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PRESENTATION TO PORTFOLIO COMMITTEE ON WATER AFFAIRS AND FORESTRY

PRESENTATION TO PORTFOLIO COMMITTEE ON WATER AFFAIRS AND FORESTRY. WATER BOARDS : GENERAL ISSUES 19-20 March 2007. Silas Mbedzi Chief Director: Institutional Oversight. DWAF’s LEGAL MANDATE. Water Boards are established & regulated by the Minister of DWAF i.t.o.: Water Services Act

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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 WATER BOARDS : GENERAL ISSUES 19-20 March 2007 Silas Mbedzi Chief Director: Institutional Oversight

  2. DWAF’s LEGAL MANDATE • Water Boards are established & regulated by the Minister of DWAF i.t.o.: • Water Services Act • PFMA & Treasury Regulations • Municipal Finance Management Act • Division of Revenue Act • Municipal Structures & Systems Act

  3. DWAF’s OVERSIGHT ROLE • Compliance to PFMA • Ensure that various committees of Water Boards operate effectively • Audit committee • Human Resource committee • Procurement committee • Hay Grading remuneration of CEO & Executives • Minister approves stipends of board members: policy document developed to ensure consistency regarding board practices and remuneration

  4. DWAF’s CHANGING ROLE • DWAF’s present & future role: regulator of WSA • Current role • Business plans are scrutinized to determine whether 5 year plans seem viable & if appropriate services are provided to communities; DWAF issues directives on corrective measures to be taken • Financial performance is appraised through the Annual Reports; DWAF provides guidance during individual appraisal sessions • Future role (additional to current role) • More close scrutiny is required, i.e. quarterly performance appraisals to determine whether business plans are implemented. • Compare actual performance to projected performance in the business plan. • Consolidate water board financials to DWAF Annual Report

  5. DWAF’s FUTURE ROLE AS SECTOR LEADER • Establish norms & standards and ensure compliance, e.g. water quality & drinking water standards. • Provide guidance to Municipalities on sustainable WSI & Institutional Reform Process. • Monitor & evaluate WSIs’ business proposals to determine viability of service provides.

  6. INSTITUTIONAL REFORM PLAN • Roles & responsibilities of water boards i.t.o. Water Services Act & Municipal Systems Act • Boundary issues – water boards don’t operate on municipal boundaries • Governance of water boards – Minister appoints board members

  7. PUBLIC/PRIVATE INITIATIVES • A need exists to involve private/public sector in water related matters, e.g. • Rand Water with another Municipality or smaller water boards • Midvaal Water Company, DWAF’s interaction needs to be developed • Challenges: • Minister to consider oversight/regulatory responsibility in the PPI

  8. CONSOLIDATED FINANCIAL PERFORMANCE OF WATER BOARDS

  9. CONSOLIDATED FINANCIAL PERFORMANCE OF WATER BOARDS

  10. FIXED ASSETS & EXTERNAL DEBT

  11. 2005/06 TARIFF COMPOSITION • Composition of tariffs: • Johannesburg Water & Rand Water • Raw water 43,33% • Water Board’s contribution 32,01% • Municipality’s contribution 24,66% (Supported by Lesotho Highlands Project) • Durban Metro • Raw water 7,37% • Water Board’s contribution 41,83% • Municipality’s contribution 50,8% (Supported by dams built in the 1960’s)

  12. PROPOSED TARIFF MODEL • New Guidelines being prepared for determining bulk potable water tariffs • Consulted extensively with SAAWU • In line with Treasury requirements on capital structure of public entities • Ensures that inefficiency costs are not passed on to the consumer • 4-step approach proposed • Benchmark input forecast costs • Compile excel cashflow/ financial model • Prepare pro-forma tariff table • Submit to DWAF for approval

  13. WATER BOARDS RECEIVING SUBSIDIES 2006 2005 • Sedibeng Water R26,5m R33,5m • Botshelo Water R32,8m R29,7m • Bushbuckridge Water R10,3m R13,3m • Magalies Water -R 4,0m R 3,6m • Ikangala Water R 0,0mR 2,5m TOTALS R65,6m* R82,6m *Balance of RDP grants received, after project expenditure has been deducted

  14. CONSOLIDATED SUBSIDIES PAID TO WATER BOARDS Declining Trend

  15. TOTAL MUNICIPAL DEBT TO WATER BOARDS

  16. CORPORATE SOCIAL INVESTMENT

  17. BORROWING CAPACITY • National Treasury established guidelines limiting the borrowing powers of water boards (Gazette in 2002) • Water boards need to obtain National Treasury approval to exceed their borrowing limits via DWAF to Guarantee Certification Committee at National Treasury

  18. THE END THANK YOU

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