The business of Bushbuckridge Water continued to grow in the past year. This growth put a lot of pressure on the organisation as the expectation for performance also rose. Such expectation on performance and delivery were also resultant from the transformation agenda of the water sector, the reflection of the ten years of democracy and service delivery, the holding of the third democratic elections in the country, and the unfortunate drought catastrophe that continued to affect Mpumalanga and Limpopo provinces.

Bushbuckridge Water had to deal with the shortage of raw water supplies whereas ensuring that water continued to grace our pipelines. These challenges brought with them important lessons into the organisation. To respond to the challenges and position the organisation for the future, we had to restructure and package the organisation into strategic business units (SBUs) that will be portable enough across the sector. These SBUs will be better placed to drive the agenda of the water services sector which include institutional reform, meeting of the water services targets and integration throughout the water services value chain.

As herein contained in the report some of the challenges facing us ahead include:

• Strengthening of corporate governance
• Management of water resources to guarantee strategic supplies
• Black Empowerment
• Extension of services
• Employment Equity
• Strengthening of relationships with clients
• Infrastructure backlog and the broadening of revenue streams
• Institutional reform

Hereunder follows the report reflecting the work by the various components of the organisation :

The provision of bulk water services from the water treatment works listed on table 1 went on fairly well beside challenges regarding transforming current technology to appropriate technology and applicability there of. The drive was basically to maximize production, minimize water loss and operational costs without compromising treated water quality. As a result, abstraction and production during 2003/2004 was reduced by 0.1% as compared to the 2002/2003 financial year. But water loss during production was reduced from 9 % to 6.1 % respectively. Production of 38.2 Ml/d of potable water complying with SABS 242 – 1999 was achieved for distribution to the communities in Bushbuckridge. 68 Ml/d was produced and distributed to the communities of Nsikazi in the Mbombela Municipality area through the Nsikazi operations and maintenance project.

Current infrastructure includes ten water treatment works, nineteen booster-pumping stations, long bulk pipeline (75 mm to 600 mm in diameter), and reservoirs (200 m³ to 9 000 m³ in size). Save Marite Scheme ( which employs disinfection only), all treatment works employ flocculation, settling, filtration and disinfection (see Table 1: Water Treatment Plants).

BWB’s raw water comes from the Sabie – Sand catchment (Sabie River, Marite River, Sand River, Klein Sand River, Mutlumuvi River and the following dams; Acornhoek, Edinburgh and Inyaka). Studies have shown that the number of dry years in the Sabie-Sand Catchment tends to increase over the past 5 decades thus there is a need to augment this catchment by transfer of raw water from Inyaka dam during the dry season.

Major problems were with regard insufficient raw water from the sources as a result of the drought. The most affected sources were:

• Acornhoek dam which supply raw water to Acornhoek water treatment works.
• Edinburgh dam which supply Edinburgh A and B water works.
• Mutlumuvi and Sand Rivers, which supply Dwarsloop, Thulamahashe, and Sand River water works.
• Shatale weir, which supplies Shatale water, works.

Nevertheless Inyaka dam has become stronger since last year. The dam recorded 60% during June 2004.

The quality of raw water in the Sand catchment is constantly degraded by discharges from sewage treatment works (Dwarsloop and Thulamahashe sewage treatment works). Due to the degrading raw water quality, treatment requires strict control mostly when it comes to disinfection of final treated water. This in turn increases the operation costs drastically.

Water production entails abstraction, coagulation, flocculation, settling, filtration, disinfection and pumping to distribution reservoirs. The department focused on plant optimization for effective use of chemicals, energy, equipment and human resources.

Abstraction and production quantities are tabulated below. There was a 0.1% decrease on production as compared to 2002/03 financial year.

The average water loss was reduced from 9 to 6.1 % as a result of optimization.

BOHLABELA DISTRICT MUNICIPALITY AREA

MBOMBELA LOCAL MUNICIPALITY AREA

Average monthly abstraction rates, production rates, and water loss figures are graphically presented on figures 1, 2 and 3 of Annexure 1, while the related tables are on annexure 2.

Quality assurance is done at two different levels.

• Hourly analyses are conducted at each plant for the purposes of process control and optimization of systems.
• Samples are collected from each plant and distribution points twice per month. These samples are analyzed for physical, chemical and bacteriological characteristics.

A summary of Analytical results for five major water treatment plants is attached as Annexure 3.

From the results the following water quality compliances with SABS 241 – 1999 were achieved:

Chemical quality: 100 % compliant.

Physical quality: 98.3 % compliant.

Bacteriological quality: 100 % compliant.

The quality of the final treated water was acceptable for potable use.

Planned, routine and emergency repairs/maintenance were conducted by the maintenance teams, which, are grouped according to their specialization i.e. mechanical, electrical and civil. The department introduced a job card system since January 2004.

The planning and development function is not yet fully established. Current activities include initiation of projects, facilitation of projects implemented by Municipalities/ DWAF.

The following projects were successfully completed during 2003/04 financial year:

• Upgrading of Zoeknog water works (DWAF project).
• Construction of an emergency pipeline to supply Dwarsloop reservoir. (BWB project)
• Phase 1 of Nsikazi operation and maintenance project.

Current and future projects:

• Inyaka Water treatment works: Phase 1B: 20 Ml/d (in progress).
• Refurbishment/upgrading of Shatale water works (in progress).
• Phase 2 of the Nsikazi operation and maintenance project (in progress)
• Upgrading of Hoxane works to a capacity of 50 Ml/d (in progress)
• Repair of Kabokweni oxidation dams (in progress)
• Ludlow bulk pipeline (in progress)
• Automation of Marite distribution (in progress)
• Inyaka – Marite, Inyaka – Acornhoek bulk pipelines (at conceptual stage)

The income reflected in the annual financial statement includes an amount of R 4 000 000, which is part payment by the Bohlabela District Municipality in respect of bulk water services provided during the year under review. There was no commitment to pay the outstanding debt, and therefore the board wrote off a sum of R28 132 609 as there are no reasonable prospects of recovering it.

Bushbuckridge Water relied mostly on grants from the Department of Water Affairs and Forestry as well as income for services rendered at Nsikazi to fund its major operations. There has been a significant rise in operating income as compared to the previous years. Bushbuckridge Water and Bohlabela District Municipality have signed the memorandum of understanding for bulk water services that shall have the legal force of an agreement until a final agreement is in place. Such an MOU was sent to National Treasury to invoke section 8 of the Division of Revenue Act of 2004, in order to guarantee inflow of water services grants to BWB from DWAF on behalf of Bohlabela District Municipality.

Bushbuckridge Water board tried its utmost best to minimise expenditure without compromising service delivery and quality. The operating expenses appear to have increased highly due to the writing off of bad debt, whereas there has been a minimal rise in real terms. The Department of Water Affairs and Forestry also continued to exempt Bushbuckridge Water from raw water charges. All this together with the rise in income made us to have for the first time real retained earnings and positive closing balance.

During the year under review Bushbuckridge Water supplied water to Bohlabela District Municipality at the rate of R 2.39 per kilolitre. This tariff is an average tariff based on economic realities of the area of supply. It has been consistent throughout the years and only adjusted with the inflation rate. For the Mbombela Municipality area the rates are as per the contract with DWAF.

During the year under review the Board changed its accounting policy with respect to the treatment of sales of water. In anticipation of payment from municipalities, we are now accounting for sales of water irrespective of whether received or not. The change in the policy has resulted in the disclosure of sales of R33 395 767 which part of it has been written off. Our VAT registration status has changed from invoice basis to cash basis.

The audited annual financial statement of the Bushbuckridge Water Board are attached.

The procurement systems are designed in the way that they support the Black Economic Empowerment (BEE). Although it has been very tough, the board tried very hard to ensure that the BEE is supported in all respect. Of the total procurement budget, 11% was spent on BEE. There is a firm commitment of increasing this quota to 20% next financial year, and to 50% over the next five years. This should mainly comprise the significant products and services. The sectors of the BEE which benefited from our procurement budget are the following:-

• Carpentry
• Accounting and Auditing
• Chemical Industry
• Engineering Services
• Security Services
• Printing
• Hardware

Bushbuckridge water profiled its risks during the year to assess the possible shocks that may arise. We have a risk management and fraud management in place. However this was not easy to implement and monitor because of the lack of the internal audit function. The finance department was also mean in manner that the principle of segregation of duties was seriously compromised. The position of the Chief Financial Officer remained vacant. With the financial situation stabilizing the board will now appoint a CFO, an internal auditor, together with the other positions created by the restructuring process.

The Board has not as yet developed and agreed to a framework of acceptable levels of materiality and significance with the Minister. When the shareholders compact for 2005/2006 is concluded it will include such a framework.

The organizational structure has been re-aligned with the revised strategic objectives of the organisation. The revised structure was implemented on 01 July 2004. BWB has a total of 266 employees. Seventy-nine of these employees are contract employees involved in the Nsikazi Project. Our involvement in the Project has been extended to 30 June 2005.

The personnel component that was transferred to BWB from DWAF was incorporated into the salary grading system used at BWB. All those workers were integrated into unified organization and effectively fully appointed into their permanent positions on the organogram. We are now running a single and uniform payroll for all employees save the Nsikazi Project employees.

We have three employee organisations (unions) who are representing employees in BWB, namely, National Education, Health and Allied Workers Union (NEHAWU), the Public Servants Association (PSA) and the South African Municipal workers Union (SAMWU). SAMWU represents employees at the Nsikazi Project. A sound relationship is maintained through monthly meeting with the unions. we do not have collective bargaining system, however the existing unions collaborate on a number of issues. Bushbuckridge together with the unions are part of the Amanzi Statutory Council.

The Board has approved an Employment Equity plan for BWB. The plan seeks to address issues of gender balance, skills development for the previously disadvantaged individuals and the employment of people living with disabilities. The plan seeks to address equity issues with clear timeframe and targets running up to 2009.

The consistent application of disciplinary rules and procedures in a corrective manner has kept discipline at an acceptable level in the organisation.

The Workplace Skills Plan for the current year is due to be submitted to the Local Government, Water and Related Services Sector Education and Training Authority (LGWSETA) at the end of October 2004. The plan will address issues related to skills development needs identified during the redesign of the organisational structure.

We have set up most of the structures required by the Occupational Health and Safety Act, Act 85 of 1993, in consultation with the employee organisations. We have secured the services of a health and safety expert to evaluate our workstations and a report was issued with recommendations for improving our health and safety standards.

A Management Board composed of an equal number of representatives from both the employee organisation and the employer has been established. The Management Board will continuously look at maximising the benefits that we derive out of our provident fund.

We have re-aligned our performance management system to be in line with the principle of performance related pay. All workers in the organization will be subjected to an intermittent process of appraisal linked to the overall performance of the organization. Outstanding performance shall be rewarded while non-performance shall also receive attention.

We are continuously seeking ways of attracting high caliber professional and keeping them longer in the organization. This is important because we find it difficult to attract top quality professionals from effluent areas, whilst we also lose staff to urban centers.

• Public – Public Partnership

• Schools Participation

• The Water Journey

• Public Participation

• BWB proudly sponsored the Bohlabela Mayoral’s Awards organised by the Mzumba Production at Swadini Aventura during November 2003.
• Further sponsorships were directed to the regional celebrations of the ten years of democracy in the Bohlabela District Municipality.
• Bondzeni High School received sponsorship to encourage learners to perform high.
• BWB also participated and contributed to a number of development initiatives in the region.

I fully acknowledge that the road ahead is not that much easy, beside the institutional reform of the sector, we are bracing our self for changes in our municipalities in light of the re-demarcation of boundaries. However the relationships that we built through the current leadership will prevail over those challenges. The support that we are getting from DWAF, SAAWU, and SALGA continues to strengthen us.

I wish to thank my board for the leadership and direction provided throughout the year. Lastly my management team and the entire staff, your support will always be appreciated. Let us continue to work together and build a strong organisation in a strong nation.

S.G. NKUNA

CHIEF EXECUTIVE

Bushbuckridge Water is a public entity listed as Schedule 3 part B: National Government Business Enterprise in terms of the Public Finance Management Act 1 of 1999 (as amended by Act 29 of 1999). All listed entities are expected to comply with the King Report on Corporate Governance as adapted into the Protocol on Corporate Governance for State-owned Enterprise (SOE). BWB continues to assess itself in terms of compliance with legislation and the protocol.

Governing Bodies

The board of Bushbuckridge Water is responsible for setting over all strategic objectives and the monitoring of performance and policy implementation.

The Chairperson and members of the Board are appointed by the Minister of Water Affairs and Forestry in terms of the Water Services Act 108 of 1997. The present Board of 10 members were appointed on the 28^th February 2002 and therefore their term expires on 27^th February 2006. All members are non-executive directors save the Chief Executive.

The role of the Chairperson and the Chief Executive are separate. The Board meets on a bi-monthly basis. The Board delegates some of its work to the following committees:

• The Executive Committee

• The Finance Committee

• Human Resources Committee

• Business Development Committee

• Technical Committee

• Audit Committee

• Management Committee

• Environmental management
• HIV/AIDS in the workplace
• Corporate social investment
• Employment equity
• Black economic empowerment
• Communication with stakeholders
• Matters dealing with conflict of interest