Annual reports are the key reporting instruments for departments to report against the performance targets and budgets outlined in their strategic plans, read together with the Estimates of National Expenditure (ENE), and Budget Statement Two (for the provincial sphere). Annual reports are therefore required to contain information on service delivery, in addition to financial statements and the audit report. It is meant to be a backward-looking document, focusing on performance in the financial year that has just ended. It reports on how the budget for that financial year was implemented.

To gauge the performance of the Department of Water Affairs and Forestry for the 2004/05 financial year, the outputs for 2004/05 and 2005/06 highlighted for the four programmes, Administration, Water Resources Management, Water Services and Forestry, will be correlated from the following source documents:

• Strategic Plan 2004/05 – 2006/07.
• Estimates of National Expenditure.
• Presentations at Public Hearings of the Portfolio Committee on Water Affairs and Forestry, 12 – 14 October 2005.

to that of the Annual Report 2005 and other source documents, so as to assess the way in which DWAF functioned in the delivery of its core aim, that is to:

• Change from irrigation boards’ to water user associations.
• Transfer of water service operations to Municipalities. There are significant costs associated with the transfer, including personnel costs and restructuring costs. This has resulted in an increase in an expenditure on Administration in the DWAF. The transfer of Water Services should be completed by April 2006.

In September 2003, the Strategic Framework for Water Services was approved. The Framework updated the 1994 White Paper on Water Supply and Sanitation and ensured alignment between policy for water services and the evolving municipal policy framework.

• Commercial and indigenous forests to be transferred out of the Department.

Both the above will impact on the staffing structure of DWAF, in water services and forestry, in particular.

• In the 2003/04 financial year, the water sector faced severe drought conditions in many parts of the country. Fortunately, late rains somewhat alleviated the situation. Extra efforts were required to implement drought emergency works, particularly in the Western Highveld area, and the allocation of additional funds late in the financial year necessitated rollovers for work that will only be completed during the 2004/05 year.

The drought was preceded by a particularly severe fire season for forestry and agriculture. Overall, the forest industry lost 30 176 hectares of plantation to fire, resulting in a loss of 4,5 million tons of direct production valued at R695,7 million and a loss of an estimated R3 Billion worth of downstream timber products. The costs of firefighting and replanting amounted to R227 million. Departmental losses represented about 15% of the total. Further damage was only averted by cooperation between all members of the forest industry family. In recognition of the losses suffered, the Department is working with organised forestry to find ways to temporarily exempt growers from water use charges for areas affected by the fires.

• Water resources in South Africa are limited and highly variable. The country’s water resources would be sufficient to support social and economic development for the future provided they are judiciously managed, and wisely allocated. The fundamental objectives for managing South Africa’s water resources are to achieve equitable access to water resources and their sustainable and efficient use.

The National Water Resources Management Strategy, (NWRS) has been adopted by Government to guide municipalities and local government on how to better manage water resources in South Africa. Municipalities and Local Government need to implement the NWRS with all urgency.

• Catchment Management Agencies and Water User Associations

Catchment Management Agencies (CMAs) and Water User Associations (WUAs) have been established in certain areas. However, other areas are still lagging behind.

The 2005 State of the Nation Address highlighted the following targets for the sectoral Departments:

• To ensure that within the next five years, all households would have easy access to clean running water.
• During the current year, more than 300 000 households will be provided with basic sanitation.
• Improve the capacity of Municipalities to ensure that the target of providing sanitation to 300 000 households per year is met. The targeted timeframe is 2007.
• To ensure that by December 2004, through programmes undertaken by the Department of Water Affairs and Forestry (DWAF), government will provide clean and potable water to the 10^th million South African since 1994.

• Municipal Infrastructure Grant (MIG)

The President has pointed out that there are approximately three-quarters of households that are receiving the free 6 kilolitres of water per month. These, however, are households that have the infrastructure to provide potable water. A key resource for municipalities to improve on the poor infrastructure in other areas is the Municipal Infrastructure Grant (MIG). In addition, municipalities should be encouraged to see how they could make use of the R85 billion, which will be provided by the South African Banks over a period of three years to finance infrastructure development in rural areas.

In addition, DWAF administers a R1.2 billion grant over the next three years that would go into the eradication of the bucket system.

• Transfer of Water Schemes

Although transfers of water schemes have been completed in certain areas, other areas are lagging far behind. DWAF had to complete these transfers this financial year (2005), but could not do so. DWAF has therefore requested from Treasury to complete the transfers by 2006.

To what extent have municipalities and local government implemented the NWRS?

Water losses remain a challenge. The impact and cost of such water losses must be quantified by municipalities, but they do not appear to have the requisite capacity to do so. Will DWAF intervene in this process?

How has DWAF monitored the progress of the establishment of Catchment Management Agencies. What were some of the encountered problems? How are these being addressed?

The Committee, in collaboration with DWAF should monitor progress made by municipalities in making optimal use of the MIG so that the bucket system, and pit latrines, so commonly used in rural areas can be phased out.

Municipalities should be encouraged to see how they can use the R85 billion, which will be provided by the South African Banks over a period of three years to finance infrastructure development in rural areas.

The transfer of water schemes should be completed, and DWAF needs to provide a detailed progress report regarding the transfers.

How is DWAF playing a role in facilitating and educating municipalities, and local government in capacity building programmes?

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.

The two main components of programme 1 are corporate services and financial administration.

The Corporate Service component achieved the following:

• Human Resource Development:

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

• Human Resource Management: The pension management process was strengthened and the Performance Management and Development Strategy was implemented. Increased support to restructuring process in line with Resolution 7 of 2002.

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

• Administration: The Unit is subdivided into district 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 were compensated. Land is being acquired for the raising of the Flag Botshelo Dam. The acquisition should be finalised by end October 2005. Approximately, 36 applications for development around 2006.

The Financial administration worked toward the following:

• The department budget was simplified by restructuring from 8 programmes to 4, thus making management and accountability clearer. The Branch was able to implement the provisions of the Public Finance Management Act (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.

The purpose of water resources management is to ensure 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.

The National Water Act (36 of 198) replaced previous legislation with an equitable system of administrative authorizations to use water, and Government became the public trustee of the nation’s water resources. The Department is responsible for administering all aspects of the new Act, and for the development and implementation of related policies, strategies and regulatory instruments. It is also responsible for planning, developing, operating and maintaining the water resources management infrastructure owned by the state, and for overseeing the activities of all water management institutions. The role will change over time, as 19 new regional water management institutions – catchment management agencies are established. The creation of a national water resource infrastructure agency is also being considered to manage existing national infrastructure and to develop new infrastructure.

The main achievements in Programme 2 as highlighted in the 2005 Annual Report reflect the following:

• The National Water Resources Strategy was established in January 2005.
• The process of establishing new international, national and catchment-based water management institutions progressed during this period, and moved the Department towards its ultimate role of sector policy maker and regulator.
• A number of international developments and agreements regarding studies and establishment of joint basins were concluded.
• The process of separating the management and further development of national water resources infrastructure from its other activities with preparations for establishing a new Infrastructure Branch with effect from 1 April 2005. The establishment of a new public entity – the National Water Resource Infrastructure Agency commenced and will be considered by Cabinet early in the next financial year.
• Ten new water user associations 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 and Van der Kloof – but there were other 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.
• The fourth consecutive year of sub-normal rainfall throughout most of the country necessitated continuing support to municipalities to deliver water services where sources – especially groundwater sources had failed or were failing.
• A five-year plan was developed to facilitate the integration of all aspects of water resources monitoring, covering the quantity and quality of surface and groundwater. This was complemented by the development of improved methodologies to determine groundwater recharge, potential and use, and groundwater interactions with surface water.

The key outputs and service delivery trends as mentioned in the Annual Report also highlight the actual performance of this programme. The actual performance column in the Annual Report is an important quantitative indicator of progress made in Programme 2. For Programme 2, the actual performance, highlights, amongst others, the following:

• Subsidies granted to four groups of farmers.
• Draft Policy for Water Allocation Reform for South Africa to achieve equity in access to the use of water resources finalised after consultation with key stakeholders.
• Models are being set up for five catchments – modeling will be done during compulsory licensing.
• Internal Strategic Perspectives (departmental forerunners of catchment management strategies) completed for all 19 water management areas.
• Validating of registered water use and verification of claimed existing lawful use substantially completed in the Vaal Catchment, and commenced in the Mhlathuze.
• Commitments to bulk water users and water boards met.
• 142 500 hectares of invasive alien vegetation cleared.
• About 12 000 person years of employment provided.

The purpose of Programme 3 is to ensure that effective, efficient, sustainable and affordable water and sanitation services are provided to the people of South Africa, as well as economic users.

In 2004/05, the Department continued to move from its role of construction and operation of water and sanitation services to its regulatory role. This is indicated in the budget allocation for its Capex-programme from an all time high during 2003/04 of R1505,371 million (including donor funds) to R587,018 million for 2004/05, reducing even further to R388,873 million during 2005/06 and to R140,963 million for 2006/07. This function has been taken over by the Municipal Infrastructure Grant (MIG) programme.

On Operations and Maintenance, 95 schemes out of a targeted total of 317 have been transferred out of DWAF, representing an annual budget amount of R124,370 million.

During 2004/05, the sector leadership role was taken forward through programmes including free basic water, Masibambane, participation in the MIG programme and other support to Local Government. Many Water Service Authorities (WSA’s) benefited from DWAF support through advice/support services from the regional offices.

The 2005 Annual Report in its overview of access to basic services, states that:

The main achievements in Programme 3, Water Services, as highlighted in the 2005 Annual Report reflect the following:

• Achievement of an important milestone in service delivery – the provision of safe drinking water to the 10^th millionth person since 1994. The sector has also achieved the Millennium Development Water Supply goal by halving the backlog since 1994. it was also the first year that the bulk of the capital funds for basic services were allocated directly to municipalities through the Municipal Infrastructure Grant (MIG) – the MIG allocation being R2,3 billion (R1,5 billion allocated for water supply and R0,8 billion for sanitation). The Department has thus focused on its new role of sector leader with responsibility for policy, regulation, information and support.
• Regarding the capital programme, DWAF’s core focus was to ensure municipal compliance to MIG project conditions, to support municipalities in the eradication of service backlogs, and the provision of sustainable services.
• The Department continued to promote the eradication of the bucket system and to replace it with more dignified and appropriate types of sanitation services. R1,2 billion, in addition to the existing MIG allocation, has been negotiated and committed over the next three financial years to ensure that the bucket system is completely eradicated.
• Good progress was made on implementing the Strategic Framework for Water Services, as approved by Cabinet on 17 September 2003, especially on the development of Institutional Reform and Regulatory strategies. The process of Institutional Reform has proved to be especially challenging.
• The new Water Services Regulation Directorate produced a first draft of the National Water Services Regulation Strategy, which will be put through a rigorous internal and external consultation process during the next period.
• As reported in the State of the Water Services Sector, there is justified concern over the quality of water supply and sanitation services at municipal level, especially around drinking water quality and reliability of service. This highlights the importance of the regulatory function and systems.
• The implementation of Free Basic Water services programme went well. Approximately 95% of municipalities are now supplying FBW to all or part of their municipal population. This translates to 69% of the total RSA population. The programme is making a huge difference to the poor (households with less than a R1000 income/month). In total, 23 million poor get their basic water free of charge. The Department’s provincial support units are still assisting municipalities with the implementation of the policy.
• A Free Basic Sanitation policy has been drafted, and it is hoped that as soon as it is approved, a formal FBS programme will be rolled out.
• Health and Hygiene education and promotion continued to be part of the Department’s Water and Sanitation programme and efforts were to embed it into the MIG projects implemented at municipal level. The Departments of Health, Housing and DWAF have developed a health and hygiene package that will not be part of Housing Customer Care programme.

• Transfers continued to take place within the Joint Policy position and there has been consistency in the implementation of the policy since adopted by the Inter Departmental Transfer Committee. Assets with a present day value of R1250 million have been transferred since the inception of the programme. In most cases, associated staff were also transferred or seconded to Local Government or relevant receiving institutions. A further 30 agreements have to be concluded by March 2006.
• The oversight role played by the South African Local Government Association (SALGA), DWAF, DPLG and National Treasury helped to ensure that transfers happen within the agreed framework. In terms of the programme which includes the Division of Revenue Act, all transfers should be effected by 30 March 2006, with all conditional grants (subsidies) phased out by June 2011 at which stage, the conditional grants will be incorporated into the equitable share allocations to local government.
• The Department of Public Service and Administration (DPSA) issued a circular on the transfer framework to facilitate the transfers of personnel between spheres of Government.
• DWAF is working on a number of initiatives to ensure that the transition period following a transfer is as smooth as possible, including the drafting of an ‘after-care’ framework for staff who were transferred from DWAF.

The key outputs and service delivery trends as mentioned in the Annual Report also highlight the actual performance of this programme. The actual performance column in the Annual Report is an important quantitative indicator of progress made in Programme 2. For Programme 2, the actual performance, highlights, amongst others, the following:

• Basic water supply was provided to 1,51 million people.
• Sanitation facilities were delivered to 1,3 million people. This was more than 300 000 households.
• The MIG allocation for water supply amounted to R1 501 million and the DWAF Water Services Supply budget was R352 million. The MIG allocation for Sanitation services amounted to R778 million.
• 9 100 bucket type toilets were replaced by either VIP’s or water borne units in the Free State. R1,2 million, in addition to the existing MIG allocation, has been negotiated and committed over the next three financial years to ensure that the bucket system is eradicated completely.
• 95% of municipalities have reported the implementation of a FBW policy and FBW reaches 75% of the population served by infrastructure.
• The monitoring and oversight role of DWAF for Water Boards continued through a formal evaluation process, including appraisal of Policy Statements and Business Plans.

The Department promotes the sustainable management of South Africa’s indigenous and commercial forest resources. It aims to ensure that commercial plantations are regulated and managed in a sustainable manner to promote investment, employment, competition and black empowerment, as well as rural development. It seeks to ensure that there is an effective system to monitor, regulate and manage the protection and use of South Africa’s indigenous state forests.

The 1996 White Paper on Sustainable Forest Development focused on the transformation of the forest sector to serve the needs of South Africa and its people. The National Forests Act (84 of 1998) and the National Veld and Forest Fires Act (101 of 1998), which followed, impact on the work of the Department. A great deal of attention has been focused on the restructuring of the forests and plantations run by the Department. The process of disposing of the category A or large and economically viable plantations is largely complete. The disposal included substantial elements of black economic empowerment.

The main achievements in Programme 4: Forestry, as highlighted in the 2004/5 Annual Report reflects the following:

• In terms of Plantation Forests, two leases of state plantations were concluded during the 2004/05 financial year. These lease transactions are part of the restructuring of SAFCOL, which, it is anticipated, will be finalised during 2005/06 with the conclusion of the Komatiland forestry lease, which has been delayed while the proposed transaction is considered by the Competition Commission.
• The transfer of the Department’s remaining plantations has not progressed due to a number of challenges posed by the need to reach agreement with key stakeholders.
• The plantations have been re-grouped into management clusters reflecting their forestry potential in the context of their transfers to communities. These assets represent an important opportunity for strengthening and re-generating local economies and to achieve the objectives of BBBEE.
• In terms of indigenous forests, an important aspect was the finalisation of the delegation to SANParks of the management control over approximately 97 000 hectares of State Forest land.

The key outputs and service delivery trends as mentioned in the Annual Report also highlight the actual performance of this programme. The actual performance column in the Annual Report is an important quantitative indicator of progress made in Programme 4. For Programme 4, the actual performance, highlights, amongst others, the following:

• Revenue increased by 20,5% from 2003/04 from R39, 795 million to R47, 934 million.
• A report is due in May 2006 on staff profiles.
• The policy on transfers of indigenous approved.
• All audits of leased plantations conducted.

* The actual performance column in the Annual Report is an important quantitative indicator of progress made by DWAF.

* A detailed reading of the actual achievements for programmes could provide the Committee with sufficient information to undertake its oversight functions.

* Questions on each of the actual performances could be asked, and a systematic programme could be set on each of the listed performance mentioned.

* Although the Annual report provides further detail on the number of people receiving access to basic water supply, water tariffs, water boards, etc. the report is silent on the challenges faced by various sectors in working toward implementing policies to provide basic water and sanitation to all citizens.

* Although all programmes summarise the achievements, no mention is made of the challenges encountered at various levels. The document is silent on the mechanisms that DWAF or local government or municipalities would use to address the real concerns of people who need access to these services.

* No mention is made of whether studies on creating a national database of service providers to all 9 provinces, which would account for each household. No mention is made of empirical studies, undertaken by DWAF or municipalities to engage the level/degree of satisfaction of services by people.

* No mention is made on the manner in which DWAF would monitor and evaluate progress made in delivery of services.

* Water losses remain a challenge. The impact and cost of such water losses must be quantified by municipalities, but they do not have the requisite capacity to do so.

* In many instances, the outputs detailed in the Multi-Year Strategy Plan 2004/05 – 2005/06 and the Annual Report correlated.

* None of the outputs or actual performance input in the Annual Report highlights the challenges confronted by DWAF itself or entities in fulfilling its mandate.

* DWAF interacts extensively with the Portfolio Committee on Water Affairs and Forestry in Parliament. This is not reflected in the Annual Report. It is a serious omission, as the Portfolio Committee provides a useful oversight function over DWAF, and its entities.

* In providing information on the Main Achievements of programmes, sentences are far too long and convoluted. This detracts from the core issues that need to be raised.

* The report does not provide sufficient information that would allow a picture of how DWAF, local government and other stakeholders are working to concretise its stated vision.

* The 2004/5 financial year was the last one in which DWAF provided water services. The 2005/6 AR should therefore reflect the transfer for water services to municipalities under the Municipal Infrastructure Grant (MIG). This means that reference would have to be made to DWAF as sharing responsibility for regulating service delivery by ensuring that municipalities are: properly focused on ending the backlog in sanitation and water supply; adequately capacitated to deal with service delivery;

adequately supported to ensure maintenance of equipment while still providing people access to clean water.

Related to the above, the issue of how the transfer of services to local municipalities may affect reporting to parliament

Related to the role of DWAF in guiding and supporting the development and roll out of the MIG process, it is important to note that the achievement of DWAF’s stated KPIs depends on how successful the local municipalities are in delivering services. The 2005/6-2006/7 multi-year SP refers to (on page 25) this as "well established, supported and maintained". This must be interrogated. ANC MPs need more detail of the manner in which this process is unfolding. "Well established, supported and maintained" does not allow the DWAF to share with ANC MPs the problems and challenges that is emerging from this multi-level, inter-departmental process.

There is unfortunately, in these documents, no an indication that particular areas have been identified as having greater needs than others. This, in spite of the fact that there is a greater need in under-serviced areas of our country in urban, peri-urban and rural areas.

It is within Programme 1, Administration, that much of the challenges to re-arrange DWAF in appropriate ways to ensure deep transformation, that the challenges lie. The challenge faced by DWAF has to do with the maintenance and transformation of a government department. Maintenance suggests stability and maintaining the status quo. Transformation on the other hand suggests action and a deliberative drive to re-arrange and restructure into another form. In the case of DWAF, these seemingly contradictory aspects of DWAF’s processes at this time have to happen for the purpose of achieving the same developmental objective: that of ensuring that services are regulated properly and rolled out efficiently and decisively to ensure transformation of areas where they previously were non-existent. In short, these types of contradictions have to be managed within the department to ensure that South Africans’ lives are improved and its economy is consistently developing.

DWAF has to maintain a high level of managing water as resource, regulating service delivery and maintaining the affairs of water and forestry in the country. It does this while simultaneously restructuring its programmes, sub-programmes and branches in order to ensure that human resources are efficiently utilized. It is within the ambit of DWAF’s programme of Administration that the tension between maintenance of the system and its transformation and restructuring is situated. This has to be managed across DWAF’s three line-function programmes (water resource management, the regulation of service delivery and regulation of forestry) as well as between different levels of government and other relevant departments of government.

In some cases it involves a process of staff having to be re-positioned and placed within appropriate sub-programmes or across to other departments to deal with, for example, the transfer of water services to the local government sphere. It is, however, the same staff whose morale has to be kept up, who has to be capacitated and developed in spite of the unpleasant effects of being re-positioned elsewhere along the restructuring of DWAF.

This aspect of restructuring must not be ignored or under-estimated. The sub-programmes of Labour Relations, Restructuring and Organizational Management Support are key areas in which the maintenance of the system and restructuring plays itself out. The AR does not provide sufficient particularities in its details. For example, it uses the broad Public Service Labour Relations Sector as a measuring stick to proclaim that its management decisions affecting DWAF employees were "fair and above average". This does not provide a useful enough idea of the intricacies involved in restructuring that lies ahead. It is hope that the 2005 AR and its multi-year Strategic Plan dated 2005/6-2007/9 will provide detail that gives more serious consideration to the complexities involved.

* The National Water Resources Strategy has been adopted by government to guide municipalities and local government on how to better manage water resources in South Africa. Municipalities and local government need to implement the NWRS with all urgency.

* The Water Resources programme has cooperated with the Departments of Agriculture to put in place an effective support programme for agriculture, focusing on the needs of emerging farmers. This needs to be evaluated and monitored.

* The restructuring in the DWAF further has to do with transforming it from service provider (of water in the case of Programme 3, Water Services) or manager (of Forests in Programme 4, Forestry) to being the regulator of these line functions. That requires the transfer of equipment, expertise, and information and in some cases staff to appropriate positions at other levels of government or the department. It also means that such transfers require interesting but crucial inter-departmental and multi-level government cooperation. DWAF, the Department of Provincial and Local Government (DPLG), South African Local Government Association (SALGA) and Treasury as well as key Departments such as Education (DoE), Health, Housing and in some cases Public Works, are involved.

Rather than to just list the effects of the restructuring exercises as achievements, it would be useful for the department to provide the Portfolio Committee with a detailed picture of the process and the intricacies involved in them in each of its four programmes and sub-programmes It is important to reflect on this as a process. We understand that it is broken up in the AR and SP into units that can be managed, but that in actual practice it is an on-going process. It is important so that the AR would include reflection of challenges involved in giving effect to the restructuring effort at other levels of government and society. In this way, the collective can be on the same level and challenges that may arise in the future can be strategically anticipated. Related to this, the issue of transferring delivery of services to water services authorities (WSAs) at municipality levels has to be identified as one that will for the foreseeable future have effects on the DWAF structures as well as its annual audits. It will also have an impact on attempts to transform the department and populate it with much needed skilled personnel in key areas.

Under Programme 4, the movement of indigenous forests and plantations out of the DWAF’s functional areas will also reduce staff numbers and result in the increase of its budget to ensure the transfer and redeployment process.

No main achievement for forestry was recorded in the Annual Report. Instead there appears to be a mismatch of information on page 35, as it contains the same information as the main achievements of the water resources management.

The Department’s total expenditure for the 2004/05 financial year amounted to R7, 791 billion. For the past two years, their spending level was approximately 99%. Two of their four financial statements, the Water Trading Account and Equipment Trading Account, received qualified reports from the Auditor-General. A turnaround strategy to address these shortcomings was developed.

In 2004/05, the Department continued to move from its role of construction and operation of water and sanitation services to its regulatory role.

Water Services

A reduction in the budget allocation for its Capex programme indicated that from an all-time high during 2003/04 of R1505, 371 million (including donor funds) to R587, 018 million for 2004/05, reducing even further to R388, 873 million during 2005/06 and to R140, 963 million for 2006/07. This function has been taken over by the Municipal Infrastructure Grant (MIG) programme.

On Operation and Maintenance, 95 schemes out of a targeted total of 317 have been transferred out of DWAF, representing an annual budget amount of R124, 370 million.

The programme to transfer the water services works that it currently owns and/or operates to the relevant water services authorities has made good progress. In terms of the programme, which is included in the Division of Revenue Act, all transfers should be effected by 31 March 2006, with all conditional grants (subsidies) phased out by March 2012 at which stage, the conditional grants will be incorporated into the equitable share allocations to local government. By the close of the financial year, transfers had been made to 25 of the 55 Municipalities affected with assets transferred valued at R1, 250 million.

Sanitation

In the area of sanitation, an additional ring-fenced funds amounting to R1, 2 billion were included in the MIG for a three-year programme commencing in 2005/06 to eradicate the bucket system.

Spending Trends

The Annual Report maintains that the underspending in this programme should not impact on service delivery. The reports states that the saving is due to delays in the transfer of staff to municipalities due to protracted negotiations with receiving municipalities, and funds will be rolled over to the 2005/06 year.

The report maintains that the impact of underspending in this programme should not impact on service delivery. The report notes that due to the Bohlabela Municipality responsible for this emergency project, it was unable to make sufficient progress in the short time between the allocation of funds, and for the end of the financial year to enable the Department to transfer the funds to them. Contracts were concluded and orders placed, but the deliveries and/or payments could not take place before 31 March 2005.

No impact on service delivery.

No impact on service delivery.

2. Financial Components as Highlighted by DWAF’s Presentation

1. Report of the Auditor General on the Financial Statements

Vote 34: Exchequer Account – unqualified audit. Emphasis of matter in respect of:

• Asset and inventory management.
• Internal controls.
• Value for money audits with regard to management of fleet services and the outsourcing of information systems.
• Information systems audit of the network security.
• Late submission of the audit report.

Water Trading Account: Disclaimer of audit opinion. Qualifications in respect of:

• Financial statements.
• Property plant and equipment.

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

Equipment Trading Account: Adverse audit opinion. Qualifications in respect of:

• Property plant and equipment and related depreciation.
• Retained earning.

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:

• Operation of the National Forest Recreation Trust.
• Progress with previous Standing Committee on Public Accounts (SCOPA) resolutions.

1. Annual Financial Statements: Financial Management Improvement Plan

The 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 the Audit Committee.

• Addressing previous audit queries.

A key issue that arose from the hearings is the importance of collaboration and cooperation amongst stakeholders, levels of government and the people to whom the services must be rendered.

Transfers are not as effective as should be and for the Annual Report to claim that delays in the transfer of staff to municipalities would not impact on service delivery is misleading. The spending trends and explanations given for under spending was unacceptable to the Committee, and raises issues of the extent to which the Department is evaluating or monitoring the progress made by municipalities on the delivery of services.

While the Portfolio Committee noted the comments made by the Director-General to effect turnaround strategies to address problems with qualified reports, the Committee raises strong concerns that the financial component of DWAF has not been resolved in the last six years.

• Trans-Caledon Tunnel Authority (PFMA Schedule 2 Major Public Entity)

No grants are made to the Authority, as it is funded from income on tariffs levied on the sale of water and other loans. Where other parties benefit from services provided, the TCTA is empowered to recover the costs of such services.

• Water Research Commission (PFMA National Public Entity Schedule 3 – Part A)

No grants are made to the Commission as its work is funded by a levy on water users.

• Water Boards (PFMA National Government Business Enterprises Schedule 3 – Part B)

The water boards were established as water service providers that report to the Minister of Water Affairs and Forestry. The primary function of these boards is bulk water service provision within their supply areas. Water Boards have been set up to be financially independent institutions. In terms of section 34(1) of the Water Services Act, water boards must strive, amongst others, to be financially viable. In this respect, they are required to repay and service their debts; recover their capital, operational and maintenance costs, make reasonable provision for depreciation of assets, recover the costs associated with the repayment of capital from revenue over time; and make reasonable provision for future capital requirements and expansions.

The impact of their financial performance on the Department has therefore been limited. Apart from providing seed funding for some of the newly formed water boards and operating subsidies, where they have undertaken specific functions on behalf of the Department, the Department has only in exceptional circumstances had to provide financial assistance to some of the water boards.

• Komati River Basin Water Authority

The Komati River Basin Development Project is a joint development between South Africa and Swaziland in terms of the treaty on the development and utilisation of the water resources of the Komati River Basin, ratified in 1992. In terms of the treaty, funding of project costs is guaranteed by the South African government and the Department is responsible for payment of these costs.

• National Forest Recreation and Access Trust

The only source of revenue for the Trust is interest earnings.

• Grants to Municipalities: Reasons for Transfer Payments

Transfer payments are made to municipalities in accordance with the exit strategy of the Community Water and Sanitation Programme from the department to Local government as detailed in the Division of Revenue Act. Transfer payments are made to ensure that Local Government have funds to implement those projects identified in Water Service Development Plans (WSDPs).

• Glukstadt Irrigation Board

The Glukstadt IB defaulted on a loan to Land Bank, guaranteed by DWAF as well as a state loan granted in the 80s. The Land Bank obtained a judgement against the Irrigation Board, but was unable to recover anything, as the board had no assets. Land Bank demanded the final settlement payment from DWAF.

• Impala Water User Association

DWAF had to pay shortfalls in instalment repayments as a result of some members of the Impala WUA refusing to pay their instalments on a loan taken from Rand Merchant Bank. The loan is guaranteed by DWAF for an amount of R150 million. The basis of their refusal is a challenge to the National Water Act. The case will be heard in the Court of Appeal during November 2005. Also included in the above is an amount of R553 104, which is DWAF’s contribution to cover its agreed portion of the legal cost for the various court actions.

• Kalahari East Water User Association (WUA)

Kalahari East WUA obtained a Land Bank loan in 1989 amounting to R77, 4 million guaranteed by the Government. The above portion of the loan had to be written off for which National Treasury made funds available.

• Blyde River 800

Payments of interest on the portion of the Land Bank loan allocated to Blyde 800 project, which will provide opportunities for high value irrigation farming for historically disadvantaged farmers.

• Lower Blyde River Water User Association (WUA)

The WUA defaulted on a loan taken from Land Bank, guaranteed by the Government. In order to prevent interest accumulating at some R250 000 per month, it was decided to settle the loan, but to continue with legal action against the WUA to recover the outstanding debt.

• Kanon Eiland Water User Association (WUA)

Judgement was granted against the WUA for the settlement of a debt of R12 million, guaranteed by the Government. The judgement could only realise half the amount owed and DWAF was asked to honour the balance in terms of the guarantee.

1. Water Boards

In terms of the role of water boards, the committee requested that submissions focus on its role in service delivery, with a specific focus on delivery of services to the poorest of the poor. The following targets were used as a guideline to inform the discussions:

• Water supply to all South Africans by 2008.
• Functioning basic sanitation by 2010.

In 1997, the Amatola Water, a state owned entity, was created to render bulk water supply services within its area of authorisation. This includes the Amathole District Municipality and portions of the Chris Hani, Ukhahlamba and Cacadu District Municipalities in the Eastern Cape Province. Currently, AW renders primary service of bulk water provision to the local municipalities of Buffalo City, Ngqushwa, Nkonkobe and Amahlati located within the Amathole District Municipality. AW manages water services assets to the value of R250 million that can produce a total of 102.74 megalitres per day. Secondary services that include technical, financial, institutional and environmental services are rendered throughout the Eastern Cape Province on a project-by-project basis.

In terms of the provision of water supply to all South Africans by 2008, AW noted the following direct benefits to the poor:

• In the 2004/05 financial year, 21.36 million kilolitres of potable water was produced. Of this, an estimated 24% benefited rural poor households in the local municipalities, mentioned above. The distribution of the remaining 76% of the potable water is not within the control of Amatola Water, but can be sourced from the respective municipalities that received the water.
• Water service capital projects to the value of approximately R81 million for the Amatola District Municipality, of which 85% focused on the elimination of the water backlog, and upgrading existing water infrastructure. This function benefits the poor through the delivery of water services in an efficient, cost effective and professional manner. Amatola also supports the District Municipality to utilise its limited human resource base more effectively for all its functions.
• Consumers benefit directly from Amatola Water’s capital expenditure programme.
• There is a continuous awareness programme via radio programmes, school tours and National Events.

In terms of the indirect benefit to the poor of water supply by 2008, the following was noted:

• Amatola has been appointed by the Chris Hani and Amathole District Municipality to provide a transfer management service to the Municipalities for the transfer of assets and staff from the Department of Water Affairs and Forestry, for the water service provision function.
• Strategic planning is a continuous process at Amatola Water. This component of planning ensures that Amatola Water is always aligned with the service delivery vision of the Water Service Authorities it serves. This alignment is vital to the effective utilisation of limited financial and human resources.
• The Working for Water Project is a multi-faceted programme to ensure South Africa’s water resources are maintained. AW has been involved in the programme through the eradication of water hyacinth on the Laing Dam, Wriggleswade Dam and Kubusi River in the Amathole District Municipality in 2004/05.
• A crucial factor in service delivery is working relationships between key role players and Amatola participates in strategic forums such as the South African Association of Water Utilities and the Integrated Water Service Management Forum of the Eastern Cape Province.
• Training is a key tool in achieving one of Amatola’s corporate values.

The water scheme was constructed during the 1970s, and the Board came into existence in 1982. The scheme consists of an extraction point on the Orange River at Henkries Mouth, purification works at Henkries, a booster pump station at Doringwater, and approximately 130 kilometres of pipeline, which gravitates to Springbok. Another 120 kilometres of pipeline stretch from Springbok to Kleinzee.

The Board is a bulk supplier of water to the Nama Khoi Municipality. The communities served are the Steinkopf, Okiep, Concordia, Nadabeep, Bulletrap, Carolusberg, Springbok and Kleinzee. The estimated total population is approximately 50 000.

The total water sales per annum is the following:

• 1.9 million kilolitres amounting to 160 000 kilolitres per month.
• Raw water supplied to Dadelryk at Henkries is at a total of 77 243 kilolitres per annum.
• The total water sales amounts to R6.5 million per annum.
• Total income is R7.4 million and total expenditure is R8.6 million.
• The current water tariff is R2.99 + V.A.T.
• The budget budgeted for the deficit as its contribution to keep water affordable for the poor consumer. The deficit was funded through surplus funds of the Board.

The composition of the Board is as follows:

Initially, there were 8 Board members, but currently, there are only 5 members. The term office of the Board expired, but the Minister granted an extension of the term of office to afford Nama Khoi Municipality the opportunity to conduct a section 78 assessments. Nama Khoi Municipality will thereafter be the water service provider. Namakwa is one of the smallest boards in the country. The workforce consists of 32 personnel, of which 5 are women.

The upgrading of water networks of 7 kilometres of pipeline between Henkries and Doringwater at a cost of R7 million, financed by a loan from the Development Bank of South Africa. At completion, the pipeline will increase the supply capacity of the network.

The following challenges were noted:

• Upgrading of the existing old pipeline (Eenriet – Okiep).
• The maintenance of infrastructure.
• Possible expansion of the pipeline to supply water to Kamiesberg.
• Control of pollution that occurs upstream.
• The pumping costs are high.
• Need to reduce water losses and pipe bursts.

Magalies Water is a state owned Water Board providing a wide range of related water and sanitation services and operates in four provinces that include Gauteng, Limpopo, Northwest and Mpumalanga. The area of operation is in the extent of 34000 kilometres. The Board of Magalies Water was originally established by Government Notice 234 of 1969, with various subsequent amendments to both its name and area of supply.

In 2004, Magalies experienced growth and moved in the areas of service delivery, especially the Bulk, Scientific Services and Retail Operations. Magalies Water provides water services to a wide range of stakeholders that include municipalities, urban, peri-urban, rural communities, mines, state entities and commercial industries across an area of 34 000 km² in four provinces. Magalies Water manages approximately 35 000 individual households under contracts from the municipalities.

The overall business performance (2004/2005) reflected the following:

• Exceeded several of the Key Performance Benchmarks and targets that it set for itself in 2004/05. These benchmarks were attained in areas such as water quality, revenue, and debt management. The challenge however, still exists as far as cost recovery in the retail environment is concerned. Further initiatives are constantly being pursued with Municipalities in order to jointly deal with cost recovery whilst ensuring continuous provision of water to affected communities and consumers.
• The management of rural, urban and peri-urban schemes, involving internal reticulation, constitutes the Retail Operations of the Board. An agreement has been reached with the City of Tshwane Metropolitan Municipality for the provision of all retail services within the areas of Temba/Hammanskraal. The board assists the Local Municipalities with tariff setting and development of bylaws.
• Magalies water, together with ABSA and Bigen Africa successfully concluded a contract with the Rustenburg Water Services Trust, for the provision of bulk sanitation and potable water services functions on behalf of the Rustenburg Local Municipality. In respect of bulk sanitation services, Magalies Water manages the operation and maintenance functions of the Rustenburg Sewage Treatment Works and the Boitekong Sewage Treatment Works.

Mhlathuze Water focused on strategic alliances that would provide solutions through sharing of expertise and resources in a sustainable manner. Their competencies included programme management, technical support on management of bulk and retail water and sanitation schemes, water quality management and corporate governance.

Mhlathuze Water served five areas: City of uMhlathuze (Richards Bay), uThungulu District Municipality, Ilembe District Municipality, uMkhanyakude District Municipality and Zululand District Municipality. Their regional initiatives involved implementing projects for the Department of Water Affairs and Forestry. They had thus far implemented schemes reaching 470 000 people. They were also involved in two projects to reach a further 30 000 people. This project was still awaiting approval.

The following challenges were noted by Mhlathuze Water:

• Lack of sharing experience.
• Unreliable water resources.
• Some areas are difficult to service.
• Sanitation had not been part of their planning.
• Seasonal droughts in Mlubatuba posed further problems in servicing the region.

Mhlathuze Water forwarded the following recommendations:

• Municipal structures needed greater capacity.
• A more proactive role should be played by Sector Education and Training Authorities (SETAs), and the Department of Water Affairs and Forestry had to do more work on the free basic water scheme.
• A new national initiative was needed to encourage consumers to pay for water services above the free limit.

Sedibeng Water maintained that their long-term strategies for sustainability were reflected in their annual report, and these had shown progress on all strategic imperatives. The Board achieved cost savings of 20% on their budget, but their revenue declined by 7% due to a reduction in water demand and unpaid equitable shares. The Board had achieved a net surplus of R13,8 million. The maintenance expenditure went 1% over budget and capital expenditure amounted to R14,2 million.

Sedibeng noted that the maintenance of water quality was at Class 1, except for periodic colour, iron and manganese concentrations. Water quality could be improved to meet Class 1 standards at 95% of the time, but the cost implications would be enormous for consumers.

Customer satisfaction had been maintained through weekly interactions with ward committees and an improved response time and reduction of interruptions. This had led to a reduction in complaints. They also had a customer satisfaction monitoring system in place.

Sedibeng assisted in water and wastewater testing and analysis. They also had an HIV/AIDS awareness campaign and provided anti-retroviral treatment, which began in March 2005. Sedibeng was environmentally conscious in that there was a constant monitoring of discharges. Corporate social investments had amounted to R1, 5 million, and concentrated on food parcels, donations to schools and orphanages and learnerships.

The Board provided bulk water services, and its primary focus was the implementation of projects on behalf of the Department of Water Affairs and Forestry, and relevant municipalities in Ukhahlamba District Municipality (Eastern Cape), and Mangaung Local Municipality (Free State). As implementing agents, they were responsible for the preparation of business plans, procurement of service providers, and ensuring implementation. Their role in service delivery consisted of providing access to water services, community participation and training and empowerment.

In the Botshabelo, Thaba Nchu and Mangaung municipalities, Bloem Water paid R6,1 million in local labour salaries and provided temporary jobs to 226 individuals per month. In the Herschel Rural Water Supply programme, total salaries paid to local labour amounted to R9, 84 million, while employing 132 individuals on average per month.

On the issue of training and empowerment, Bloem Water had paid R400 000 toward accredited training in the Botshabelo, Thaba Nchu and Mangaung districts. R34 million was paid to local emerging contractors. The Hershel Rural Water Supply programme provided on-site skills training to 9 504 labourers. Total training costs amounted to R500 000. Selected community members were also trained in pump station operation and maintenance.

Bushbuckridge Water Board was established in 1997 in accordance with the Water Services Act, Act 108 of 1997. Their primary responsibility is the provision of bulk water services to other water service institutions. Busbuckridge currently operates in Bohlabela District Municipality, and parts of Mbombela Municipality area (serving approximately 1, 2 million people).

Bushbuckridge Water highlighted the following areas of services and some of the encountered challenges:

• The socio-economic profile of the service area is characterised as rural small villages and dense villages with total population of 826 000 and 374 000 people, respectively.
• The present water supply systems comprise ground water, river schemes and treated water supply.
• Service levels vary from village to village, from RDP house connection with waterborne sanitation.
• The drought has intensified over the past 5 years, and this has negatively affected both ground and surface water resources.
• Cost recovery for services rendered remains a huge challenge, and therefore DWAF subsidies play a major role in sustaining water supply to communities.
• Equitable distribution of available potable water is still a challenge due to unauthorised connections, growing water demand, and capacity constraints related to infrastructure.

The activities in achieving the 2008/10 targets in the development of infrastructure comprise the following:

• Refurbishment of boreholes (R20m) targeting a population of approximately 250 000 people in the Bushbuckridge area.
• Upgrading of Hoxane water treatment works (62m) from 26 Ml/day in order to reach the communities of Nsikazi North (200 000 people) and parts of Bushbuckridge South (150 000 people).
• Construction of the 45 km transfer pipeline to convey treated water from Inyaka works further north up to Acornhoek.

The activities in achieving the 2008/10 targets in operations, maintenance and distribution, comprise the following:

• Operations and maintenance are conducted such that production costs are minimised while maximising quantity without compromising quality.
• The total average monthly volume of water produced and distributed to the population of 1, 2 million people indicates a projected water use of 100 litres/ca. per day. In reality, this is not the case, as BWB developed equitable distribution plans for Nsikazi and Bushbuckridge areas.
• The average monthly cost for Operations and Maintenance currently stands at R2, 7 m.

The major threats/opportunities facing service delivery comprise the following:

• The incorporation of the Bushbuckridge area to Mpumalanga Province will open up opportunities for BWB with regard to extending the customer base.
• Poor recovery of costs for services rendered results in lack of budgets to implement capital projects (refurbishment, realignment of schemes for optimal use).
• The intensifying drought affecting surface and underground resources leaves BWB with no option but to fast track the development of the Inyaka and Hoxane Regional Schemes.
• Lack of guaranteed operational grants/subsidies relating to operation and maintenance threatens service delivery.
• Delays in signing of water services provider agreements with water services authorities impacts on service delivery.

Some recommendations highlighted by Bushbuckridge encompassed the following:

• Sustainability of water services hinges on effective and efficient management of the services through optimisation of all resources to minimise operating costs and loss while maintaining a good quality product.
• Targets can only be achieved if all spheres of government cooperate in the development of sustainable water services.
• The activities toward achieving the targets must be undertaken in an integrated and sustainable manner so as not to deplete/degrade the environment.

Rand Water services the Gauteng, portions of the North-West, Mpumalanga and Free State Provinces. Rand Water has embarked on the following three-pronged strategy to attain service delivery in water and sanitation:

• Addressing backlogs in water and sanitation services in its area of service and beyond.

Rand Water has embarked on a prorate that has the following objectives:

• Understand the inadequacy of water service provision in clearly defined areas within and in areas that are in close proximity to its areas of service. This means gathering data on the following:

• Population numbers, household sizes, personal income profiles and employment status – all derived from the national census data.
• Status quo access to water and sanitation in terms of set norms and standards.
• Municipal ability to extend coverage.
• Bulk infrastructure availability.
• Growth projections – population growth and demand growth.
• Assessment of Rand Water’s current ability to provide bulk water services.

Once this information has been collected and analysed, Rand Water would have a scientific basis for making practical proposals on how it could, in the medium term, that is, over the next 3 – 4 years extend the coverage of water and sanitation services to all the people within, and in areas within close proximity to its areas of services.

• Working with DWAF in improving water and sanitation services to municipalities in its areas of service.

Most municipalities within the areas of service do not comply with environmental standards for sewerage effluent discharges. The result is that raw sewerage is discharged into the environment. Examples are: Emalahleni, Maluti-aPhofung, Govan Mbeki, Emfuleni, Midvaal, Randfontien, Westonaria, Merufong Kungwini and Parys.

Common problems with these municipalities are sub-standard effluent quality, plant capacity and poor condition of treatment facilities, and little capacity to handle and dispose of sewerage. What is needed is an assessment of the treatment works to enable them to put an end to this environmental pollution. The total cost for undertaking this assessment is R2 million.

Of the municipalities that RWB approached, only Midvaal and Randfontein accepted assistance, and have since seen a significant improvement in the operation of their treatment works and in the training and development of their staff. Emfuleni has signed an interim service contract, which enables the municipality to comply with standards with the assistance of RWB. All other municipalities either do not have the funding to help them comply or have stated that they do not need assistance.

The key implication of discharging raw or untreated sewerage into the environment is that it directly influences the quality of raw water sources. The deterioration of water sources increases the cost of purification, which raises the end price of drinking water to consumers.

RWB raised the problems that municipalities have with accessing enough funds with which to acquire assistance to buy purification services from water boards, such as, Rand Water Board with DWAF. The response was to raise it with municipalities themselves as transfers/grants form National Government is inadequate, and does not allow WSAs to ensure good quality water in a sustainable manner to customers. In the absence of adequate funding, the cost of water will continue to become unaffordable and excessive.

• Working directly with municipalities to improve water and sanitation service delivery.

Municipalities have a shortage of skills in terms of unaccounted for water, implementation of upgrading and refurbishment projects, increased accessibility, improving payment levels and the reduction of unpaid water volumes. RWB has over the past few years approached municipalities to offer assistance in this regard. In spite of the success of collaborative efforts between RWB and municipalities, some municipalities still do not take advantage of the services that water boards offer them.

The following challenges were noted by Rand Water to provide clean and healthy water to all citizens:

• Municipalities are responsible for the delivery of water services to communities. The problem is that they do not seem to be held accountable. Little is done to rectify specific areas of non-delivery, lack of capacity and funding.
• Water service providers should not be allowed to supply water to people without testing it for its compliance to quality standards.
• The legislative framework within which water boards operate is an obstacle. The recent conferring of the status of water service authorities on municipalities has had unintended consequences. Municipalities, have in general, used this authority to look at the provision of water services in a selfish manner, thereby ignoring regional provision and efficiency. Rand Water highlighted the Western Highveld as an example – the current infrastructure is regional in nature, which means that it provides water to the entire region. However, individual municipalities in the region have convinced DWAF, by virtue of their water service authority status, to carve this structure up and transfer them to individual municipalities. Such action can and will, in the long term, work against the sustainable and equitable provision of water to the region. The danger is that access to water will be severely impacted on. The current expansion by ran Water of bulk infrastructure is left to continue as it is. It appears as if DWAF itself is powerless to intervene and stop this ill-informed transfer of assets. Authority without accountability can never be good for improved service delivery.

Established in 1974, Umgeni Water is one of Africa's most successful organisations involved in water management and the largest bulk water supplier in the province of KwaZulu-Natal, South Africa. It is one of the largest catchment-based water utility in Southern Africa, supplying some 340 000 kilolitres of clean, safe drinking water to almost 4.8 million people annually. Its main customers include eThekwini Metropolitan Municipality, Ilembe, Sisonke, Umgungundlovu and Ugu district municipalities, and the Msunduzi and Mngeni local municipalities, amongst others.

• Mgeni Regional Scheme – Comprises of a number of sub-components, viz. A planning investigation into the proposed future infrastructure requirements to upgrade the main spine has just been completed.
• The Umbumbulu Bulk Pipeline is currently being constructed.
• Pre-feasibility level planning of an extension of the Wartburg Pipeline has commenced.
• Detailed feasibility planning of the Richmond pipeline is scheduled to start in August.
• North Coast Regional Scheme - Detailed civil design is complete. Servitude registration and the environmental assessments are currently underway for the North Coast Bulk Pipeline.
• Mvoti Regional Scheme - Pre-feasibility level planning of this scheme has recently commenced.
• South Coast Regional Scheme - Construction of the upper portion of the South Coast Bulk Pipeline is scheduled to commence early next year. Design and environmental assessments are currently underway.
• Mzintlava Regional Scheme - External consultants have recently been appointed to undertake a reconnaissance level planning investigation based on the conceptual scheme initially presented. This study will also guide the configuration of the adjacent schemes.
• Mooi Regional Scheme - The pre-feasibility level planning investigation of the Greater Nottingham Road area, which includes the Mooi regional bulk pipeline to Msinga, has been completed.

The Umgeni Water Board has seen a profit turnaround from a R37 million loss to a R55 million profit. Revenue had increased by 11%. Cash flow from operations had increased by R125 million. Net debt had been reduced by R300 million. Umgeni Water was characterised by affordable tariffs and sound management principles to eliminate water backlogs.

By 2008, all local citizens within Umgeni’s area of service would have access to water. By 2010, sanitation would be available to all households. Umgeni will work toward linking water resources and water supply to provide sustainable water solutions.

Overberg Water, compared to other organisations, is a small organisation and financially not in a position as bigger enterprises to bring about massive changes. However, Overberg plays a significant role in its region to ensure quality services. Overberg Water has the basic structural and systems infrastructure to provide quality services, and to play a supportive role. It operates high quality production plants, does quality control, distribution, maintenance, water conservation and demand management, and other direct services.

Although comprehensive agreements between the Water Authorities and Overberg Water need to be concluded as a matter of urgency, there is reluctance on the part of authorities to respond. One of the issues is that the Authorities only want short-term contracts, whereas Overberg Water requires long-term contracts to enable it to make financial investments.

The principle of institutional reform is of crucial concern to Water Boards, as they need clarity on their position in order to take the necessary steps to prepare for service delivery, which is not a short-term undertaking.

The Board operates and maintains reticulation systems under the jurisdiction of different Water Services Authorities. The Board also operates Sewage and Water Treatment Plants, which also fall outside its area of jurisdiction. Within the areas of jurisdiction, the Board is responsible for the maintenance of boreholes, in order to provide safe drinking water for consumers in rural areas.

Retailing of water, including cost recovery is carried out in the following urban and rural areas, together with the operations and maintenance of their reticulation systems for the following areas of four municipalities:

• Ditsobotla: Ditsobtla Municipality/Central District Municipality.
• Ganyesa: Bophirima District Council.
• Madikwe: Zeerust Local/Central District Municipality.
• Molopo: Mafikeng Local Municipality/Central District Municipality.

Asset management is undertaken through preventative maintenance system with the aid of computer software (PRAGMA SYSTEM). This has been the strength of Botshelo in maintaining its assets. This computerised system helps to effectively plan, monitor, control and report.

Botshelo supplies bulk water to two Water Service Authorities, which are Moses-Kotane Local Municipality. Within the Central District Municipality, Botshelo Water supplies directly to Ditsobotla Local Municipality and Mafikeng Local Municipality.

Central District Municipality is supplied from Mafikeng and Mmabatho Water Works for its peri-urban areas around Mafikeng town, while Verdwaal in Itsoseng is supplied by Itsoseng bulk from local dolomite Aquifers. Mafikeng Local Municipality is supplied from both Mafikeng and Mmbatho Water Works. Ditsobotla Local Municipality is supplied from local dolomite Aquifers.

In terms of bulk assets, it is expected that all water treatment plants will be transferred from DWAF at no cost to Botshelo Water. An investigation into the conditions of the assets has been completed and submitted to DWAF. Botshelo Water is expected to take over the operations of the Upper Bulk Water Supply Scheme, from DWAF, which will reduce its dependence on subsidies.

Botshelo is committed to enter into municipal partnerships with water services authorities, and partnerships with other water services institutions in order to raise capital to develop large resources, and water services infrastructures in the region.

In terms of retail water sales, Botshelo Water supplied water directly to consumers in urban and rural areas. The distribution of these consumers in Botshelo Water’s area of jurisdiction is as follows: A sliding scale of tariffs has been applied in order to make water more affordable for the majority of consumers. This activity is subsidised by DWAF, to an amount of R34,632 m annually (paid monthly at R2,886 m). This subsidy contributes to the difference between the cost of supply to consumers and cost recovery effected from the consumers. Water for this activity is produced in Bulk Water Treatment Plants of Botshelo Water. Strict quality control measures are applied on a continuous basis to ensure that the highest water quality standards are met and maintained.

In terms of cost recovery, water loss and demand management, the following was noted:

• Cost recovery has been low due to a lack of infrastructure systems. Statutory measures are taken on an ongoing basis to improve the recovery rate. Illegal connections continue to impact adversely on water loss management efforts. Most of the illegal connections have been regularised, except in Dinokana and Driefontein. Amnesty programmes have been developed and implemented in order to bring illegal connections into the billing net.
• A major capital investment will be required to establish cost recovery infrastructure in rural areas. Water process loss in Bulk Supply is in the order of 2 – 10%.
• In the retail activity, water losses are in the order of 15% due to unauthorised connections. Reticulation systems in certain areas are in need of refurbishment/upgrading. The inadequate bulk source in Lehurutshe still adversely affects cost recovery. Large infrastructure investment plans will be more actively promoted in the next financial year.

The Board operates 8 purification plants in 5 WSAs in the Limpopo Province. The Board worked on a five-year planning cycle, which included security of supply during droughts. The board provided assistance and support to municipalities. Their financial position had been consolidated and the gearing levels had been reduced. Municipal debt remained a challenge. There had been no proper costing of the free basic water policy by municipalities.

The challenges highlighted by Lepelle incorporated the following:

• Authority function is often confused with provision function by municipalities.
• Transfer of assets that take effect before finalisation of section 78 process.
• Insufficient water resources in certain areas.
• MIG funding policies a constraint to sustainability of schemes as envisaged in SFFWS.
• No proper costing of FBW policy by municipalities.
• Administration of indigent policies is problematic.
• Municipal debt poses a challenge.

• A disparity is noted in the manner in which Water Boards are managed, operationally and financially.
• Some water boards assist in providing a transfer management service to the Municipalities, for the transfer of assets and staff from the Department of Water Affairs and Forestry.
• Major contributor to service in the sector.
• Mandate and promises around Millennium Development Goals (MDGs).
• Some areas in various provinces have 2 or 3 Water Boards operating in one province. There appears to be a skewed distribution of the quality of services offered as competing interests override the fundamental objective, that is, of providing services to communities.
• Cost recovery in the retail environment is a big problem.
• Some Water Boards borrow substantial amounts of money from various banking institutions, whilst others manage to work out strategies to recover them.
• In terms of infrastructure, water boards did not talk of their linkages to the Expanded Public Works Programme (EPWP) to facilitate the process.
• Some water boards highlighted the transfer of DWAF personnel and infrastructure.
• Some new water user associations have problems with staff shortage.
• Capacitating and skilling municipalities so that reticulation services, amongst others, are efficiently taken over in the future.
• The quality of water in some regions was highlighted.
• Tariffs charged differ from province to province.
• The costing of free basic water provision is not sufficiently detailed and therefore it can impact on the delivery of other water services.
• Over time, the competencies of some water boards in terms of its overall function has shifted, not only focusing on bulk and retail water but offering capacity and skills to municipalities and communities.
• Cost recovery for services rendered remains a huge challenge, hence DWAF subsidies play a major role in sustaining water supply to communities.
• Equitable distribution of available potable water is still a challenge due to unauthorised connections, growing water demand, and capacity constraints related to infrastructure.
• Lack of guaranteed operational grants/subsidies relating to operation and maintenance threatens service delivery.
• There are delays in the signing of water services provider agreements with water services authorities.
• Payment of subsidies and equitable shares by Water Services Authorities.
• A move toward partnering with other water boards or water utilities on joint ventures to identify the most effective sanitation models and processes. Joint task teams would be established to conduct research and publish information regularly on findings.
• Catchment areas need to be assessed. Water boards in the context of financial, technical systems, there is a major place at this point in South Africa.
• Efficiency issues in catchment areas need to be examined.

1. Water User Associations

The Vaalharts Water User Association was established in 2001. The Minister approved the constitution of the Water User Association and certain powers and duties in terms of the National Water Act have been delegated to the Vaalharts Water User Association.

The principle function of Vaalharts WUA is to supply bulk raw water in the most economical way, according to the lawful entitlement of all water users, within the borders of the operational area of the Association, with the least possible losses and disruptions.

The Association does not supply purified water to any water user, but supplies raw water to Water Service Authorities such as municipalities. The Association does not supply any sanitation infrastructure or services. Irrigation water represents 96. 2% of the total amount of water supplied by the Association, and Industrial and Household water, 3.8%. This forms the basis of the Association’s income.

The infrastructure (irrigation canals, storm water drainage canals and appurtenant structures) is more than 60 years old and enormous amounts of monies are needed for maintenance and refurbishment. The infrastructure is well monitored to avoid disruptive failures, and to curb water losses as far as possible. The fragile financial well being of the Association is closely linked to the volatile agricultural environment from where its revenue comes from (96.2% of its water sales).

No major growth is expected within the borders of the Association’s area of operation, and henceforth growth in revenue will mainly be in raising the water tariff. This, on the other hand, can only be done if it is affordable to the water users.

The functions to be performed by the Association in its area of operation are:

• To prevent water from any water resource and/or waterworks being wasted.
• To protect water resources and/or waterworks.
• To prevent any unlawful water use.
• To remove or arrange to remove any obstruction unlawfully placed in a watercourse and/or waterworks.
• To prevent any unlawful act likely to reduce the quality of water in any water resource.
• To exercise general supervision over water resources and/or waterworks.

The duties of the WUA are as follows:

• To comply with the National Water Act.
• Collect water rates and pay over to DWAF.
• Administration/Financial service to sub-areas.
• Take action against default players.
• Make inputs regarding water tariffs.

The area of operation consists of 32 624. 9 hectares, which is divided into 17 Sub-Areas. The WUA distributes water via each Sub-Area to approximately 330 commercial farmers.

The Water tariffs in sub-areas comprise R270.00 – R690.00 per hectare per year. Payable to DWAF: R15.6 million per year.

The Sub-Areas Tariffs comprise R50.00 – R130.00 hectares per year.

Some of the problems experienced by the WUA are:

• The payment of water and sub-areas tariffs. Most of the ‘emerging’ black commercial farmers experience lack of funds. At this point, the WUA pays DWAF on behalf of some farmers, and the WUA recovers the outstanding rates at a later stage when funds become available.
• Some farmers do not have the experience to farm an irrigation farm. Training in irrigation farming is a necessity.
• It is important that government/DWAF assist those farmers with the rates in subsidies.
• Although DWAF has a scheme for the subsidisation of the DWAF component of the water tariff, the actual process to access this has not been spelt out, which in reality means that there are no subsidies. The Historically Disadvantaged Individual farmers in this jurisdiction are thus billed for their full quota of water, whether they use it or not. In normal circumstances, unpaid bills are handed over to lawyers for collection. This, however, could spell economic disaster for a new HDI farmer trying to break even in a highly competitive market. The WUA tries to sell off the unused amounts of water of the HDI farmers to the bigger commercial farmers, and this alleviates the financial burden of the newcomer.

Some of the challenges experienced by the WUA are:

• To see that there is a high level of payment for water.
• To see that water is used more effectively.
• To keep any increase in raw water pricing to a minimum.
• To upgrade canal systems.
• To encourage farmers to get basic domestic water to the staff residing on their farms, and also provide sanitation facilities and electricity where such basics are not in place.

Some of the achievements highlighted by the WUA are:

• The WUA was the first irrigation board to be transformed into a WUA in the Eastern Cape.
• Although the process followed to transform in terms of the National Water Act complied with the guidelines used at that stage, the WUA is of the opinion that the revised guidelines are far more advanced in promoting true democratisation and empowerment for the transformation process.
• The WUA sees the compilation of a Business Plan as a means to advance democratisation and empowerment issues not covered in detail in their Constitution. The WUA has already put a tremendous amount of work into compiling the Business Plan as this has some far-reaching intentions regarding democratisation, empowerment and the encouragement of the settling of resource-poor farmers of previously disadvantaged race groups on irrigation farms served by this WUA. WUAs have been informed that DWAF may be employing a Professional Service Provider to help in the compilation of the Business Plans.

The Association’s management committee comprised 14 members, representing irrigators in all three of the zones of the association. Irrigation entitlements consisted of 12, 989 million cubic metres from the Ebenezer Dam, and 105, 028 million cubic metres from the Tzaneen Dam. These entitlements were available to new entrants for irrigation agriculture, but most of these entitlements were under utilised. If land claims were to be settled and the entitlements purchased by the state, the figure could rise to 70%. Previously disadvantaged persons had access to a sizeable percentage of irrigation entitlements and this was bound to grow.

The total annual entitlements were 168, 500 million cubic metres, of the three major dams in the area by 50 million cubic metres per annum. Following requests during 1983, the Department of Water Affairs and Forestry undertook a major study for a fourth major dam in the area – the Nwamitwa Dam. The water this proposed dam would impound could result in an additional 53 million metres of assured draft, which would eliminate the current shortfall. The Water User Association was concentrating on stabilising the supply of water to all farmers by relentlessly promoting the building of the Nwamitwa Dam.

Kakamas has as its water users the local authority, emerging farmers, and irrigation, domestic, industrial, environmental and recreational users. Their management committee comprise 15 members.

The Association is a bulk water supplier and did not supply purified water or any sanitation infrastructure.

Orange-Riet is a multi sectorial Water User Association in the Free State. The Association supplies water users in their management area. Only bulk water is supplied to municipalities, therefore the WUA is not responsible for sanitation service.

However, development of new areas for emergent farmers are high on the priority for Orange-Riet, and the availability of water for 3 000 hectares from the Orange River in the Free State can be utilised very economically and productively to help eliminate and uplift people in the Orange Riet management area.

The Association supplied water to five towns, small-scale farmers, industries and diamond diggers. A telemetry system, use of satellite images and minimum payment of 85% reduced losses. Water saved through water conservation and demand management is used for emerging farmers. The management committee comprised 17 members, of which 3 are female.

In terms of section 98(4) of the National Water Act, Act 36 of 1998, existing Irrigation Boards must transform into Water User Associations. The Impala Water User Association (Impala) was established on 12 January 2001.

The area of operation of Impala includes the catchment of the Bivane river from the inflow into the Bivane Dam and the balance of the catchment of the Pongola River, within the boundaries of South Africa, from the Upper Pongola Weir situated on the farm Bendor 211 HT on the north bank and the farm Verdruk 26 on the south bank, both inclusive, downstream to and including the farm Sunland 72HU on the north bank and the farm Klipfontein 740 on the south bank.

Impala may also operate in any other water resource situated outside the area mentioned above. This may happen if Impala is asked to provide water resource to accompanying areas which DWAF or the responsible authority may require the Association to control, situated in the water management area number 6 in the KZN and Mpumlanga provinces.

The purpose and functions of Impala can be summarised as follows:

• The distribution of water to farmers, industrial use, a municipality and other smaller users from its source, the Pongola and Bivane Rivers.
• The monitoring and protection of the water resource and environment in its area of operation.
• The maintenance and upgrading of the water distribution system and works.
• The monitoring and control of the volume of water flowing into and out of the area of responsibility and water use.
• The implementation of an effective administrative system and functions in order to manage its affairs, and the changing and collecting of water use charges from legitimate water users.

Apart from the normal execution of its primary functions as outlined above, the following additional areas are also addressed to achieve the objectives of the organisation:

• Institutional development through building relationships with various stakeholders, work opportunities and sub-contractor optimisation.
• The taking up and execution of ancillary functions in terms of catchment management activities, such as:

• Resource protection.
• Erosion control.
• Alien plant control.
• Water quality monitoring.
• Pollution prevention.

The challenges noted by Impala were the following:

• The construction of Bivane Dam.
• The settlement of emerging farmers.
• Water supply to the rural areas.

One of the principal objectives of the Association was to regulate the distribution and division of raw water in the Breede River. The municipality of Worcester discharged wastewater into the Breede River. The resultant pollutant affected all water users.

Although the Association had wanted to implement initiatives like the Water Allocation Reform programme to help previously disadvantaged beginner farmers, bureaucracy had hampered progress and the affected public were frustrated.

The upkeep of infrastructure by the WUAs is emerging as a problem and needs addressing.

It emerged from the hearings that there are tensions between water boards, water user associations and municipalities. It often relates to WUAs proposing to strengthen service delivery, which often cannot be accommodated by municipalities due to problems.

In some instances, some WUAs show no sign of transformation. They do not actively deal with the task of including the previously disadvantaged in their associations. The presenters stated that legislation and regulations prevented them from including people other than farmers in their associations. This problem must be highlighted.

Those who own land perceive themselves as having strong rights to water usage than those who do not own land. This issue presents a challenge to DWAF as sector leader.

DWAF has to deal with the transformation of WUAs.

A key question on the issue of WUAs: What was the thinking behind setting up WUAs? Are WUAs living out the mandate that the Act states if they are only looking after the interests of big users?

It seems as if the devolution of powers to local associations and governments can have unintended consequences. While the intention is good and consistent with empowering people to democratically participate in structures, the outcome is often unfortunately one in which the poorest of the poor remain marginalised.

In terms of its functions, associations usually regulate the distribution and division of water. In some cases, WUA point out the problems encountered in environmental pollution of water, but the problem persists.

There are also disparities in the manner in which Water User Associations operate, which is defined by the nature of jurisdiction. In some cases, some WUA’s provide raw water to irrigation farmers and purified water to all households and people within the respective areas.

Some WUA’s argue that although they have attempted to assist emergent farmers with water supplies, the process is rather slow in attaining this.

The growing demand for water for waterborne sanitation will impact on the future of water user associations in terms of maintenance and operations of infrastructure.

The role of water user associations’ with emergent farmers needs in-depth studies to ensure the sustainability of this process.

Land claims issues have an impact on the role and functions of the WUA’s.

• SALGA continues to play a key role in supporting municipalities to achieve the targets set out in the Strategic Framework of Water Services.
• A major focus is to ensure that water and sanitation support is properly targeted to municipal needs as well as addressing the
• In terms of challenges, SALGA pointed out that sanitation remains the biggest challenge in water service delivery.

• Whilst municipalities are addressing sanitation at household level, special attention must be paid to sanitation on farms, informal settlements and bucket eradication.
• The former DWAF subsidy did not help much towards bucket eradication were waterborne was being sought as an alternative.

Critical Issues – Water Services Provider Support

• In terms of water services provider support, much support has been given by DWAF in initiating and leading excellent support programmes, such as WSPD support, section 78 support, MIG support, institutional support, support to putting policies and bylaws in place. The most pressing need is to support the service provision function, ensuring good operations and maintenance, water quality management, revenue collection, WSP business planning, asset management and customer relations.
• A clear support strategy for water services providers is needed.

Achieving the water and sanitation targets, SALGA noted the following:

• Questions have been raised about the feasibility of achieving the water and sanitation targets for 2008 and 2010, respectively.
• These targets are not only the responsibility of local government, but also the responsibility of the entire sector.
• Realistic plans are needed for each municipality to determine what can or cannot be achieved within the target timeframes.
• Political decisions are needed in terms of those municipalities that will not be able to meet the targets within existing conditions (municipality capacity, water services challenges, current resources, etc.)
• A crucial question asked by SALGA was: will the targets be changed or will national and provincial government be coming forward with contingency plans?

Consolidated Support Targeted to Real Needs

• Consolidation of support across sectors remains a challenge.
• Whilst Project Consolidate has various outputs, it aims to achieve, a plan needs to be consolidating sector support from the provincial level to municipalities.
• Many instruments are still being used to assess municipal capacity. However, these instruments are generic- need to study the results of these assessments to build the capacity they need.
• Institutional building and capacity building requires resources and funding. Access to such resources needs to be facilitated to speed up sustainable local government.

More detail is needed on the role of SALGA in building capacity at municipalities.

In terms of the above inputs, and DWAF’s new role as sector leader in the water area, it does not necessarily mean that the expertise and guidance of DWAF has to be completely invisible. The following issues, emanating from the presentations were noted:

• Representivity in the transformation of the water users’ associations and boards were of particular concern.
• Disparities were noted between the management and financing of water boards.
• There were varying service delivery and the provision of free basic water, particularly due to inadequate infrastructure in less advantaged areas.
• The need to bring together dispersed skills and fragmented organisations into a coherent water sector.
• The Catchment Management Agencies are still lagging behind.
• Whilst some boards had borrowed money from various institutions, others had managed to develop coping strategies.
• Capacity had been a much-discussed issue, particularly by municipalities.
• Quality of water was a matter of concern.
• Cost recovery had also been a frequently discussed topic.
• The equitable distribution of drinkable water had often been mentioned in many reports.
• Water services agreements were another area that had frequently been discussed, especially the role of tariffs, municipalities and water boards.
• On the issue of associations, most discussions related to:

• The functions, regulations, distribution and allocation of water.
• The growing demand for water and waterborne sanitation and the impact of this on the water user association.
• The operation, maintenance and the infrastructure needed by water user associations to effectively supply basic services.
• The impact of land, land claims affected the way in which water boards are composed. This is an area that needed further study as the land and water issues were indivisible.

As sector leader, DWAF can still play a role on the issue of water boards borrowing substantial amounts of money from outside financial institutions. This relates to cost recovery, and the involvement of private financial institutions in public service delivery. It is perhaps an important period for DWAF to engage with the private sector on its role in service delivery.

On the issue of diversity of tariffs, and within a developmental context, the ‘water retail environment’ cannot cause further hardship for the poor. DWAF, as sector leader needs to indicate how it plans to play a regulatory role in this regard.

DWAF stated that regulation happens at 2 levels – DWAF and municipalities regulate. This begs the following questions:

- Who monitors and regulates nationally?

- Does the Department ensure that municipal regulations conform to nationally stated guidelines as the sector leader?

- What evaluation and monitoring tools has DWAF initiated to address the above?

The Annual Report and DWAF’s responses to the above at the hearings were inadequate. Oversight visits provided a picture of municipalities not following an integrated approach as they do not view the process of delivery as one that demands interaction with national, regional levels, as well as one that requires co-operation with different departments (Health, Education, Public Works and Housing, etc.) to ensure quality services to the people.

The 2005 Annual Report was not very forward-looking. It does not deal with the challenges experienced and alternative solutions to encountered problems. DWAF states its new role as sector leaders, but the Annual Report does not speak of what the role means in the current context. It stresses the fact that DWAF is no longer the service provider, but does not highlight the enormous challenges involved in shifting to playing that role.

The following recommendations from the members of the Portfolio Committee and presentations emerged at the 3-day public hearings:

• The Portfolio Committee requires DWAF to provide it with quarterly reports dealing with the following:

• The role of DWAF as sector leader in rectifying the problems of asset and inventory management as identified by the Auditor-General. Specifically, DWAF needs to state the plans to:

• Strengthen stock counts at regional offices.
• Sort out its ledger card system.
• Verify its assets.
• Ensure that all assets are bar-coded.

• The role of DWAF in putting in place an appropriate, documented and approved policy and procedure framework that would strengthen the weaknesses noted in the AG’s comments on internal control. These deal specifically with the undefined basis on which allocations of transactions were made to the Water Trading Account that resulted in uncertainty regarding the accurate allocation of expenses incurred on behalf of this account.

• SALGA emphasised the important role that DWAF played in building institutional capacity for water services, and argued strongly that this role should continue.

• Particularly challenging is building provision capacity.
• Integrated management will need to tackle sectoral agencies protecting their traditional roles and responsibilities, as well as the problems of overlapping or conflicting legal mandates and responsibilities. The limited array of senior and powerful advocates for the concept of IWRM make it difficult to alter the well-entrenched existing water governance systems, which tend to reflect sectoral approaches.
• Collaboration across the water sector was a major problem. While the Water Summits were supposedly held to bring together stakeholders to work out proposals to improve relationships, it is clear from the hearings that the relationship between water boards and municipalities are fraught with tension. DWAF needs to address these problems strategically.
• As water-related services are extended to promote public health and food production, uncoordinated institutions can be confusing and lead to water resources depletion. It is equally alarming that in many countries, a large number of water supply and sanitation projects and water management policies continue to be developed in isolation from each other.
• Effective water governance requires change in attitudes and behaviour among individuals, institutions, professionals, decision-makers – in short, among all involved. Participation by the public or stakeholders is an important tool in implementing such changes as it facilitates more informal decision-making and eases conflict resolution. It can also guarantee that voices of relatively powerless groups, such as women and indigenous people, are heard. Participation offers people the opportunity to meet their responsibilities, as well as the opportunity to claim their rights.
• Key aspects of sustainability include empowerment of local people, self-reliance and social justice. These reflect concern about principles of equity, accountability and transparency. One way to incorporate these principles into real-life management is to move away from conventional forms of water governance, which have usually been dominated by a top-down approach, and professional experts in the government and the private sector, and move towards the bottom-up approach, which combines the experience, knowledge and understanding of various local groups and people.

• Transformation in WUAs: Link the issue of transformation in Water Boards and Water user Associations as the necessary foundation for policy goals to be reached. An urgent look at how boards and associations represent the interests of all people need to be undertaken.
• Link the issue of transformation of WBs and WUAs as the necessary foundation for policy goals to be reached.

• Water Service Providers (WSP) support requires a new approach to what was used to build WSA capacity.
• The provision function is about managing a water services business where we provide services to our communities – services that meet their needs.
• The provision function has to be sustainable – it requires ongoing business planning, measures to ensure compliance with standards, mechanisms for customer satisfaction, plans for improvement, and has to be financially viable.
• Experience in running good water services provider’s lies within some municipalities and water boards – how does one harness this experience into our support initiatives?
• There is currently a gap in support provided – it does not extend sufficiently to water services providers.

• Municipalities that are WSPs are best placed to determine the nature and targets of WSP support.
• Municipalities with expertise and experience in the WSP functions need to shape the WSP Support Strategy.
• Although the Constitution provides municipalities with the authority to be water user authorities who regulate. A strong recommendation is that this be discussed in a joint Portfolio Committee meeting with the Department of Provincial and Local Government (DPLG) and DWAF to discuss the Intergovernmental Relations Framework. This meeting can discuss issues of what it means to be a regulator, where intervention can take place and where not.

• It has been recommended that the challenges faced by municipalities and other stakeholders, be addressed by the formation of steering committees between regional DWAF, WUAs, municipalities and SAWU. These steering committees would then address the problem. It is important that DWAF updates the Portfolio committee in its quarterly reports, regarding these attempts.
• Municipality capacity remains a challenge for many municipalities.
• Pressures on local government to both extend services and ensure sustainable service delivery. This requires sustainable institutions that have adequate human resources, skills and expertise, as well as the necessary systems in place.

• The schemes transferred by DWAF need to comply with water quality standards.
• There is a shortfall in the rehabilitation funding and this impacts on the rehabilitation of the schemes.
• After Care Transfer processes are inadequate and this impedes service delivery.

Five categories, according to the United Nations Department of Economic and Social Affairs publication, Governing Water Wisely for Sustainable Development, deserve special attention:

• Water resource assessment: comprising data collection networks, environmental impact assessment techniques and risk management tools, for example, for floods and droughts.
• Communication and information: raising awareness is often a potent instrument for improving management, particularly when accompanied by opportunities for informed stakeholder participation.
• Tools for water allocation and conflict resolution: allocation could be done through a mix of regulatory and market instruments based on valuation of costs and benefits; and conflict resolution tools could provide guidance on issues of upstream versus downstream, sector versus sector and human versus nature.
• Regulatory instruments: including direct controls such as land use plans and utility regulation, as well as economic instruments (prices, tariffs, subsidies and others) and encouragement of self-regulation, for example, by transparent benchmarking.
• Technology: both new and traditional technologies might provide scope for progress, within the water sector as well as in others that affect water demand.

Substantive input by the Portfolio Committee on Water Affairs and Forestry at the Public Hearings, 12 – 14 October 2005

Department of Water Affairs and Forestry, Annual Report 2005

The Estimate of National Expenditure Actual Expenditure (2004/05) and the Budget Allocation (MTEF 2005/06 – 2007/08) amount for the Department of Water Affairs and Forestry (DWAF)

Presentations made at the Public Hearings:

• Department of Water Affairs and Forestry
• Amatola Water Board
• Bloem Water Board
• Mhlathuze Water Board
• Bushbuckridge Water Board
• Magalies Water Board
• Rand Water Board
• Botshelo Water Board
• Trans-Caledon Tunnel Authority (TCTA)
• Great Fish River Water User Association
• South African Local Government Association
• Overberg Water board
• Central Breede River Water User Association
• Umgeni Water Board
• Lepelle Northern Water Board
• Vaalharts Water User Association
• Impala Water User Association
• Kakamas Water User Association

Orange-Riet Water User Association