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Presentation to the Water Affairs and Forestry Portfolio Committee Date: 11 June 2003

Presentation to the Water Affairs and Forestry Portfolio Committee Date: 11 June 2003 Presentation by Executive Management. Content of this Presentation. The Status Quo on April 2002 - Manase Report Consultations The internal challenges The external challenges? Threats to Umgeni Water?.

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Presentation to the Water Affairs and Forestry Portfolio Committee Date: 11 June 2003

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  1. Presentation to the Water Affairs and Forestry Portfolio Committee Date: 11 June 2003 Presentation by Executive Management

  2. Content of this Presentation • The Status Quo on April 2002 - Manase Report • Consultations • The internal challenges • The external challenges? • Threats to Umgeni Water?

  3. The Status Quo – April 2002 • High debt position. The debt position at R 4.2 billion. Prior to 1991 R 1 billion raised. In 1997 and thereafter R 3.2 billion raised via SOL • Expenses higher than income historically since 1999 • Interest on borrowing a huge challenge since 1990. A major challenge with regard to our tariff • Volumes are decreasing

  4. Capex and O & M remain a challenge as over-runs are sometimes 50% more than initially anticipated Operational efficiencies not maximised ( e.g. Plants) Overcapacity of the staff compliment & culture of the organisation A Parastatal with a strong apartheid history The Status Quo

  5. Consultation with staff – April 2002 Consultation with the unions – signed agreement in 16 August 2002 Consultation with the previous executive management Consultations with the Board Consultations with customers Consultations with DWAF Generic discussions with TCTA Generic discussions with investors Consultations

  6. Subsidiaries a drain to UW ( Watertite, Turngrow) No policy to guide activities outside South Africa Settlement with SOL was pending Media coverage (negative covering a number of areas including previous UW employees setting up a company of the similar name & previous CEO issues, SOL etc) Dispute with Mani Meyer and told not to have any meetings with him – it was a historical matter Disunity throughout the organisation, trust a big problem. The Status Quo

  7. The funding costs – high debt position Operational inefficiencies Too many staff (bi-focal strategy) Response by the new executive team Corporate strategy Balance scorecard New structure (new executive from January - March) Business plans crafted in consultation with staff Consultative restructuring process The Internal Challenges

  8. Capacity of district municipalities Role of Water Boards (Department not too clear on this matter) Investor sentiments Reducing tariff strategy Access to finance & cost of finance Ongoing challenges / managing the organisation outside the media The External Challenges

  9. Continuing historical problems Culture that there must be a victim - education process necessary Relationships still need to be built - a challenge Investor confidence to be worked on What will the water sector look like in 20 years time – is there a clear vision? Internal conflicts played in the public domain Lack of focus on corporate governance “Institutional creep” Some municipal clients who have other agendas Threat to UW’s Restructuring Process and Future

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