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REVENUE MANAGEMENT Presented by: MPHO MOFOKENG ACTING Chief Financial Officer

REVENUE MANAGEMENT Presented by: MPHO MOFOKENG ACTING Chief Financial Officer Water Trading Entity Date : 16 April 2013. Background.

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REVENUE MANAGEMENT Presented by: MPHO MOFOKENG ACTING Chief Financial Officer

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  1. REVENUE MANAGEMENT Presented by: MPHO MOFOKENG ACTING Chief Financial Officer Water Trading Entity Date : 16 April 2013

  2. Background • The Water Trading Entity (WTE) was established in 1983 under the Exchequer Act as a trading account operating as an integral part of the Department of Water Affairs. The status of government trading accounts was eventually changed through the Public Finance Management Act of 1999, converting trading accounts into trading entities. • The Water Trading Entity has adopted General Recognized Accounting Practices (GRAP) in the financial year under review in accordance with Directive 9, issued in November 2011 by the Accounting Standards Board (ASB) • The Water Trading Entity (WTE) reports directly to the Accounting Officer of the Department of Water Affairs and is comprised of two operating units, the Water Resource Management unit and the Infrastructure Branch.

  3. 1. ANALYSIS OF RECEIVABLES Receivables balances at 28 February 2013

  4. 1. ANALYSIS OF RECEIVABLES - FEB 2013

  5. Status of the WTE Receivables Book as at 28 February 2013

  6. Status of the WTE Receivables Book

  7. Provision for impairment of receivables

  8. Provision for impairment

  9. Provision for impairment

  10. Strategies to address long outstanding accounts • Our approach is to ensure that our customers agree with the their outstanding balances • This will be achieved through debtor’s circulations and • signing of acknowledgement of debt. By our customers • A debt collection agency has been appointed to assist the WTE to collect all outstanding debt. Part of the scope of the contract is to validate account balances and to assist in proposing adjustments to be performed to restate account balances. • Processes have also been implemented to validate all billing prior to it being recognised in SAP. 3. Possible write-off of incorrect interest charge. 4. We are currently performing line item clearing on the age analysis. 5. Recruitment of staff at regions and cluster to improve revenue management 6. SAP upgrade to Utility module

  11. Response 2 CORRECTION OF OPENING BALANCES • It is currently impractical to accurately restate the opening balances of receivables due to the measurement of revenue as we are using registered volumes for CMA’s and some of the NWRI customers. • The following is the strategy to ensure roll out on the metering strategy for NWRI and some CMA customers

  12. 2. ACTION PLAN: METERING STRATEGY CURRENT BILLING STRATEGY • Currently water resource abstraction users pay water resource management (“WRM”) charges and others are dependent on an assurance of water supply through a government water scheme “GWS”). • This response is limited to water utilised from GWS , i.e. National Water Resource Infrastructure (“NWRI”) related use. • The Chief Director: Operations within the NWRI branch is in the process of finalising the water measuring strategy. • The fundamental emphasis of the strategy is that metering remains the most credible and most reliable form of water use volume determination. • Within the strategy, provision is made to determine the water consumed based on metering or any other measuring device (e.g. water releases via canal off takes)

  13. Response 1: Cont. • The expected time frame for the implementation of the strategy is three years after the approval of thereof. • The branch has already budgeted for part of the expected capital expenditure to be incurred during the 2013/14 financial year.

  14. Response 1: Cont. • The metering strategy classifies users for the purpose of introducing the prospect for self-reading opportunities, as follows: • Class 1: These would be the Strategic users (e.g. ESKOM, SASOL, major mining houses, etc.). Due to the very high volumes of water used it would be required that the NWRI prioritise these users for high frequency meter readings (monthly) by cluster offices. • Class 2: These would be users that could be identified to do self-reading of meters and provide the NWRI with the readings. This arrangement will be dependent on meters conforming to NWRI requirements, a web-based system available to allow for readings to be submitted to DWA from remote areas. This arrangement will also require verification audit readings at a bi-annual frequency (at least). • Class 3: These would be users whose usage will be administered through a bulk supply agreement. The bulk meter reading could be conducted similar to Class 2 arrangements but would require further reconciliation of usage of all users within the WUA with bulk reading. It will also include irrigation users where seasonal use verification will be introduced. • Class 4: These would be remote, lower volume users that would be required to do self-reading of meters on a monthly frequency. Low frequency verification readings to be undertaken by NWRI staff.

  15. Closing Remarks It is recommended that the Portfolio Committee note the following: • Progress in the implementation of the metering systems for NWRI’s • The age analysis of various categories of customers • Possible provision for impairment of receivables

  16. THANK YOU

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