• Part A General information

· Part B : Programme Performance

• Programme 1 : Administration
• Programme 2 : Water resources Management
• Programme 3 : Water Services
• Programme 4: Forestry

• Part C : Human Resources Oversight

• Part D : Report of the Audit Committee

• Part E : Annual financial Statements

• The National Water Act, 1998 (Act No.36 of 1998): to ensure that South Africa's water resources are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner, for the benefit of all persons. The Act establishes the National Government, acting through the Minister of Water Affairs and Forestry, as the public trustee of the nation's water resources, with power to regulate the use, flow and control of all water in the Republic.

• The Water Services Act, 1997 (Act No.108 of 1997): to create a developmental regulatory framework within which water services can be provided. The Act establishes water services institutions, and defines their roles and responsibilities. Schedule 4 of the Constitution of the Republic of South Africa vests the responsibility for water and sanitation services, limited to potable water supply systems and domestic wastewater and sewage disposal systems, in Local Government. However, the National Government has a constitutional responsibility to support and strengthen the capacity of municipalities to manage their own affairs

LEGISLATIVE MANDATE (2)

• The National Forests Act, i998 (Act No.84 of 1998): to ensure that South Africa's forest resources (indigenous and plantation) are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner, for the benefit of all. The administration of indigenous

forest is however a concurrent competence between the National and Provincial Governments.

• The National Veld and Forest Fire Act, 1998 (Act No.101 of 1998): to create a framework to prevent and combat veld, forest and mountain fires throughout the county and thereby limit and reduce the damage and losses caused by fires to life, fixed property, stock, crops, fauna and flora and veld in South Africa. In terms of the Constitution, fire fighting is a local government function, with Provincial and National Governments playing as facilitating role players, including Fire Protection Associations, which are established under the Act.

• Section 20 of the Environment conservation Act, 1989 (Act No.73 of 1989), which gives DWAF the mandate to permit all landfill sites. under the Environment Conservation Amendment Act, 2003 (Act No. 50 of 2003) this function is to be administered by the Department of Environmental Affairs and Tourism but transfer of the function has not yet taken place.

PUBLIC ENTITIES REPORTING TO THE MINISTER (1)

• TRANS-CALEDON TUNNEL AUTHORITY (TCTA) In terms of the 1986 treaty on the Lesotho Highlands Water Project (LHWP) between Lesotho and South Africa, South Africa was obliged to establish the Trans-Caledon Tunnel Authority (TCTA) to implement the project on the South African side. This was done under the 1956 Water Act. The TCTA is governed by a board of directors to whom the Chief Executive and management report. Government control of the TCTA is exercised through the Minister's power to appoint all board members. The Director-General is a board member, as is an official of the Department of Finance. The TCTA is a public entity listed in schedule 2 of the Public Finance Management Act of 1999. In terms of section 3(b) of the Act, chapter 6 applies. In terms of section 49, the TCTA board is the accountable authority for purpose of the Act. The TCTA is authorised by the National Treasury to borrow R 24 billion up to March 2006 for the LHWP and R 1,5 billion up to March 2006 for BWP. The borrowing limits are reviewed on a regular basis.

PUBLIC ENTITIES REPORTING TO THE MINISTER (2)

• KOMATI RIVER BASIN WATER AUTHORITY (KOBWA) : The Komati River Basin Authority (KOBWA) is a bi-national water authority of the kingdom of Swaziland and the Republic of South Africa formed under the Treaty on the Development and utilization of the Water Resources of the komati River Basin, ratified in 1992. KOBWA is tasked with the implementation of phase 1 of the komati River Basin Development Project, which comprises the Driekoppies Dam (phase 1 a) near Schoemansdal in South Africa and the Maguga Dam (phase 1b) near Pigg's Peak in Swaziland. The purpose of the project is to promote rural development and alleviate poverty in the lower komati Valley by increasing the productivity of the land through irrigated agriculture. During the reporting period, the focus was on the operation and maintenance of the two dams with the objective of optimising the benefits from this shared water project while meeting the international obligations to Mozambique. Storage levels reached only 30% during the season due to drought in the catchment area. Low assurance water use had to be rationed.

• WATER RESEARCH COMMISSION (WRC): The Water Research Commission (WRC), classified as a Schedule 3A Public Entity under the Public Finance Management Act, was established in terms of the Water Research Act (Act No 34 of 1971) with the mandate to co-ordinate, promote, encourage, finance and manage research in respect of the occurrence, preservation, utilisation, conservation, control, supply, distribution, purification, pollution or reclamation of water supplies or water resources. The WRC is given further responsibility to accumulate, assimilate and disseminate knowledge with regard to the results of such research and the application thereof, and to promote development work for the purposes of such application. To enable the WRC to carry out its mandate, the Water Research Act makes provision for a Water Research Fund to be administered by the WRC, the income of which is composed of rates and charges levied either on land irrigated, or on water supplied to users by the State, water boards and local authorities. During this reporting period R 77 million was made available for research projects and research support services, including knowledge dissementation and technology transfer. Research projects of the WRC supported 465 post graduate students, of whom 274 were previously disadvantaged individuals (PD Is).

PUBLIC ENTITIES REPORTING TO THE MINISTER (4)

• WATER BOARDS : Chapter Six of the water Services Act (No 108 of 1997) provides the legislative framework in which water Boards operate. In terms of the Act, the primary activity of a Water Board is to provide water services to other water services institutions within its service area. Water Boards must enter into formal service provision agreements with the water service authorities (municipalities) in their service areas. The role of water Boards has transformed significantly since their inception. The changes brought about by various pieces of legislation have established water Boards as public sector water service providers whose primary activity is to support municipalities, in meeting their constitutional mandate to provide water services to all South Africans.

This requires the water Boards to enter into service provision agreements with municipalities, a process which requires agreement between both parties. Many water Boards have developed good relations with local municipalities but others have still not established formal agreements and there was continuing uncertainty as a result of Section 78 processes being undertaken in terms of the Municipal Structures Act. while, in general, financial performance and governance of water Boards was good, problems have been experienced in Botshelo water, Bushbuckridge, Ikangala and Bloem water and interventions are ongoing.

PUBLIC ENTITIES REPORTING TO THE MINISTER (5)

• Albany coast Water Board
• Amatola Water Board
• Bloem Water
• Botshelo Water
• Bushbuckridge Water Board
• Ikangala Water
• Lepelle Northern Water
• Magalies Water
• Mhlathuze Water
• Namakwa Water
• Overberg Water
• Polladrift Water Board
• Rand Water
• Sedibeng Water
• Umgeni Water

Programme 1: Administration

· TWO MAIN COMPONENTS

• CORPORATE SERVICES

• FINANCIAL ADMINISTRATION

· PURPOSE: The programme provides for the management of the Department, including: policy formulation by the Minister and senior management, centralised administrative, legal and office support services, departmental personnel management, financial administration and information technology (IT).

· Legal Services : provides legal support to the Department. The sub-programme's mandate includes the drafting of legislation, regulations, delegations, government notices and assignments. It also negotiates and drafts international agreements and contracts to ensure that State interests are protected. It manages, co-ordinates and deal with claims, court litigation and all other forms of legal action by and against the department in cooperation with the State Attorney and outside advocates. It assists the Department in the enforcement of legislation administered by the Department. It also gives the Department legal opinions or advice on any matter in order to ensure that its rights and obligations are exploited in terms of the Constitution, laws and best national and international legal practice and provides administrative support to the Water Tribunal.

Transformation: During the period under review a common understanding was build of the need to integrate transformation into the core business of the Department. Through its Anti-Racism campaigns the Department developed a partnership with the SA Human Rights Commission to assist in combatting racism and xenophobia. Workshops on human rights, racism and diversity were held in all nine regions, and were attended by employees at various levels.

· HRD: A strategy on the implementation of the Work Place Skills plan was devised. It will be implemented during 2005. Negotiations on incorporation of LGWSETA into the PSETA and ESETA. Pilot learnerships implemented in water purification, waste water treatment and water reticulation

· HRM: The pension management process was strengthened and the Performance Management and Development Strategy was implemented. Increased support to restructuring process in line with Res7 of 2002.

• Communication: Campaigns such as Water and Arbor weeks, and other national campaigns such as 16 Days of Activism, Woman's month, Heritage and World Aids Days were coordinated and implemented and formed part of the unit's major activities with resounding successes marked by participation of the highest level in government.

• Administration: The Unit is subdivided into distinct divisions namely: - provisioning services, office services, protection services, land requirements and land usage, and transport. A key activity was the National Treasury procurement integration process, that was implemented successfully. Land and servitudes were successfully acquired and affected persons compensated. Land is being acquired for the raising of the Flag Boshielo Dam which acquisition should be finalised by end October 2005. Approximately 36 applications for development around dams were received and co-ordinated

· The Departmental budget Was simplified by restructuring from eight (8) programmes to four (4) thus making management and accountability clearer. The Branch was able to implement the provisions of the PFMA, which include separating the trading account activities from the main Exchequer account activities, opening separate bank accounts for these different activities as well as implementing procurement processes in line with the Act.

The branch developed processes to implement accrual accounting including a full asset management system in accordance with the PFMA. The risks affecting the department have also been assessed and strategies have been developed to address them. A turn-around strategy is being implemented to address the audit qualifications.

• Ensures that the country's water resources are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner for the benefit of all people.

• Measurable objective:

• To ensure the allocation of water resource to promote optimal social and economic development and the availability of sufficient water at an agreed level of reliability and of an appropriate quality to meet the needs of the industrial, power generation, mining, agricultural, small business, municipal and domestic sectors and to meet international water sharing agreements while ensuring that water resources are protected to enable sustainable water use.

• The formal national framework for managing water resources was set in place when the National Water Resource Strategy, First Edition, 2004, was approved by Cabinet in September 2004, and established by Government Notice in January 2005.

• Publication of nine more Internal Strategic Perspectives -departmentally completed the coverage of sub-national management strategies for all 19 water management areas.

• Steps were taken to improve liaison arrangements with provincial planning authorities to ensure alignment between water management strategies and provincial growth and development strategies.

• The process of establishing new international, national and catchment-based water management institutions progressed, thereby moving the Department towards its ultimate role of sector policy maker and regulator by facilitating international cooperation in shared river basins, separating operational and regulatory functions, and decentralising the responsibility for managing water resources.

• Limpopo Commission: an agreement to establish the Limpopo Basin Commission was signed by South Africa, Botswana, Zimbabwe and Mozambique, all of whom share the waters of the basin.

• 2nd Phase LHWP: Agreement concluded with Lesotho (at ministerial level) to proceed with feasibility study for second phase of the Lesotho Highlands Water Project concluded

• Maputo Basin: Agreement reached to undertake joint basin study of the Maputo basin (with Mozambique)

• Orange River: The pre-feasibility study for a joint South Africa-Namibia management plan for the lower Orange River substatially completed

• Branch/Agency: The Department began the process of separating the management and further development of national water resources infrastructure from its other activities and established a new Infrastructure Branch with effect from 1 April 2005. A study conducted of institutional options for the management of water resource infrastructure in South Africa and preparation of a business case for the establishment of an Agency by April 2008.

• CMA's : The Inkomati Catchment Management Agency was established

by Government Notice, and nominations for the governing board were submitted to the Minister by the advisory committee. The proposal to establish a CMA in the Breede water management area was published for public comment in the Government Gazette. The Notice to establish a CMA in the Mvoti-Mzimkulu was approved by the Minister, and Notices to establish CMAs in the Crocodile West/Marico, Usutu-Mhlathuze and Thukela water management areas were in advanced stages of preparation

• WUA's : Ten new WUA's were established, and constitutions for a further four associations - for revitalised irrigation schemes in Limpopo Province -were in preparation. Ten existing irrigation boards were transformed into water user associations, and a further six transformation submissions were received for review and processing.

• Progress was made in arrangements to transfer operating and maintenance responsibilities for five government water schemes to water user associations - Boegoeberg, Kakamas, Lower Olifants, Sand-Vet anti Van der Kloof, delays in finalising staff transfer agreements in three of the schemes, whilst the other two requested deferral of transfer because they

were experiencing drought-related difficulties

• Subsidy policy and programme of support to small-scale farmers revised. Targets for number of farmers assisted not achieved as implementation commenced at end of reporting year
• Draft policy for Water Allocation Reform for SA finalised and national programme of public consultation commenced
• Policy on Financial Assistance to Resource-Poor Irrigation Farmers which supplements the Water Allocation Reform programme was approved by Minister

• Emergency Infrastructure development:

• Due to sub-normal rainfall, Emergency works constructed to support municipalities deliver services, construction of a pipeline to augment water supplies for industrial and domestic use completed from the Rand Water supply system in Mamelodi to Cullinan, and the extension to the Ekangala area was substantially completed. A pipeline between Morgenstond and Jericho dams, to augment water supplies to Eskom power stations on the eastern highveld, was also completed.

• Final isation of financing agreements for funding of Berg River Project in the Western Cape and commencement of construction

• The Olifants River River Water Resources Development Project was approved by Cabinet

• Design work commenced on the De Hoop Dam and Steelpoort River began

• Work continued on the raising of Flag Bosh ielo Dam in Limpopo Province

• Construction of the Nandoni Dam on the Levuvhu River was completed

• Design work also commenced on the pipeline from Vaal Dam to in order to improve assurance of supply to Eskom power stations and the SASOL complex in Mpumalanga, after Cabinet approved the project.

• Water conservation and demand management:

• Finalised and published, together with subsidiary strategies for the Agriculture, Water Services and Industry, Mining and Power Generation sectors

• The Working for Water programme continued to address the problem of invasive alien vegetation by clearing 142 500 hectares, following up on about 507 000 hectares of previously cleared land, and provided about 12 000 person years of employment

• 1999 Water Pricing Strategy revised to incorporate charges for waste discharge and the water research levy submiffed to Minister for approval after extensive consultation with key stakeholders

• High-confidence "comprehensive" preliminary Reserve determinations initiated in four major catchments (Olifants/Doorn, komati, Letaba, kromme/Seekoei rivers

• Lower confidence preliminary Reserve determinations carried out in 150 quarternary catchments

• Baseline monitoring surveys and groundwater studies initiated to support Reserve determinations

• Monitoring

• Strategy to deal with unlawful water use by enforcing the conditions of use piloted in dolomitic areas on the East Rand of Gauteng, North West and Northern Cape Provinces

• Five-year plan developed to facilitate the integration of all aspects of water resources monitoring, covering the quantity and quality of surface and groundwater

• The River Health Programme produced State of Rivers reports for the Buffalo (Eastern Cape), Crocodile West/Marico; Berg, Diep and Hout Bay rivers, bringing the total number of rivers and river systems studied by the programme to 24

• Improved Co-operation with developing countries

• Participation in AMCOW Inter-ministerial Council. (Technical Advisory Committee activities)
• Participation in SADC policy formulation
• Project Manager for SADC Hycos identified
• Ministerial visits to China. MOU under negotiation
• Agreement with Cuba being implemented

• Improved relationships with international and multilateral organisations

• Secondment agreement with African Development Bank under negotiation

• Ongoing advocacy activity around IWRM to influence international debate

• Effective participation in UN Commission for Sustainable Development 13 and Millennium Project

• Ensure that effective, efficient) sustainable and affordable water and sanitation services

• Measurable objective:

• As water services sector leader, to ensure that water supply and sanitation services are provided by effective, efficient and sustainable institutions that are accountable and responsive to those whom they serve. To ensure that water is used effectively, efficiently and sustainably.

• Important milestone was the provision of safe drinking water to the 10 millionth person since 1994
• Millenium Development Water Supply Goal of halving the backlog since 1994 was reached

• Bulk of capital funds for basic services allocated directly to municipalities through the MIG

• 95% of municipalities are now supplying FBW to all or part of their municipal population

• Capital programme

• Strategic objectives were achieved through the provision of an improved water supply to 1.5 million people
• Improved sanitation services to 1.3 million people (more than 300 000 households)
• NT made R1 30 million grant for upgrading of services in Emfuleni Local Municipality including water and sanitation services. DWAF drafted KPI's to monitor performance and regulate payments to the municipality.

• R1.2 billion , in addition to existing MIG allocation negotiated and committed over the next three financial years
• 231 000 households will be provided with a level of service that varies from VIPs to full water home sanitation

• Free Basic Sanitation (FBS)

• Approval awaited for draft FBS policy

• Health and Hygiene Education Programmes

• Hygiene and Health package developed by Health, Housing and DWAF to form part of the Housing Customer Care programme
• Health and Hygiene programmes incorporated into school curricula for Grades 0 to 6
• Through the Baswa le Meetse competitions that took place regionally and nationally learners were encouraged to develop and interest in health and hygiene

• Implementation of the Strategic Framework for Water Services (SANS)

• Process initiated to review the sector legislation
• First draft of the Water Services Revision Bill produced

• Institutional clarity & formal understandings with other role players

• Communication process with SALGA started with specific reference to the process of Institutional Reform.

• Water Services Regulation Strategy

• First draft produced
• Successful international conference hosted in February
• National Drinking Water Quality Management Strategy developed with participation of sector stakeholders, and will be implemented during 2005

• Effective Water Services Institutions

• Third version of the Institutional Reform Strategy drafted and discussed extensively in sector
• Sector Support Strategy in progress
• Due to the restructuring of the LGWSETA the sector could not proceed with the MOU between DWAF, DPLG and LGWS ETA for collaborative implementation of the sector skills development plan
• Amalgamation of the Water Chamber into the Energy SETA completed

• Transfers continued to take place in terms of the Joint Policy position, consistency in the implementation of the policy
• 25 transfer agreements out of a total of 55 had been concluded and are being implemented by the Department's regional offices
• Water Schemes had been transferred to 11 Local and District Municipalities
• AtotalofR42ll22O6forO&M, R36319265for Refurbishment and R 31 582 031 for HR is to be transferred on a quarterly basis as per the signed transfer agreement
• 118 schemes rehabilitated as per Joint Transfer Policy Position with a total of R 114 Million spend and/or transferred to Water Services Authorities
• Annual Audit against maintenance procedures completed and is ongoing in respect of further audit work
• While the transfer of staff takes place in terms of section 197 of the LRA, a joint negotiating established with SALGA to conclude a MOU relating to the transfer of staff.

• Participated in SADC and international sessions

• Compiled the MDG country report on MDG targets 10 and 11 regarding water and sanitation

• Compiled draft World Water Assessment Report to be published in 2005

• Promote the conservation of plantation and indigenous forests, and their commercial and community use, to achieve optimal social and economic benefits. Promote rural development through policy development, regulation, facilitation and monitoring and evaluation

• Measurable Objective:

To ensure the sustainable management of all forests and plantations, and to enhance the contribution of forest resources to economic development and poverty eradication.

Forestry: Main Achievements

• Two leases for state plantations concluded during 2004/05 as part of the restructuring of SAFC0L. The remaining lease for Komatiland should be completed in 2005/06 depending on the outcome of the Competition Tribunal process.

• Approximately 13 000 ha of State Forest land was reincorporated under the management of the Department as a consequence of the MTO lease transaction The Department will continue to support the Cape Conversion Programme until the end of the delegation with SAFC0L

• Transfer of remaining plantations has not progressed due to number of challenges posed by the need to reach agreement with key stakeholders

• Remaining plantations re-grouped into management clusters reflecting their forestry potential in the context of their transfers to communities. Steps are being taken to complement the Department's capacity to manage the plantations, until they can be transferred to rightful owners. These assets represent an important opportunity for strengthening local economies and to achieve the objectives of BBBEE.

• Finalisation of the delegation to SAN Parks of the management control over approximately 97 000 ha of State Forest land in the Southern Cape and Tsikamma areas

• SAN Parks as a conservation agency will manage these natural forests in terms of all the provisions of the National Forests Act, 1998

• A further 1000 ha of plantation forest at Tokai and Cecilia were transferred to SANParks for incorporation into the Table Mountain National Park

• The Lowveld plantation exit strategy to incorporate 11000 ha of plantation area into the National Parks system is at an advanced stage

• Payments to land beneficiaries and the possibility of transferring this function to appropriate agents

• Cannot be done until underlying land rights are resolved by DLA. Ministers and DG's of DWAF and DLA are addressing the matter

• Amendment Bill

• Draft amendment Bill submitted to Portfolio Committee for consideration

• SFM Research Strategy

• Not in place. Research strategy to be initiated in 2005-2006

• Strategy for Revised NFP

• Strategy approved by Minister(The strategy would also serve as strategy for profiling forestry), to be initiated in 2005-2006

• National Database for Veldfire Incidents in the Country

• Development of the National Veldfire Information System (NVIS)
• A veldfire Risk classification map was produced

• The operation of the NFDRS has been delegated to the South African Weather Service

• Fire Protection Association (FPAs)

• More than 120 notices of intention to apply for registration as FPAs were received. Most of these are currently drawing up their business plans (containing veldfire management strategies), which are required for registration purposes.

• Co-operation with SADC formalized

• Discussions with FAO to assist in strengthening ability of signatories to implement the forestry protocol

• Participation and leadership in UNFF

• Effective representation at UNFF-4 in May 2004

• Strategy for expansion of forestry in Eastern Cape developed;

• Draft policy on Transfers incorporates possibility of synergy between expansion and transfers

• Elimination of SFRA licensing backlogs

• Maps for possible new afforestation in KZN approved

• Wattle jungle licensing strategy

• Strategy revised as strategy for invasive alien plants Integration of forestry into local planning processes
• Forestry incorporated into the PGDS's of both Limpopo and Eastern Cape Provinces. Process to include it into Mpumalanga and kzN Provinces started

• BBBEE Indaba

• Launched the BBBEE Indaba with Forest sector in April 2005, good progress being made on the charter preparation

• Total Expenditure 2004/05 financial year

• Total Expenditure : R7 791 558 000
• Exchequer: R3 776 946 000
• Trading Accounts : R4 014 612 000

• Spending

• Spending is done at Head Office and 9 Regional Offices in 4 programmes

- Administration: R272 694 000

- Water Resource Management: R1 447 049 000

- Water Services: R1 561 359 000

- Forestry: R466 629 000

• Trading Accounts

- Equipment Account: R65 453 000

- Water Trading Account: R3 976 519 000

• Spending level

• For past two financial years i 99 %
• For 2004105 also reached a 99% spending level which includes rollovers of R430 million

• Reports of the Auditor General on the Financial Statements:

• Vote 34 Exchequer Account

- Unqualified audit

- Emphasis of matter in respect of:

(a) Asset and inventory management,

(b) Internal controls

(c) Value for money audits with regard to Management of fleet services and the outsourcing of information systems

(d) Information systems audit of the network security, and

(e) Late submission of the audit report.

• Water Trading account

- Disdaimer of audit opinion

- Qualifications in respect of: (a) Financial statements, and (b) Property plant and equipment.

- Emphasis of matter in respect of the re-submission of financial statements

• Equipment Trading account

- Adverse audit opinion

• Qualifications in respect of:

- Emphasis of matter in respect of the re-submission of financial statements

• National Forest Recreation and Access Trust

Unqualified audit

Emphasis of matter in respect of: (a) operation of the National Forest Recreation

Trust, and (b) progress with previous SCOPA resolutions

• Department has developed a Turnaround Strategy to address shortcomings related to:

- Capacity

- Financial Policies and Procedures

- Financial Training

• Development of Risk Management Strategy
• Standardisation of business processes across the department
• The department is developing the financial system for trading entities to operate accrual accounting

• Standardisation of business processes across the department
• Improved record keeping
• Fraud prevention plan strategy has been developed and approved by Audit Committee

• Addressing previous audit queries

Thank You