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This presentation provides an overview of Mhlathuze Water's annual report for 2016/17, highlighting their role as a leading water utilities provider in Northern KZN. It discusses their operations, infrastructure projects, and strategic objectives for delivering affordable and sustainable water services.
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MHLATHUZE WATER/AMANZI PRESENTATION ON THE 2016/17 ANNUAL REPORT Presented by Mr Mthokozisi P. Duze (Interim Chief Executive) 13 MARCH 2018
Overview • Mhlathuze Water is one of South Africa’s leading water utilities providing services mainly to the Northern KZN • Area of operation extends to the entire KZN province • Supply raw, clarified and potable water to both municipal and industrial customers • Own and operate one of the biggest off-shore effluent disposal system in the country • Implement water and waste water infrastructure projects on behalf of various government departments. • Provide operation and maintenance services on water and waste water bulk infrastructure to municipal and industrial clients • Operate and maintain Tugela-Goedetrouw Inter-basin Transfer Scheme on behalf of DWS
VISION To be the regional water and waste water service provider of choice for all stakeholders in the water value chain. MISSION To provide and expand affordable, sustainable, quality and reliable regional water and waste water services to stakeholders, improve quality of life and contribute to development. STRATEGIC INTENT: To support the Government in delivering critical services to the industries and rural communities
4 Balanced Perspectives 6 Strategic Objectives • Outcomes: • All round Customer Satisfaction • Quality Product (Water and Wastewater) • Support and understanding of all stakeholders and customers in the value chain • Environmental and community sustainability • Financial Viability • Optimised operational structures • Adequate water resources • Efficient Leadership and employee base SO 1: Grow the provision of water services SO 3: Initiate and build relationships with Stakeholders to add value for the mutual benefit of all. Customer and Stakeholder Perspective SO 2: Ensure the long term financial sustainability of the organisation. Financial Perspective SO 5: Optimise business processes and systems. SO 6: Be proactive in issues related to environmental compliance and stewardship. Process Perspective Organisational Capacity Perspective SO 4: Resource the organisation with the required skills and competence to deliver the strategic intent. • Outcomes: • All round Customer Satisfaction • Quality Product (Water and Wastewater) • Support and understanding of all stakeholders and customers in the value chain • Environmental and community sustainability • Financial Viability • Optimised operational structures • Adequate water resources • Efficient Leadership and employee base
Core Business (Section 29) • Supply of raw, clarified, potable & waste water services to both municipal and industrial customers, which are: • City of uMhlathuze • Mondi • Foskor • Tronox • RBM • South 32 • Mpact
Secondary Activities (Section 30) • Operations & Maintenance contracts: • City of uMhlathuze • Tugela Goedetrouw Emergency Transfer Scheme • Ministerial Directives: • Nongoma & Abaqulusi Water Supply Scheme • Royal Household Water Supply • Newcastle Emergency Intervention • Jozini Regional Water Scheme • uMkhanyakude Waste Water Treatment Works Refurbishment • War on Leaks
Highlights • Drought interventions • CoGTA – installation of boreholes, package water treatment plants, provision of water tankers and static tanks, exploring potential for desalination and water recycling • Provision of static tanks and water in eDumbe Municipality • Nongoma and Abaqulisi projects – identification and protection of water sources, and borehole reticulation • Completion of Ingwavuma Waste Water Treatment Works Refurbishment in uMkhanyakude • Jozini Regional bulk water supply project • 40 Ml/day WTP completed
Governance • Accounting Authority • MhlathuzeWater Board was dissolved on 26 April 2017 and the Minister appointed the Interim CEO as an Accounting Authority until the new Board is appointed • Independent Audit and Risk Committee • An Independent Audit and Risk Committee was appointed to oversee all strategic financial and risk matters • Disestablishment • Establishment of one KZN Board in progress
Performance Highlights cont’d • A majority of targets were achieved by the end of the 2016/17 financial year • Out of the 37 planned targets, 24 were achieved, which accounts for 65% of the planned targets • Mhlathuze Water exceeded expected performance; and out of the 24 achieved targets, 12 were exceeded • Only 13 (35%) targets were not achieved
BBBEE/BBE Spend • The target for 2016/2017 was 50.1% of discretionary spend on black owned companies • The actual achieved was 70.02%
Tariff Proposal for FY2018/19 • Mhlathuze Water met with the Water Service Authority (City of uMhlathuze) as per Circular 23 of the MFMA, and tabled the proposed Tariff increases. • Mhlathuze Water also extended the consultation process to other (industrial) customers. • Mhlathuze Water proposed two sets of Tariffs for Raw Water and Potable Water, one for the Water Service Authority and another one for industrial customers. • The tariff proposed for the Water Service Authority has been discounted as an initiative give back to the community.
2016/17 Audit Outcome • The Auditor General (SA) has mandated to audit Water Boards commencing from the 2016/17 financial year • A qualified audit opinion was expressed by the AG • Qualification emanated from: • A misstatement of Property, Plant and Equipment • Assets acquired at R1 instead of cost or fair value • Inadequate review of useful lives of assets & determination of fair value • Misallocation between project costs • Irregular Expenditure • R20.1m of irregular expenditure in the current year emanated from a contravention of SCM legislation in the prior periods • R98.1m of irregular expenditure from the previous periods due to not following SCM policies
Irregular Expenditure • Irregular Expenditure resulting mostly from: • Tenders advertised for less than 21 days • Contracts awarded without following a competitive bidding process • Irregular appointment of an independent contractor • Contracts register not complete • Bidder’s tax affairs not declared • Not advertising on CIDB for construction projects • Winning bidder’s CIDB not appropriate for the project • Winning bidder not declared local content • Payments made greater than contract value • Deviations not in accordance with NT’s condition of approval • Less than 3 quotations received • Invoice amounts not according to approved BOQ
Fruitless & Wasteful Expenditure • Fruitless & Wasteful Expenditure: • FY2016/17 - R237k relates to: • costs incurred on travel & conferencing facilities for a delegate who didn’t attend the conference • FY2015/16 & prior periods – R23.5m relates to: • payments made to various suppliers without approved VOs; • costs were inflated on the BOQ; • payments to suppliers not supported by approved engineer’s certificates
Reflections • The Financial Overview has highlighted operational challenges mainly due to the current drought which has exerted a lot of pressure on the financial sustainability of the organisation. • The organisation has however shown great resilience through these turbulent times and remains sustainable in the medium to long term. • Although the impact of the drought is short term, the organisational culture needs to be improved to focus more on better management of operational expenditure and cash flows, prioritisation of capital projects and the driving of the growth strategy.
