Water Research Commission and Trans-Caledon Tunnel Authority: Annual Performance Plans 2021/22; with Deputy Minister

Meeting report

The Chairperson welcomed everyone and thanked everyone for their presence. She apologised to the presenters and Department for the meeting being delayed because the Committee did not have a quorum. The meeting observed a moment of silence.

Ms M Mohlala (EFF) said in future to avoid confusion the Committee should reschedule its meeting if Members want to attend other plenary meetings.

The Chairperson said that the plenary was not in the Committees’ cluster, however Members should have communicated that they wanted to attend and have the Committees’ meeting rescheduled.

Water Research Commission (WRC) APP 2021/22
Mr Dhesigen Naidoo, the Chief Executive Officer (CEO) of the Water Research Commission (WRC), took the Committee through a detailed presentation (see attached). The presentation included the Annual Performance Plan (APP) and budget of the WRC for the period 2021/2022 to 2025/2026.

He said that the WRC planned the following to address issues:

Water Quality:
• Supporting the development of standards for water use efficiency and water safety in buildings.
• Development and testing of a rapid molecular method to detect C Perfringens spores using recombinase polymerase amplification and paper based lateral flow assay.
• Large-scale multiple barrier treatment system for the removal of multi-drug resistant ESKAPE pathogens from water sources in sub-Saharan Africa.
• A combination of chemical analysis and stakeholders participation in solving the Hennops river pollution in Gauteng Province, South Africa.
• Real-time water sensing as alert system for substances of concern.

Water Security:
•The socio-technical dimensions of, and solutions to non-revenue water in eThekwini Municipality and South Africa
• Development of a national risk-based decision support tool to assess fitness for reuse
• Integrating water quality – health impacts into an Integrated Water Resources Management Decision-Support System (INWARDS) for early warning.
• Scenario building for future water management in South Africa.
• Subsurface water in terms of future urban settings.

Food Security:
•Transformative approaches in managing human waste and wastewater by reframing nutrient recovery from innovative sanitation technologies as integral components of farming and food systems.
• Direct urine capture for use as a fertilizer.
• Nutrition Water Productivity of Bush Tea.
• Determining water use, water use efficiency and nutritional water productivity of Moringa under varying crop management practices
• The utilisation of geothermal spring water for tilapia aquaculture to promote food security and skills development.

Energy Security
• Synthesis and application of Highly Porous Three-Dimensional (3D) Graphene Macrostructures for Capacitive Deionization and Solar based Desalination of Saline Water.
• The Water, Energy, Food nexus to support climate change adaptation in South Africa.
• Demonstrating the WEF nexus integrative model in Mpumalanga using quantitative and qualitative research methods to inform policy development for achieving sustainability.

Sanitation
• Offering integrated urban wastewater modelling support to municipalities.
• The customization and pilot production of bionanomaterial technology for large scale wastewater treatment.
• Advancing Circular Economy in the Water Sector: Utilisation of Biochar from Sludge Treatment in a Novel Technology for Wastewater Effluent Recovery and Reuse.
• Microbiome of VIP latrines.

Discussion:
Ms Mohlala referred to slide 6 of the presentation which said that the WRC aimed to influence policy and decision making with research-based knowledge. She asked if only the WRC determined research topics or could Parliament request research on a specific topic. She asked if the WRC will conduct research on weaknesses on the National Water Act (NWA) and the national Water Services Act (WSA) to influence amendments to this legislation. There needs to be an economic regulator to determine rates of water because the current regulator model has a lot of issues. She asked the WRC what alternative model can be developed in South Africa (SA). She said that the WRC aimed to build and developed the interest of youth in water research management (WRM). She asked what involvement the WRC’s has with primary and high school learners in building their interest for WRM. She asked the WRC if its capital expenditure included the renting of buildings and if so did it consider to buy land and build its own facilities. She indicated that she did not know where it will get land but the government does have land it can use. She said that if the WRC was allocated more money for its budget and asked the WRC to explain how it will improve the detrimental features of SA.

Mr M Tseki (ANC) commented on the good progress of including women in transformation targets of the WRC. He asked the WRC what its target for women and transformation was for the previous financial year and how many targets did it achieve. He said that the Committee engaged with other entities and discussed the increase in the cost of chemicals that clean water. These chemicals are imported from other countries because it is cheaper than what is produced in SA. He asked the WRC what it can do with other departments, using research to solve this problem.

Ms G Tseke (ANC) said that agriculture is critical to the gross domestic product (GDP) of SA. She asked what innovative research can be used to develop the link between agriculture and the water sector. She noted the slide regarding the transformation of women and blacks in the WRC, however nothing is mentioned regarding people with disabilities. She asked the WRC to elaborate more on this.

Ms S Mokgotho (EFF) made reference to slide 19 of the WRC’s presentation on addressing the issues of sustainability by increasing leverage funding. She asked the WRC to explain this concept and how it planned to implement it.

WRC responses
Ms Nozi Mjoli, the Chairperson of the WRC, replied to Ms Mohlala’s question on influencing policy that the WRC responds to the needs of the stakeholders. She said that if Parliament requires specific research it must communicate it to the WRC. She replied to the question about the WRC owning its building that the WRC used to own its building.

Mr Naidoo added that the agenda of the WRC is very complex and the process takes month to complete. The agenda process takes into account the inputs of the various sectors the WRC serves and presents these to the Department of Water and Sanitation (DWS). The DWS gives its own input and the final agenda product is presented to the Ministry for final consideration. The WRC tries its best to deal with immediate problems with its research while it tries to remedy the long term issues that the research needs to address. The WRC uses the advantage of the time to deal with long term and the issues that are unknown in the long term. The WRC will not wait until the world has transitioned into the fourth industrial revolution economy and uses a new water management system and then have to catch up. The WRC hopes that SA will be one of the leaders of this transition and assist other countries. He replied to Mr Tseki’s question on chemicals, that the WRC would like to turn this scenario around. The WRC wants countries to import from SA because, as Mr Tseki correctly said, the country becomes vulnerable to the currency exchange. In the research domain, research inflation is higher than the general inflation rate because it is not computed. The second programme of the WRC in the previous financial year was influenced because of the global lockdown. There is another problem with price escalations and availability. The WRC is working with stakeholders to ensure more localisation of the manufacturing of chemicals, consumables and new sanitation solutions. In 2017 the WRC ran a programme to put more effort into local manufacture and export goods.

Mr Naidoo replied to Ms Mohlala’s question on influencing policy that the WRC will respond to any Committee request either by providing existing information gathered over the years or it will launch new projects. The projects that influence policy making get discussed in the stakeholder engagements in the agenda setting process and also come from the Minister’s and the Department’s requests. The WRC receives requests from sectors under other Ministries as well. The WRC have expanded as an organisation and have 3 000 researchers. This is the expertise that the WRC provides both locally and internationally to answer research questions.
 
He said that the WRC have done a lot of work on issues of governance [in the water and sanitation sector] and on finding a regulator. The WRC has informed legislation and clauses in the current National Water Act (NWA). It has helped many institutions like the water users associations. The WRC is working closely with the Department of Water and Sanitation (DWS) on the amendments for the NWA, the Water Services Act (WSA) and other acts in its domain. There a number of problems that arise when resolving issues because you can use a theoretical framework but one needs to be practical about the situation. He made an example by saying that regarding the NWA and WSA, that it would be desirable to have one unified piece of legislation. The steps to get there will require there to be amendments to the current NWA and WSA to have one piece of legislation.

He said that Ms Mohlala’s question on an economic regulator has been an ongoing issue. It had been tabled in Parliament during the previous Minister’s tenure. He said that the WRC have been working on the matter since then regarding the structure, because the public opinion questioned the independence of the economic regulator. He said that as the matter continues the WRC will keep the Committee informed.

The WRC is actively involved in the schools’ curriculum and the research of the WRC is being used in the Curriculum Assessments Policy Statements (CAPS) system. Institutions at tertiary level also use the WRC work and a PhD candidate has recently used research of the WRC. The WRC has major competitions involving schools. The winners of local water research competitions represent the country in an international competition in Stockholm. SA had two winners in the international competitions. Each winner has their own company, funded by various donors.

The WRC did own its own building, however there were three major issues as to why the WRC moved from its first building. The first issue was the building’s location. It was chosen in 1971, and was very far from the WRC’s partners and the working environment was not academic. The new building’s location is near headquarters of 12 national science institutions. The second issue was the maintenance of the building and the cost of it. Lastly the WRC moved to a smaller space to be able to work with its partners and have an improved ICT structure.

He spoke about the allocation of budget. If the WRC is allocated more money it will want to fund over 200 projects that it cannot currently fund. The WRC would also like to demonstrate and implement more pilot projects around revolutionary technologies. He then said that WRC does not only want to ensure that the projects mitigate the issues around investments but to also offer support to small, medium and micro enterprises (SMMEs). He requested that the Chairperson allow the WRC to brief the Committee about this in detail.

Replying to Ms Tseke, Mr Naidoo said that the WRC’s work on agriculture is fairly renowned. SA has become the epicenter for Southern Africa regarding the water and food nexus and the country was one of the hotspots in the world in this domain. The WRC works closely with the Department of Agriculture and the rural and district municipalities of SA on matters of agriculture. The WRC does not fund any projects on agriculture because all the projects are privately funded. The WRC is involved in all agriculture projects, from the highest of citrus and macadamia from commercial farmers to helping emerging farmers. The WRC is currently working on a new policy for the water consideration in regards to the land restitution project. The WRC will send a copy of this initiative to the Committee because it will be very interesting.

He replied to Ms Tseke’s question on transformation, saying that the WRC does not currently have a disability group in the project’s leaders. The WRC recognises the issue of transformation in its staff and 5% of its staff are people with disabilities. The national target is 2% and the WRC is doing well in this domain. There are some members in project teams and the WRC will work on this matter to incorporate more people with disabilities.
 
The target for women in the previous financial year was 80 and the WRC achieved 146 and with the new portfolio the WRC targeted 30 and achieved 51. The WRC is taking steps in the right directions regarding the development of women in water and science. This matter was discussed extensively in the conference the WRC held in March 2021. Solutions to the development of women were raised in the conference and it is guiding the WRC and its partners on how to develop women.

Mr Naidoo responded to Ms Mokgotho’s question on leveraging funding by saying that two funds were concerned. The first is the water resource levy funding and that money goes into the water research projects done by the WRC. The second fund source is from international donors, whereby all institutions will compete for funding and each will present its research projects that need funding. The WRC is currently engaged in projects all around the world. One of its biggest funders is the Bill and Melinda Gates Foundation. The WRC is its leading partner in the change the toilet campaign. This is the non-levy funding that the WRC were able to procure and it plays a huge role in the WRC’s achievements. He said that during the difficult year of 2021 the WRC were able to exceed expectations.

The Chairperson thanked the WRC for its presentation and wished it well for all its projects. She hoped that the pandemic does not worsen and the WRC can implement all its projects because the work it does is very important.  

Trans-Caledon Tunnel Authority (TCTA)
Mr Percy Sechemane, the CEO of the Trans-Caledon Tunnel Authority (TCTA), said that the TCTA funded and implemented the following:

• the infrastructure in Lesotho for the Lesotho Highlands Water Project (LHWP) Phase 1, with a total cost of R13 billion (outstanding debt), R32.5 billion (cost of LHWP-2).
• the Berg Water Project (BWP) with a total cost of R1.6 billion.
• the Vaal River Eastern Subsystem Augmentation Project with a total cost of R2.9 billion.
• Phase 2C of the Olifants River Water Resources Development Project with a total cost of R2.3 billion.
• Phase 2 of the Mooi-Mgeni Transfer Scheme (including rehabilitation of Phase 1) with a total cost of R2.1 billion.
• the Komati Water Scheme Augmentation Project with a total cost of R1.1 billion.
• Phase 1 of the Mokolo-Crocodile Water Augmentation Project with a total cost of R2.1 billion.
• the treatment works for the short-term intervention on Acid Mine Drainage in the Witwatersrand Goldfields with a total cost of R2.6 billion.
• operation and maintenance of Acid Mine Drainage – short term intervention (AMD-STI ) and LHWP SA portion.

He said that the following projects will have particular economic impact effects:  

• Phase 2 of the Lesotho Highlands Water Project and part of the Vaal River System (VRS) which supports 50-60% of South Africa’s GDP.
• uMkhomazi Water Project and part of the uMgeni System which supports 5 million people in KwaZulu-Natal.
• Phase 2A of the Mokolo Crocodile Water Augmentation Project (MCWAP) which will support 20% of Eskom’s installed generating capacity and allow flue gas desulphurization on all of Medupi’s generating units (a condition of a World Bank loan).
• Berg River Voëlvlei Augmentation Scheme and part of the Western Cape Water Supply System which supports between 10 –13% of South Africa’s GDP.

In the raising of funding, debt management and the implementation of projects, TCTA faces risks as a public entity due to challenges.

• Raise funding: Requires guarantees for VRS funding to repay maturing debt on 28 May 2021 and for LHWP Phase 2 capital expenditure. Reduced funders’ appetite for lending to State-Owned Entities (SOEs) and generally tight lending conditions.
• Debt management: municipalities’ ability to pay water tariffs, ensuring that tariffs are affordable but also sustainable to assure viability of water sector institutions, tighter conditions of regulatory approval for borrowings reduce flexibility to deal with unforeseen liquidity challenges.
• Project implementation: Delays in environmental authorisations by the Department of Environment, Forestry and Fisheries (DEFF) and challenges in agreeing funding models with project beneficiaries and obtaining their commitment to sign offtake agreements contribute to delays in raising funding.

Directed projects on hold include:

• Phase 2B of the Olifants River Water Resources Development Project: TCTA is waiting for the DWS to decide on an alternative funding strategy that was proposed by TCTA in collaboration with DBSA.
• AMD-LTS (Long term strategy): TCTA has requested the Minister to suspend the Directive following DWS’ decision to review technical solution options for the project.
• Kriel Project: the directive requires TCTA to assist the DWS with project management and procurement of long-lead items, TCTA is still awaiting transfer of funds from the DWS for this project to be completed.

Mr Sechemane outlined the Objectives in the Corporate Balanced Scorecard for 2021/22. [These are covered in detail in presentation slides 34 to 43]

He presented an analysis of the 2021/22 Budget, and said that the following principles were applied when drawing up the budget.
• Zero-based budgeting.
• Administrative costs directly attributable to a specific project are allocated to that project.
• Indirect overheads are shared amongst all the projects – retrospective adjustments are made where new mandates come on stream during a year.
• National Treasury cost containment principles applied.

He commented on the Medium Term Expenditure Forecast up to 2023/4, pointing out that.
• Tariff billing is based on income agreements and budgeted water volumes.
• Expenses are based on contract values where these otherwise inflated by 5% for routine expenses.
• Capex is based on TCTA Capital Expenditure Plans and Lesotho Highlands Development Authority (LHDA) Long-Term Cost Plan.
• Capex on projects where funding is still to be secured are excluded.

Discussion
Ms Mohlala said that the TCTA plays a critical role in the Lesotho Highlands Water Project (LHWP). She asked the TCTA if the issues around the audit finding of 2019/19 on the treaty and the access to documents by the authority had been resolved. Would the audit finding have an impact on phase two of the LHWP? She made reference to slide 27 of the presentation and said that an amount of R13 billion was regarded as outstanding debt for phase one of the LHWP. She asked the TCTA to elaborate more on this situation. She said that phase two requires R32.5 billion and asked how it will be procured because there is a delay in the allocation of grants by National Treasury (NT). She made reference to the acid mine drainage and the Vaal River project and said that the DWS put this project on hold. The Minister mentioned that it will take over the water and sanitation part of the project. She asked the Deputy Minister to provide details of progress on the project.

Ms Mokgotho asked the TCTA what conditions the National Treasury (NT) set for bailouts. She indicated that there are delays in the issuing of grants by the NT. She asked what challenges does the TCTA foresee for 2021/22 and how does it plan to address these challenges.

The Chairperson asked the TCTA what is the progress of the Vaal Dam project because this is a very important project. She commended the TCTA for its work done with the LHWP and asked how the TCTA planned to implement the project system because it should not use Apartheid methods. The DWS and TCTA must ensure that all communities get water.

Ms Mohlala said that part of the Committees’ mandate is to conduct oversight of TCTA’s work. The Committee conducted oversight of the LHWP and did not see members from the TCTA when the Committee went to Lesotho because the TCTA is using tax payer’s money.

The Chairperson added to Ms Mohlala’s comments and said that when the Committee does oversight in Lesotho the TCTA should send senior management representatives.

Mr David Mahlobo, Deputy Minister for Human Settlements, Water and Sanitation, apologised to the Committee and said that TCTA will send management, and the executive will be present next time.

TCTA’s responses
Mr Sechemane replied to Ms Mohlala’s question about the audit findings, saying that the implementer of the LHWP is the Lesotho government. The problem is that the South African government and TCTA are raising the funds for the project. The Auditor General (AG) is presenting the findings in a way that the Committee will be able to see that work is being done on the project. The reason why the project received an unfavourable audit opinion was because the TCTA could not provide the AG with enough information about the project. The reason why the project received a qualified audit opinion in the second year was because of the first year’s info and the TCTA’s inability to provide information on time. The AG in Lesotho has helped the TCTA’s AG in this regard. The TCTA asked itself if it is accounting correctly about work being done by others. The TCTA, NT, the AG and the DWS have engaged to come up with a solution to solve this problem. He said that the TCTA acknowledges the concerns of the Committee and will provide feedback on the engagements between the different stakeholders and the information the TCTA receives from the AG. He said that is not a good sign to achieve a qualified opinion but it will not prevent the implementation of phase 2 of the LHWP.

He replied to the question about the outstanding debt for the LHWP by saying that it funded phase 1 and other donors are funding phase 2. He said that this was the reason it was regarded as outstanding debt and that it needs to ensure that water remains affordable at all times. The TCTA has to pay R9.5 billion by 31 May 2021 and that some of the debt was refinanced. If NT cannot make the money available TCTA will go and borrow money from other funders, however it does require the guarantees from NT. He said that all TCTA’s applications for funding were in order and depended on the world market’s response to SA. When TCTA wanted to borrow money from other funders, the funders had their own conditions for the loans. In some cases NT felt uncomfortable with the conditions and this caused delays.

The TCTA was not present at the Committee oversight visit to the LHWP because the TCTA needed to come up with a better strategy of representation. The TCTA received the invitation and asked how many members can go with the Committee to do oversight; the response was only one member. He said the issue was because of the number of members invited not because the TCTA deemed the oversight visit as unimportant. He agreed with the Deputy Minister’s comments and said that the TCTA will address the matter.

He added to his comments about the guarantees of NT that it is a matter that the TCTA is currently trying to address. He said that this is a problem that many SOE’s have because external funders will not fund the entities if it does not have the support of its government.

Mr Sechemane thanked the Committee for acknowledging the good work that the TCTA is doing in the LHWP. He replied to the question on people having access to water and said that the TCTA built single purpose dams and the Department has done a lot to turn these dams into multi-purpose dams ensuring that people have access to the dams. He noted the social components and said that when there are plans to build dams the communities affected need to be considered.

Ms Deborah Mochotlhi, acting Director-General, DWS said the Department had difficulty with finances for the acid mine drainage (AMD) issue. She said that the difficulties have not yet been resolved but the DWS does have a turn-around strategy to address the issue. At operational level the DWS is working with the WRC and the DWS is determining if it can do the operation itself or allow the TCTA do the work. She did not want to provide a timeframe for the Committee until the DWS have come up with a conclusive strategy.

Deputy Minister Mahlobo noted the comments of the Chairperson and said that the Apartheid method of infrastructure must not be used and that all communities must have access to water. The dams must be multi-purpose and not only for single use because the dams that were built previously did not consider the needs of surrounding communities. He replied to the AMD issue that the DWS needs to work closely with the Department of Mineral Resources and Energy (DMRE) because a number of mines cause damage to ground water and SA will have less water to use because you cannot keep rehabilitating the water. The Department needs to implement consequence management when it comes to the pollution principles. The WRC is a prime example on how to implement infrastructure on time and how it can get external funding. The TCTA can improve its targets and the LHWP is a very important project because it shows that neighbouring countries can have co-existing water systems. He replied to the Vaal River project question, saying that the Key Points Act (KPA) application need to be done by the user and is still in progress. It is not only going to be looking at security issues but at new technologies that can be used because the departments are spending a lot of money on security. The government needs to educate its citizens that if the infrastructure gets damaged or property gets stolen it is also the responsibility of the public.

Follow-up discussion
Ms Mohlala said that the mandate of the Committee is to conduct oversight of the TCTA’s work and other institutions. This means that the Committee must do oversight for the LHWP. She noted that the CEO said that a Lesotho entity is in charge of the LHWP. She asked the TCTA to clarify this issue.

The Chairperson added that the Committee does oversight for the DWS and the money that it allocates to its entities. The treaty signed by the DWS and Lesotho, might indicate that Lesotho is the implementer of the project. She said that it is the responsibility of the Committee to ensure that the interests of South Africa are considered in the project.

TCTA’s follow-up responses
Mr Sechemane replied to the issue raised by Ms Mohlala that the Lesotho entity is in charge of the project. He said that he did not want the Committee to misinterpret his response because the SA government is funding the LHWP. The designated authority that represents SA in the LHWP is the DWS. He said that when the Committee went to Lesotho it met with representatives of the SA delegation. The two countries select members from both sides to represent it on the LHWP commission. The commission is responsible for the oversight work on the LHWP. He said that because the TCTA is funding the project the DWS will hold the TCTA accountable for the project’s funding. The SA representatives of the LHWP commission are responsible to ensure that the interest of SA is being maintained in the project. The commission plays a very important role in the project and is responsible for the work at ground level and all the processes of the project.

Deputy Minister Mahlobo said that the Committee has a right to oversee the treaty that the two countries signed. He added to the comments of Mr Sechemane that other entities in the LHWP belonged to the Lesotho government. He repeated that the DWS will send senior management with the Committee and have a de-briefing when the Committee does oversight visits in Lesotho.

Ms Mohlala said that the explanation given by Mr Sechemane raises more question. She then indicated that there is a problem with the set-up of the project because there are no representatives of the Committee to do oversight work. She said that the treaty needed to be revisited.

The Chairperson agreed with Ms Mohlala and said that it will be included in the report and the Committee will invite the DWS to brief the Committee. She said that the treaty needed to be revisited because the TCTA cannot fund a project and not be part of the implementation. She thanked the TCTA and the DWS for the information provided.

The Committee was in agreement.

Report of the PC on Budget Vote 33: Human Settlements and on the revised Strategic Plan for the coming Medium Term Expenditure Framework (MTEF) period and Annual Performance Plan (APP) 2021/22.

Mr Sabelo Mnguni, the Committees’ Content Advisor, took the Committee through the draft report of the Committee on Budget Vote 33: Human Settlements and on the revised Strategic Plan for the coming MTEF period and the APP for 2021/22 report.

The Chairperson indicated that Mr Mnguni needed to check if the figures under section 3, the Budget analysis are correct.

Ms Mohlala indicated that she did not see the annual targets because the Department did send its APP. Reports like this can compromise the oversight mandate of the Committee. She said that Mr Mnguni needed to check if the figures are correct because if he is unsure then the report cannot be adopted.

Mr Tseki said that he is happy with the report and suggested that the Committee must continuously register what targets was achieved by the Department in each quarter.

The Chairperson said that in KZN and Western Cape (WC), the provincial departments were punished for utilising their budgets incorrectly. She said that NT took R10 million from the WC’s department and suggested that the punishment must be in accordance to the money that the department gets. She said that the problem will continue until the Committee comes up with a resolution. She said that the budget is done annually therefore the targets must be linked with the budget. She said that the IT system of the Estate Agency Affairs Board (EAAB) has been a problem for many years and needed to be resolved as soon as possible.

Ms Mohlala said that the EFF rejects the report.

Mr Tseki moved for the adoption of the report with its amendments.

Ms Tseke seconded the adoption with its amendments.

Ms Mohlala asked what the amendments were and asked if the figures are correct.

Mr Mnguni indicated that the figures were correct.

Ms Tseke agreed with Mr Mnguni and said the budget figures are correct.

The Chairperson indicated the amendments of the annual budget were linked with the targets.

The report was adopted with amendments.

The Committee Secretary took the Committee through the minutes of 28 and 29 April 2021.

The minutes were considered and adopted.

The meeting was adjourned.