PORTFOLIO COMMITTEE ON WATER AND ENVIRONMENTAL AFFAIRS

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PORTFOLIO COMMITTEE ON WATER AND ENVIRONMENTAL
AFFAIRS
DWA RESPONSE TO QUESTIONS RAISED BY PORTFOLIO
COMMITTEE DURING DISCUSSION OF WATER BOARDS
TARIFFS for 2009/2010

• 7 JULY 2009
• DEPARTMENT OF WATER AFFAIRS

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Questions by PCWHAT IS DWAs ROLE IN
OVERSIGHT OF WBs?

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Questions by PC

• DWA TO DEEPEN ITS ROLE TO EFFECTIVELY SUPPORT
  WBs
• While DWA cannot engage in micro managing the
  institutions, there are projects that DWA WBs
  jointly engage in, to enhance service delivery,
  e.g.
• Sedibeng Water providing retail services at DWAs
  request
• Overberg Water engaging in the WfW projects
• In the past DWA extended once off grants to WBs
  in financial distress, however, the principle is
  that all WBs must be self funding.
• Unviable WBs will need special measures and
  evaluation as well as the consideration of
  alternative arrangements for service delivery.

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Limpopo Province
Midvaal Water
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Questions by PC

• HOW DOES DWA PLAN TO SUPPLY WATER TO UN-SERVICED
  AREAS? (CITED VARIOUS VILLAGES WHERE THERE IS NO
  WATER SUPPLY)
• Providing access to unserved people is the
  responsibility of municipalities who get
  substantial allocations from the Municipal
  Infrastructure Grant (MIG).
• Especially rural municipalities lack capacity to
  plan and implement a major capital program.
• WBs can play a very important role as
  implementing agents for municipalities, not only
  for the construction, but also for operating such
  infrastructure.

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Questions by PC

• CONSIDER MOVING THE OVERSIGHT OF WBs TO THE DEPT
  OF CO-OPERATIVE GOVERNANCE AND TRADITIONAL
  AFFAIRS, AS DWA HAS NO EFFECTIVE OVERSIGHT ROLE
  OVER MUNICIPALITIES
• DWA has taken note of the comment by Umgeni, set
  out as an interesting table in the next slide,
  which gives a fair view on which further
  discussions can be based.
• Regulation of tariffs needs a holistic approach
  regulate tariffs throughout the entire supply
  chain.

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Questions by PC

• Assessment of best fit Executive Authority or
  Ministry made by Umgeni Water

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Questions by PC

• ROLE OF MUNICIPALITIES AND ROLE OF WATER BOARDS
  IN PROVIDING WATER SERVICES?
• Municipalities are water service authorities
  (WSA) that are, i.t.o. the Constitution,
  responsible to provide water and sanitation to
  communities.
• Municipalities are then free to outsource the
  function to a Water Service Provider (WSP), which
  can be a water board, another WSA with more
  capacity or even the private sector.
• In outsourcing, municipalities must comply with
  sec 19 of the Water Services Act as well as the
  Municipal Systems Act.

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Water Sector Institutions
Water Boards
TCTA NWRIA
Water Treatment Works
Bulk distribution Pump stations and pipelines
Dam and Inter-basin transfers
Water treatment works
Water User Associations
Mines
Reticulation
DWAF WRC
Agriculture
Municipalities
River
Catchment
Ground water
Forest
Sewers
Waste water treatment works
Catchment Management Agencies
Water Services Authorities
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Questions by PC

• A COMMENT WAS MADE THAT A SIGNIFICANT AMOUNT OF
  SURPLUS WATER IN EC FLOWS INTO THE SEA. HOW DOES
  DWA PLAN TO PRODUCTIVELY USE THIS WATER?
• This will be discussed at the workshop on 13 and
  14 July 2009

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Questions by PC

• DAMS DO NOT SERVICE THE COMMUNITY THAT THEY ARE
  LOCATED IN, E.G. JOZINI DAM IN KZN, NYAKA DAM IN
  MPUMALANGA, UMTATA DAM IN EC AND LOSKOP DAM NEAR
  SEKHUKUNE
• This will be discussed at the workshop on 13 and
  14 July 2009

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Questions by PC

• THE POSSIBLE DISESTABLISHMENT OF BUSHBUCKRIDGE
  WATER?
• A report is being prepared by DWA and the new
  Minister will apply her mind.
• The Mpumalanga Provincial Cabinet has taken a
  decision to assist in strengthening the WB to
  supply Ehlanzeni Municipalities and discussions
  are underway. Minister will be consulted in due
  course.
• DISESTABLISHMENT OF IKANGALA WATER WHO HAS
  TAKEN OVER SERVICES?
• The WBs function has been taken over by DWA
  Regional Office in Nelspruit, incorporating the
  moveable assets and four staff members who worked
  at Ikangala.
• Rand Water is currently delivering the service
  based on a short term agreement. Negotiations are
  underway with municipalities to appoint Rand
  Water on a long term basis.

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Questions by PC

• COMPLAINT BY WATER BOARDS THAT THEY ARE IGNORED
  BY THE REGIONAL OFFICES
• If WBs complained to senior management at DWA
  National Office, the issue would surely have been
  addressed.

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Questions by PC

• WHAT SUPPORT IS PROVIDED TO WBs BY DWA WITH THE
  COLLECTION OF DEBT OWED BY MUNICIPALITIES?
• Outstanding debt is aggravated by
• Many service contracts are in place, but several
  WBs do not have contracts in place.
• When there is lack of immediate action by WBs,
  it allows debt to grow out of proportion.
• Below-standard billing and meter readings are a
  recipe for disputes.
• Poor management of customers by municipalities.
• Equitable share not utilised by municipalities
  for the intented purpose.

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Questions by PC

• Outstanding debt is primarily the responsibility
  of WBs,
• not DWA or NT
• Sec 41 of the MFMA requires that NT monitor
  prices and payments for bulk resources
• WBs are required to report monthly to NT for
  each municipality
• The amount to be paid for that month and for the
  year up to that month
• The arrears owing and the age profile of the
  arrears
• Any actions taken by the WB to recover the
  outstanding debt
• Sec 44 of the MFMA provides for dispute
  resolution between WBs and municipalities. The
  process is dealt with jointly between NT and DWA
• DWA successfully facilitated and mediated with NT
  in two cases
• Umgeni Water and Umsunduzi LM
• Bloem Water and Ukhahlamba DM

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Questions by PC

• DWA TO CONSIDER LONG TERM SUSTAINABLE FUNDING TO
  WBs
• To date most WBs have been self funding, and
  where borrowing is needed, they have relied on
  their balance sheet and their cash generating
  ability to finance infrastructure development.
• DWAs contribution in the water value chain is
  the significant investment in dams where trading
  deficits are substantial.
• Most of the larger urban water boards are paid
  timeously by municipalities, while the
  municipalities themselves have to wait for
  payment from individual citizens and run
  significant arrears on their water trading
  activities. In this way WBs are protected to a
  significant extent.
• DWA is constantly reviewing policies and the
  financial viability of water services is an
  ongoing priority.

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Challenges raised by WBs

• DEBT COLLECTION
• Can assist in terms of MFMA, but debtors records
  need to be correct for NT to provide effective
  support.
• WHAT SUPPORT WILL BE PROVIDED TO NAMAKWA WATER ?
• New Minister has requested a report and will then
  apply her mind on the future of NW.
• Viable method of supply will have to be in place.

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Challenges raised by WBs

• WRITE OFF OF OVERBERG WATERS STATE LOAN
• The Board is self funding
• The loan is interest free
• Any write off needs to be motivated i.t.o. PFMA
  requirements and
• The write off of this loan cannot be justified
  i.t.o. sec 76(1)(e) sec 76(4)(a) of the PFMA
  and Treasury Regulation 11.4.

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THANK YOU