Presentation to the Standing Committee on Appropriation: Water & Environmental Affairs

Presentation to the Standing Committee on Appropriation: Water & Environmental Affairs Presentation byMs. Nthabiseng FundakubiActing Chief Financial Officer22 March 2011 Briefing on Current Expenditure and their Performance Trends 1

Expenditure outcome for the third quarter ended 31 December 2010 2

Expenditure outcome for the third quarter ended 31 December 2010 3

Expenditure outcome water services operating subsidy and regional bulk infrastructure as at 31 December 2010 4

Reasons for under spending as at 31 December 2010 Unfilled vacant posts as well as challenges of the unavailability of suitable candidates, especially engineers who must meet OSD criteria Outstanding invoices in respect of Diner’s Club, Phakisa World and Auto Page for goods and services already rendered as a result of disputes Incorrect submission of payment certificate which prolong the payment period in respect of Accelerated Community Infrastructure Project. Delays by municipalities in appointing implementing agents in respect of the refurbishment of waste water treatments plants Delays by municipalities in submitting incorrect payment certificate as result, documents had to be returned to various municipalities Protracted delays in finalizing transfer of staff to various municipalities 5

Reasons for under spending as at 31 December 2010 The Climate Survey Programme which was put on hold . The approval is now granted and part of expenditure is expected to be disbursed in the last quarter of the financial year. Delays in approval of the Training and Development plans Late redistribution of the Masibambane budget allocation. Delays in appointing mechanical and electrical contractors by municipalities. 6

Reasons for slow expenditure and possible under expenditure Long procurement and design process of projects by municipalities Contract administration problems in municipalities Non performing contractors Slow processing of payments by DWA Limited institutional capacity to project manage Delays caused by suppliers Delays in EIA and abstraction permits WSA reluctant to continue / commit due to partial funding or tenders are much high than estimates 7

Reasons for under expenditure Projects encountering challenges Limpopo Giyani Bulk Water Drought Relief (R 54 million) Region and Mopani District Municipality differ in the technical options of the project. Slow process to finalise the implementation of the project and Management intervention was needed. Budget reallocated to other Olifantspoort WTW and Mogolakwena BWS MametjaSekororo Bulk Water Supply (R 7 million) The design of the project has been completed but no further action was taken by the Mopani District Municipality for the implementation and Management action was needed. R 7 million has been reallocated. Moutse Bulk Water Supply (R 20 million) During the second half of the financial year the Minister requested that R20 million be allocated to the Moutse Project. The approval process took a long time and it is anticipated that only R 13 million will be spent

Projects encountering challenges Mpumalanga Acornhoek Bulk Water Supply (R 37 million) Municipality did not have the capacity to implement the project and requested the Department to implement the project which took a long time to be approved. There is also a legal action between the department and the previous suppliers. It is expected that the contractor will be on site middle February 2011. R 12 million of the budget has been reallocated and later during the year the remaining R10 million has been reallocated to the Bloemendal Project Bloemendal Bulk Water Supply (R 10 million) On 30 October 2010 the various stakeholders signed the agreement for the implementation of the project. Due to escalation cost the parties had to agree to the co-funding portion. All agreements are now in place and R 10 million will now be spent 9

Projects encountering challenges North West Madibeng Water Treatment Works (R 20 million) The Madibeng Local Municipality is under administration and requested the department to implement the project. The designs developed by the consulting engineer was of poor quality. Magalies Water has been appointed to implement the emergency work and the development of the designs. R 8 million has been reallocated Free State Sterkfontein Bulk Water Supply (R 50.050 million) Although the project was progressing well the past few years, during this year some problems were encountered with the contractors but this problem has now been resolved. The tender process for the supply of steel pipes took longer than expected and R 8 million has been reallocated to the Eastern Cape 10

Expenditure outcomes as at 18 March 2011 11

Expenditure outcome as at 18 March 2011 12

Expenditure outcome water services operating subsidy and regional bulk infrastructure as at 18 March 2011 13

Reasons for under spending as at 18 March 2011 Unfilled vacant posts still a challenge however the department embarked on the recruitment drive project Outstanding invoices from the big accounts; Diner’s Club, Phakisa World, Arivia, AGSA, travel agencies. 19

Reasons for under spending as at 18 March 2011 The validation and verification process currently being conducted by a service provider is on a slow pace and is affecting the Enforcement Unit in terms of spending because they are currently waiting for the process to be finalised after which they can take further steps against unlawful water users. Delays in approving of the service providers 20

THANK YOU 21

Presentation to the Standing Committee on Appropriation: Water & Environmental Affairs