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PRESENTATION TO PORTFOLIO COMMITTEE ON WATER AFFAIRS AND FORESTRY

2. DWAF's OVERSIGHT ROLE OVER WATER BOARDS . Evaluated Shareholder Compacts to determine if five-year plans are viable

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PRESENTATION TO PORTFOLIO COMMITTEE ON WATER AFFAIRS AND FORESTRY

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    1. PRESENTATION TO PORTFOLIO COMMITTEE ON WATER AFFAIRS AND FORESTRY Silas Mbedzi Chief Director: Institutional Oversight

    2. 2 DWAF’s OVERSIGHT ROLE OVER WATER BOARDS Evaluated Shareholder Compacts to determine if five-year plans are viable & sustainable & if appropriate services are provided to WSA; followed by individual appraisal sessions, which provide guidance Compare actual performance to projected performance in the business plan Appraise financial performance through the annual reports & financial statements - individual meetings with boards to discuss DWAF comments & concerns Ensure that tariff processes in terms of sec 42 of MFMA are complied with & tariff increases are timeously tabled in Parliament

    3. 3 PROGRESS WITH OVERSIGHT OVER WATER BOARDS

    4. 4 REASON FOR BOTSHELO’s NON-SUBMISSION OF AR & FS The former acting Financial Manager & former Chief Executive left BW in Nov 2007 and Dec 2007 respectively, without ensuring that the AR & FS were ready for auditing Compilation of FS has been outsourced & completion expected end Feb ’08 Auditing by Auditor General expected to be finalized end April ’08 AR & FS expected to be ready end May ‘08

    5. 5 CONSOLIDATED FINANCIAL PERFORMANCE OF WATER BOARDS [Botshelo Water’s 2005/06 figures included]

    6. 6 CONSOLIDATED RATIOS

    7. 7 SIZE OF BOARDS IN TERMS OF SALES

    8. 8 PROFIT / LOSS MAKING BOARDS

    9. 9 QUALIFIED AUDITS SIX OUT OF FIFTEEN QUALIFIED QUALIFIED AUDITS Albany Coast Water Magalies Water Mhlathuze Water Sedibeng (North West Region) QUALIFIED WITH EMPHASIS OF MATTER Bushbuckridge Water Ikangala Water

    10. 10 CHALLENGES & SOLUTIONS

    11. 11 CHALLENGES & SOLUTIONS

    12. 12 ISSUES RAISED BY PC IN 2007 ALBANY COAST WATER Low book value of assets – a re-valuation of property was performed & reflected in 2007/08 FS AMATOLA WATER Transfer of assets to AW- Once results from study on institutional models for water services provision are known, transfer of asset will be fast-tracked BUSHBUCKRIDGE WATE Bohlabela DM has been disestablished & debt taken over by Bushbuckridge LM Debt owed by Bushbuckridge LM not yet fully recovered; new billing meters installed & credit control measures put in place to ensure recovery

    13. 13 ISSUES RAISED BY PC IN 2007 BOTSHELO WATER Internal audit committee appointed in July 2007 Forensic auditors are investigating the assets reflected as not owned by BW New board endeavours to get buy-in from Municipalities to pay their accounts in order to ensure future financial viability of BW IKANGALA WATER A consultation process determined whether Board should be disestablished or not – a report was submitted to the Minister during Oct 07 – awaiting her final decision (decision imminent)

    14. 14 ISSUES RAISED BY PC IN 2007 LEPELLE NORTHERN WATER Rehabilitation & refurbishment of existing infrastructure is being addressed – Board budgeted R66m for 2007/08 & secured R92m from DWAF & Anglo Platinum Upgrading of projects are in progress to increase capacity of schemes to address continuous increase in demand for water Ba-Phalaborwa LM paid R18 million of outstanding debt & LNW will write-off interest of R27m when principal debt is serviced Protracted sec 78 process prevents LNW from entering into SLA with WSAs Capacity constraints are being addressed (i) by enrolling employees in learner ships, apprenticeships & skills programmes (ii) With respect to recruitment strategy only qualified & skilled people are targeted for appointment (iii) Incentive Policy with retention clause will ensure scarce skills are retained

    15. 15 ISSUES RAISED BY PC IN 2007 MAGALIES WATER Retail debtors not included in the FS have been addressed Fixed assets were re-valued & auditors provided their opinion in 2006/07 financial year audit An actuary re-evaluated the endowment policy in 2007 SARS confirmed registration of MW as an entity exempt from income tax MHLATHUZE WATER Debt collection has improved slightly & is continually monitored for improvement NAMAKWA WATER Process to appoint a Manager (not CEO) is underway Nama Khoi Municipality cannot take over function of NW as they are struggling financially Sec 78 process is nearly completed & will resolve uncertainties concerning viability & future of NW

    16. 16 ISSUES RAISED BY PC IN 2007 OVERBERG WATER Staff retention remains a challenge Long term contracts with Municipalities not yet concluded, although several meetings were held between DWAF & respective municipalities Disclosure of board meeting attendance & remuneration was done in 2006/07 Annual Report PELLADRIFT WATER DWAF provided support with strategic planning session & development of BP & Shareholder Compact SEDIBENG WATER Interest rate on long-term debt was renegotiated with DBSA, but higher penalties will be charged if loans are redeemed earlier than their maturity dates

    17. 17 THE END THANK YOU

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