STANDING COMMITTEE ON APPROPRIATION

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STANDING COMMITTEE ON APPROPRIATION

• Presented byMr Onesmus AyayaChief Financial
  OfficerDepartment Water Affairs (DWA)2
  November 2009

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Presentation Outline

• Comments on MTBPS
• MTEF Allocations
• Efficiency Savings
• Earmarked Funding MTEF PERIOD
• Budget Bids
• Departmental Allocation Before and After Transfer
  of Functions
• Rollover of Funds
• Virement
• Unforeseeable and Unavoidable Expenditure
• Earmarked Funding - Current Financial Year
• Transfer of Functions
• Re-Scheduling of Earmarked Funds

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COMMENTS ON MTBPS

• 1. Job Creation
• Create jobs in rural areas under construction and
  EPWP
• Filling of vacant post in regions to be less
  dependant on consultants
• Appointment of SMMEs to create jobs and trigger
  economic growth

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Comments on MTBPS

• 2. Rural development focus
• Targeted procurement to support economic
  opportunities for HDIs
• Increased allocations to Working for Water and
  Working for Fire
• Preferential employment opportunities in rural
  areas where DWA projects are implemented
• Utilisation of SMMEs to encourage their
  contribution to economic growth
• Investments in in water resource infrastructure
  to make more water available for economic growth
  and development in selected rural areas

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COMMENTS ON MTBPS

• 3. FIGHTING CRIME AND CORRUPTION
• Firm action on findings emanating from
  investigation of all fraud hotline-reported cases
  
• Targeted internal audit focus on controls around
  supply chain management
• Implementation of awareness campaigns to address
  fraudulent activities
• Use of regular payroll audits to prevent and
  identify ghost employees
• 4. ENHANCING THE QUALITY OF EDUCATION
• Learning academy established and bursary scheme
  used to support young engineer
• Use of interns to expose young graduates to the
  world of work

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Comments on MTBPS

• 5. Contribution to improved health outcomes
• Purchase of packaged plants in the fight of
  Cholera outbreaks
• Support to provision of clean running water
• Rehabilitation of reticulation and treatment
  works
• Implementation of water conservation and demand
  management is selected municipalities
• Eradication of bucket system in line with human
  settlement plans
• Targeted support to municipalities to address
  water and sanitation bottlenecks

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MTEF BUDGET ALLOCATION -2010/11-2012/13INCLUDING
EARMARKED FUNDING
R000
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MTEF BUDGET ALLOCATION -2010/11-2012/13INCLUDING
EARMARKED FUNDING
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RECOMMENDED EFFICIENCY SAVING BY NATIONAL
TREASURY -2010/11-2012/13
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MTEF BUDGET ALLOCATION -2010/11-2012/13EXCLUDING
EFFICIENCY SAVINGS
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EARMARKED FUNDING -2010/11-2012/13
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MTEF BUDGET ALLOCATION -2010/11-2012/13EXCLUDING
EARMARKED FUNDING AND EFFICIENCY SAVING
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REQUEST FOR ADDITIONAL FUNDING
CURRENT EXPENDITURE PRIOR TO BUDGET SCALED DOWN
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REQUEST FOR ADDITIONAL FUNDING
CAPITAL EXPENDITURE PRIOR TO BUDGET SCALED DOWN
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REQUEST FOR ADDITIONAL FUNDING
CURRENT EXPENDITURE AFTER BUDGET BIDS SCALED
DOWN
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REQUEST FOR ADDITIONAL FUNDING
CAPITAL EXPENDITURE AFTER BUDGET BIDS SCALED
DOWN
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Quarter 2 actual expenditure ending in 30 Sept
2009 (Before transfer of functions)
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Quarter 2 actual expenditure ending in 30 Sept
2009 (Before transfer of functions)
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Reason for under spending

• Late submission of invoices in respect of
  services already rendered.
• Projects such as backlogs in sanitation at
  schools and clinics and Regional Bulk
  Infrastructure are still at tender phase, the
  expenditure is anticipated to increase in the
  third quarter of this financial year
• Non-payment of general wage increase, it was
  anticipated (As projected) that the expenditure
  will kick in July 2009. These increases are now
  anticipated to be paid in October as per DPSA
  directive
• Protracted delays in reaching agreements with
  municipalities to transferring staff and water
  schemes.

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Departmental Allocation- After transfer of
functions
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DEPARTMENTAL ALLOCATION AFTER TRANSFER OF
FUNCTIONS
Economic Classification
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Rollover of Funds from 2008/09 Financial Year
Def Funds appropriated but not spent in a
particular financial year may be rolled over to a
subsequent year subject to approval of the
National Treasury
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Reason why funds were not spent -Rollover of
funds

• Delays in the conclusion of the negotiations to
  finalise the memorandum of agreement with the 23
  different mines.
• Exceptional high rainfall prevented contractors
  from making anticipated progress
• Late submission of invoice in respect of Regional
  Bulk Infrastructure with multiple errors on
  calculation of bill of quantities

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Virement (Shifting of Funds in terms of Section
43 of PFMA

• During a financial year, some deviations between
  actual expenditure and the allocated budget for
  that specific financial year may occur.
• Unforeseen circumstances may require the revision
  and subsequent adjustment of the original planned
  projects and/or estimated costs involved in the
  execution of activities.
• Virement is subject to the following
• Shifting between programmes may not exceed eight
  percent (8)
• Virement may not be applied to amount
  appropriated for transfer to institution
• Virement may not be applied to amount
  appropriated for capital expenditure to defray
  current expenditure
• Virement may not be applied to earmarked funds

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Virement (Shifting of Funds in terms of Section
43 of PFMA
Virement 2009/10 financial year
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Reason for Virement

• Programme1 Administration
• 1.1 Budget of R 14.086 million was shifted to
  Water Services due to reallocation of
  inflationary adjustment that was initially
  allocated during Estimate of National Expenditure
  process in this programme.
• Programme2 Water Resource management
• 2.1 Budget of R65.386 million was shifted to
  Water Services and Forestry due to the following
  reasons
• 2.1.1 Unfilled positions as a result of newly
  created structures
• 2.1.2 Re-allocation of water use conservation and
  water demand management to the respective
  regions.
• 2.1.3 Funds were incorrectly allocated under
  goods and services in this programme for the
  purchase of machinery and equipment
• 3 Programme3 Water Services
• 3.1 Budget of R77.466 million was shifted to this
  programme as result of re-allocation of
  inflationary adjustment that was initially
  allocated in programme 1 Administration as well
  as re-allocation of water use and conservation
  and water demand management

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Unforeseeable and Unavoidable Expenditure

• Section 30(2)(b) of the PFMA and Treasury
  Regulations 6.6, provides for the allocation of
  additional funds through an adjustment budget to
  finance unforeseeable and unavoidable expenditure
• Unforeseeable and Unavoidable expenditure relates
  to expenditure that could not be anticipated at
  the time of finalising the budget (ENE)
• National Treasury has recommended an amount of
  R124,144 million to Cabinet for approvals. Below
  are the details

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Unforeseeable and Unavoidable Expenditure
The difference means that the department must
reprioritise the budget and shift budget
(virement) to fund the shortfall
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EARMARKED FUNDING

• Earmarked funding are allocations earmarked by
  National Treasury for a specific purpose and may
  not be used for other purposes. Below are
  earmarked allocations for 2009/10 financial year
  before adjustments
• Total of earmarked funds amount to R3 170 163 000
  
• Rent of buildings 138 331 000
• Working for Water 455 724 000
• Working on Fire 123 608 000
• Refurbishment of water scheme 30 000 000
• De Hoop Dam (Phases 2B to 2G) 600 000 000
• Additional capacity Internal Audit and Finance
  6 000 000
• Sanitation at school and clinics 350 000 000
• Regional Bulk infrastructure 611 500 000
• Operating subsidy (Water Services) 855 000
  000
• Total earmarked funding 3 170 163 000

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2009/10 Earmarked Vs Un- earmarkedBefore
Adjustments
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TRANSFER OF FUNCTIONS

• The president of Republic of South Africa has
  announced during his state of the nation address
  that functions of Sanitation services and
  Forestry will reside with the Dept. of Human
  Settlement and the Dept. of Agriculture, Forestry
  and Fisheries respectively.
• Where a function is to be transferred between
  votes during a financial year, National Treasury
  must be consulted in advance to facilitate any
  request for the resulting transfer of funds voted
  for that function in terms of section 33 of the
  PFMA. In the absence of an agreement between the
  affected departments on the amount of funds to be
  transferred, National Treasury will determine the
  funds to be shifted.
• Transfer of functions National Treasury
  approval must be obtained before seeking approval
  from the Minister of Public Service
  Administration for a transfer of a function to
  another sphere of government

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TRANSFER OF FUNCTIONS (cont.)

• Budget of R519,186 million will be surrendered to
  the Department of Human Settlement and the Dept.
  of Agriculture, Forestry and Fisheries
  respectively.
• 1.2 Department of Agriculture and Fisheries
• 1.2.1 Operational budget in the Office of DDG
  Forestry R3.934 million
• 1.2.2 Forestry Budget (as per ENE) R485.641
  million
• 1.2.3 Compensation of employees in respect of
• support services R27.605 million
• 1.2.4 Forest land management R2.006 million
• TOTAL 519.186 million

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RE-SCHEDULING OF FUNDS EARMARKED FOR
INFRUSTRACTURE PROJECTS(DE HOOP DAM) FOR OTHER
PURPOSE

• National Treasury has granted the Department to
  reschedule earmarked funds of R502 million owing
  to.
• 1.1 Delays in signing Memorandum of Agreement
  with the mining sector
• 1.2 Delays in reaching Water Supply agreements
  with individual mines due to the global economic
  crisis
• As result of this, the Department will only be
  able to spend R98 million of R600 million
• The Department therefore requested the National
  Treasury to utilise R502 million as follows

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RE-SCHEDULING OF FUNDS EARMARKED FOR
INFRUSTRACTURE PROJECTS(DE HOOP DAM) FOR OTHER
PURPOSE

• DWA requested the National Treasury to reschedule
  R502 million as follows
• 2.1 To further the following infrastructure
  projects - R297 million
• 2.1.1 Nandoni Water Treatment Works
• 2.1.2 Inyaka Water Treatment Works
• 2.1.3 Hluhluwe Regional Water Scheme
• 2.2 Augmentation to the Water Trading Entity
  R205 million is a result of infrastructure
  projects undertaken by WTE in 2008/09 financial
  year

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• I thank you

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