Briefing on Budget Vote No.37

1. 1 Briefing on Budget Vote No.37

2. EXPENDITURE TRENDS - MEA

3. EXPENDITURE OUTCOME FOR END 31 March 2010

4. EXPENDITURE OUTCOME FOR END 31March 2010 Reason for under spending Unfilled vacant posts throughout the department contributed to under � expenditure, it is anticipated approximately R70 million will not be spend in this current financial year Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.) Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year. Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months. A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. Reason for under spending Unfilled vacant posts throughout the department contributed to under � expenditure, it is anticipated approximately R70 million will not be spend in this current financial year Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.) Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year. Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months. A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year.

5. Reason for under/over spending The over expenditure on Programme 1: Administration relates to Theft and Losses incurred by the Department which includes staff debts, write-offs in respect of water and irrigation board loans Unfilled vacant posts throughout the department contributed to under � expenditure, it is anticipated approximately R113 million will not be spend in this current financial year Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arriva.) Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA. An amount of R23,3 million was withhold in terms of DORA due to municipalities failure to submit proper expenditure and close-out report. months. Delays in finalising contractual agreement between DWA and service providers in respect Accelerated Community Infrastructure Projects.

6. 2010/11: KEY PROGRAMMES Post government reconfiguration: reorganised Programme structure is as follows: Administration Water management National water resources infrastructure Regional management Water sector regulation Prior to the government reconfiguration that saw forestry going to agriculture and sanitation going to human settlement, the programmes were as follows: Administration Water resource management Water servicesPrior to the government reconfiguration that saw forestry going to agriculture and sanitation going to human settlement, the programmes were as follows: Administration Water resource management Water services

8. EARMARKED FUNDING

9. UN-EARMARKED FUNDING

10. DONOR FUNDING

11. COMBINED BUDGET (EXCHEQUER & DONOR FUNDING)

12. REQUEST FOR ADDITIONAL FUNDING � 2010/11

13. Regional Bulk Infrastructure Grant (RBIG)

14. Introduction Regional Bulk Infrastructure Programme Grant mechanism established in 2007 to supplement the financing for the development of regional bulk water infrastructure and regional bulk sanitation collection as well as regional water and waste water treatment works (social component only) Budget Allocation (2010 MTEF) R4.42 billion Estimated R60 billion investment required

15. SONA (Extracts) In addition, we will work to improve the effectiveness of local government, infrastructure development and human settlements We are not a water rich country. Yet we still lose a lot of water through leaking pipes and inadequate infrastructure. We will be putting in place measures to reduce our water loss by half by 2014. This government will ensure that our environmental assets and natural resources are well protected, and are continually enhanced.

16. How does RBIG respond to SONA Support and assist WSA with Bulk infrastructure operations and maintenance Ensure that WC/WDM is effectively addressed before approving RBIG projects Ensure adequate O & M, and asset management measures are part of the new RBIG projects Promote where possible WC/WDM related RBIG projects i.e. Wastewater recycling (re-use)

17. Aim: This fund aims to support Government�s development targets (e.g. eradication of basic water supply and basic sanitation backlogs) as well as socio economic priorities such as the 2010 Soccer World Cup, enablement of growth and development initiatives as well as addressing specific water risks (e.g. water availability, water quality and environmental challenges). Responsibility: DWA is responsible and accountable for the management of this specific-purpose Water Services Regional Bulk Infrastructure Grant. Accountability: The transfer from National Treasury to DWA will take place as per DoRA and bi-lateral arrangements. Assessment / Allocation: The fund is project focused and each case is assessed and selected on merit. It is not formula based and not generically allocated. Co-funding; While this fund must enable economic development, the proportional capital cost for higher levels of domestic, commercial and industrial uses must be obtained from suitable co-funding or financing mechanisms

19. Project Criteria Funding is only allocated for implementation once the Projects is �implementation ready�. Projects must be aligned with regional and national water resource development strategies, including compliance to WC/WDM. Projects must provide for realistic longer-term development scenarios and �total needs� Projects must have stakeholder involvement and commitment. Projects must be environmentally acceptable (approved EIA and environmental Management plan).

20. Implementation Readiness Comprehensive feasibility planning must be undertaken; Prove socio-economic benefit; Financial viability; Illustrate sustainability Technical acceptability; Institutional arrangements; Agreement , commitments for both implementation and sustainable operation; Projects must be environmentally acceptable; A financing plan must be in place, Compliance to water conservation measures; Acceptable asset management plans and systems; Completed Environmental Impact Assessment, and Water licenses

21. Previous financial years 2007/08 and 2008/09 2007/08 R 300.0 million 2008/09 R 444.7 million 2009/10 R 616.8 million 2010/11 MTEF Allocation 2010/11 R 893.0 million (Including the R54 mil Limpopo drought relief funding) 2011/12 R 1675.3 million 2012/13 R 1849.2 million

22. Progress to date The total projects implemented since the start of the programme are as follows: 107 projects were started since 07/08 financial year; 50 implementation projects have been initiated and are in construction, design or tender phase 32 construction, 18 design / tender phase 57 feasibility / implementation ready studies underway (budget for implementation approximately R3 billion) 9 projects have been completed New projects can be funded from 2012/13

23. Projects completed The projects completed to date are as follows: 2007/08 Chris Hani Tsomo RDP2 BWS Delmas Phase 1 Emergency Thaba Chweu BWS 2008/09 Delmas Phase 2 Maqwassi Hills RWS 2009/10 Mbhashe North BWS Mathulini BWS Greater Mthonjaneni BWS Phase 1 Van Wyksvlei Interim Solution

24. Projects completed in next Quarter Projects to be completed in the next quarter Mthatha Bulk Water Intervention Jagersfontein BWS Groblersdal Lukau BWS Van Der Kloof/Petrusville BWS

25. Jobs created

26. Project Challenges & Risks Transfer of funds Misuse of funds by Municipalities Many projects were not ready and were given funding Non-Dora compliance (eg Roll over requests from NT) Inadequate capacity by municipalities to manage implementation Delays in implementation of projects and expenditure High escalation costs Approval process not followed Sustainability of projects once completed (commitments by Municipalities to perform O&M) Lack of Co-funding by WSA

27. Refocusing our approach DWA to take greater/direct control for implementing new RBIG projects utilising: Project management capacity from DWA: Regional and National Offices Utilising the capacity of Water Boards Utilising DWA construction Where feasible new assets to be transferred to Water Boards Focus on sustainability of projects and Operations and maintenance

29. Total Needs Assessment as at Dec 08

30. New Priorities (2010) Broadening access from under-utilised and single purpose dams (Taung and Jozini); Desalination Strategy and roll-out Acid Mine Drainage Namakwa Water - refurbishment

31. Water Services Operating Subsidy 2010/11

32. Drought Relief MTEF Allocation

33. Working for Water Allocation

34. Working on Fire Allocation

35. WTE Augmentation � Actual (2009/10)

36. Augmentation to WTE MTEF Allocation

37. Thank you