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Briefing on Budget Vote No.37Briefing on Budget Vote No.37

Presentation to the Select Committee on Land and Environmental Affairs (NCOP)

Presentation by

Mr Onesmus AyayaChief Finance Officer

04 May 2010

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EXPENDITURE TRENDS - MEAYear Actual

R‘000Budget

R‘000

2005/06 3,717,088 3,935,636

2006/07 4,305,650 4,660,303

2007/08 5,385,461 5,862,513

2008/09 6,511,300 7,036,616

2009/10 7,629,840 7,774,002

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EXPENDITURE OUTCOME FOR END 31 March 2010

Programme Adjusted budget2009/10

Actual 2009/10R’ 000

% spent

Administration 799 046 846 690 105%

Water resource management

4 124 998 4 072 067 98%

Water services 2 841 945 2 711 083 95%

Total 7 774 002 7 629 840 98%

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EXPENDITURE OUTCOME FOR END 31March 2010Economic classificationProgramme Adjusted

Budget2009/10

2009/10 Actual

% spen

t

Available Budget

Compensation of Employees

1 024 055 910 574 88% 113 481

Goods and Services 2 211 129 2 137 601 96% 73 528

Interest and Rent on land - 66 - (66)

Theft and Losses 50 781 - (50 781)Transfers and Subsidies 4 456 341 4 038 763 90% 417 578

Payments for Capital Assets

82 477 492 055 596% (409 578)

Total 7 774 002 7 629 840 98% 144 162

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Reason for under/over spending• The over expenditure on Programme 1: Administration relates to

Theft and Losses incurred by the Department which includes staff debts, write-offs in respect of water and irrigation board loans

• Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R113 million will not be spend in this current financial year

• Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arriva.)

• Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA. An amount of R23,3 million was withhold in terms of DORA due to municipalities failure to submit proper expenditure and close-out report. months.

• Delays in finalising contractual agreement between DWA and service providers in respect Accelerated Community Infrastructure Projects.

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2010/11: KEY PROGRAMMES Post government reconfiguration: reorganised Programme structure is as follows:1. Administration2. Water management3. National water resources infrastructure 4. Regional management5. Water sector regulation

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Programme 2010/2011R’ 000

2011/2012R’ 000

2012/2013R’ 000

Administration 884 205 902 119 947 829Water management

364 749 386 574 405 853

National water resources infrastructure

2 241 418 2 520 177 2 739 959

Regional management

4 329 013 5 077 318 5 320 451

Water sector regulation

177 207 204 019 214 140

Total allocation 7 996 592 9 090 207 9 628 232

MAIN ACCOUNT ALLOCATION (INCLUDING EARMARKED FUNDING)

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EARMARKED FUNDINGDescription of Earmarked Projects 2010/11

R’000

Learning Academy 20 000

Property Management - Rental of Buildings 156 000

Additional Capacity – Human Resources 7 000

Working for Water 668 583

Working on Fire 207 923

Masibambane 200 000

Bulk infrastructure 893 000

Water Services Operating Subsidy 807 682

Construction of Water Services Scheme 191 942

Compliance Monitoring & Enforcement 5 000

Total 5 446 905

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UN-EARMARKED FUNDINGEconomic classification 2010/11

(R ’000)

Compensation of Employees 917 528

Goods and Services 1 246 288

Transfers of subsidies 287 008

Payment for Capital 98 863

Total 2 549 687

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DONOR FUNDINGDescription of items 2010/2011

R’ 0002011/2012R’ 000

2012/2013R’ 000

Water and sanitation services

195 874 - -

Water and sanitation programme

15 000 - -

Upgrading of hydrometric equipment in Lesotho

- - -

Community water supply and sanitation

- -

Twinning arrangements with Dutch water boards

- - -

Total 210 874 - -

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COMBINED BUDGET (EXCHEQUER & DONOR FUNDING)

Description of items 2010/11 (R’000)

2011/12 (R’000) 2012/13 (R’000)

Exchequer funds 7,996,592 9,090,207 9,628,232 Donor Funds 210 874

0

Expenditure Recurrent expenditure 3,843,637 4,152,625 4,385,641 Goods and Services - Exchequer Funds 2,466,220 2,955,915 3,173,212 Goods and Services - Donor Funds 210 874

0

Compensation of employees 1,166,543 1,196,710 1,212,429 Transfers and subsidies 3,238,487 3,076,768 3,455,007 Provinces and municipalities 890,746 380,723 399,760 Departmental agencies and entities 2,102,743 2,400,653 2,623,459 Households 64,426 114,787 251,152 Foreign governments and organisations 180,106 180,111 180,117 Universities and non-profit organization 466 494 519 Payments for capital assets 1,125,342 1,860,814 1,787,584 Buildings and other fixed assets 1,038,326 1,769,218 1,691,779 Biological Assets 341 360 378 Machinery and equipment 74,196 77,931 81,560 Software and intangibles 12,479 13,305 13,867 TOTAL 8,207,466 9,090,207 9,628,232

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REQUEST FOR ADDITIONAL FUNDING – 2010/11Description of Budget Bids Amount

RequestedR’000

Amount Approved

R’000

DifferenceR’000

Water Conservation and Demand Management 60 000 0 (60 000 )

Rainwater Harvesting Programme 51 700 0 (51 700)

Natural Resource Management (WfW) 200 000 102 573 (97 427)

Funding for Deputy Minister 8 733 3 200 (5 533)

Olifants River Water Resource Development Project 306 000 0 (306 000)

Refurbishment of Infrastructure 1 000 000 0 (1 000 000)

Regional Bulk Infrastructure 1 354 000 54 000 (1 300 000)

Upgrading and expansion of the National Water Resource Monitoring Networks

17 000 0 (17 000)

Emergency Project to address the water crisis at Giyani

98 000 0 (98 000)

Mzimvubu River Catchment 6 000 0 (6 000)

Compensation of Employees adjustment 65 559

Regional Bulk Infrastructure Grant (RBIG)

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IntroductionRegional Bulk Infrastructure Programme

Grant mechanism established in 2007 to supplement the financing for the development of regional bulk water infrastructure and regional bulk sanitation collection as well as regional water and waste water treatment works (social component only)

Budget Allocation (2010 MTEF) R4.42 billionEstimated R60 billion investment required

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SONA (Extracts) In addition, we will work to improve the effectiveness of local

government, infrastructure development and human settlements

We are not a water rich country. Yet we still lose a lot of water through leaking pipes and

inadequate infrastructure. We will be putting in place measures to reduce our water

loss by half by 2014. This government will ensure that our environmental assets

and natural resources are well protected, and are continually enhanced.

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How does RBIG respond to SONA Support and assist WSA with Bulk infrastructure

operations and maintenance Ensure that WC/WDM is effectively addressed

before approving RBIG projects Ensure adequate O & M, and asset management

measures are part of the new RBIG projects Promote where possible WC/WDM related RBIG

projects i.e. Wastewater recycling (re-use)

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• Aim: This fund aims to support Government’s development targets (e.g. eradication of basic water supply and basic sanitation backlogs) as well as socio economic priorities such as the 2010 Soccer World Cup, enablement of growth and development initiatives as well as addressing specific water risks (e.g. water availability, water quality and environmental challenges).

• Responsibility: DWA is responsible and accountable for the management of this specific-purpose Water Services Regional Bulk Infrastructure Grant.

• Accountability: The transfer from National Treasury to DWA will take place as per DoRA and bi-lateral arrangements.

• Assessment / Allocation: The fund is project focused and each case is assessed and selected on merit. It is not formula based and not generically allocated.

• Co-funding; While this fund must enable economic development, the proportional capital cost for higher levels of domestic, commercial and industrial uses must be obtained from suitable co-funding or financing mechanisms

RBIG Policy

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Policy – Definition of Regional bulk The infrastructure required to connect the water resource, on a macro or sub regional scale (over vast distances), with internal bulk and reticulation systems or any bulk supply infrastructure that may have a significant impact on water resources in terms of quantity and quality. – “Macro” is defined as infrastructure serving extensive areas across multi-

municipal boundaries– “Sub-regional” is defined as large regional bulk infrastructure serving

numerous communities over a large area normally within a specific district or local municipal area

– Over “vast distances” is considered as any distances greater than 5 km– Bulk infrastructure that has a “significant impact on water resources” includes:

• Any bulk scheme that is designed for maximum demand of 5 Ml/day or more• Any waste water treatment plant that discharges into a fresh water resource

system• Any water treatment plant that is designed for a maximum demand of more

than 2 Ml/day

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Project Criteria• Funding is only allocated for implementation once the

Projects is “implementation ready”. • Projects must be aligned with regional and national water

resource development strategies, including compliance to WC/WDM.

• Projects must provide for realistic longer-term development scenarios and “total needs”

• Projects must have stakeholder involvement and commitment.

• Projects must be environmentally acceptable (approved EIA and environmental Management plan).

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Implementation Readiness• Comprehensive feasibility planning must be undertaken;• Prove socio-economic benefit;• Financial viability;• Illustrate sustainability• Technical acceptability;• Institutional arrangements;• Agreement , commitments for both implementation and sustainable operation;• Projects must be environmentally acceptable; • A financing plan must be in place, • Compliance to water conservation measures;• Acceptable asset management plans and systems; • Completed Environmental Impact Assessment, and• Water licenses

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Previous financial years 2007/08 and 2008/09• 2007/08 R 300.0 million• 2008/09 R 444.7 million• 2009/10 R 616.8 million

2010/11 MTEF Allocation• 2010/11 R 893.0 million (Including the R54 mil

Limpopo drought relief funding)• 2011/12 R 1675.3 million• 2012/13 R 1849.2 million

Budget allocation

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Progress to dateThe total projects implemented since the start of the

programme are as follows:• 107 projects were started since 07/08 financial year;• 50 implementation projects have been initiated and are in

construction, design or tender phase 32 construction, 18 design / tender phase

• 57 feasibility / implementation ready studies underway (budget for implementation approximately R3 billion)

• 9 projects have been completed• New projects can be funded from 2012/13

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Projects completedThe projects completed to date are as follows:2007/08• Chris Hani Tsomo RDP2 BWS • Delmas Phase 1 Emergency • Thaba Chweu BWS 2008/09• Delmas Phase 2 • Maqwassi Hills RWS 2009/10• Mbhashe North BWS• Mathulini BWS • Greater Mthonjaneni BWS Phase 1 • Van Wyksvlei Interim Solution

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Projects completed in next QuarterProjects to be completed in the next quarter• Mthatha Bulk Water Intervention • Jagersfontein BWS• Groblersdal Lukau BWS • Van Der Kloof/Petrusville BWS

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Jobs created

RBIG has created 3,448 jobs,

This equates to 188,825 person days.

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Project Challenges & Risks 1. Transfer of funds 2. Misuse of funds by Municipalities3. Many projects were not ready and were given funding4. Non-Dora compliance (eg Roll over requests from NT)5. Inadequate capacity by municipalities to manage

implementation6. Delays in implementation of projects and expenditure7. High escalation costs8. Approval process not followed9. Sustainability of projects once completed

(commitments by Municipalities to perform O&M)10. Lack of Co-funding by WSA

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Refocusing our approach• DWA to take greater/direct control for implementing new

RBIG projects utilising: Project management capacity from DWA: Regional and National

Offices Utilising the capacity of Water Boards Utilising DWA construction

• Where feasible new assets to be transferred to Water Boards

• Focus on sustainability of projects and Operations and maintenance

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2010 RBIG MTEF ALLOCATIONS

REGIONBudget

Allocation 2010/11

Budget Allocation

2011/12

Budget Allocation

2012/13

Total budget Allocation

% OF TOTAL

EASTERN CAPE 155,400,000 309,000,000 321,650,000 786,050,000 17.8%FREE STATE 87,000,000 153,300,000 108,000,000 348,300,000 7.9%GAUTENG 56,000,000 63,000,000 97,500,000 216,500,000 4.9%KWAZULU NATAL 157,775,000 328,400,000 399,360,500 885,535,500 20.0%LIMPOPO 188,000,000 332,000,000 385,989,000 905,989,000 20.5%MPUMALANGA 64,000,000 93,000,000 47,000,000 204,000,000 4.6%NORTHERN CAPE 50,075,000 148,500,000 120,500,000 319,075,000 7.2%NORTH WEST 48,300,000 105,000,000 120,900,000 274,200,000 6.2%WESTERN CAPE 33,557,000 59,200,000 60,700,000 153,457,000 3.5%SPECIAL PROJECTS

Desalination Strategy and Rollout 4,000,000 5,000,000 5,000,000 14,000,000 0.3%Refurbishment of Namakwa WTW 4,000,000 15,000,000 25,000,000 44,000,000 1.0%

Green Agenda 3,000,000 5,000,000 5,000,000 13,000,000 0.3%Acid Mine Drainage 2,500,000 3,000,000 3,000,000 8,500,000 0.2%

HEAD OFFICE 39,393,000 55,940,000 149,507,500 244,840,500 5.5%TOTAL 893,000,000 1,675,340,000 1,849,107,000 4,417,447,000 100.0%

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Total Needs Assessment as at Dec 08Province Funding requiredEastern Cape R5 b (preliminary)Free State R5 b (R2.6b priority projects confirmed)

Gauteng R3 b (preliminary)Kwazulu Natal R12.5 bLimpopo R13.8 bMpumalanga R3 b (preliminary)Northern Cape R1.8 bNorth West R8.6 b (preliminary)Western Cape R7.3 bTotal R60 b (preliminary)

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New Priorities (2010)

• Broadening access from under-utilised and single purpose dams (Taung and Jozini);

• Desalination Strategy and roll-out• Acid Mine Drainage• Namakwa Water - refurbishment

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Water Services Operating Subsidy 2010/11

REGIONS Schedule 6R’000

Schedule 7R’000

Total R’000

Limpopo 379,048 112,266 491,314Mpumalanga 133,135   133,135Gauteng 22,893 1,465 24,358

North-West 52,186   52,186Eastern Cape 49,610   49,610

Western Cape 3,415   3,415Northern Cape 8,813 32,247 41,060Kwa-Zulu Natal 540   540Free State 12,064   12,064TOTAL  661,704 145,978 807,682

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Drought Relief MTEF Allocation

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REGIONS Adjusted budget2009/10R’000

2010/11R’ 000

2011/12R’000

2012/13

Western Cape 53 700 141 500Eastern Cape - 86 857 - -Free State - - - -Gauteng - - - -KZN - - - -Limpopo - 54 000 - -Mpumalanga - - - -Northern Cape - - - -Total 53 700 282 357 - -

Working for Water Allocation

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REGIONS 2010/11R’ 000

National Office – Cape Town 215 985Western Cape 72 930Eastern Cape 96 196Free State 19 440Gauteng 32 635North-west 31 015KZN 63 900Limpopo 40 337Mpumalanga 65 756Northern Cape 30 388Total 668 582

Working on Fire Allocation

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REGIONS 2010/11R’ 000

National Office – Cape Town 207 923Total 207 923

WTE Augmentation – Actual (2009/10)

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Augmentation Adjusted budget2009/10R’000

Actual 2009/10R’ 000

% spent

Available budget

Operation of water Resource

123 208 123 208 100% -

Infrastructure Development and Rehabilitation

2 216 201 2 195 379

99% 20 822

Total 2 339 409 2 318 587

99% 20 822

Augmentation to WTE MTEF Allocation

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Augmentation Adjusted budget2009/10R’000

2010/11R’ 000

2011/12R’000

2012/13

Operation of water Resource

123 208 140 000 167 100 175 500

Infrastructure Development and Rehabilitation

2 216 201 2 101 400

2 353 000

2 564 500

Total 2 339 409 2 241 400

2 520 100

2 740 000

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Thank you