Overview of Presentation to MTEC

1. Presentation to Portfolio Committee Overview of Presentation to MTEC 4 November 2005

2. PRESENTATION OUTLINE • Service Delivery for past 3 years per functional area • Revisions undertaken and proposed changes to the 2005 Appropriation • Proposed revisions to baseline estimates and outputs for next 3 years • New policy proposals

3. EXPENDITURE TRENDS FOR 2002/03 - 2004/05 FINANCIAL YEARS 1) The underspending was mainly in respect of capital projects, transfers that did not take place as well as funds for drought which were not transferred to local governments before 31 March 2004.

4. EXPENDITURE FOR WATER RESOURCE MANAGEMENT FOR 2002/03 - 2004/05 FINANCIAL YEARS (Programme 2) 1) 2) 1) Underspending largely due to flood damage repairs –committed and rolled over but not completed 2) Drought allocation underspent but funds committed and rolled over

5. Service Delivery for the past three yearsWater Resource Management Catchment Management Agencies • One agency established, in the Inkomati water management area • A proposal to establish a CMA in the Breede WMA was Gazetted for public comment, and notices to establish CMAs in the Mvoti-Mzimkulu, Crocodile West/Marico, Usutu-Mhlathuze and Thukela WMAs were in advanced stages of preparation Other Activities • Completion of Xikundu Weir and treatment works, and Nandoni Dam • Commencement of construction of Flag Boshielo Dam raising, Berg River Dam and emergency drought-related schemes • Commencement of design of Olifants River Project • Development of strategies to implement the National Water Act • Verifying/validating existing lawful water use, authorising water use, enforcing conditions of use and dealing with unlawful water use • Clearing 603 000 ha of alien invasive vegetation and following up on 1.63 million ha of previously-cleared land • Monitoring water resources and managing information

6. Progress Water Resources Transfers PROGRESS as at 31 August 2005 can be summarised as follows: Target Date: August 2008 Number of schemes to delegate O&M functions : 25 Delegations in place : 5 of 25 (25%) Staff Transferred: 336 of 1139 (29%) Staff Seconded: 137 of 1139 (12%) Staff taken VSP’s, retired : 85 of 1139 (7%) Activities funded through Trading Account 3 by water use charges Funds required for “once off” staff costs

7. EXPENDITURE FOR WATER SERVICES FOR 2002/03 – 2004/05 FINANCIAL YEARS (Programme 3) 1) 1) Capex and drought funding underspent but funds rolled over

8. Service Delivery for the past three yearsWater Resource Management INFRASTRUCTURE DELIVERY • More than 1 200 Water Projects and more than 500 Sanitation Projects Completed. • More than 2,5 million people served with water – basic level. • More than 170 000 Households serviced with VIP toilets. • 8 900 bucket toilets replaced. • R2,9 billion invested in the above infrastructure. Celebrated the provision of safe drinking water to the 10 millionth person since 1994. Other Activities PLANNING SUPPORT • Project selection • Assisted 153 Water Service Authorities (WSA) to develop WSDPs • Assisted 46 DMs to develop sector plans • Supported the selection and planning of more than 1 100 projects FREE BASIC SERVICES • 75% of population benefiting • 95% of all municipalities accepted FBS GOVERNANCE • Draft Institutional Reform Strategy prepared • Developed National Water Services Provision Strategy • Developed draft Water Revision Bill

9. Progress Water Services Transfers PROGRESS as at 31 August 2005 can be summarised as follows: TA Target Date: 31 March 2006 Number TA’s complete: 29 of 57 (51%) Schemes Transferred: 128 of 321 (40%) Staff Transferred: 659 of 8094 (8%) Staff Seconded: 1636 of 8094 (20%) Asset Trans: R2,1bil of R7,1bil (30%) Approved refurbishment budget to 07/08: R580 of R710mil required (82%) Refurbishment Expenditure: R214mil of R580mil (37%)

10. EXPENDITURE FOR FORESTRY FOR 2002/03 - 2004/05 FINANCIAL YEARS (Programme 4) 1) 1) Deferred SAFCOL payment

11. Service Delivery for past 3 yearsFORESTRY OUTPUTS2002 - 05 • SADC Forests Protocol completed. • Started conversion of Low-veld forests to natural vegetation • Two long-term (evergreen) timber contracts cancelled • Participatory Forestry Management Forums established • Collected all Category A plantation lease rentals • Forestry included into PGDS of Eastern Cape, Limpopo and Mpumalanga • Management of 84 700 ha of plantation forests • Backlog of unplanted plantation area reduced by 32% accumulative. • List of trees protected under the National Forests Act promulgated. • Forest Protected Area Planning System developed and implemented. • Collected all lease rentals for keeping in trust for beneficiaries. • 55 Fire Protection Associations (FPAs) covering 30 million ha registered • BBBEE Forestry Sector Charter initiated • Forestry Enterprise Development Policy adopted • Local initiatives to combat poverty and promote economic benefits through forestry and forest activities

12. Progress Forestry Transfers Decisions leading to the restructuring of plantation forestry: • 1st DWAF to SAFCOL – 1992; 2nd DWAF & SAFCOL - 1999 • DPE Cab memos - No 19 and No 21, 2001 • Lowveld Blyde Canyon National Park, 9000 ha state forest for conservation, 3000 ha leased forests (from Traditional Authorities) for conservation • St Lucia 7000 ha at Western shores to Greater St Lucia Wetlands Park Authority • Southern and Western Cape - Cab decision 27 June 2001, 29 000 ha for conservation, 6 000 ha for community forestry projects, 9 000 ha for agricultural settlement; and 200 ha for housing purposes. • DWAF/SAFCOL Category A plantations, 4 packages with a total area of 114000 ha sold, final package (Komatiland Forests) can only be finalised subject to a Competition Tribunal ruling expected in December 2005 • Residual liabilities resulting from restructuring being managed by SAFCOL in terms of a delegation which expires in March 2007 • DWAF continues to manage 84700 ha of commercial plantations, target date for disposal is 31 August 2008 pending finalisation of negotiations, policy framework in place • Tsitsikamma indigenous forests (97000ha) transferred to SANparks • Ongoing negotiations with conservation agencies for the transfer of the remaining indigenous forests (???number ha?

13. PROPOSED REVISIONS TO BASELINE ESTIMATESfor 2005/06

15. Principle outputs planned for the next three yearsWater Resource Management Establishment of 11 Catchment Management Agencies • 2006/2007:Thukela (WMA 7); Usutu-Mhlathuze (WMA 6); Gouritz (WMA 16); Olifants/Doorn (WMA 17) • 2007/2008:Olifants (WMA 4); Upper Vaal (WMA 8); Berg (WMA 19) • 2008/2009:Middle Vaal (WMA 9); Luvuvhu/Letaba (WMA 2); Limpopo (WMA 1); Fish-Tsitsikamma (WMA 15) Other Activities • Infrastructure development, including dams on the Berg and Olifants rivers • Establishment of National Water Resources Infrastructure Agency • Development of catchment management strategies • Implementation of the Water Allocation Reform Programme, including • Validation/verification of existing lawful water use • Authorising water use • Enforcement of conditions of use and dealing with unlawful use • Implementing water resource protection, and water conservation and demand management measures • Monitoring water resources and managing information

16. Outputs planned for the next 3 years - Water Services Infrastructure Delivery – future • Limited capital implementation. • Focus on MIG management, sector support & oversight • Focus on asset management • Ensure that water supply and sanitation MIG projects comply with sector targets • Actively promote accelerated sanitation provision through advocacy and support programs. • Eradicate bucket type systems of sanitation. • Ensure that basic services targets are met and municipalities are capacitated to take informed decisions through MIG

17. Outputs planned for the next three years – WS (Cont.) Governance & Management – Future • Finalise revised Water Services Bill and pass it through the parliamentary process • Maintain planning and decision making support to municipalities • Maintain comprehensive water services information • Implement regulatory strategy and intensify this function through sector performance monitoring and reporting. • Develop & implement final institutional reform strategy approved by cabinet. • Finalise the national support strategy (emphasis on Project Consolidate as first priority) • Ongoing practical support to municipalities including planning, project implementation, operations and maintenance, drinking water quality, tariff setting, free basic water, bylaws and suitable contractual arrangements.

18. Outputs planned for the next three years - Forestry • Transfer of the Lowveld Plantations to SANParks taking longer than anticipated – R 47.7m (2006/7), R50 .1m (2007/08 and R52.5m (2008/9) for the normal management of these assets • To effect the development of 60 000 ha+ of afforestation in the E Cape and KZN, development funding of R5 million( 2006/7), R8 million( 2007/08), R 6.5 million (2008/09) is needed • Additional to the above there is a need for funds to rehabilitate the areas in the Lowveld previously under plantation R 6 million (2006/7) R6 .9 million ( 2007/08) and R8 million (2008/09)

19. Transferring sustainable services to Local Government – B2 • DWAF still operating 60% of schemes identified for transfer to Local Government, operations and maintenance in Limpopo has been historically under-funded • Refurbishment of infrastructure being transferred to local government has commenced, programme is however only 80% funded. Funds are required to complete the programme • Adequate funding is required to fund the “once off” staff related costs for the transfer of staff from DWAF to local authorities, approximately 5 000 staff still to be transferred (average cost of R30 000 per member). • Lack of funding will further compromise the transfer programme and seriously inhibit ability to complete the programme.

20. Key investment in Water Resources Infrastructure B3 • Cabinet approval - Presidential announcement in 2003 for the Olifants development Project • Revised strategy to stimulate growth now and recover commercial part later • Important for PGDS and WS needs • Budget required for de Hoop Dam, weir and for pipeline to Mokopane • Construction will commence 2006 - completion 2010 • Lack of funding will prevent major economic development in an already poverty-stricken area

21. New Institutional Arrangements - WRM– B4 • 3 August 2005 Cabinet approved the process for the establishment of National Water Resources Infrastructure Agency, phased integration of DWAF and TCTA by 1 April 2008 • Working capital for 08/09 for the refurbishment of national infrastructure • The Agency will also require funds to continue with the Olifants project from 08/09 onwards • Fiscus support for O&M and refurbishment of non-national WRI for 08/09 and beyond • Lack of funding will result in continued degradation of infrastructure with public safety implications • Progressive establishment of CMAs to decentralise WRM responsibilities • Lack of funding will result in CMAs that are unable to function

22. Restructuring of forestry for growth and poverty eradication- B5 Afforestation in E. Cape and KZN • Potential available land for afforestation in the order of 100 000 ha • Significant contribution to fibre production and jobs Commercial plantations • Rehabilitation of infrastructure and growing stock • Additional management support required • Use of timber revenue to fund expenditure “Residual activities” • Residual responsibilities (e.g. conversion of land to new uses from restructuring process demand intensive management) • Transfer of these to other agencies for managing require funds Transfer responsibilities • Overstaffing of +- 1530 personnel due to restructuring • Funds needed for change management, payment of benefits, pension “top-ups”, compensation and social plan Lack of funding will further compromise the transfer programme and seriously inhibit development opportunities

23. Regulatory requirements – B6 VAT and related administrative charges • Various amendments to the VAT Act were introduced in the Revenue Laws • Amendment Act no. 45 of 2003 and 32 of 2004 which came into operation on 1 April 2005 • Additional amounts needed in order to pay VAT: • 2006/07 R228, 813 million • 2007/08 R249,284 million • 2008/09 R268,798 million Conditions of service: Housing Allowance • The department is unable to fund improved conditions of service by raising tariffs • Request to make provision for these improvements, including the new housing allowance, either by an adjustment to the conditional grant or by direct augmentation of the budget Information Services • Unable to comply with the IS governance requirements of the AG and SITA to combat fraud and to reduce risks • Unable to meet the requirements of NIA to comply with MISS • Unable to ensure reliability of the systems and protection against virus attacks and infrastructure failure, particularly with key operating systems • We are unable to secure these funds through internal savings

24. Achieving targets for water and sanitation - B1 • Basic water supply backlog must be eradicated by 2008, meaning: • Sector must serve 3 million people per year • Funding must be increased to at least R 3,6 billion per annum • Sanitation backlog must be eradicated by 2010, meaning: • The sector must deliver 800 000 toilets per year • Required funding level R2,4 billion per year Funds must be provided to DPLG.

27. Thank You