tariffs above the inflation rate, primarily due to a below average increase in the previous year. It could also reflect on drought conditions in parts of the province and the capital repayment for the Berg River Water Scheme (BRWS) which was completed in 2008.
Gauteng, KwaZulu-Natal, Limpopo and North West municipalities reflect the inflation rate for this reporting period and show below average increases in this financial year, following above average increases in the previous financial years.
Mpumalanga and Northern Cape had tariff increases below the inflation rate. However, both provinces had above average increases in the previous year and thus remain in line with the inflation rate over the two years.
Overall, most provinces show higher percentage increases in the upper blocks thereby introducing demand management measures.
About 57% of municipalities increased tariffs within the CPI range, while about 23% of municipalities increased tariffs below the CPI and a further 20% increased tarrifs at levels above the CPI range. Comparing the different tariff blocks, percentage increases were higher for the high-volume blocks, which indicates increased demand management and utilisation of income from the high volume users to cross-subsidise the lower volume users. A comparison of urban and rural municipalities shows that tariffs in rural municipalities are about 10% below the equivalent tariffs in urban areas.
The average commercial tariffs are R7.02 for 6-20 kilolitre, R7.83 for 20-60 kilolitre and R8.56 for volumes above 60 kilolitre per month. The respective increases in these tariff blocks were, 12%, 16% and 17%, which is in line with the increases of the domestic water use tariffs and about 20% to 70% higher than the CPI for the same reporting period. The commercial and industrial tariffs are higher than the domestic tariffs in the lower blocks and in line on the higher use blocks thus indicating cross-subsidisation to the domestic water use sector. This is to be expected as many of the new domestic water services are for the low income and indigent customers.
Gauteng, KwaZulu-Natal and Western Cape have the highest tariffs, while Limpopo, Mpumalanga, Northern Cape and North West are on the lower end. Eastern Cape had the highest annual increases of 37% in the lower blocks up to 57% in the higher blocks, reflecting on the drought in the region and the demand management intervention. Limpopo, Free State and Gauteng are second highest with increases of 17% to 34% from lower to higher blocks. The other provinces had increases within the Consumer Price Index (CPI).
Based on the municipal budgets for May 2009, the total operating expenditure for the water services sector is estimated at R21.4 billion with R17.2 billion for water supply and R4.2 billion for sanitation. Municipal budgets target a total income of more than R24 billion of which R19.5 billion is to be gathered from water supply and R4.6 billion from sanitation services. If achieved, water services will generate a net surplus of about R4.1 billion which will be used to cross-subsidise other services or, if approved, could be used for re-capitalisation of water services assets. About 55% of the operating expenditure (R12 billion) is used by the six metros and of the remainder, roughly R7 billion is used by local municipalities and about R2 billion by district municipalities.
As the custodian of water resources, the leader and regulator of the water services sector, DWA has to act as an intermediary to facilitate integrated planning and implementation of large multi-institutional regional bulk infrastructure projects through the involvement of all stakeholders. Hence the initial allocation of R1.4 billion to the Department (over three years) of which R617 million was earmarked for the 2009/10 financial year.
The focus of the Water Services Regional Bulk Infrastructure fund is on regional and local bulk water supply and sanitation services. This includes "enabling infrastructure" required to connect water resources over vast distances with bulk and reticulation systems.
Eleven projects have been completed since the inception of the Regional Bulk Infrastructure Grant in 2007/08. In March 2010, 16 projects were at design and tender stage, 48 at feasibility and implementation readiness phase and 38 in the construction phase. Six projects were completed in the 2009/10 financial year.
During the year under review, several enhancements were made to the Water Services National Information System (WSNIS), a comprehensive Water Quality Regulation System (Blue Drop System) was used, a Waste Water Quality System (Green Drop System) was developed and will be applied soon, a new Water Services Development Planning System was developed, and a Regulatory Performance Monitoring System was implemented in municipalities.
Planning initiatives continued to focus on municipal support activities. This included the development of a new Water Services Development Plan Guideline and several municipal planning products such as the Backlog Eradication Strategies, Municipal Master Plans, future Regional Bulk Infrastructure requirements, and Water Treatment Works perspectives for different provinces.
The not-so good relationship between WSAs and Water Services Providers (WSPs) (i.e. water boards and other municipalities that provide bulk and retail water services to WSAs) often prohibits effective and sustainable delivery of water services. While debts were a challenge in the past, disputes within partnerships that are based on undated contracts are currently a problem.
Legislation requires formal contracts and DWA provided sector support in this regard to ensure continuous and uninterrupted services to residents. As such, 16 water services contracts between WSAs and WSPs have been developed. A few have been signed and the rest are in the process of being signed. In addition, a draft guideline towards the development of effective retail water and sanitation tariffs by WSAs has been developed.
In response to the strained relationships between some WSAs and their consumers, the Department has supported municipalities to develop Consumer Management Plans (CMPs) to ensure that they meet the needs and interests of their consumers. DWA also developed tools and guidelines to capacitate and empower the Water Sector Institutions in understanding the water business. The tools and guidelines were rolled out in the North-West, Free State, Limpopo, Mpumalanga, Gauteng, Western Cape and Northern Cape Province. The tools and guidelines were also presented at various conferences, sector forums and ministerial indaba's.
Furthermore, political interference has been identified as one of the key causes of poor service delivery, especially lack of proper decision-making. In this regard, the Department developed a Councillor Development Programme (CDP), targeting all councillors within the water portfolio. The purpose of the programme is to empower councillors to actively participate in water and sanitation business processes and make informed decisions affecting water services business within the municipalities and communities they serve. In 2009/10, the Department held CDP workshops in the Free State, Northern Cape (five districts), and Eastern Cape.
Support to local government entails the provision of technical advice and hands-on support to municipalities to undertake their roles as WSAs and to comply to set norms and standards on water service delivery projects. The aim of support is to ensure that municipalities have the capacity to manage their own affairs, to exercise their powers and to perform their functions by means of legislative and other measures.
Support to all municipalities during the 2009/10 financial year was focused on ensuring understanding of the requirements of the Regulations Performance Measurement System (RPMS), Blue Drop and Green Drop Certification processes, analysing the Water Services Development Plans as part of the IDP process, systems support to ensure regular monitoring and reporting on drinking water quality and extending the system to include effluent quality reporting and the development of a risk ratio matrix which identifies and prioritises WWTW according to four (4) key risk areas. In addition, the Department gave comprehensive inputs to COGTA's Local Government Turn-around Strategy (LGTS) and extensive support was provided to municipalities to develop Municipal Turn-around Strategies.
The shortage of skills in the water sector remains a high risk area in relation to the provision of effective water services and water resources management. As with many other sectors in the country requiring engineers, technicians, artisans and scientists, the water sector faces major challenges in the recruitment and retention of suitably qualified staff including addressing the remuneration of the category of employees in the public service. Of particular concern is the loss of skilled civil engineering personnel by municipalities.
There is also a lack of skills development programmes or committed training in many municipalities. The DWA partnership with COGTA in supporting dedicated and accredited local government training is crucial in this regard.
Despite the Department achieving the Millennium Development Goal of "halving by the year 2015, the proportion of people who are unable to reach or to afford safe drinking water", DWA remains deeply concerned about the persistent backlogs in certain parts of the country. The Department is also aware of the anomalies in water distribution, where people reside adjacent to water sources and yet have no access to these resources, or indeed vulnerable groups such as the aged and physically challenged who do not have appropriate access to water services infrastructure. The Department will achieve the target of ensuring that every person, including vulnerable groups, has access to safe and reliable supply of drinking water, although it has to reconsider how this can be achieved.
It is recommended that the service backlogs, which are predominant in the KwaZulu-Natal, Eastern Cape, Limpopo, and the North West Provinces, are prioritised and addressed through a combination of short-term interventions such as rainwater harvesting, exploring further options of supplying communities from available sources and the further exploitation of groundwater sources, which may necessitate a policy change.
The ability of some smaller municipalities to deliver sustainable water services must be revisited as, despite all efforts to support, some have shown very little or no improvement to perform on their core mandate. A key challenge is poor financial management, which leaves many municipalities with a weak revenue base, and a growing dependency on grants.
If the country is to meet the national water services targets, the capacity of local government will have to be considered together with the process they follow to deliver on these services. DWA is currently supporting the LGTS together with COGTA and reflecting on the viability of smaller municipalities to fulfil their roles and responsibilities.
Specific challenges exist in the metros which directly influence service delivery to informal settlements and include massive basic services needs, bulk infrastructure dependencies, huge funding requirements, comprehensive and integrated planning (including water resources planning), and policy uncertainties.
Currently, the Ventilated Improved Pit (VIP) toilets are considered to be the most preferred sanitation technology in areas where waterborne systems cannot be installed. However, toilets that have been built five or more years ago are filling up and municipalities do not have the appropriate mechanisms to empty full pits. This creates new backlogs from areas that otherwise would have been considered as served. It is recommended that steps be undertaken to make it mandatory for municipalities to consider other technological options, both for new sanitation systems and maintaining existing ones, that will ensure sustainability in sanitation delivery.
Key challenges facing these programmes are a lack of integration by the affected Departments of Water Affairs, Human Settlements, Energy and CoGTA. Improved integration will ensure that there is alignment in policies and effective utilisation of resources. There is a need to make amendments to the current MIG policy to ensure that a certain proportion of the MIG funding goes towards operations and maintenance to prevent further deterioration of infrastructure. (The MIG policy is currently under review.) The use of equitable share funding which is supposed to address, among other issues, the operation and maintenance of infrastructure and this provision of free basic services to the poor, has to be looked at. It is recommended that the equitable share should have certain conditions attached to it to make it mandatory for municipalities to use it for the identified purposes. (The Equitable Share Policy is also currently under review.
DWA's regulatory function used to be contained within various units reporting to different structures. This situation was improved with the establishment of the Chief Directorate: Regulation. However, the Water Services Regulation Unit still requires additional specialist (technical and scientific) capacity to cater for the ever increasing regulatory demand.
Illegal water use is a serious challenge in many parts of the country, both in terms of illegal abstraction (mainly for agricultural use and mining) and the illegal discharge of effluents into rivers and dams. Unlawful water abstraction means that in some areas the demand for water will be higher than the availability especially during periods of poor rainfall or drought. Municipalities, industries and mines discharging effluent that does not meet compliance standards pose a severe problem to the environment, to the health of rivers and to the well-being of communities.
There is an international drive to improve drinking water quality (DWQ) from catchment to consumer level through a risk-based process. Sector development and support programmes must incorporate water safety planning as a key initiative. As such, the Department introduced this concept through the Blue Drop Certification Programme which requires the implementation of a Water Safety Plan.
The credibility of DWQ data was negatively affected by the general lack of access to accredited laboratories. The Blue Drop Certification Programme successfully bridged this gap through the promotion of accredited proficiency testing schemes in order to raise the accuracy levels of analyses. There is a need for a "step-ladder" approach towards increased access to accredited laboratories.
A draft DWQ Laboratory Strategy is being finalised with the objective of addressing this identified shortcoming in the most practical manner possible.
Existing process controlling skills are also not acceptable in terms of the Blue Drop Programme. The Draft Regulation that has been proposed to replace Regulation 2834 under the Water Act of 1956 (in terms of 1985 requirements) will be revised. This will be done with the objective of enhancing the general skills level of process controllers through mandatory training, and to ensure that the profile of water and waste water operators are raised through a new grading and licensing programme. Other elements such as asset management improvement will be addressed through the incentive-based regulation initiative.
South Africa is the 30th driest country in the world, yet water is wasted through lack of appropriate asset management by those responsible for the delivery of safe drinking water, from the source to the consumer.
A lack of asset management results in poor water demand management, operation and maintenance of infrastructure and ageing infrastructure that should have been replaced by efficient and appropriate technology. Besides the technical perspective, consumers do not conserve water efficiently as there is a general lack of awareness by users to conserve, together with an individual selfishness that believes that their own water habits will not contribute to the bigger picture.
It is essential that asset management, water demand management and water recycling become the key priority in the delivery of sufficient, safe drinking water in the future. If water conservation measures are not implemented urgently, the country will face water shortages in many of our cities. A recent study estimates that some R33 billion should be invested in various structural and operational water saving measures over the next decade. Two thirds of this amount would be required to address structural and operational issues, giving rise to water wastage in the agricultural sector which uses in excess of 60% of our available water. The balance would be required for the municipal sector.
Leakage through poorly maintained infrastructure not only reduces the quantity of safe and clean drinking water reaching consumers, but also reduces income to Water Service Authorities and the money they need to deliver such services - the water that leaks still has to be paid for. A Water Research Commission (WRC) study estimated that over 30% of revenue from water is lost by municipalities through leaking pipes, illegal connections and poor billing systems. This does not include non-payment for water services. Only once asset management is addressed, water demand management is practiced and water wastage is significantly reduced, can alternative supplies such as desalination be considered.
There is a large financing gap in the bulk infrastructure programme aimed at delivering water where it is needed and thereby improving the safety of treated drinking water. The Department has noted that there is inadequate management of sanitation infrastructure, from Ventilated Improved Pit latrines to waste water treatment works, resulting in technical breakdowns and declining service delivery performance, as well as an increased demand for water sanitation thereby compromising the available water in catchments.
There is lack of consistency in defining indigent households as well as targeting the poor in preference to all. Some municipalities are experiencing poor communication and co-operation between users, councillors, local government officials and different spheres of government and it has been found that some municipalities are not viable in their current form to fulfil their service delivery mandates.
The planning and management delivery chain throughout projects is weak due to poor municipal revenue management which is declining in many areas and new infrastructure which is increasing the financial and operating burden for municipalities. Most tariffs are not cost-reflective and are unable to balance affordability with long-term sustainability, creating a growing gap between expenditure and income for water services and equitable share not being used to fund the provision of free basic services and operation and maintenance.
working in collaboration with the DBSA on the Siyenza Manje Programme to address engineering and artisan skills shortages.
All 900 stations are maintained and monitored.
Only a bilateral meeting took place between DWA and the Department of Agriculture, Forestry and Fisheries.
A directorate focusing on climate change issues has been established and personnel will be appointed to effectively perform this function in the next financial year.
A directorate focusing on compliance, monitoring and enforcement has been established.
A project team that is fully resourced has been established to ensure that all backlogs relating to water use licence applications are eradicated during the next financial year.
4 The review of the National Water Resources Strategy, 2004 was not finalised, however, an inception report was completed.
This process will be carried over to the next financial year.
Assist municipalities in adhering to the Blue Drop and Green Drop certification programmes.
Mobilise for funding for infrastructure refurbishment, operation and maintenance.
Extensive work need to be done on irrigation scheme canals to reduce conveyance losses. Many of the irrigation schemes are old and the canal losses are unacceptably high. Extensive rehabilitaion is required to reduce these losses. Due to financial constraints on the capital budgets the targets to reduce these losses could not be realised during this reporting period. A long-term plan is being put in place to reduce conveyeance losses.
2 Shortage of dedicated technical personnel such as Climate Change Specialists, Water Plant Superintendents, Artisans, Technicians and Engineers.
5 The delay in the finalisation of the strategy for the conversion of dams resulted in the delay to convert any of the three dams planned from single to multi-purpose use.
The available draft strategy will be finalised and implemented during the next financial year.
1 Joint Water Commission(JWC) Agreement between the Republic of South Africa (RSA) and Swaziland finalised on 23 July 2010. A joint report will be compiled by the JWC secretariat and fowarded to both ministers.
3 Limpopo Water Commission (LIMCOM) Between RSA, Botswana, Mozambique and Zimbabwe - Mozambique proposed provisional entry into force of the agreement and RSA supports this proposal. The next LBPTC meeting in scheduled to take place in November 2010. A report will be produced after the meeting by the Branch: Internal Relations, together with the LBPTC commissioners.
4 Joint Permanent Technical Committee (JPTC) Between RSA and Botswana - the generic Agreement form done in 2007 to be used as a guideline for community awareness raising. Process on Marico Hydrological study on track and to be completed in July 2010; endorsed with further funding on projects still to be solicited.
5 Tripartite Permanent Technical Committee (TPTC) between RSA, Swaziland and Mozambique - Progressive Realisation of Inkomati-Maputo Agreement (PRIMA); Secretariat of IIMA currently soliciting funding and also busy with the implementation of certain projects; two IIMA projects were attended by DWA experts; a report on the study was finalised.
6 The Orange Senqu River Commision (ORASECOM) - finalisation of the lease agreement. A commissioners meeting was held in Botswana in October 2009. All task teams provided feedback reports on their progress.
7 JWC RSA / MOZAMBIQUE - SA provided letter of no objection to Mozambique. Bilateral discussion on PRIMA capacity exchange programme was held. After the Mozambique engagement has taken place, a report be produced.
8 Lesotho Highlands Water Commission (LHWP) - Legal agreement content finalised - taxation, legal, compensation of community and bilateral task team of Lesotho Highlands Water Agency. A report will be compiled by the Branch: International Relations and the LHWP commissioners after the signing of the agreement.
The Democratic Republic of Congo (DRC) agreement is still being negotiated.
DRC to ensure that funding received from the African Renaissance Fund will be utilised for the implementation of the project in the Katanga region.
Five (5) business processes mapped and implemented Water audit report compiled to inform licensing, registration of users and billing.
Task teams were dissolved. Organisational Development to play and implement interventions in the next financial year.
The approved policies have been implemented throughout the Department.
On average invoices were paid within 30 days.
The development of this system will continue in the new financial year and is expected to be completed in March 2011.
The Department will improve on this in the new financial year. Based on the water use report, a plan that includes capacity building and systems development will be implemented in 2010/11.
5 A climate survey to measure the perception of the public on their understanding of the value of water could not be conducted due to inadequate funding.
Various alternative means of gathering data will be implemented in the new financial year to ensure that feedback is obtained from clients.
Acknowledgement of women of the Tzaneen Municipality that have contributed immensely to the Water Conservation Programme. R300 000 was use to acknowledge them.
A gender mainstreaming programme that caters for disabilities initiatives will be implemented in the new financial year.
The draft Implementation Plan will be approved in the next financial year.
The Water Trading Entity (WTE) was first established as a Water Trading Account which was then approved in 1983 through Circular SY3/6/B under the Exchequer Act, 1975 (Act No. 66 of 1975) as amended, and was subsequently amended by the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) as amended, which converted it into a Water Trading Entity. Under the PFMA, the WTE was required to change from cash-based accounting to accrual-based accounting.
In terms of the National Water Act, 1998 (Act No. 36 of 1998), the Department is responsible for the regulation of water use in South Africa by ensuring that water is allocated equitably and used beneficially in the public interest, and it is also required to create a register of all water users in the country. The Act makes provision for cost recovery on services rendered by the Department to water users. It is against this background that the Department created the Water Trading Entity within its administration. It has been operating as an integral part of the Department with very limited segregation of functions from the Department's Main Exchequer Account. The accountability for its functioning is vested in the Director-General who acts as its accounting officer. The funding of its activities comes from the Department as a transfer payment and through revenue collection from the various water schemes operated throughout the country.
This trading account covers specifically water resources management functions. The integrated water management activities are geared towards ensuring that water resources are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner for the benefit of the people residing in the relevant water management areas. Key focal areas include integrated water resources quality, control and authorisation of water use, and promotion of water conservation measures.
Through Component 1, water resources will be managed within water management areas to achieve improvement in resource protection, catchment management, water use and support to established catchment management agencies. Through trading accounts 2 and 3, water resources infrastructure is developed, operated and maintained in terms of best accepted practices that embrace enterprise-wide risk and asset management and optimal revenue management. Much work has already been done on water resources infrastructure including construction of new infrastructure to increase capacity for water security and availability.
This function is charged with the responsibility of developing, managing, operating and maintaining water supply schemes as integrated water resources systems. This includes transfer schemes that ensure meeting water demands by transferring water from water rich areas within and between water management areas. An example of this is the Vaal River System where a number of dams and pipelines are operated as one inter-linked system. The activities underlying this function are funded mainly through a consumptive water use charges.
This function deals with water resources schemes operated as stand-alone schemes and do not form part of an integrated water resources system. The supply of water is in bulk to different water user groups, but the agricultural sector is by far the largest consumer. Expenditure in this component covers operations and maintenance as well as management costs, and revenue is earned through the sales of water related services, most in bulk.
On Olifants River Water Resources Development Project (ORWRDP) 2A and the new 20 kilometre stretch of the R555 road relocated around the dam basin was completed and opened for traffic in June 2009. The related infrastructure including site offices, materials laboratory, community hall and permanent housing for operators was completed and commissioned for use. For the De Hoop Dam, the foundation excavations were completed and mostly covered with a first layer of concrete. The procedures for placing roller compacted concrete at high rates were refined and the contractor is now ready for placing concrete. The second stage river diversion has been successfully completed. There are currently 752 people employed by the project.
The successful commissioning of the Nandoni water treatment work on the Dam Safety Rehabilitation Programme, the Lakeside Dam, the Molepo Dam, the Toleni Dam and the Gcuwa Dam have been successfully completed. The planning of the raising of the Clanwilliam Dam is at an advanced stage. These projects will serve households that were not previously served with clean potable water. Phase I of the Mokolo River augmentation project will supply water to the new Medupi power station, coal mines and Lephalale Municipality. Further phases of the project that are scheduled to commence during the next financial year and completed after 2014 will create opportunities for the development of future power stations, new petrochemical industries in Limpopo province and many more initiatives. On average about 500 jobs will be created over the next five years and expected to allow Broad Based Black Economic Empowerment (BBBEE) participation.
The Mooi-Mgeni Transfer Scheme project involves the construction of the Spring Grove Dam for domestic water supply in the Ethekwini and Umgungundlovu municipal areas. The construction of a transfer pipeline from the Mooi River to the Mgeni River is part of this project for which construction is planned to commence by the end of 2010 and the first water delivery is expected by 2013.
The Department is planning to spend in excess of R1 billion per annum in the next four years on capital maintenance projects, including the Gamtoos Irrigation Scheme, the Vlakfontein Canal, and the Bospoort and Nsami Dams. The 24 Rivers Canal is one of the canals that supply Voëlvlei Dam with water. The canal has reached the end of its design life and rehabilitation work on the canal commenced in 2007 and should be completed by 2011. A total of R11 million was spent on the rehabilitation of the 24 Rivers Canal during the 2009/2010 financial year.
The Bulshoek Barrage in the Olifants River, diverts water into the main canal supplying the irrigation scheme at Vredendal. Wall sluices are used to regulate the discharge into the canal. This 90-year old structure has no provision to isolate the wall sluices, thus caissons were installed to remove old wall sluices without disrupting supply.
The Impofu Dam is one of the major suppliers to the Nelson Mandela Bay Metro. After 25 years in service, the corrosion protection on the mild steel pipes in the dam was due for replacement. The intake pipes could be removed to accomplish this, but the 400 m long outlet pipeline has to be done in situ.
The Laing Dam is a major source of water for Buffalo City. The 60-year old cast iron inlet pipes have been developing leaks and had to be replaced. To supply the treatment plant immediately downstream, a siphon was installed over the spillway. The single intake system pipes are currently being removed to be replaced with a twin system.
Rehabilitation. To date eighteen dams have been rehabilitated. In this financial year, a further seven dams will be rehabilated. The upgrading of these dams brings substantial benefits, including the sustainability of water supply to water users, limiting water losses and increasing the spillway capacity to ensure the protection of the dam as part of disaster management. Dam safety rehabilitation works are substantially completed at the Gcuwa Dam and the Toleni Dam in the Eastern Cape.
Dam safety rehabilitation works are substantially completed at the Boskop Dam in the North West Province.
Dam safety rehabilitation works are substantially completed at Acornhoek in Mpumalanga.
Substantial rehabilitation work was undertaken on several elements of the Gamtoos GWS in order to improve the reliability of water supply to users, including the Port Elizabeth area.
Eskom's full demand was delivered in the Eastern Highveld for the thermal power stations without any curtailments.
Sasol's full demand was met.
1 300 000 000 m3,  was met.
Large floods were successfully routed through the dams.
Through the operations and maintenance clusters, 95% compliance to levels of assurance of supply for different user groups was ensured; however it must be noted that 99.
Extensive work need to be done on irrigation scheme canals to reduce conveyance losses.
Actual achievement high. Extensive rehabilitaion is required to reduce these losses. Due to financial constraints on the capital budgets the targets to reduce these losses could not be realised during this reporting period. A long-term plan is being put in place to reduce conveyance losses.
One project advanced to completion of project implementation preparation.
30% condition of infrastructure meet original design capacity/performance requirements.
50% of infrastructure meet design standards/capacity.
1 Training of staff on dam safety issues.
Training of technicians regarding operating rules, operation and maintenance manuals and emergency preparedness plans.
Implementation of recommendations contained in the water user audit report, in particular the reconfiguring of SAP and improved debt collection efforts; in addition, water user associations will be approached to serve as billing and collection agents for some of the water user charges.
The project will be adequately funded and carried out in the new financial year.
Current 2009/10 49.
People served 1994 - March 2010 20.
People served 1994 - March 2010 13.
Reporting focuses only on municipalities that are WSAs and that are implementing FBW.
The Millennium Development Goals (MDGs) are time-bound goals with quantifiable targets which measure extreme poverty in all its dimensions and, in turn, measure the level to which countries are meeting the aims of the Millennium Declaration (signed in 2000 by 189 countries). South Africa has reached the MDGs for both basic water and basic sanitation.
The Audit Committee reports that it has complied with its responsibilities arising from Section 38(1)(a) of the Public Finance Management Act (PFMA), 1999 (Act No.1 of 1999) as amended by Act No.29 of 1999) and Treasury Regulation 3.1.13. The Audit Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with this Charter, and has attempted to discharge its responsibilities as contained therein.
The system of internal control was not entirely effective for the year under review, as compliance with prescribed policies and procedures were lacking in certain instances. During the year under review, instances of non compliance were reported by the internal and external auditors that resulted from a breakdown in the functioning of controls. In certain instances, the weaknesses reported previously have not been fully and satisfactorily addressed, and the impact thereof in contained in the annual financial statements. The entity is currently reviewing its systems of internal control which should rectify the non compliance identified and provide more effective control.
The department has developed and approved a risk management strategy. This strategy is the foundation for a continuous risk assessment process and for management monitoring of risks on an ongoing basis.
The internal audit department is responsible for independent and objective evaluation of the department's system of internal control at a detailed level and to bring any significant business risks and exposure to the attention of management and the committee through the provision of comprehensive internal audit reports.
During the year under review the internal audit department did not have adequate capacity which has resulted in the audit plan for the year not being adequately covered. The Audit Committee is monitoring the progress with appointments within the internal audit department.
The committee notes with concern, the Auditor-General's Qualified Audit Opinion on the financial statements of the Main Account. Management will be required to implement corrective measures to address the concerns raised by the Auditor-General that gave rise to the above-mentioned opinion.
The Audit Committee concurs and accepts the conclusions of the Auditor-General on the annual financial statements and is of the opinion that the audited annual financial statements be accepted and read together with the report of the Auditor-General.
During the year under review the Audit Committee held six normal meetings and one special meeting.
The system of internal control was not entirely effective for the year under review, as compliance with prescribed policies and procedures were lacking in certain instances. During the year under review, instances of non compliance were reported by the internal and external auditors that resulted from a breakdown in the functioning of controls. In certain instances, the weaknesses reported previously have not been fully and satisfactorily addressed, and the impact thereof is contained in the annual financial statements. The entity is currently reviewing its systems of internal control which should rectify the non compliance identified and provide more effective control.
Internal auditing provides a supportive role to management and the Audit Committee to achieve their objectives by assisting in the management of risk within the department.
The committee notes with concern, the Auditor-General's Qualified Audit Opinion on the financial statements of the Water Trading Entity. Management will be required to implement corrective measures to address the concerns raised by the Auditor-General that gave rise to the above-mentioned opinion.
The committee is further concerned with the material prior year adjustments processed in the currently year's financial statements especially as the 2009 financial statements were unqualified.
The Department of Water Affairs is the custodian of water resources, charged with the primary responsibility of ensuring safe and reliable water to all South Africa's citizens. The Department also has a key role to regulate the water sector and to provide strategic leadership to the entire sector. The Department plays an important role in contributing to various key programmes of Government as informed by the priorities contained in the Medium-term Strategic Framework (2009-2014). Some of the key programmes contribute directly to economic growth, social development and poverty alleviation with the intent to create job opportunities.
The Water for Growth and Development Strategic Framework was developed to set in motion a course of action to ensure that there is sufficient water in both quantitative and qualitative terms to support South Africa' growth path. To give expression to the framework, the Department has executed the following measures.
The IWRP continued to develop key strategies to ensure that sufficient water would be available to meet the growth and development needs of the country.
Vaal River System - it was recommended that Phase 2 of the Lesotho Highlands Water Project be implemented, illegal water abstraction for irrigation in the Vaal System to be eradicated, water losses from the domestic and industrial water supply system be reduced by at least 15%.
Crocodile (West) River System - it was recommended that the Mokolo Crocodile West Augmentation Project be implemented to meet the growing needs in the Lephalale area. Growing return flows from Gauteng North area will be used to meet the needs of the Crocodile (West) System Supply Area.
KZN Coastal - the re-use of effluent from urban areas of the KZN Coastal area will be required to meet future demands and the Mooi-mgeni Transfer Scheme, entailing the construction of Spring Grove Dam and Associated works, needs to be urgently implemented. Desalination of sea water needs to be investigated.
all other towns in South Africa.
Strategies for Cape Town and the Amatola aater supply systems, which were completed in the previous financial years, were updated and the recommended actions followed.
The IWRP has over the years developed robust water operating rules, which are protocols for regulating the storage and movement of water resources in systems (dams) in order to match water availability with requirements. Operating rules guide the applications in order to ensure equitable supply of water and mitigation against risk of failure of water resources during drought conditions. This approach has largely been successful.
During the 2009/10 financial year, the process of developing and enhancing its water operating rules, including tools with benchmarks, early warning systems, a monitoring procedures process of enhancing and triggering to spark corrective measures like restrictions in order to mitigate system failures during drought conditions, was continued.
These assessments recommended key actions which helped to minimise the impact of drought especially in some areas of the Eastern Cape.
The review of the National Water Resources Strategy, 2004, which describes how water resources will be protected, used, managed and conserved, was supposed to be revised during the period under review. However, the inception report was only completed in March 2010 and it is expected that the actual work will be carried out in the next financial year.
The IWRP continued to assess opportunities for improving the efficient use of water through the development and implementation of appropriate sector strategies. Extensive education and awareness campaigns, especially amongst the youth, to inform communities about water use efficiency, were confirmed. This was done through projects such as the 2020 vision programme, where schools get to participate in water efficiency programmes. These include water and sanitation related competitions such as the South African Youth Water Prize and Baswa Le Meetsi (Youth in Water). Also, communities were encouraged to use water efficiently through projects such as the Community Water Efficiency Programme (COWEP), the Blue Bus Campaign, and the annual WCWDM Sector Awards for contributions towards the efficient use of water.
The Department, as a regulator, must ensure that Water Service Authorities adhere to water quality standards and continue to ensure that drinking water quality monitoring programmes are improved. The quality of water, both supplied to consumers and waste discharged back into water resources, depends on the quality of the treatment facilities. As the development of policy for water services infrastructure development is the Department's regulatory responsibility, the Department will ensure that there is adequate planning for the management, operation, maintenance, refurbishment and upgrading of infrastructure.
A new unit responsible for Compliance, Monitoring and Enforcement was established and a total of fourteen Water Management Inspectors have been recruited and trained. As a result of the implementation of the Compliance, Monitoring and Enforcement programme, a total of 239 directives have been issued of which 31 have been resolved positively and 14 will be dealt with in court.
The eradication of authorisation of water use will be a major contribution development to economic development as almost all developments require water. Water use authorisation is also a major part of the efficient integrated water resource management as it serves as a regulatory basis and a foundation for the sustainability of the resource (prevention of pollution and over abstraction by regulatory).
Provincial water indabas were held in nine provinces and water sector plan were developed.
A national water resource classification system has been finalised.
Regulations for classification of water resources have been finalised.
National coverage of Reserve determination has been improved to 60%.
Capital expenditure on mega projects provides opportunities to positively impact on the socio-economic environment. The Department has already achieved success on recently completed projects (Berg Water project and Vaal Pipeline) by setting project specific targets for creating job opportunities and procurement of goods and services from local communities. Targets are set in a consultative manner and enforced through penalty clauses in service contracts. Time is needed to set the targets associated with planned capital investment projects.
98% completion of the Nandoni Treatment Works.
To ensure operational efficiency the extensive backlog on rehabilitation / refurbishment, which had developed due to insufficient funding for maintenance, needs to be urgently addressed. The Department has recently assessed all national water resources infrastructure and concluded that a R10 billion backlog has developed with regard to the assets currently valued at R58 billion (depreciated replacement cost).
The rehabilitation of civil works and the refurbishment of mechanical and electrical components of existing water resources infrastructure are taking part. Examples are the completion of extensive work done on the Gamtoos River distribution canals in the Eastern Cape and the improvements at the De Hoop Dam. The associated Dam Safety Rehabilitation Programme has also resulted in the completion of substantive upgrades to the Bospoort Dam in Limpopo, the Belfort Dam in the Eastern Cape and 18 smaller projects as well as 32 more projects that are planned for completion in the coming financial years. Both these programmes made major contributions to reducing the backlog in infrastructure rehabilitation and improved the efficiency, safety and useful lifespan of strategically important water resources infrastructure.
The Department's role is to create an enabling environment in which local government is equipped to fulfil its Constitutional mandate and improve service delivery. This requires a joint effort and better collaboration between the three spheres of government, with the Department of Cooperative Governance and Traditional Affairs being the main role player. This will be made easy with the implementation of the Local Government Turn-around Strategy that was approved by Cabinet in January 2010. As the Constitution clearly defines the role of the Department of Water Affairs with regard to the provision of water services, the Department's responsibility relates to the provision of support to municipalities, particularly those that are under capacitated. This is done through the development of Water Services Development Plans (WSDP) and Integrated Development Plans (IDP) by the deployment of expertise in partnership with the Development Bank of Southern Africa (DBSA), as well as the operation and maintenance of water services infrastructure.
The legislative and policy instruments provide strategic direction for the implementation of the transformation agenda in the water sector. Internal strategic tools were developed to give expression to the transformation imperatives of government as contained in legal frameworks. These include the Broad Based Black Economic Empowerment strategy, the youth development strategy and guidelines on the establishment of Catchment Management Agencies, the Water Allocation Reform programme, support to resource poor farmers, the women empowerment and disability programme, human resources development strategy and the public education and awareness programme. Annual targets are set against each focus area and monitored in terms of the performance monitoring and evaluation system.
The Department played an important role with regard to poverty alleviation by creating 19 203 job opportunities through the Working-for-Water programme. This directly supports the Expanded Public Works Programme. Women empowerment events and disability campaigns were implemented as part of the transformation agenda. The involvement of communities during the event was given a strong focus.
The Department played an important role in shaping the global agenda on water through the implementation of various cooperation agreements at regional and international level aimed at improving the management of water resources. As an active participant to the regional and continental water engagements, the Minister of Water and Environmental Affairs was elected the chairperson of the African Ministers' Council on Water (AMCOW), with the term running over a period of two years starting from November 2009. This particular privilege reflects the confidence of governments in the ability of the Minister to provide leadership on issues of growing importance like the collective management of trans-boundary and shared water resources.
The organisational structure of the Department was reviewed in response to the problems of misalignment, role ambiguity and to give strategic focus to the core business of the Department. This process was enhanced through the development of job profiles for senior management echelons. The learning continued to play a key role in securing an adequate human resource supply of the relevant technical skills to meet the current and future demands of the Department.
The Department implemented a financial management improvement plan focusing on addressing all the issues raised in the Auditor General's report. The alignment between a corporate strategy, business plans and performance agreements continues to be a challenge. We will continue to implement measures to improve alignment and create a sense of strategic coherence.
The River Health programme was implemented in the Vaal and Crocodile Rivers. This resulted in cleaner rivers, an improved ecosystem and improved water quality. The programme trains and employs people from local communities to clean rivers.
There was a 25% improvement in the finalisation of non-compliance cases (CME). Compliance enforcement is necessary to ensure sustainable water resource managements.
895 900 hectares were cleared of invasive species through the Working for Water (WfW) programme.
Reconciliation strategies for the Crocodile (West), Vaal and KwaZulu-Natal coastal areas that are meant to secure continued water supply to those areas at an appropriate level of assurance for the various users were completed.  This is over and above work that has been done in areas such as the Western Cape, Amatole (East London area), Algoa and others.
The Department implemented the BLUE DROP programme, aimed at assessing the quality of drinking water in various municipalities and highlighting drinking water quality related deficiencies to Water Service Authorities. This was also complemented by the implementation of the GREEN DROP programme which focused on the assessment of the waste water treatment works in various municipalities to determine their level of compliance to minimise the negative environmental impact and the human health risks.
Six regional CME implementation plans were approved for implementation in 2010/11 1.3.
Olifants River Water Resources Development Project (ORWRDP) 2A: The new 20 km stretch of the R555 road relocated around the dam basin was completed and opened for traffic in June 2009.
De Hoop Dam: The project employed 752 people in this period. The foundation excavations were completed and mostly covered with a first layer of concrete. The procedures for placing roller compacted concrete at high rates were refined and ready for placing concrete.
Dam Safety and Rehabilitation Programme: The Nandoni water treatment works was commissioned. The Lakeside Dam, Molepo Dam, Toleni Dam and Gcuwa Dam were completed. The planning of the raising of Clanwilliam Dam is at an advanced stage. At the end of the financial year at total of eighteen dams had been rehabilitated. The upgrading of these dams ensures: (i) sustainability of water supply, (ii) limiting water losses, and (iii) increase the spillway capacity to ensure the protection of the dam as part of disaster management.
Mokolo River Augmentation Project: Phase I will supply water to the new Medupi power station, coal mines and the Lephalale Municipality. Further phases of the project, scheduled to be completed after 2014, will create opportunities for the development of future power stations, new petrochemical industries in the Limpopo Province and many more initiatives. On the average, about 500 jobs will be created over the next five years.
Mooi-Mgeni Transfer Scheme Project: involves the construction of the Spring Grove Dam for domestic water supply in the Ethekwini and Umgungundlovu municipal areas. The construction of a transfer pipeline from the Mooi River to the Mgeni River is part of this project for which construction is planned to commence by the end of 2010 and the first water delivery is expected by 2013.
95% compliance for different user groups was ensured; 99.5% to the energy sector was ensured.
The Vaal River Eastern Sub-system Augmentation Project (VRESAP) was declared operational in June 2009. Water can now be conveyed from the Vaal Dam to a distribution point near Secunda to ensure the provision of additional water to Eskom and Sasol at the high level of assurance of supply required for strategic industries.
The RBIG is a targeted support programme to Water Services Authorities (WSAs) established in 2007 to supplement the financing for the development of regional bulk water infrastructure, regional bulk sanitation collection as well as regional water treatment works and waste water treatment works. The programme started with a budget of R300 million in the 2007/08 financial year and up to the end of the 2009/10 financial year an amount of R1,362 billion had been invested. Furthermore, the programme had created a total of 6 342 job opportunities.
A total of 11 projects had been completed with improved access to approximately 249 000 people.
The ACIP is a "rapid intervention programme" with a focus on: (i) community infrastructure water and sanitation, (ii) Water conservation and demand management, (iii) the Waste Water Infrastructure Refurbishment programme, and (iv) drought intervention in the Eastern Cape. It is being implemented in partnership with the targeted municipalities which are also co-funding implementation. An initial amount of R500 million was identified and set aside by the Department to kick start, the programme. At the end of the financial year a total of 14 projects for water supply and 13 projects for household sanitation were selected and ranked on the basis of exposure to the impacts of cholera and high water services backlogs (typically where between 50% and 100% of households were not served). These projects will benefit from the co-financing of municipalities during implementation in the 2010/11 financial year.
During this period, the Department (on behalf of the country) hosted the second Africa Water Week event and Seventh Session of the African Minister's Council on Water (AMCOW). During this event, South Africa, through the Department of Water Affairs, took over the chair of AMCOW for the next two years. This places a huge responsibility on the country to provide strategic leadership and guidance to address the problem of water security on the Africa continent.
The Department undertook improving financial management as a contribution to government priority.
In the 2008/09 financial year, the Department received an unqualified audit opinion from the Auditor-General.
Financial management improvement initiatives have been undertaken in areas of (i) asset management, (ii) revenue management, (iii) the establishment of risk management, and (iv) the enhancement of internal audit function.
The Enterprise Wide Asset Management (EWAM) project undertook the verification and valuation of major water infrastructure assets with a view to producing a complete and verified asset management register, including the establishment of relevant asset management policies.
The Department installed underground rainwater tanks in 500 households to be used for food gardens and in addition 300 resource poor farmers were supported.
The Department did not engage in any expenditure in this regard.
delays in reaching water supply agreements with individual mines due to the global economic crisis.
As result, the Department anticipated to spend only R98 million of the R600 million earmarked for phases 2B and 2G of the De Hoop Dam.
Augmentation to the Water Trading Entity (WTE) - R205 million to cover the cost of water services infrastructure projects undertaken by the WTE in the 2008/09 financial year.
An amount of R8.4 million was shifted to Programme 1: Administration to defray over-expenditure on Programme 1: Administration mainly attributable to additional accommodation needed by the Department as well as the increased cost of office accommodation and municipal services.
An amount of R26.4 million was shifted to Programme 1: Administration to defray over-expenditure on Programme 1: Administration mainly attributable to additional accommodation needed by the Department as well as the increased cost of office accommodation and municipal services.
In comparison with the 2008/09 financial year when only 92 % of the appropriated amount was spent, 98% was spent in 2009/10.
Ensure compliance, monitoring and enforcing of prescripts in terms of the National Water Act, 1998 (Act No.
The policy framework for charging for the use of water resources is set out in sections 56 to 60 of the National Water Act, 1998 (Act No. 36 of 1998). The pricing strategy for raw water use charges was published in Government Gazette No. 1353 of 12 November 1999. The first review of the pricing strategy has been completed and implemented by Notice No. 296973 in the Government Gazette of 16 March 2007 for implementation since April 2007. It remains valid until it is replaced by a new pricing strategy.
The proposed pricing for waste discharge related uses and return flows will be implemented after the review of the existing pricing strategy and other fiscal policy measures that have an impact on environmental taxes.
A big and enduring problem with the implementation of the pricing strategy so far has been that insufficient revenue is collected by means of infrastructure-related water use charges to fund the maintenance, refurbishment and betterment of government water resources infrastructure at a sustainable level. It was thought that this problem could potentially be solved by trying to address the government funding model for water resources infrastructure during the pricing strategy review process, but if this did not turn out to be feasible to at least make a serious effort to increase the efficiency of the Department's revenue collection process and broaden the consumer base, to appeal to the National Treasury for more financial support to keep water resources infrastructure at a sustainable level.
Schedule 1 of the National Water Act, 1998 (Act No.
Various technical and administrative support services were provided to Water Services Authorities and Water Management Institutions. These vary over a wide range of actions but mostly around support such as the provision of information to municipalities, the media and the public. Booklets, guidelines and pamphlets were distributed free of charge to municipalities, civil society and NGOs working in the water sector. It is estimated that Water Services Authorities provided water to a further 107 million people during the reporting period through the respective Water Services Development Plans and it is reported that R2,5 billion of the Municipal Infrastructure Grant (MIG) was spent during this period. Reports indicate that access to basic water supply services improved from 59% (1994) to 93% (2010) of the national population based on the Census 2001 results, as updated annually by the Department.
Free training was provided to operators of water works, councillors and water board members. Specialised planning was done to assist municipalities in forward planning for water resources and water services. All these were done in addition to participation in several actions, activities and workshops organised by other spheres of government such as provincial and local government.
Inventories amounted to R81 827 000 as at 31 March 2010. These are reflected as Note 5.5 to the Annual Financial Statements.
The donor-funded programme, Masibambane, which is in its third phase, is one of the most significant vehicles aimed at strengthening the Department's ability to effectively discharge its mandate through the implementation of the Community Water Supply and Sanitation Programme (CWSS).
the implementation of financial management improvement practices.
The Department comprises various statutory institutions and entities that have been established in accordance with the acts of Parliament and accounts directly to the Executive Authority. These institutions and entities are mentioned below.
The Water Trading Entity (WTE) was first established as a Water Trading Account by Cabinet approval in 1983 made via Circular SY3/6/B under the Exchequer Act, 1975 (Act No. 66 of 1975) as amended. It was subsequently amended by the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) as amended, which converted it into a Water Trading Entity. In terms of the PFMA, the WTE was required to change from cash-based accounting to accrual-based accounting. This conversion to accrual-based accounting from cash-based accounting has been achieved as evidenced by the audit outcome of 2008/09.
In terms of the National Water Act, 1998 (Act No. 36 of 1998), the Department is responsible for the regulation of water use in South Africa by ensuring that water is allocated equitably and used beneficially in the public interest. It is also required to create a register of all water users in the country. The Act makes provision for cost recovery on services rendered by the Department to water users. It is against this background that the Department created the Water Trading Entity within its administration to operate the raw water supply infrastructure. The WTE has continued to operate as an integral part of the Department with a fair segregation of functions from the Department's Main Exchequer Account. The accountability for its functioning is vested in the Director-General of the Department of Water Affairs who is the accounting officer. The operating activities of WTE are funded by the Department as an augmentation and through revenue collection from water users throughout the country.
This component specifically covers water resources management functions. The integrated water management activities are geared towards ensuring that water resources in those areas are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner for the benefit of the people residing in the relevant water management areas. Key focal areas include integrated water resources quality, control and authorisation of water use, and promotion of water conservation measures.
Through Component 1, water resources are managed within water management areas to achieve improvement in resource protection, catchment management, water use and support to establish catchment management agencies. Through Components 2 and 3, water resources infrastructure is developed, operated and maintained in terms of best accepted practices that embrace enterprise-wide risk and asset management and optimal revenue management. The activities underlying this function are funded mainly through consumptive water use charges.
This function deals with water resources schemes operated as stand-alone schemes and does not form part of an integrated water resources system. The supply of water is in bulk to different water user groups, but the agricultural sector is by far the largest consumer. Expenditure in this component covers operations and maintenance as well as management costs, and revenue is earned through the sales of water related services, most in bulk.
This is a specialised liability management entity mandated to finance, develop and implement bulk raw-water infrastructure within an acceptable risk framework and in the most cost-effective manner to benefit water consumers. It was established in 1986 in terms of the Water Act, 1956 (Act No. 54 of 1956) which was repealed by the National Water Act, 1998 (Act No. 36 of 1998). Besides implementing and financing new water infrastructure projects as directed by the Minister, it is mandated to provide treasury and financial advisory services to the Department and other water management institutions. Over the medium term, the Trans-Caledon Tunnel Authority (TCTA) is expected to increase expenditure by nine percent which is in line with the increased expenditure in projects.
the Mokolo-Crocodile Water Augmentation Project (MCWAP).
The TCTA has successfully completed the implementation and funding of the part of the Lesotho Highlands Water Project (LHWP) phase 1 on Southern African soil and is currently responsible for the operation and maintenance of the same components. It also provides debt management services to the Department of Water Affairs (DWA) for the LHWP Phase 1.
The TCTA has successfully completed the implementation and funding of the Berg River Water Project and is responsible for debt management of the related borrowings. The TCTA derives its mandate from the notice of establishment that effectively allows it to delegate its borrowing powers and for the DWA to delegate its project implementation and execution to the TCTA.
The Water Research Commission (WRC) was established in terms of the Water Research Act, 1971 (Act No. 34 of 1971) to promote the coordination, communication and cooperation in water research, to establish water research needs and priorities from a national perspective, to fund prioritised research, to promote the effective transfer, dissemination and application of research findings and to enhance knowledge and capacity building in the water sector. The WRC has five key strategic areas, each providing an integrated framework for investment in addressing a portfolio of key water related needs.
The areas allow for multidisciplinary studies and are focused on solving problems related to national needs and supporting society as well as the water sector. While each of the areas is unique and mutually exclusive, they collectively cover the spectrum of water-related topics of strategic importance.
In terms of Chapter 7 of the National Water Act, 1998 (Act No. 36 of 1998), provision is made for the establishment of Catchment Management Agencies (CMAs) that should perform delegated water resources management functions at the regional or catchment level and to involve local communities in decision-making processes. CMAs are classified as Schedule 3A public entities in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended which implies that they are supposed to have governing structures in the form of a board and a chief executive officer (CEO). Only two CMAs, namely Inkomati and Breede-Overberg, currently exist. Both have function governing boards and CEOs. Seed funding of R42 million for the two established CMAs was disbursed to them to support their operations. Both are operational with governing boards, first line managers and staff in place.
Water boards have been established to operate as water services providers, which mainly entails the provision of bulk portable water supply. These boards manage water services in their supply areas, provide potable water at cost-effective prices and act as important intermediaries between bulk infrastructure provision, water reticulation and end users. There are currently 14 water boards that have been set up as financially independent institutions in terms of section 34(1) of the Water Services Act, 1997 (Act No. 108 of 1997) and must aim to be financially viable.
According to Chapter 8, Schedule 3 of the National Water Act, 1998 (Act No. 36 of 1998), all irrigation boards formed under the Water Act of 1956 (Act No. 54 of 1956) must be transformed into water user associations (WUAs) to provide a vehicle for localised users to operationally manage the use of the resource in a more integrated manner. Currently, all irrigation boards are in the process of being transformed into water user associations to fall within the ambit of the National Water Act, 1998 (Act No. 36 of 1998). To date, only 59 of the 279 irrigation boards have been transformed into water user associations. In addition, 31 new water user associations have been established and most of these are focused on supporting resource-poor farmers.
Although these entities are active in the water sector they are not public entities which report to the Minister of Water and Environmental Affairs.
The Komati River Basin Water Authority (KOBWA) has been established in terms of the treaty on water resources of the Komati River basin entered into between South Africa and Swaziland. It is governed by the Joint Water Commission, whose members consist of officials from both governments.
The Komati River Basin Water Authority was responsible for financing, building, operating and maintaining the water resources infrastructure in the Nkomati River basin, comprising the Driekoppies Dam in South Africa and the Maguga Dam in Swaziland, with ancillary works.
The construction of the Driekoppies Dam was secured through a loan of R488.4 million from the Development Bank of South Africa. The loan is payable biannually in 40 instalments, at an interest rate of 10% per annum from March 2001. The liability is secured by a 100% guarantee from the South African Government. The outstanding balance on the loan as at 31 March 2010 was R364.8 million.
The loan of R1 158 000 000, structured by a promissory note as agreed by the South African and Swaziland Governments, is an additional facility to complete the Maguga Dam. It bears interest of 13.1% per year, payable biannually in arrears. The capital and interest are repayable in 30 biannual instalments from June 2002. The loan is fully guaranteed by the South African Government and in turn the Swaziland Government guarantees 40% per cent of the loan to South Africa. The balance on the outstanding loan as at 31 March 2010 amounts to R1 013 078 000.
All entities to which transfer payments have been made are reflected in Note 11 to the Annual Financial Statements.
Transfer payments are made to municipalities in terms of section 64 of the Water Services Act, 1997, (Act No. 108 of 1997) which is intended to subsidise the operation and maintenance of water schemes owned and/or operated by the Department or by other agencies on behalf of the Department.
Funds are transferred on the basis of a transfer agreement (contract between the Department and the receiving institution). The transfer agreement is intended to ensure the effective and sustainable delivery of infrastructure in accordance with the required accountability aspects of the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended and the Division of Revenue Act, 2009 (Act No. 12 of 2009).
The Water Trading Entity (WTE) operates under the administration of the Department and any deficit must be made good from the Main Exchequer Account as an augmentation. For the year under review, augmentation to the WTE amounted to R2,195 million for infrastructure, R123,208 million for normal augmentation and R175,952 million for the Komati Water Basis Authority (KOBWA).
The Department does not have any public-private partnerships.
The King Report, informed by the Constitution and Public Finance Management Act,1999 (Act No. 1 of 1999), as amended, and the dictates of the King I, II and III reports, address the conformance of the Department of Water Affairs to the relevant statutory and regulatory imperatives. The Department, as a government entity, is required to prepare and submit annual financial statements which incorporate a corporate governance report.
Senior management of the Department of Water Affairs (DWA) endorses the Code of Corporate Practices and Conduct contained in the King III Report on Corporate Governance. By supporting the Code, senior management has recognised the need to conduct the DWA's affairs with integrity and in accordance with generally accepted corporate practices.
The Department has appointed a Director: Risk Management to manage the risk management function at enterprise level. The Director: Risk Management reports to the Chief Operations Officer (COO). A Risk Management Committee has been established to which the Director: Risk Management reports functionally. The Audit Committee is responsible for oversight requirements of risk management and evaluating and monitoring the Department's performance with regard to risk management.
The Department has a risk management policy in place. The day-to-day work practices involve risk assessment which is carried out intuitively and formally in line with the risk management policy. The risk management policy formalises the risk management process with risk registers maintained and reviewed as part of the business planning process.
Risk management champions were identified at branch level to strengthen the implementation of the function. Various risk management workshops were held which resulted in risk management plans containing ten significant risks being developed for the individual branches and regions.
A fraud risk assessment was performed from which a fraud risk register was developed. This informs the review of the Department's fraud policy and response plan.
The Department considers fraud prevention as an integral part of an overall Department risk management strategy. The Internal Audit function has a directorate that focuses specifically on fraud prevention, detection and investigation. The Department has a fraud prevention policy and response plan, which is reviewed annually, that contains the policy stance of the Department to fraud and corruption as well as the response mechanisms in place to report, investigate and resolve incidents of fraud and corruption which impact on the Department.
The Department has identified the risk in this area as being the lack of application, knowledge, awareness, effective communication and training with regard to its prevailing prescripts, as well as some policies and procedures which may be inadequate.
Management will improve awareness and knowledge of the relevant systems, policies, procedures, rules and regulations, including the requirements of the Public Finance Management Act, 1999 (Act No. 1 of 1999) as amended, the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000) and the Supply Chain Management (SCM) Guidelines among the employees.
This will be done through the development of clearly defined communication and training strategies ensuring that all employees are aware of the policies and procedures and that they would be able to implement these in their respective duties and responsibilities.
The Internal Audit Unit of the Department discharges its responsibilities in accordance with the Treasury Regulation requirements. The unit has enhanced its capacity during the year by the appointment of key personnel which put it in a position to adequately deliver on its mandate. The Internal Audit Unit is headed by a Chief Director who reports operationally to the Accounting Officer and functionary to the Audit Committee. The component implement a risk-based internal audit plan annually which is in line with the standards set by the Institute of Internal Auditors. It performs an advisory role to management by ensuring that periodic audits and reports are produced based on the evaluation of the Department's system of internal controls and risk management processes. The unit also assesses the Department's ability to comply with legislative requirements as well as the performance of its functions in accordance with the mandate and commitment made in the strategic plans.
The Audit Committee has been appointed in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) as amended and members discharge their functions in accordance with the PFMA, Treasury Regulations and the Audit Committee Charter. Members have at each Audit Committee meeting engaged management on, among others, matters relating to performance and financial management improvement action plans formulated to address performance and financial management weakness identified by the external auditors in the previous financial years.
The following committees exist: Top Management, Executive Committee (EXCO), the Management Committee (MANCO) and the Departmental Bid Adjudication Committee (DBAC). These are functioning effectively and are achieving their objectives. Management structures are in place to deal with the flow of information, issues of conflict of interest, provide leadership and facilitate decision making..
The Department had in the absence of its own code of conduct for employees adopted and continued to implement the Public Service Code of Conduct developed by the Department of the Public Service and Administration to manage the conduct of employees. This is supplemented by the Public Service Coordinating Bargaining Council (PSCBC) Resolutions such as the Disciplinary Procedures (Resolution 2 of 1999) and the Grievance Procedures (Resolutions 14 of 2002) in the public service to deal with disciplinary matters as well as formal complaints from employees.
The Department adheres to health and safety standards and regulations that are contained in the acts and policies by ensuring that plans and structures are in place to safeguard the wellbeing of the employees.
According to the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996) the administrative powers and functions entrusted by legislation can be transferred to certain Cabinet Ministers in terms of section 97 of the Constitution.
Given under his Hand and the Seal of the Republic of South Africa, His Excellency Mr J Zuma, in his capacity as President of South Africa, signed the transfer of certain functions to various Cabinet Ministers on 22 June 2009 and it was published in Government Gazette No. 32367 dated 1 July 2009.
As a result of this, the administration, powers and functions in respect of the forestry and sanitation functions were transferred to the Minister of Agriculture, Forestry and Fisheries and the Minister of Human Settlements, respectively. According to the determination letters that were signed by the Minister of Public Service and Administration, the sanitation function was transferred to the Department of Human Settlements with effect from 1 December 2009 and the forestry function to the Department of Agriculture, Forestry and Fisheries with effect from 23 March 2010.
Section 42 of the PFMA and Treasury Regulation 6.5.2 state that "Should the Minister of Public Service and Administration or a Premier of a province make a determination regarding the transfer of a function between departments in terms of the Public Service Act, 1994, as amended, that determination must accompany a request for the transfer of funds as per Treasury Regulation 6.5.1. Should the Minister of Public Service and Administration or a Premier approve a function transfer after the finalisation of the adjustments estimates, it must be dealt with on a recoverable basis."
The budget for the forestry function for the 2009/10 financial year was transferred to the Department of Agriculture, Forestry and Fisheries (DAFF) by way of the Adjustment Estimate which was approved by Cabinet on 2 October 2009. Expenditure amounting to R554 075 614.09 was therefore dealt with on a recoverable basis by the DWA.
The budget of the sanitation function was only transferred to the Department of Human Settlements (DHS) with effect from 1 April 2010. Expenditure amounting to R1 324 627.45 was incurred by the DHS since the transfer of the staff to the DHS and was dealt with on a recoverable basis by the DHS.
Before the forestry functions were transferred, the aim of the Department was to ensure the availability and supply of water at national level, to facilitate equitable and sustainable social and economic development, ensure the universal and efficient supply of water services at local level, and promote the sustainable management of forests.
The aim of the Department of Water Affairs after the forestry functions were transferred remains the same for water activities, but the promotion of sustainable forest management was removed from the budget.
As a result of the transfer of the aforementioned functions the Department's name was changed from the Department of Water Affairs and Forestry to the Department of Water Affairs.
Detail of the functions transferred.
The purpose of Programme 4: Forestry of the Department, where the forestry functions were managed, was to ensure sustainable management of the Department's plantations and indigenous forests in order to realise their optimal social, environmental and economic benefits also to promote rural development through policy development, regulation, facilitation, and monitoring and evaluation.
The sanitation functions were integrated in Programme 3: Water Services. The aim of sanitation services was to develop infrastructure for basic sanitation services at the regional level for improved quality of life and poverty alleviation.
As a result of the transfer of the forestry functions, no figures are reflected in the appropriation statement for forestry for the 2009/10 financial year.
No substantial new activities have been implemented during the reporting year.
A physical asset verification conducted at the nine regional offices of the Department confirms that all assets are recorded and captured in the asset register. During the reconciliation, assets paid through sundry payments were detected and added to those acquired on LOGIS. These were accounted for as additions and form part of the asset register.
The Departmental asset register meets the minimum requirements as per asset management guidelines and the Asset Management Framework. Current and capital assets are separately disclosed and are captured either in the minor or major asset registers.
The Department did not have a formal asset management plan in place in line with the strategic plan. This has since been rectified. The 2010/11 - 2012/13 strategic plan includes the asset management plan.
The Department is faced with the challenge of system (LOGIS) problems. LOGIS is a procurement system and was not meant to be an asset management system. Therefore, some of the activities are not accurately performed and reliance cannot be placed on it for reporting purposes. Misallocation of posting is still a challenge when procuring assets. This challenge has been dealt with through targeted transaction analysis. Supply chain and asset management officials have been subjected to the Standard Chart of Accounts (SCOA) training, enabling them to manage the misallocation at inception of the process when goods are procured.
The determination letter to transfer the forestry functions to DAFF was only signed on 23 March 2010 by the Minster of Public Service and Administration, but the physical transfer of the 2 949 staff members only took place with effect from 1 May 2010, which resulted in the salaries of Forestry staff for April 2010 to be paid by the DWA on a recoverable basis in the 2010/11 financial year.
The Department has strengthened its performance management through the finalisation and implementation of the policy and procedure manual on managing organisational performance. Although these documents were approved during the last quarter of the financial year, implementation was carried out using the drafts as the basis. Some of the outcomes observed during the year under review are the improvement in the level of performance contracting by managers and the introduction of performance reviews taking place at departmental and branch levels. In addition to that, each branch produced a business plan that was approved by the accounting officer, and then cascaded to various chief directorates and directorates.
Discussion on the performance of the Department also took place at various governance structures such as Top Management, Executive Committee (EXCO) and Management Committee (MANCO). These meetings were convened to focus on strategic and business planning as well as performance reporting. Progress reports against the implementation of the strategic and business plans were submitted to the executive authority on quarterly basis as part of compliance with Part 3 of Treasury Regulation 5.3.1.
According to the final expenditure reports there is no unauthorised expenditure to be reported for the 2009/10 financial year and no resolutions from SCOPA for previous financial years have been made available to the Department.
The information systems that was not appropriate to facilitate the preparation of a performance report that is accurate and complete.
No controls were implemented to ensure the accuracy and completeness of reported performance information.
No functional performance management system was in place whereby performance bonuses were only paid after proper assessment and approval by those charged with governance.
The internal audit functions did not substantially fulfil its responsibilities for the year, as set out in Treasury Regulation 3.2.
The financial statements were subject to material amendments resulting from the audit.
These issues were addressed in a specific financial management improvement action plan which was compiled in consultation with all role players after a debriefing session held in October 2009. Recommended solutions were included in the action plan and were strictly monitored on a monthly basis to ensure the non-recurrence of the issues raised in the audit report.
The Department has engaged in a vigorous process to capacitate the Internal Audit Unit. During the reporting period the unit has successfully recruited audit professionals and filled key posts to position the Internal Audit Unit to effectively fulfil its responsibilities in terms of Treasury Regulation 3.2.
No application was filed with the National Treasury seeking to exempt the Department from statuary reporting requirements.
The Annual Financial Statements set out on pages 95 to 172 have been approved by the acting Accounting Officer, Ms Nobubele Ngele.
DEPARTMENT OF WATER AFFAIRS VOTE 34 REPORT OF THE ACCOUNTING OFFICER for the year ended 31 March 2010 1Bulk infrastructure plays a central and critical role in facilitating: (i) universal access to basic water, (ii) municipal growth and economic development, (iii) drinking water quality and wastewater management, (iv) water resources management including effective use and environmental protection.
I have audited the accompanying financial statements of the Department of Water Affairs which comprise the statement of financial position as at 31 March 2010, and the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information as set out on pages 95 to 172.
The accounting officer is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting determined by the National Treasury, as set out in accounting policy note 1.1 and in the manner required by the Public Finance Management Act, 1999 (Act No. 1 of 1999). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
As required by section 188 of the Constitution of South Africa and section 4 of the Public Audit Act of South Africa, my responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with International Standards on Auditing and General Notice 1570 of 2009 issued in Government Gazette 32758 of 27 November 2009. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
I was unable to verify the existence and completeness of immovable tangible capital assets stated at R33 499 000 (2009: R5 043 122 000) as disclosed in note 32 to the financial statements. The department imposed a limitation on the scope of my work, as the final asset register was not provided in time to verify the amounts.
The closing balance for movable tangible capital assets of R90 724 000, as disclosed in note 30, to the financial statements, does not agree to the balance of R48 257 427 per the asset register. The department did not provide sufficient and appropriate evidence to explain the difference between the disclosure note and the underlying asset register of R42 895 573. Consequently, the department's records did not permit the application of alternative procedures to verify the existence and completeness of moveable assets.
The additions for movable tangible capital assets of R33 800 000, as disclosed in note 30, to the financial statements, does not agree to the additions of R16 160 794 in the asset register. The difference is as a result of misclassifications of expenditure on goods and services as capital expenditure. The department did not reconcile the difference. Consequently, I could not determine the effect of the misclassification on the tangible capital assets balance and on the goods and services amount contained in the financial statements.
In my opinion, except for the effects of the matters described in the Basis for qualified opinion paragraphs, the financial statements present fairly, in all material respects, the financial position of the Department of Water Affairs as at 31 March 2010, and its financial performance and its cash flows for the year ended in accordance with the modified cash basis of accounting determined by the National Treasury, as set out in accounting policy note 1.1 and in the manner required by the Public Finance Management Act.
I draw attention to the matters below.
The department's policy is to prepare financial statements on the modified cash basis of accounting determined by the National Treasury, described in accounting policy note 1.1 to the financial statements.
As disclosed in note 26 to the financial statements, irregular expenditure to the amount of R12,921 million was incurred as proper procurement processes had not been followed.
I draw attention to the matter below.
The supplementary information set out in annexures 1A to 6 does not form part of the financial statements and is presented as additional information. I have not audited these schedules and accordingly I do not express an opinion thereon.
In terms of the PAA of South Africa and General notice 1570 of 2009, issued in Government Gazette No. 32758 of 27 November 2009 I include below my findings on the report on predetermined objectives, compliance with the Public Finance Management Act and financial management (internal control).
The Department of Water Affairs' strategic plan is not consistent with the department's published medium term expenditure estimates as required by the Treasury Regulations paragraph 5.2.2 (a).
Consistency: Has the department reported on its performance with regard to its objectives, indicators and targets in its approved strategic plan, i.e. are the objectives, indicators and targets consistent between planning and reporting documents?
Relevance: Is there a clear and logical link between the objectives, outcomes, outputs, indicators and performance targets?
Measurability: Are objectives made measurable by means of indicators and targets Are indicators well defined and verifiable, and are targets specific, measurable, and time bound?
For the selected strategic goal two (2), 100% of the planned and reported targets were not clear.
Contrary to the requirements of TR16A3.2 and Section 51(1) (a) (iii) of the PFMA, the accounting officer did not implement and enforce controls to prevent the occurrence of irregular expenditure arising from non compliance with procurement processes.
Contrary to the requirements of section 40(1)(c)(i) the department did not submit their annual performance report for auditing within two months after the end of the financial year as required by the Auditor General Directive for 2009, it was submitted on the 03 June 2010.
I considered internal control relevant to my audit of the financial statements and the report on predetermined objectives and compliance with the PFMA but not for the purposes of expressing an opinion on the effectiveness of internal control. The matters reported are limited to the deficiencies identified during the audit.
The accounting officer did not exercise adequate oversight over reporting and compliance with laws and regulations relating to supply chain management to prevent irregular expenditure.
The financial statements and other information to be included in the annual report were not reviewed for completeness and accuracy prior to submission for audit. In addition, transactions are not reviewed by competent officials prior and subsequent to capturing in the financial systems.
The department did not assess the likelihood and impact of risks relating to supply chain management and respond to the assessed risks adequately.
An investigation into certain procurement irregularities at the department was conducted during the year under review and the report was finalised and tabled in May 2010.
A performance audit commenced during the year under review concerning the department's use of consultants and professional service providers. The report on this audit will be tabled when the engagement is finalised.
Appropriation Statement: Forestry Current year figures are being disclosed by the Department of Agriculture, Forestry and Fisheries.
DEPARTMENT OF WATER AFFAIRS VOTE 34 NOTES TO THE APPROPRIATION STATEMENT for the year ended 31 March 2010 1.
Detail of these transactions can be viewed in the note on Transfers and subsidies, disclosure notes and Annexure 1 (A-H) to the Annual Financial Statements.
Detail of these transactions can be viewed in note 1 (Annual Appropriation) to the Annual Financial Statements.
Detail of these transactions per programme can be viewed in the note on Financial transactions in assets and liabilities to the Annual Financial Statements.
The under spending is mainly due to the delay in the installation of ESKOM power supply to construction site for the phase 2B-2G.
The under spending is mainly due to delays that were experienced in finalising implementation agreements with municipalities with respect to the ACIP programme.
The Financial Statements have been prepared in accordance with the following policies, which have been applied consistently in all material aspects, unless otherwise indicated. However, where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the Financial Statements and to comply with the statutory requirements of the Public Finance Management Act, Act 1 of 1999 (as amended by Act 29 of 1999), and the Treasury Regulations issued in terms of the Act and the Division of Revenue Act, Act 2 of 2006.
The Financial Statements have been prepared on a modified cash basis of accounting, except where stated otherwise. The modified cash basis constitutes the cash basis of accounting supplemented with additional disclosure items. Under the cash basis of accounting transactions and other events are recognised when cash is received or paid.
All amounts have been presented in the currency of the South African Rand (R) which is also the functional currency of the department.
Unless otherwise stated all financial figures have been rounded to the nearest one thousand Rand (R'000).
Prior period comparative information has been presented in the current year's financial statements. Where necessary figures included in the prior period financial statements have been reclassified to ensure that the format in which the information is presented is consistent with the format of the current year's financial statements. Prior year figures have not been restated in relation to the Forestry transfer.
A comparison between actual amounts and final appropriation per major classification of expenditure is included in the Appropriation Statement.
Appropriated funds comprises of departmental allocations as well as direct charges against revenue fund (i.e. statutory appropriation).
Appropriated funds are recognised in the financial records on the date the appropriation becomes effective. Adjustments made in terms of the adjustments budget process are recognised in the financial records on the date the adjustments become effective.
The total appropriated funds received during the year are presented in the statement of financial performance.
Unexpended appropriated funds are surrendered to the National Revenue Fund. Any amounts owing to the National Revenue Fund at the end of the financial year are recognised as payable in the statement of financial position.
All departmental revenue is recognised in the statement of financial performance when received and is subsequently paid into the National Revenue Fund, unless stated otherwise.
Any amount owing to the National Revenue Fund is recognised as a payable in the statement of financial position.
No accrual is made for the amount receivable from the last receipt date to the end of the reporting period. These amounts are however disclosed in the disclosure note to the annual financial statements.
All direct exchequer receipts are recognised in the statement of financial performance when the cash is received and subsequently paid into the National Revenue Fund, unless otherwise stated.
All direct exchequer payments are recognised in the statement of financial performance when final authorisation for payment is effected on the system (by no later than 31 March of each year).
Any amount owing to the National Revenue Funds at the end of the financial year is recognised as a payable in the statement of financial position.
Aid assistance is recognised as revenue when received.
All in-kind aid assistance is disclosed at fair value on the date of receipt in the annexures to the Annual Financial Statements.
The cash payments made during the year relating to aid assistance projects are recognised as expenditure in the statement of financial performance when final authorisation for payments is effected on the system (by no later than 31 March of each year).
The value of the assistance expensed prior to the receipt of funds is recognised as a receivable in the statement of financial position.
Inappropriately expensed amounts using aid assistance and any unutilised amounts are recognised as payables in the statement of financial position.
The cost of short-term employee benefits are expensed in the statement of financial performance when financial authorisation for payment is effected on the system (by no later then 31 March each year).
Short-tem employee benefits that give rise to a present legal or constructive obligation are disclosed in the disclosure notes to the financial statements. These amounts must not be recognised in the statement of financial performance or position.
Employee cost are capitalised to the cost of a capital project when an employee spends more than 50% of his/her time in the project. These payments form part of expenditure for capital assets in the statement of financial performance.
Employer contribution (i.e. social contributions) are expensed in the statement of financial performance when the final authorisation for payment is effected on the system (by no later than 31 March each year).
No provision is made for retirement benefits in the financial statements of the department. Any potential liabilities are disclosed in the financial statements of the National Revenue Funds and not in the financial statements of the employer department.
Social contribution (such as medical benefits) made by the department for certain of its ex-employees are classified as transfers to households in the statement of financial performance.
Termination benefits such as severance packages are recognised as an expense in the statement of financial performance as a transfer (to households) when the final authorisation for payment is effected on the system (by no later than 31 March of each year).
Other long-term employee benefits (such as capped leave) are recognised as an expense in the statement of financial performance as a transfer (to households) when the final authorisation for payment is effected on the system (by no later than 31 March of each year).
Long-term employee benefits that give rise to a present legal or constructive obligation are disclosed in the disclosure notes to the financial statements.
Payments made for goods and/or services are recognised as an expense in the statement of financial performance when the final authorisation for payment is effected on the system (by no later than 31 March of each year).
The expense is classified as capital if the goods and services were acquired for a capital project or if the total purchase price exceeds the capitalisation threshold (currently R5, 000). All other expenditures are classified as current.
Interest and rental payments are recognised as an expense in the statement of financial performance when the final authorisation for payment is effected on the system (by no later than 31 March of each year). This item excludes rental for the use of buildings or other fixed structures. If it is not possible to distinguish between payment for the use of land and the fixed structures on it, the whole amount should be recorded under goods and services.
Debts are written off when identified as irrecoverable. Debts written-off are limited to the amount of savings and/or underspending of appropriated funds. The write off occurs at year-end or when funds are available. No provision is made for irrecoverable amounts but an estimate is included in the disclosure notes to the financial statements amounts.
All other losses are recognised when authorisation has been granted for the recognition thereof.
Transfers and subsidies are recognised as an expense when the final authorisation for payment is effected on the system (by no later than 31 March of each year).
When confirmed unauthorised expenditure is recognised as an asset in the statement of financial position until such time as the expenditure is either approved by the relevant authority, recovered from the responsible person or written off as irrecoverable in the statement of financial performance.
Unauthorised expenditure approved with funding is derecognised from the statement of financial position when the unauthorised expenditure is approved and the related funds are received.
Where the amount is approved without funding it is recognised as expenditure in the statement of financial performance on the date of approval.
Fruitless and wasteful expenditure is recognised as expenditure in the statement of financial performance according to the nature of the payment and not as a separate line item on the face of the statement. If the expenditure is recoverable it is treated as an asset until it is recovered from the responsible person or written off as irrecoverable in the statement of financial performance.
Irregular expenditure is recognised as expenditure in the statement of financial performance. If the expenditure is not condoned by the relevant authority it is treated as an asset until it is recovered or written off as irrecoverable.
Cash and cash equivalents are carried in the statement of financial position at cost.
Bank overdrafts are shown separately on the face of the statement of financial position.
For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held, other short-term highly liquid investments and bank overdrafts.
Other financial assets are carried in the statement of financial position at cost.
Amounts prepaid or advanced are recognised in the statement of financial position when the payments are made and where the goods and services have not been received by year end.
Prepayments and advances outstanding at the end of the year are carried in the statement of financial position at cost.
Receivables included in the statement of financial position arise from cash payments made that are recoverable from another party or from the sale of goods/rendering of services.
Receivables outstanding at year-end are carried in the statement of financial position at cost plus any accrued interest. Amounts that are potentials irrecoverable are included in the disclosure notes.
Capitalised investments are shown at cost in the statement of financial position.
Investments are tested for an impairment loss whenever events or changes in circumstances indicate that the investment may be impaired. Any impairment loss is included in the disclosure notes.
Loans are recognised in the statement of financial position when the cash is paid to the beneficiary. Loans that are outstanding at year-end are carried in the statement of financial position at cost plus accrued interest.
Amounts that are potentially irrecoverable are included in the disclosure notes.
Inventories that qualify for recognition must be initially reflected at cost. Where inventories are acquired at no cost, or for nominal consideration, their cost shall be their fair value at the date of acquisition.
All inventory items at year-end are reflected using the weighted average cost or FIFO cost formula.
A capital asset is recorded on receipt of the item at cost. Cost of an asset is defined as the total cost of acquisition. Where the cost cannot be determined accurately, the movable capital asset is stated at fair value. Where fair value cannot be determined, the capital asset is included in the asset register at R1.
All assets acquired prior to 1 April 2002 are included in the register R1.
Subsequent expenditure of a capital nature is recorded in the statement of financial performance as "expenditure for capital asset" and is capitalised in the asset register of the department on completion of the project.
Repairs and maintenance is expensed as current "goods and services" in the statement of financial performance.
A capital asset is recorded on receipt of the item at cost. Cost of an asset is defined as the total cost of acquisition. Where the cost cannot be determined accurately, the immovable capital asset is stated at R1 unless the fair value for the asset has been reliably estimated.
Work-in-progress of a capital nature is recorded in the statement of financial performance as "expenditure for capital asset". On completion, the total cost of the project is included in the asset register of the department that legally owns the asset or the national department of public works.
Recognised payables mainly comprise of amounts owing to other governmental entities. These payables are carried at cost in the statement of financial position.
Contingent liabilities are included in the disclosure notes to the financial statements when it is possible that economic benefits will flow from the department, or when an outflow of economic benefits or service potential is probable but cannot be measured reliably.
Contingent assets are included in the disclosure notes to the financial statements when it is possible that an inflow of economic benefits will flow to the entity.
Commitments are not recognised in the statement of financial position as a liability or as expenditure in the statement of financial performance but are included in the disclosure notes.
Accruals are not recognised in the statement of financial position as a liability or as expenditure in the statement of financial performance but are included in the disclosure notes.
Short-term employee benefits that give rise to a present legal or constructive obligation are disclosed in the disclosure notes to the financial statements. These amounts are not recognised in the statement of financial performance or the statement of financial position.
Finance leases are not recognised as assets and liabilities in the statement of financial position. Finance lease payments are recognised as an expense in the statement of financial performance and are apportioned between the capital and interest portions. The finance lease liability is disclosed in the disclosure notes to the financial statements.
Operating lease payments are recognised as an expense in the statement of financial performance. The operating lease commitments are disclosed in the discloser notes to the financial statement.
Provisions are disclosed when there is a present legal or constructive obligation to forfeit economic benefits as a result of events in the past and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made.
Receivables for departmental revenue are disclosed in the disclosure notes to the annual financial statements.
The capitalisation reserve comprises of financial assets and/or liabilities originating in a prior reporting period but which are recognised in the statement of financial position for the first time in the current reporting period. Amounts are recognised in the capitalisation reserves when identified in the current period and are transferred to the National Revenue Fund when the underlining asset is disposed and the related funds are received.
Amounts are recognised as recoverable revenue when a payment made in a previous financial year becomes recoverable from a debtor in the current financial year. Amounts are either transferred to the National Revenue Fund when recovered or are transferred to the statement of financial performance when written-off.
Specific information with regards to related party transactions is included in the disclosure notes.
Compensation paid to key management personnel including their family members where relevant, is included in the disclosure notes.
Assets less then R5,000 5.
Compensation Com. Contr.
These amounts are not recognised in the Annual Financial Statements and are disclosed to enhance the usefulness of the Annual Financial Statements.
The amounts for 2008/09 and 2009/10 include commitments running over the years beyond the 2009/10 and 2010/11 financial years respectively.
The amount of R4 115 378.10 for the prior year 2008/09 has been deemed to be irregular expenditure by the forensic investigation conducted by AGSA in a special report. Services were rendered by Pism Consulting (Advisory consulting services).