Report of the Portfolio Committee on Water Affairs and Forestry, dated 22 November 2006:

Report of Hearings on Department of Water Affairs and Forestry 2005/06 Annual Report, 16 – 18 October 2006

‘Socio-economic growth and service delivery toward rural development’

1. Introduction

Annual reports are the key reporting instruments for departments to report against the performance targets 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. It is within the above context that Parliament, in undertaking its oversight function, has begun to note the shifts in which this process has improved. Parliamentary oversight of departmental annual reports has evolved over time. What is beginning to emerge is that, initially, focus on oversight was strongly focused on legislative aspects of our emergent democracy. However, with many policies and legislation in place at present, the work of parliamentary committees has shifted to focus on the following:

Implementation of policies and legislation.
Compliance with financial and non-financial aspects of departments and entities’ work.
Cooperative governance.
Intergovernmental relations.
National Treasury guidelines governing the financial and performance components of departmental and entities work.

When the Portfolio Committee undertook its first examination of the Annual Reports of the department and its entities in 2005, the technical component of the reports was extensively critiqued. Some of the issues noted were the poor quality of reporting in terms of lack of quality controlling and editing information found in the Annual Report of the Department of Water Affairs and Forestry, its qualifications, disclaimers and matters of emphasis. However, what is noted is that the Department has managed to attain a high standard of editing in its 2005/06 Annual Report. Furthermore, the findings of research also show that in terms of reporting of its performance, the outputs of the 2005/06 – 2007/08 Strategic Plan correlated to the 2005/06 Annual Report. DWAF was also transparent in the challenges they face within the four programmes.


2. Day One, 16 October 2006

2.1 Summary of Submissions – Department of Water Affairs and Forestry

The Minister of Water Affairs noted the achievements and challenges that the Department of Water Affairs and Forestry had faced during the financial year. The good work of the Department was undermined by a qualified audit report, but the financial situation was being worked on. The Department hoped to meet its 2007 target for eradication of the bucket system. Staff profiles and equality were improved, although skilled employees remained dominated by white males.

The Director General, reported on strategies for change in financial management. The Department was focusing on water resource infrastructure, relationships with local government and stakeholders and other countries. The Acting Chief Financial Officer set out the Auditor General’s findings, a seven point plan for the Department and expenditure trends. He explained the under spending. There was no suggestion of a misuse of funds. A SAP accounting system had been introduced. Asset management strategy and an Audit Steering Committee had been set up. The presentation on Corporate Services noted that regions had a partnership with a tertiary institution providing bursaries and a talent pipeline, that a Gender/Disability Directorate had been created. Decision-making had been streamlined. Human resource issues were outlined and explained. Performance was being improved by increasing accountability department wide through quarterly progress reports.

A further briefing addressed water resource management, noting that there were still some restrictions and the Department was allied to other Departments. Provincial breakdowns of progress were given. 254 licences had been authorised in the year. Feasibility studies were being done for long term planning. The shortage of engineers was a problem and there had been under spending on dam safety. There were many challenges with the relationship between water boards and water service authorities. The National Water Resource Initiative (NWRI) was outlined and statistics and overviews of the various projects were presented.

A briefing on water services and forestry noted that about 78% of the population was now serviced with free basic water. The effectiveness of programmes depended on the support that DWAF gave to local government. The water summits were successful and there were also education programs. Mpumalanga had been successful in the eradication of the bucket system because there had been political buy-in. In Forestry, BEE was a major focus as well as sustainable management of plantations. Long term timber planning, the profile of Forestry and National Fire Danger Rating systems were priority areas.

Presentations

2.2.1 The Honourable Minister Lindiwe B Hendricks

The Minister noted the achievements and challenges that the DWAF had faced during the financial year. She, however, maintained that the Annual Report had not reflected all of the achievement that the Department had made, and this was particularly pertinent to more people receiving access to water. Furthermore, DWAF hoped to complete the new forestry branch creation, and a dedicated Deputy Director-General would be appointed. The next key challenge was the eradication of the bucket system by 2007. Mpumalanga had already met this target. The 2005 deadline for schools access to sanitation had been missed. Public works needed to be involved. This had a ripple effect on learners, and a new target needed to be made. The profile of senior management had a good spread of blacks and females, but more were needed in middle management and the skilled employee sector, which remained dominated by white males. The Department was going through a transition to become a regulator and supporter in the sector.

Despite the good work that the Department had done, the qualified audit report undermined this. She assured the Committee that work was being done to turn the financial situation around. The Director General and the Minister had signed an agreement that linked the financial condition of the Department to the DG’s personal performance appraisal. She reiterated that the Annual Report did not reflect fully the progress being made to meet targets and improve the financial situation.

2.2.2 The Director-General, Mr Jabulani Sindane

The Director-General stated that his briefing would focus on finance and corporate issues, water and forestry. At the outset, he commented on the qualified audit report, which had embarrassed the Department, especially since it was not the first time this had happened. He had made a personal and financial commitment, through his performance appraisal, to turn it around. They had to improve areas of policy, put systems in place and provide high quality information. DWAF was not working alone and had met with the Office of the Auditor General and the Accountant General. DWAF was looking for expertise outside the Department, like retired accountants. It had introduced performance-based management so that accountability was at a higher level. He had agreed with the Minister on his performance agreement. Similar agreements would be made with the Deputy Director Generals. The Department could not do all the work themselves and it had to filter down to provincial and municipal levels. It was upgrading the relationships with the Department of Land Affairs, especially with regard to emerging farmers. People with access to land must also have access to water. It was upgrading the monitoring system. Members had been worried about the Water Boards in the past. The relationships must be tightened up and focused. Water resource infrastructure was a focus especially for the construction of the De Hoop Dam. DWAF was a sector leader and water was a cross cutting issue. Local Government relationships were proceeding well. The Organs of Civil Society were a major stakeholder and must work together. DWAF was utilising Local Government but must do better to reinforce capacity. The Department was also active internationally with bordering countries, the SADC region and globally, especially in forestry. It was involved in the African Forest Law Enforcement initiative and the international best forestry practices.

2.2.3 Acting Chief Financial Officer, Mr Trevor Balzar

Mr Balzar covered the Annual financial statements, the Auditor General’s findings, and a seven-point plan for the department and expenditure trends for the various programs within DWAF. There had been no wasteful or fruitless expenditure even though the Auditor’s report reflected poorly on DWAF. In the 2005/2006 year only 94.4% of funding was spent. The Exchequer account was qualified. The Auditor General had very specific technical needs for the report, requiring international standards, even if systems were not in place to meet them. There was no suggestion of a misuse of funds. A SAP accounting system had been introduced.

The Seven Point Plan focused on restructuring, which would entail:

To separate roles and responsibilities and meet PFMA requirements.
To build a relationship with the Accountant General.
To initiate a one year contract with the National Accounting Firm.

SAP was introduced on 4 October 2006, but the necessary infrastructure and support had to be built. This was a world-class system and there would be no excuses in future for systems not being in place. Extensive training for SAP users had been done, including Super users (internal) and Power users (external). Asset management strategy had been set up to account for all the Department’s assets, and an Audit Steering Committee and Auditor General meetings would provide feedback. With regard to the budget, 94.4% was spent, under spending by the biggest margins was seen with Administration and Water Resources. Under expenditure in Administration was due to the slow transfer of staff to the municipalities. Water Resource Management under-spending was due to vacant posts not being filled. The Municipal Infrastructure Grant (MIG) was responsible for the decrease in spending. Forestry spending had increased and there was a roll over of funds to pay for the YORCOR claim. DWAF should be able to start mitigating running on deficit. The Equipment Trading Account would be merged with the Water Trading Account. There had been a large decrease in theft and losses in this year compared to the previous financial year.

2.2.4 Deputy Director-General, Corporate Services, Ms NJ Ngele

Each region had a partnership with a tertiary institution providing bursaries and a talent pipeline. DWAF had created a Gender/Disability Directorate as well as a Forestry branch. It was streamlining decision making for accountability at different levels. There was a turnaround in human resources as the technical workforce aged. Since human resources were the bedrock of an organisation, it was important to have performance by being both ruthless and constructive. There was a scarce skills allowance from Government for the education of scientists and engineers. Experienced mentors were being put in place and the regional offices were being strengthened. Under spending in administration was due to unions.

Ms Ngele added that there was a strategy in place to deal with vacancies. DWAF was moving from being implementers to being regulators. The Committee should be able to see a shift in the paradigm in the Department. Parliament had a strategy to match capabilities and needs. DWAF previously had 3000 extra employees, but Cabinet reassigned them. DWAF needed to identify what skills were needed for the coming years. Much more consultation and compliance was needed to set up a good retention strategy.

2.2.5 The Deputy Director General: Forestry and Water Resource Management, Ms Barbara Schreiner

Ms Schreiner reported that rainfall had been better this year. There were still restrictions in some parts, and storage levels ranged between 67-90% in dams. For Water Allocation Reform, DWAF needed to align with the Departments of Agriculture and Land Affairs. There were discrepancies between water use and the claims. She gave a provincial breakdown of major progress taking place and reported that 254 licences had been authorised in the year. Feasibility studies were being done for long term planning, up to 25 years. A problem had been that engineers were lost to the 2010 Football World Cup and Gautrain projects. Working For Water exceeded its target by 103%. Under spending on dam safety was due to not spending drought relief money. It would be rolled over to the next year. The Catchment Management Agencies were represented before the Committee for the first time. There were still challenges in the Irrigation boards and Water User Association restructure. Various loans had been made from the state, the Land Bank and from a Partnership with Rand Merchant Bank. Human Resources were a challenge and data had been collected to monitor water resources. Review and oversight of entities had not been included in the Annual Report but it should be. Regulation was needed, not just oversight. There were many challenges with the relationship between water boards and water service authorities. They needed institutional reform to make the water boards perform.

2.2.6 Manager, Water Use, Dr Cornelius Ruiters

Mr Ruiters presented on the Establishment of the National Water Resource Initiative (NWRI), branch of Water Resource Management. It was a two-phase establishment. The Berg River Water Project was going through environmental monitoring to be compliant with the Environmental Impact Assessment (EIA). 46% of the jobs created were unskilled. Impounding of the reservoir will be completed by July 2007 and it would supply Cape Town. The raising of Flag Boshielo Dam was 94% completed, and the delay had been due to rain. The Olifants River Water Resource Development Plan included the De Hoop Dam. Planning for this dam was complete and construction was waiting for revision. That was why there was under spending. 65% of workers were local. DWAF had completed the labour procurement for the construction of the dam. VRESAP Project, which took water from the Vaal to the industrial area of Mpumalanga, would be completed in October 2007. This was an important project for Sasol as the hydrogen was used to create 41% of South Africa’s fuel.

2.2.7 Deputy-Director General, Regions, Water Services and Forestry, Ms T Mbassa

Ms Mbassa briefed the Committee on water services, focusing on water and sanitation provision and the achievements and challenges that these have presented. 74% to 78% of people were now serviced with free basic water. The effectiveness of programmes depended on the support that DWAF gave to local government. The Water summits were very successful and there were also education programs. Mpumalanga had been successful in the eradication of the bucket system because there had been political buy-in and additional funds were allocated to them from campaigning.

2.2.8 The Deputy Director General: Forestry and Water Resource Management, Ms Barbara Schreiner

Ms B Schreiner presented on forestry. BEE was a major focus as well as sustainable management of plantations. Temporary unplanted areas (TUP) were problematic as they experienced far more fires and thefts. The Department had a strategy to combat long-term timber shortages. The Forestry profile was being raised with a new website and other public access initiatives. The National Fire Danger Rating System will be implemented soon.

The following aspects need serious consideration within DWAF’s Annual Report:

Audit of the Annual Report

In 2004/05 and 2005/06, the department received qualifications on the trading account’s financial statements. This was due to technical aspects with non-compliance of the Generally Accepted Accounting Practice. The cash and accrual systems utilised by the department posed a problem. The lack of an appropriate documented and approved policy and procedural framework led to control weaknesses.

A disclaimer of audit opinion by the Auditor-General usually reflects an extremely negative view of the department in that the financial systems were difficult to analyse, and even the Auditor-General and his team could not offer an opinion.

The audit is also problematic in that it raises the following concerns:

The financial management systems are not fully aligned with the Public Finance Management Act requirements.
In terms of asset management, no adequate record system for the 2006-year exists. This raises concerns of contradictions within the financial evaluation of the department.

The systemic issues highlighted above with the financial management are some of the reasons for continuous qualified reports by the Auditor-General.

3. Day Two and Three, 17 - 18 October 2006

3.1 Summary of Submissions

Initiatives concerning rural development projects and support to municipalities that deal with these projects were tabled. Recurring themes spanned from dissatisfaction with the Department of Water Affairs and Forestry audit, to the transfer of Department assets, to concerns with the communication between the provincial and local areas. Several questions were asked of the Water Boards on their own specific activities. Backlogs, assistance to housing schemes and use of dams and catchments were also questioned. Emerging farmers' plights were specifically highlighted with three presentations coming from representatives of this faction.

3.2 Presentations on day two and three were given by the following water entities:

South African Association of Water Utilities (SAAWU) – overarching body of water boards.
Mhlathuze Water Board.
Bushbuckridge Water Board.
Botshelo Water Board.
Amatola Water Board.
Bloem Water.
Albany Coast.
Rand Water.
Magalies.
Ikangala.
Overberg.
Lepelle Northern.
Sedibeng.
Umgeni.
Namaqua.


Other presentation incorporated the following:

Inkomati Catchment Management Agency.
Water Research Commission.
Trans-Caledon Tunnel Authority.
Development Bank of South Africa.
Working on Fire.
Forestry South Africa.
Surplus Peoples Project.
National African Farmers’ Union.
Jonkershoek Crisis Committee.
South African Local Government Association.
Rural Development Services Network.
Mawubuye Community Trust.

3.2.1 South African Association of Water Utilities

Mr J Conolly, Chief Executive Officer, SAAWU opened the presentation by describing SAAWU’s structure, objectives and its 22 members. He explained the strategic importance for Regional Water Utilities within the economic concentration of activities and people in the country. Mr Conolly outlined SAAWU’s relations with the Department of Water Affairs and Forestry (DWAF), which included the development of sector policies and the implementation of them. This was described as a ‘relationship of constructive collaboration and partnering’. He congratulated DWAF on a comprehensive Annual Report, and specifically the programs relevant to the SAAWU members. Mr Conolly called for DWAF to further exercise its oversight responsibility with regard to Public Finance Management Act (PFMA), and Water Service Authority (WSA) requirements regarding the Water Boards’ policy statements and business plans, and also to ensure these to be complied with timeously. He also raised concerns about the delay in the appointment of water boards and the Department's qualified audit status. Mr Conolly commented on programme 2 and 3 in particular covering such topics as some vagueness in the report. He ended with marking areas where SAAWU received substantial support from DWAF and concluded with a plan to keep the ties with the Department strong.

3.2.2 Mhlathuzi Water

Mr Lawrence Sithole, CEO of Mhlathuzi Water (MW) opened his presentation by outlining MW’s commitment to sustainable development and other of its objectives. He went on to describe MW’s contribution to rural development through the ‘KZN bulk regional water concept’, which was formally adopted in September 2005. This programme was focused on the sustainability and affordability of water services, optimal water utilisation, the condensation of systems to achieve economies of scale, and the addressing of backlogs.

Mr Sithole thereafter went into detail regarding MW’s ability to add value to water service authorities (WSA). This was followed by a progress report spanning the partnering of a proposal on a bulk regional scheme pre-feasibility plan presented to the Ilembe district Municipality, covering rural communities, industrial nodes, urban areas and costal developments. This was intended to address rural backlog and to support housing initiatives. He outlined the financial arrangements of this scheme, which included R502 million capital injection, of which over a half was private funding. A regional master plan had been concluded and projects identified in the Umkhanyakude district municipality where backlog and unemployment figures created the need for urgent attention. Situated within this area was South Africa's third largest dam but resources were still in need of harnessing and local capacity was vital to sustain a project of this capacity. On the other side of the scale the Mkhanyakude Region was almost devoid of water resources which constrained economic activity, which centred on the sugar industry in which irrigation was vital. Mr Sithole pleaded that DWAF consider increasing the amount of water available for irrigation purposes, which would not only create jobs but also boost tourism investment in the area. He brought up other possible activities in the area, which would boost growth including hydroelectric power and other agricultural activities.

Mr Sithole then briefed the Committee about the outcomes of the extended cabinet Lekgotla, the Uthungulu and Zululand district municipalities and concluded by saying that he believed that these initiatives would contribute towards rural developments.

3.2.3 Bushbuckridge Water Board

Ms T Nyakane-Maluka, Chairperson, Bushbuckridge Water Board (BWB) opened the presentation with comments on the Annual Report. She felt it was unfortunate that there was yet another qualification and disclaimer of audit opinion. She then outlined the BWB history, activities and make-up as well as adding notes about the challenges it faced, which included the rural setting, high crime and unemployment, and cost recovery.

Mr R Matsebula, Chief Executive, Bushbuckridge Water, continued by outlining the Board's primary activities towards socio-economic growth, which included the expansion of service coverage, by way of maintenance and upgrades. Its secondary activities included the establishment of a call centre to receive complaints, systems of effective cost recovery, formulation, implementation and monitoring of policy, water conservation education programmes, crime awareness campaigns, the maintenance of irrigation canals, and the hosting of student medics. Challenges in the future were alluded to, which included negotiations with the Bushbuckridge municipality over the new WSA following the disbanded Bohlabela District Municipality, serious competition that had emerged between BWB and Bi-Water, a British provider, poor coordination with provincial government, undefined ownership of assets transferred to them by DWAF and new appointments of top management. Both speakers concluded by reaffirming their responsibility to rural inhabitants, which involved a broad view of socio-economic needs.

3.2.4 Botshelo Water Board

Mr F van Rensburg, Deputy Chair of Botshelo Water (Botshelo), made comments about Botshelo and the DWAF report. He noted DWAF’s commitment to the development and partnership and Accelerated Shared Growth initiatives (NEPAD and ASGISA) as well as the setting up of CMAs and the transformation of irrigation boards to Water User Associations (WUA). Mr van Rensburg thereafter detailed Botshelo's responsibilities, which included servicing 42% of the North West Province, of which over three quarters was rural in nature. He explained that although water delivery was well underway, sanitation efforts were well under reconstruction and development programme (RDP) levels and most of this service was afforded to the urban population (1.037mil of 1.22mil), whereas the Zeerust area was the most poorly served. He endeavoured to show the Committee the various resources available in the region as well as the great improvement of yard connection statistics.

Since its inception in 1995, Botshelo had served over 300 000 people, but, owing to the incredible backlog, much more was needed and he made a plea for further extensive funding. Consultations were underway regarding the bulk potable water tariff. He went on to describe Botshelo’s operations, which included the maintenance of boreholes, schemes of 3 WSAs and wastewater treatment works. He outlined the Tswasa water scheme, which was a cross-border scheme with Gaborone, Botswana, as well as the tariffing system. He admitted that cost recovery was low and that a major capital investment would be required as upgrading and refurbishment was necessary. Skills development and water conservation education was also being undertaken. As a side note he detailed the committee on the Memorandum of Understanding with Midvaal Water Company.

3.2.5 Amatola Water Board

Mr M Sirenya, CEO of Amatola Water Board (Amatola), provided a description of Amatola’s vision, mandate and background of operation in the Eastern Cape. He outlined the areas in this region fed by dam supplies and overseen by Amatola. He said that the services received from DWAF included institutional reform leadership, board training and coordination of strategic studies. Amatola’s contribution to rural development was described as direct and indirect support via WUAs, elimination of backlog, rural schools sanitation programmes and learnerships. It did not yet include forestry support. Challenges faced included tariff negotiations, as the bulk raw water tariffs were high and the treated water tariffs were being delayed by DWAF. Other challenges related to the tariff approval process and the DWAF compliance audit, which was high in cost, and unfortunately, was bedevilled by lack of understanding from affected water boards of the reason behind the audit. He too raised, as a problem the transfer of DWAF owned assets, Section 78 assessments and institutional reform.

3.2.6 Albany Coast Water Board

Mr A. Swartz, Technical Director of Ocean Horizon, gave the background to the Albany Coast Water Board's (ACWB) location and especially the lack of fresh water reserves in the area. He described the desalination processes and plants used to combat the lack of resources. Most of these resources supplied the Ndlambe Municipality which serviced over 15 000 permanent residents who were predominantly HDI or retired persons. These people received unrestricted water supplies even though few were able to pay levies. Albany was therefore only able to cover its operational expenses and could not budget for future capital reinvesting projects. Compounding this effect was the increase of demand due to the Diaz Cross Aquifer drying up during dry months, and pressure from expanding communities. Plans were therefore being laid for five additional Megalitre storage facilities in order to meet this need and Mr Swartz said he looked forward to DWAF’s support in this venture.

3.2.7 Bloem Water Board

Ms M Matsabu, Chairperson of Bloem Water Board, gave a brief feedback on the forensic audit issue, which covered governance breaches by previous management as well as pension funds, policies and procedures, and the state of the company's finances.

Mr L van Oudtshoorn, General Manager of Technical Services, continued by detailing Bloem Water’s contribution in support of DWAF service delivery objectives by describing Bloem Water’s responsibilities, service delivery and community empowerment. He outlined the Herschel service area, which serviced 67 villages, the Elundini Area, Botshabelo, Thaba Nchu & Mangaung. Community participation was another area of important discussion, which included labour intensive construction and community liaison officers. Training and empowerment initiatives spanned awareness campaigns to the use of local materials and equipment. Other support provided materialised in the form of Project Consolidate, debt recovery and a repayment plan to Bloem Water, school sanitation, operation and maintenance and the likes.

3.2.8 Rand Water Board

Ms M Letsoalo (General Manager) presented their project approach of sustainability. A focus area is water conservation especially in preventing water wastage. 1389 jobs have been crated through the year. They have not met their goal to halve 50% female employees, only reaching 46%. Rand Water aligns its work to DWAF’s Strategic Plan, in the following manner:

Key Focus Areas RW Contribution

Water Resource Management	KFA 6 KFA 7	Ensure reliable and equitable supply of water for sustainable economic and social development, including the eradication of poverty. Ensure the protection of water resources.	Eradication of invasive alien plants. Domestic leaks, repairs and wetland rehabilitation projects.
Water Services	KFA 10 KFA 11	Ensure provision of basic water supply and sanitation for improved quality of life and poverty alleviation. Ensure effective and sustainable delivery of water services to underpin economic and social development.	Construction of water infrastructure and VIP toilet facilities. 10 community development projects.

3.2.8.1 The challenges noted by Rand Water were the following:

Increasing access to water and sanitation services to poor communities.
Ensuring affordable and sustainable services through constant reduction of water wastage.
Increased level of female participation in community development agenda.
Promotion of effective exit strategy to ensure that contract workers are employable upon completion of community projects.

3.2.9 Magalies Water Board

Mr J Ngobeni (CEO) and Ms M Legana (Chairperson) said that they needed quarterly feedback from the Department. They thanked DWAF for their support but mentioned that they are a little left behind at times when the municipalities get more support. Black Economic Empowerment (BEE) remained a big challenge to the board. They presented their goals and values and summarised their activities. They described the agreements they have with service providers that help them fulfil their objectives. They expanded on how their work assists rural development and the areas where they were active.

In terms of the challenges related to support from DWAF, Magalies highlighted the following:

Inordinate delays in issuing of raw water licences, thereby resulting in non-compliance by the Water Boards.
Issuing of raw water tariffs delayed and this results in non-compliance with regulation or delays in communication with stakeholders and consumers (in 2005/06).
Regular quarterly feedbacks with water boards not conducted.
Water boards often left to fend for themselves where disagreements exist with municipalities, and solutions are not readily fast tracked.
Some policies that have been designed are still in draft stage, yet water boards are expected to implement them.
DWAF has largely excluded the Water Board in the development of the Integrated Strategic Rural Development Programme (ISRDP), and Urban Renewal Programme (URP). This information was obtained only after the programmes and plans were complete.
Long turnaround times in providing updates on the Institutional Reform process, and this creates additional anxiety and uncertainty.
Need to engage Water Boards as key role players in the Transfer of Assets and S78 process, for which DWAF provides support to municipalities.

3.2.10 Ikangala Water Board

Mr T Mkoana (Chairperson) reported on the function of the board and where they are involved at grassroots level. He gave details of how they are involved in rural development and where the achievements and challenges lay.

3.2.11 Overberg Water Board

Mr J Emeran (Chairperson) talked about the challenges that his board had in its relations with the Department, which was a source of great frustration for the board. He expanded on the various achievements of the board.

In terms of the challenges faced by Overberg in its relation with the Department, the following was noted:

The Board could only play a meaningful role if they remained financially viable, and this, at times, is difficult due to the nature of its infrastructure and its client base.
The Auditor-General issuing a qualified report in respect of certain financial aspects of DWAF’s impact negatively on the client relationship of the Board, as the Board is seen to be part of DWAF. This is a perception, irrespective if the Board’s finances and all its systems received an unqualified audited report.
As sector leader, the Board would like to see DWAF coming through stronger in some respects, and showing more confidence in entities working in water and water services delivery.
DWAF needs to take strong leadership in certain instances where intervention is needed.

3.2.12 Lepelle Northern Water

Ms M Maponya (Acting Chief Executive) presented on DWAFs Annual Report, their involvement in socio-economic growth, funding for wetland development and bursaries for 12 students. They focused on the employment of historically disadvantaged individuals, job creation and service delivery through Project Consolidate. They used to provide bulk water only, but now provide sanitation, as well.

Lepelle Northern operates in the Limpopo Province and areas of supply comprise the Mopani, Maruleng, Fetakgomo, Capricorn and Marble Hall municipalities. The Board, however, noted that they would be expanding into all Water Service Authorities to capture 100% of the market share.

In providing a commentary on the department’s 2005/06 Annual report, the Board noted the following challenges:

Tabling of tariffs by the department to Parliament. Lepelle Northern has complied with the provisions of section 42 of the Municipal Finance Management Act.
Lepelle Northern’s tariff increase for the current year is below inflation.
The water quality at all purification plants achieved a standard of SANS 241, and is drinkable.
The Board successfully refinanced the Ebenezer Loan taken from DWAF at 15.75%, a loan from DBSA at 9.21%, resulting in interest savings of R12 million over the term of the loan.

3.2.13 Sedibeng Water Board

Mr M Ubisi (CEO) explained their background and areas of activity. They explained their participation in Project Consolidate, their contribution to social development through bursaries and the challenges faced in rural development including cost recovery and slowness in institutional reform. Some of the challenges noted by Sedibeng were the following:

The cost recovery in the North West Region posed a problem.
Consultation on activities planned by the Department with respect to water board, for example, compliance and technical audits on water board posed a further problem.
Timeous invoicing for raw water.

3.2.14 Umgeni Water Board

Mr D Naidoo (Acting General Manager: Operations) said that school sanitation was a major concern of theirs. He expanded on the relationship they had with DWAF and Water Service Authorities. He explained various projects, their locations and progress. They had a good relationship with Working For Water and wanted to spend the MIG on them. Umgeni did not receive any extra funding for this financial year.

3.2.15 Namaqua Water Board

Mr H Visser (Chairperson) presented on the history and geographical range of the board as well as its current illegal status. The Board’s term ends in 2006. Repeated applications had been made to the Department for extensions of their term.

In terms of the Board’s current and future projects, the Board currently only supplies water to the Nama Khoi Municipal area. During the 2005/06 year, a 6.2 km section of the pipeline between Henkries and Doringwater was replaced. The total distance of 19.7 km between Henkries and Doringwater is now replaced. This was after 33 years since the establishment of the system. The other 97 km of pipeline between Doringwater and Vaalhoek reservoir at Okiep is still the original product. Between Eenriet reservoir (Steinkopf) and Vaalhoek reservoir (Okiep), the gravity line’s lowest point (Kliphoog) is a weak point on the system. The pressure becomes very high at a certain section, and many pipes burst. A pressure valve was successfully installed at Vrieskloof to reduce the pressure and prevent burst and water losses. This upgrading was financed with a loan of R8 million from the Development Bank of Southern Africa (DBSA).

In terms of water tariffs, the Board’s income is mainly derived from water sales to Nama Khoi Municipality, and de Beers Minies, Kleinzee. The communities serviced by the Water Board are: Steinkopf, Bulletrap, Nababeep, Carolusberg, Okiep, Concordia, Springbok and Kleinzee. The current tariff is R2.99 per kilolitre (VAT excluded).

In terms of water quality, the Henkries purification plant has a design capacity of 18 mega litres per day, of which only 12 mega litres per day are currently utilised during peak seasons. The Board notes that until such time that they are able to upgrade/replace the pipeline between Eenriet and Okiep, they are unable to utilise the spare capacity of 6 mega litres per day. The provision of clean and safe potable water to communities within Namaqua Water Board’s supply area is the primary focus of the Water Board. Fortnightly bacteriological testing (PathCare) of the water is done throughout the year to ensure safe drinking water.

4. Related Stakeholders

Presentations

4.1.1 Inkomati CMA

Ms T Nyakane Mamika, Chairperson of Inkomati CMA, spoke on the governance of this CMA. She reported that regular meetings of the governing body were held, as well as board training. For efficiency the board was divided into five sub-committees, each with its own portfolio, and for effectiveness there was an audit committee. She went on to say that the establishment of the CMA was 80% complete, and it was to be launched by the Minister on the 2^nd November 2006. Inkomati had submitted a business plan, and a strategy was being worked on. There was a drive towards a strong organisational culture, but human resource problems persisted with a struggle to transfer labour to the CMA and overlapping of delivery.

However, on a positive note, five students were being provided with bursaries so as to equip the CMA with qualified personnel down the line. International and local companies were used to benchmark performance and a balanced scorecard was used. The Chairperson stated that with regard to stakeholder engagement, Inkomati was engaged with provincial and local government planning processes and had ‘champions’ conveying decisions to the communities. The transformation of water institutions was a major priority for Inkomati with goals such as changing the remaining 26 irrigation boards to WUAs that were not gender and racially exclusive, and helping these institutions to stabilize their financial situation. HDI support included rainwater harvesting and project awareness through the aforementioned ‘champions’. Internationally, protocols and agreements were shared with Swaziland and Mozambique.

Mr R Ndlovu, CEO, Inkomati set out some of the challenges that lay ahead for this ‘government experiment’. These included the gap between demand and supply of the resources, urgent support needed by the emerging farmers, and revenue generation. He noted that farmers used up to 92% of the catchment water but refused to pay owing to disagreements with the Department. There was also a problem that institutional commitments were not fully complied with. Inkomati still needed to appoint a full time chairperson.

4.1.2 Water Research Commission (WRC)

Ms R Kfir (CEO) and Mr K Pietersen (Director) presented on the achievements and highlights of the past year. They described the tools they created for rural development and poverty alleviation including the mitigation of pathogen proliferation. They described their relationship with the Department saying that it was a good and co-operative one.

4.1.3 Trans Caledon Tunnel Authority (TCTA)

Ms M van Rensburg (CEO) thanked the Committee for the opportunity to present. She explained who they were and their role as a public entity. They are aligned with ASGISA. She highlighted various achievements including their involvement in the Lesotho Highlands Water project and the Berg River dam. 67% of their organization was black and 60% female. The Vaal pipeline would be started in March. 1480 jobs had been created in the Berg River project.

4.1.4 Development Bank of Southern Africa (DBSA)

Mr M Marler (Municipal Infrastructure Specialist) apologised for not attending the previous day and for not having a presentation. The new CEO did not realise the importance of the bank in the hearings. The spending of the bank was small in the sector but they nonetheless have a large impact. There were task teams for sanitation that operate in the SADC region especially in rural development. This was not so much in South Africa. They had recommendations for the Committee; a constraint in service delivery tends to be for basic services. The Development Bank was not the appropriate place to source funding for this. It should be funded by grants. This could, however, be an opportunity to support municipalities in poverty alleviation.

Socio-economic growth is integral to the DBSA’s mandate and they must comply with the law. They had loaned money in the North West Province for eradication of the bucket system. There was a lack of skills at the municipal level. If they could not function in an urban area, they had little chance of functioning in a rural one. Stringent monitoring from the Bank was important. They found that a small desalination plant had been the most efficient in one remote location. The Development Bank reviewed the water board reports and thought it was a very beneficial process.

4.1.5 Working on Fire (WOF)

Ms V Charlton (Co-ordinator) said that they agreed with the Annual Report of the Department. She had brought the statistics that covered all administrative issues. 11.4% of the Western Cape region burned last year and 15% of open areas would be replanted. 13% of this was complete but the fire had undone it all. They aim to manage land and not just suppress fire. They tried to reduce fuel levels, especially through reducing invasive plants but also in the build up of the undercover in plantations. The challenge lay in the transmission of fire information. Their co-operation with the Department was very good and DWAF was on their board to give guidance. 1500 people were employed by WOF, most of whom were young people. There was an expansion of emerging growers. They agreed with the Department’s Annual Report about the challenges in fire protection.

4.1.6 Forestry South Africa

Mr S. Ngubane, Small Business Development Manager, Forestry South Africa (FSA), opened his presentation with observations on the forestry sector ranging from leadership and capacity issues to communication and information dissemination challenges. He spoke firstly on the water resources management programme. He referred to water allocation reform, and noted that the logical sequence principal was incorrect. He described water source management strategies, which for example, covered verification of water use.

He spoke on water use charges, which required a realistic approach that internalised environmental costs and created incentives, assistance to poor and emerging farmers, water allocation and equity. He noted that results were yet to be produced showing benefits to historically disadvantaged individuals (HDIs). He also dealt with water management institutions and make-up of the Catchment Management Area (CMA) boards, expressing concern over the almost mandatory membership enforced on users, and unlawful water use. The rest of the presentation concentrated on the forestry programme in which Mr Ngubane looked at the forestry sector transformation, including drafting a charter ‘sensibly’, and the resource management of state property, whether leasing or redistributive in nature, sustainable forest management, the sector's growth and development. He detailed some sector plans, specific strategies, genus exchange and Research and Development.

Mr Ngubane conveyed FSA’s activities with regard to socio-development and emerging interest groups as one of facilitation, support and capacity building. He concluded with remarks on areas of future attention, which were mainly licensing process issues, improving internal and external relations as well as leadership and capacity improvement.

4.1.7 Surplus Peoples Project

Ms A Stagler, Surplus Peoples Project (SPP), addressed the Committee in conjunction with Mr Jan Fortuin, Chairperson of Matzikama Emerging Farmers Forum, and Pieter Esau, Chairperson of the Bergrivier Emerging Farmers Forum. The SPP was described as an NGO that facilitated land reform in the Northern and Western Cape, where its main objective was to ensure that HDI’s got access to and ownership of natural resources to better their positions. Farmers were still South Africa's biggest water users, at about 70%, and only about 4% had been redistributed to HDI’s. Specific examples included Nuwehoop farm where the owner refused farm dwellers access to water and the municipality had to step in to supply drinking water. The shortage of access to water was a serious stumbling block to emerging farmers and projects to ensure water rights were underway. These emerging farmers found their situation even more difficult as they had limited knowledge and technical skills. SPP appealed to the Department to launch systematic capacity building programmes for these emerging farmers.


4.1.8 National African Farmer's Union (NAFU)

Mr M Mokoene, CEO, NAFU began his talk with a background and the aims of the Union, which covered the entry of black farmers into mainstream agriculture. Its objectives remained to promote the interests of members and act as their mouthpiece, the acquisition by its members of agricultural land and to lobby for appropriate tenure arrangements and to ensure the removal of all legal restrictions which inhibited the activities of small and emerging farmers. Major challenges included the legacy of the past, initiatives to revitalise old schemes, and ensuring sustainability and water and irrigation. He noted that these alone would not solve emerging farmers' problems. Specific issues remained and amongst these were the acquisition of land in Limpopo without water rights.

4.1.9 Jonkershoek Crisis Committee

Mr A Simmers, Jonkershoek Crisis Committee, spoke about the dire needs and obstacles facing emerging farmers and farm workers in this area, and the lack of support received from local government. He mentioned that although Mr Truter of DWAF in Pretoria had told him that money had been put aside for the upgrading of the water and sanitation of the area, this had not yet materialised. Problems on the state land included the fact that people still made use of pit toilets, which were in terrible states. Septic tanks and French drains were also in use, but were very unhealthy. The Committee was concerned about pollution of the aquifer, and water quality in the area was also of very low quality.

There was no proper infrastructure for emerging farmers, and the farming of livestock was also not allowed on the land. The community would also like to have its own graveyard, but was concerned about the possible pollution of the aquifer. The storm water trench was not maintained and was running off into the houses.

The community also believed that invasive fish species, faeces, and food that Stellenbosch University used to feed the fish polluted the Eerste River. Shortage of water occurred in summer, and this was a big issue. The municipality used water that fell on their property, and would not allow this community to make use of this water. The reservoir was also leaking, and no one wished to come and attend to it. Cape Nature Conservation channelled this water to breed invasive fish species, which threatened the environmental balance. The Crisis Committee had taken part in the integrated development plans of the province, and believed that DWAF should give the forested areas surrounding their land as a community forestry area. He said that he was told that DWAF now wanted to withdraw from the area. The Crisis Committee failed to understand this move, and disturbed by rumours that a foreign company wanted to come and take over the area. There were major concerns raised about the state of the farms in the area.

4.1.10 South African Local Government Association (SALGA)

Mr W Moraka (Manager: Water Services) said that the Department of Water Affairs and Forestry (DWAF) has shown great leadership and he commended the Director General, Mr J Sindane, in particular for his leadership and guidance. He thanked the Department for bringing all relevant sectors together to collaborate. From the report he highlighted the key areas of: Water Allocation Reform, which was important for the theme of the meeting; Infrastructure development at a bulk level; and the unlawful users of water. The challenges included the role and responsibilities of the Water Users Associations. The interface between water resource and services was very important. He was glad that sanitation was getting the attention and profile that it deserves. School and clinic water provision is now a focus. They want their relationship with the water boards to grow and were thus glad that they were present at the meeting. Tariffs have a huge impact on the socio-economic state of the country, especially at a municipal level. Their achievements included building of the Berg River dam and bulk storage facilities, as well as treatment works. The goal is creating sustainable service provision. They need R38 billion to meet water and sanitation backlogs. This will take ten years. The affordability of water was highlighted and bulk infrastructure was essential and fundamental to it. SALGA started collaborations with civil society organisations. The Municipal Infrastructure Grant (MIG) ends in 2013 so they need to set the right tariffs now for the future. He wanted the Treasury to understand the backlogs.


4.1.11 Rural Development Services Network (RDSN)

Mr V Thoka (Director) presented that the RDSN is an amalgamation of civil society organisations. They operate in all provinces. They are strengthening inter and extra Government relations. They support local economic development by supplying water and sanitation to the whole country and by fostering technological advances. A challenge is that some people use consultants instead of civil society organs. They are in partnership with DWAF for sanitation provision. They adhere to the millennium development goals in line with the policies of the Southern African Development Community (SADC) and the New Partnership for Africa’s Development (NEPAD). Their view of rural development includes any area with poorly developed water infrastructure and as such includes peri-urban areas like Alexandra in Gauteng.

4.1.12 Mawubuye Community Trust

Mr M Klaas (Representative of the Mawubuye Community Trust for Community Outreach and Education (TCOE)) said that they represented the people on a farm in the Breede River Valley. 70% of people there were unemployed. They lacked infrastructure and have to carry water themselves. The farm was not viable as household water was being used for livestock, which resulted in high bills and unhygienic conditions. They had waited more than a year for a response from the Department. They have land but no water. They use buckets to irrigate crops and had very poor service delivery. Service to small-scale farmers is fragmented and not adequate. The public must be made aware of their rights and land must not be given without water as a matter of principle.

Mr W Wilemse (Representative of the Mawubuye Community Trust for Community Outreach and Education) added that the report was daunting but he appreciates the opportunity to present. His organisation is made up of more than 100 members. He wanted to tell the Committee about the challenges they encountered in getting water to their land. Land and water should go together. The Water Users Association had not informed them of the hearings. They have been waiting for ten years for water. They have to carry their own water, using 17 drums per week over 6km. This was a big cost. It is easy for big farmers to utilise water by turning on a tap. Local government needs to regulate water users and access to dams that are not being used by big farmers should be granted to emerging farmers.

5. Conclusion

In 2005, the transformation of the Department of Water Affairs and Forestry reached a critical stage. This transformation has entailed implementation of vital new functions such as water allocation reform, the regulation of municipal water services and the oversight of forestry ownership gaining momentum. The delivery has meant that many operational functions such as water service delivery and indigenous forest management, was transferred to more appropriate organisations during the year.

With regard to the input by the South African Local Government Association, the Association needs to focus critically on expenditure trends that impact on service delivery by municipalities. Furthermore, SALGA plays a critical role acting as an intermediary within the local government structures. Therefore, alternatives and solutions should be emerging at this level to ensure that all the people of the country have access to basic services. SALGA cannot hide behind the issues of lack of capacity, limited financial resources, etc. as this Portfolio Committee has heard these comments from SALGA in the past.

The Portfolio Committee appealed to SALGA to begin critically looking at the challenges that they come across and work on solutions that would help the municipalities. It is also important that SALGA begin engaging with the progress in the implementation of the MFMA, and recognize the challenges that remain, in particular, the building of capacity and skills, improving and integrating planning and budgeting, and improving the quality, timeliness and relevance of reporting. The reforms to local government have been supported by national government through the MIG and conditional grants and technical assistance. Therefore, SALGA needs to empower the municipalities in the manner in which they could effectively comply with the MFMA and suite of legislation that impact on their financial viability and has an effect on service delivery.

With regard to the Water Boards, differences were noted in the manner in which high and low expenditure and revenue generated figures emerged from the various water boards. However, it is also noted that Water Boards are not only aiming at profit making, as was the case in the past, but beginning to work on sustainably developing the communities they service.

The challenges raised by Water Boards include delays in issuing raw water licences, no support by DWAF given when disagreements arise with Municipalities. They requested that confidence to be shown by DWAF in entities working with water and water service delivery; stronger leadership to be taken by DWAF in certain instances where intervention is needed. Concern was also raised regarding the transfer of DWAF owned assets, Section 78 assessments and institutional reform.

As sector leader, DWAF faces new challenges in ensuring a common vision and approach in each of the three sectors for which it is responsible. To achieve water supply and sanitation targets, and ensure that sustainable services are accessible to all will require major efforts from all organs of government to support local government.
The Portfolio Committee acknowledges progress reported by all in the public hearings towards rural development and expresses our gratitude in the quality of submissions made by all in this regard.

6. Recommendations

In engaging with the 2005/06 Annual Report, the Portfolio Committee on Water Affairs and Forestry recommends the following:

In so far as the technical quality of the report is concerned, whilst progress is noted in so far as the structure, information of the report, DWAF to detail their interaction with Parliament also in the report as well as detailing alongside challenges, reports on progress on service delivery in particular targets set by the President and targets set by DWAF too. All future reports should include oversight and institutional mechanism on all entities reporting to the Minister.

Noting that challenges still occur with regards to DWAF continuing to receive a qualified report by the Auditor General, therefore recommends that DWAF continue to provide quarterly reports to the Portfolio Committee on improvements in financial management.

In this regard the Portfolio committee recommends that DWAF’s Audit Committee provide a report to the Portfolio Committee on amongst others under and over expenditure, policy formulations improvement and all other relevant obligations as per the Public Finance Management Act.

That quarterly reports to the Portfolio Committee by Corporate Services also to continue which should include amongst others capacity development plans with regards to:

Establishment of Asset register,
Scarce skills allowances paid and the number of beneficiaries,
Training needs of staff and categories of skills staff require.
Obligations of all staff including regions with regards to the Public finance Management Act.
Exit strategies for retired accounting staff.
Capacity building programmes and evaluation on current and all new financial systems implemented.

The Portfolio Committee urges DWAF to speed up the process of ensuring a fulltime chief financial officer that can take up the financial accountability obligations in terms of the Public Finance Management Act. In this regard recommends that DWAF continue to engage with the Department of Public Service and Administration on a speedy finalisation of the outstanding case of the suspended Chief Financial Officer. The Portfolio committee to receive progress report in this regard by December 2006.

The Portfolio Committee endorses the decision of the Honourable Minister of Water Affairs and Forestry to link the Director General’s performance assessment to the attainment of an unqualified Audit report. The Portfolio Committee further recommends that similarly performance assessment agreements of Deputy Director Generals and Regional Heads also be linked to improvements into financial accountability obligations.
The Portfolio committee to receive a report on evaluation on work done by retired accountants and the National Accounting firm.

DWAF to report on their interaction with National Treasury and the Office of the Auditor General in pursuit of proper financial obligations.

A deliberate water allocation reform programme to be implemented and financed towards emergent farmers so as to enable them to participate equally in the economy, as well as overcoming obstacles towards under expenditure on monies allocated towards assisting emerging farmers.

A joint programme between DWAF, the Department of Provincial and Local Government and the Department of Land and Agriculture should be implemented to eradicate the problems encountered with water inaccessibility and water allocation reforms as well as those encountered on forestry. A deliberate programme to be initiated to ensure that land, agriculture and water reforms programmes occur simultaneously.

Bulk infrastructure for water services is often cited, as one of the impediments to delivery of free basic water and this should be investigated.

The Portfolio Committee reaffirms their recommendations made into the challenges faced by the functioning of some Water boards. It therefore recommends that by December 2006 the Portfolio Committee receives a progress report and an implementation plan with regards to the future viability of Ikangala, ensuring that Namaqua Waterboards’ Board becomes legal in their operations and improvements towards the functioning of Bushbuckridge Waterboards as well as the strife between them and the Provincial and Local Government in the areas of their operations.

DWAF and SALGA to continue seeking improvements in intergovernmental relations between Waterboards, Municipalities and Provincial Governments.

With regards to Forestry, results were yet to be produced showing benefits to historically disadvantaged individuals. Therefore the Portfolio Committee recommends that the forestry sector transformation should include in the further drafting of a BEE Forestry Charter a deliberate programme of entry into the forestry sector as well as a deliberate programme of sustainability in continuing in the forestry sector. That the resource management of state property, whether leasing or redistributive in nature, as well as sustainable forest management, developed a definitive sector’s growth and development path.

DWAF to finalise institutional reform with regards to water resource and services so as to find a relationship and synergy between Water services and Water resources.