2017/2018 post audit remedial action plan & departmental approach to deal with water crisis in municipalities; City of Tshwane on water crisis & intergovernmental plan / engagement to deal with crisis

Meeting report

DWS financial and non-financial performance: turnaround strategy

The Department of Water and Sanitation said the specific strategies targeted to complete and achieve its proposed plans included strengthening governance, human resources management, improved cash flow, reprioritisation of the budget, an  improved control environment, and infrastructure and service delivery improvements. Several priority areas aimed at addressing key deliverables had been identified and implemented.

Alignment of strategic intent, governance and compliance

Some of the progress to date had been the establishment of the Ministerial Water Advisory Committee, which included former Directors General (DGs), to advise on the governance and management of the nation’s water resources. The introduction of consequence management and condonation processes, and investigations into unauthorised, irregular, fruitless and wasteful expenditure, was in progress.

Cash and revenue enhancement

The Department had entered into debt restructuring arrangements with creditors which had seen an improvement in the cash position by the end of September 2019.

Community participation

A Ministerial national rapid response task team had been established to address urgent challenges in the water and sanitation sector. Infrastructure projects incorporated community participation

Monitoring and reporting

Bilateral meetings with National Treasury were ongoing as scheduled in support of the Department’s turnaround strategy, and revenue and cash flow enhancement strategies were being implemented for water sales debt customer categories.

Summary of financial position

Financial balances showed that several municipalities and entities had not cleared their debt, which stood at R82.5 million. For the year 2019/20, it had already been documented that there had been fruitless and wasteful expenditure, with minimal cash recovery. However, through consequence management, a number of cases had been investigated and disciplinary action taken. The results indicated that 139 of the 249 cases brought forward were found to be true, with a total of 86 officials found guilty, 14 officials not found guilty, 24 officials resigning, and one official being reinstated following an arbitration award.

“War on Leaks” project

The “War on Leaks” project was initiated as a result of a study conducted by the Water Research Commission (WRC) in 2012, which focused on the state of non-revenue water in South Africa: The national average for non-revenue water was found to be 36.8%, with an estimated value of R7.2 billion. High level objectives were indicated, which were focused on changing the status quo. These were mainly based on water conservation and skills development. However, the project had not produced the desired outcomes. The Department proposed an exit strategy, which stood at an estimated value of R 724 million, as it could no longer financially sustain the project.

Action plan to deal with water crises in municipalities

The DWS presented on the progress with its post-audit remedial action plan, incorporating its turnaround strategy and Departmental approach to dealing with the water crises in municipalities

In the 2017/18 financial year, the Department had obtained a qualified audit report with matters of emphasis on irregular, fruitless and wasteful expenditure and commitments. A post audit remedial action plan had been developed and in the year 2018/19, a turnaround strategic process was initiated.

The audit outcomes for the years 2017/2018 versus 2018/2019 were based on the audit reports for 2017/18 and management reports for 2018/19, as the audit outcome had not been released. Substantial work had been done to address fruitless and wasteful expenditure, with accruals having been reduced by 50%.

Issues concerning irregular, fruitless and wasteful expenditure had been resolved. Measures had been put in place to ensure that there was an updated review which tracks the performance on expenditure and the development of a checklist that should be used when implementing the DWS projects. The training of compliance officers was under way to ensure that there were oversight roles during bid evaluations.

For expenditure and consequence management, a turnaround strategy had been developed to address budget constraints. Verification and confirmation of work done was performed before invoices were submitted for payment, and risk management would be tasked to conduct investigations and implement the recommendations from the investigations report. A consequence management committee would be established to manage and monitor progress, and implement the recommendations from the investigations report.

Water Trading Entity: Post audit remedial action plan

The Department reported on progress with post audit remedial action plan for the Water Trading Entity (WTE).

Carrying amount of assets under construction

This had been an issue for qualification in the audit report, as the entity did not have adequate systems in place to reconcile the carrying amount of assets under construction, and had not assessed the carrying amount for indicators of impairment. This had not been resolved by the Department, as there were limitations in applying the generally recognised accounting principles (GRAP), because the DWS was not intending to sell its infrastructure assets and there was a market for its assets. However, significant improvements had been made. The unresolved matter was related to a difference in interpretation and application of GRAP.

The overdrawn bank account was to be managed by compiling the debt recovery and management plan, as this was still a pending problem. The issue had not yet been resolved as there had been an increase in the overdrawn bank balance due to payments for commitments from prior financial years.

The Department was continually monitoring the implementation of the corrective action plans to improve the audit outcomes.

Discussion

Mr G Michalakis (DA, Free State) commented that the sub judice rule was a misused and misunderstood legal principle in the country. It did not affect the outcomes of a case and as such, the information that might be required was supposed to be available to Parliament, and should be made public. He asked that the Department provide the following information:

• The case numbers of all cases that had been opened;
• The police station where they had been opened;
• The date when they were opened, and the basis of the case.

He added that this should be done to track the progress of the cases so that in instances where there was little or no progress, the Committee could take it further through the Department of Police. This was necessary in cases where there was consequence management that may be affected by a corrupt internal process, resulting in the cases not progressing.

Mr S Mfayela (IFP, North West) said that the government was losing billions of rands as a result of irregular, fruitless and wasteful expenditure. He asked which other contributing factors could be attributed to the money loss, apart from corruption and the bypassing of processes.

Mr E Mthethwa (ANC, KwaZulu-Natal) appreciated the efforts of the Department. He said he was concerned that when it came to procurement, contract and expenditure management, little had been done in these areas although they were key to the functioning of the Department. He asked that the processes for cases which had been finalised be completed, so that if there was money to be recovered, it could be as soon as possible. 

Mr I Sileku (DA, Western Cape) asked how long the DDG had been on suspension, and when the CFO vacancy would be filled. How much of the financial year’s budget went to accruals, and what was the Department doing to make sure that municipalities owing water boards paid their debts? How was the Department planning to recover money owed by the water boards? What had been collected currently, what percentage of the debt had been recovered, and what was the target?

With regard to consequence management, how many people had been arrested? Cases which had been presented to the Committee had included no details of what the involved officials had done and how the presiding officer had come to a decision on the penalties imposed. He added that a presiding officer could be bribed, and those implicated could face penalties which were not appropriate for their punishable actions -- this was prevalent in municipalities. If the Department was serious about accountability, the appointment of presiding officers needed to be carefully monitored.

Ms C Visser (DA, North West) asked whether any further action was being taken against the 24 officials who had resigned.

With the money that had been made available to municipalities, was there a point of reference which gave indications on how the money should be spent? She said that there were huge amounts which were projected towards providing bulk water to municipalities, and this had initiated the drilling of boreholes which had not yielded results. 

Mr S Zandamela (EFF, Mpumalanga) asked that the Department explain how control management was structured, and how internal processes worked when it came to disciplinary action. The Department had committed in previous financial years to various projects which were initially funded through the water trading account, but had eventually been transferred to the main account without the corresponding budgets

Mr K Motsamai (EFF, Gauteng) he asked why those who had misused and stolen money had not been arrested.

Ms M Mmola (ANC, Mpumalanga) asked the Department to explain what they meant when they indicated that procurement, contract and expenditure management had remained unchanged. She asked how the Department had committed to contractual agreements without a budget in place. What action had been taken against the 86 officials who had been found guilty? Was there money involved? When had the 24 officials who had resigned decided on such action -- was it before or after the investigation? Concerning those who had been suspended, was there money involved, and how was the Department planning on recovering that money. When would the CFO vacancy filled, and what had been the reason for the departure of the former CFO?

Mr A Gxoyiya (ANC, Northern Cape) said the absence of the Ministers was a major concern, as some of the questions asked would be best answered by their office. He added that, without disregarding the progress which had already been made, there needed to be a stable system within the Department, and that required the permanent employment of those in key positions. He asked the Department to quantify losses incurred and state the amounts that could be recovered and which could not be recovered, and the action necessary to recover the money. What plans had the Department put in place to insulate the system from manipulation?

The Chairperson acknowledged the improvements in the Department.  He said that water boards were supposed to be established in terms of the Water Services Act of 1999, but there were some which had not been established in terms of this Act and were not governed by the Public Finance Management Act (PFMA). He asked why these boards were still independent of government, and how many there were in total.

Department’s response

The Department clarified that they understood the sub judice rule and how it worked. However, since the cases were in progress, it may not work to their benefit to discuss such matters, as this could jeopardise the process. However, the information required by the Committee could be made available.

The Department agreed that they shared the same views with the Committee when it came to the sanctions imposed on those who had gone through disciplinary hearings. They too were frustrated by the outcomes, as these did not reflect what they wanted, but the positive results were that the investigations had been intensified.  There were several cases where people had been demoted, and these had shown positive outcomes so far.

With regard to the contract management challenges, the Department admitted that they were struggling to manage.

Officials who were under investigation and had decided to resign were not pardoned. The previous two CFOs who resigned were under investigations which had not yet been concluded, and the Department would not want to give out too much information. There were also other cases that had been taken up by the Special Investigating Unit (SIU).  

There was a current Acting DDG, since the former DDG had been charged and was under investigation, and the position could not be filled until all investigations had been concluded.

Replying to the question regarding the lack of arrest for theft, the Department said the missing money was not necessarily the result of theft, but also was related to the bypassing of standard operating procedures to achieve personal gain. Once such actions had been identified, the cases were handed over to the police for further investigations.

The cases of the 86 officials who had been found guilty were monitored on a quarterly basis. The forensic audit and case details containing the amounts involved, could be provided to the Committee. Money involved in the cases could be recovered and disclosed only once the disciplinary process had been concluded. With the cases of the 86 officials, there were sanctions which had been recorded and civil action taken against those who had resigned.

To curb fraud and corruption, 749 officials had been trained and there was an active campaign in place.

Regarding the payment of accruals, the Department indicated that R1.6 billion accounted for 10% of the budget, with 5% that had already been paid. To ensure that money was collected from debtors there was a plan that had been developed to look into the payment of money owed by the municipality.  

The Chairperson emphasised the question about water boards which did not function under the laws of the Department, and asked that this issue be further elaborated on in the upcoming year.

Further discussion

Mr Mthethwa referred to the recent floods in KwaZulu-Natal, and commented that the amount of water that was received during such cases was deposited directly into the sea. He asked what measures the Department had put in place to harvest this water.

Mr Sileku wanted an update on progress with the Mzimvubu project. He asked the Department to elaborate on the refurbishment of the Etholeni Dam, and whether this had improved its capacity or not.

Mr Michalakis said that over a period of two years, an amount of R30 million had been spent to build boreholes. He asked how the allocated funds were being spent, as the boreholes were currently not running and money to assist in this situation was being sourced from non-government organisations (NGOs). He added that the boreholes could not be sustained and were in a bad condition. Qwaqwa was one of the areas which was facing a water crisis, and he asked what had been done with the Water Service Grant of R12.6 million, as specified in the 2016/17 Auditor General report, to assist such areas.  Regarding the construction of a pipeline to Winburg, why had the Department not invested in the infrastructure?

Ms Visser asked about the mandate for municipalities concerning the “War on Leaks” project, because people had been trained but were not allowed to work in certain municipalities.

Mr Zandamela said that there was no water supply in Bushbuckridge, and the presentation did not reflect Mpumalanga. He asked that the Department explain the budget allocations and what they had been used for. A lot of money that had been spent on the Inyaka Dam, but the surrounding areas had no water supply. Where had the money been spent?

Ms Mmola recommended that all regional managers should attend Committee meetings.

Mr Gxoyiya said there were two dams in the Eastern Cape that were 45 km away from each other. The one had water, and the other had none, which meant certain areas had no water supply for as long as three days. He suggested that the Department should look into how these dams could be linked.  

He asked for clarity on the differences in quality between surface and ground water.

The Northern Cape had two main rivers -- the Orange and the Vaal. How could water loss be minimised and regulated?

Had the Department considered partnering with mines to ensure that there was provision of water? What was the verdict on the desalination project?

The Chairperson said that there needed to be a strategy to deal with the issue of drought, and solutions such as desalination and the harvesting of rain water needed to be considered.  

Department’s response

The Department said one of its plans to combat drought was to use a water mix strategy, which mostly utilised surface water. Further information would be shared with the Committee. Most water supplies went to the agricultural sector, which accounted for 61% of the total of, but this water was not used efficiently and therefore needed to be regulated. The Department had partnered with the mining companies over additional water resources.

Further information would be shared with the Committee concerning the Mzimvubu project.

Concerning the harvesting of water in places such as KwaZulu-Natal, the dams which had been built had the capacity to secure water for communities, but there was still progress in the development of the dams.

Differentiating between the quality ground and surface water depended on a number of variables which were reliant on test procedures. Water resources were monitored, and the results were made available when they were complete.

When licences were issued to the agricultural sector, there were guidelines which determined which type of licence was issued. These factors included types of crops which would be planted, and these informed the conditions aligned with an issued license.

The Etholeni Dam was the smallest state dam in Butterworth, Eastern Cape, and it had not been enlarged but refurbished to get a better expansion point. The dam levels currently stand at 1.2%, which it was projected to recover quickly.  

City of Tshwane: Plan to deal with water crisis 

The Department said 71% of the City of Tshwane’s water comes from Rand Water, 28% from own sources -- purification plants, boreholes and fountains -- and Magalies Water supplies 1% in the Cullinan/Derdepoort area. The City’s total average water supply was 987 million litres per day

The current challenges were as a result of pollution of raw water by waste water treatment works (WWTWs) due to insufficient treatment capacity. Of note were the Rooiwal and Bavianspoort WWTWs, where the theft and vandalism of infrastructure affected operations and treatment processes. Other contributing factors were the water restrictions imposed by Rand Water from October, the lighting strike at the Pyramid electricity sub-station on 18 October, power outages affecting the Rooiwal WWTW, the shut-down of the Temba water purification plant on 24 October, and the power failure on 4 November due to damage to the transformer and cables at the Temba water purification plant

The City of Tshwane had made a presentation on 10 September 2019 in Parliament, mainly on Rooiwal WWTW and the Temba water treatment plant. Actions identified by the Portfolio Committee had included:

• Improved maintenance and expansion / upgrading of the Rooiwal waste water treatment plant and other plants in the City;
• Rehabilitation of the Apies River and Leeuwkraal Dam, and similar others;
• Cleaning of the reservoirs that supply water in Temba/Hammanskraal and surrounding areas;
• Increased piped water supply through other sources (Soshanguve DD and Magalies Water) to supply water in the eastern and western parts of Temba/Hammanskraal;
• Flushing and disinfection of the water distribution network in Temba;
• Deployment of water tankers in Temba, where necessary;
• Communication and awareness campaigns;
• Reprioritisation of grant funding.

There had been short-term and long-term interventions to resolve the issues faced by the Rooiwal WWTW. The short-term interventions included refurbishment of the sludge belt presses and return activated sludge screw pumps, the dredging of maturation ponds and implementation of the Phase 1 upgrade of the plant. The long-term interventions included the extension of Phases 2 and 3.

The short-term interventions to resolve the issues at the Temba water treatment plant included the cleaning of reservoirs, flushing and disinfection of the water networks, water supplied from Magalies Water through the Sosha DD pipeline, the deployment of water tankers, implementation of the maintenance plan, and the completion of the Temba plant upgrade project.

Water restrictions

Rand Water’s distribution system was under severe stress due to high water demand, and the system had been experiencing low water levels recently as a result of the failure of two purification plants. The situation had been exacerbated by the malfunctioning of a valve at one of the utility’s pumping mains from Zuikerbosch Purification Plant. 

The impact of the imposed restrictions had seen the majority of the City’s reservoirs sitting with water levels of more than 70%, and a few with less than 50%. As a result of stage 2 water restrictions, the Laudium, Atteridgeville and Constantia Park Reservoir had run dry, and no-water situations were experienced. However, these reservoirs had since recovered and were currently above 60%.

To establish communication and awareness campaigns, some of the messages communicated were:

• Use grey water for watering gardens and flushing toilets;
• Report water leaks and pipe bursts;
• Install water-saving devices;
• Where possible, install a low-flush showerhead and tap aerators;
• Use a dual-flush toilet cistern;
• Plant indigenous or drought resistant shrubs in the garden;
• No watering of gardens;
• Use a broom instead of a hosepipe to clean driveways or patios;
• Collect rainwater for reuse in the garden or for washing cars;
• Cover the swimming pool to reduce evaporation;
• Take a shower rather than a bath;
• Close a running tap while brushing teeth or shaving;
• Regularly check toilets and taps for leaks.

The City of Tshwane was collaborating with other organs of state to resolve the water and wastewater challenges.

Discussion

The Chairperson asked about the situation in Hammanskraal, and what measures were being taken to address the issues there.

The Municipality responded that the affected plant was back in operation, and there was a water supply, although it was not fit for human consumption. To remedy the situation,160 tankers had been provided to supply clean drinking water.

The Chairperson asked why Jubilee District Hospital had been left without water supply.

The Municipality explained that when the treatment plant was shut down, water was not supplied, and the hospital was affected. The situated was exacerbated, as Hammanskraal was also affected. The hospital had a reservoir in place and would be supplied with pure clean water. To relieve the situation in the region further, the Municipality was working with its councillors to ensure that there was a distribution of tankers and “JOJO” tanks to strategic points.

Mr Mfayela asked if the alternative water supply targeted only residential areas, or also distributed in industrial areas. How much had been spent by the municipality on tankers and JOJO tanks?

Mr Sileku asked what measures the municipality would in place to prevent vandalism, and whether the present plant operators had the necessary qualifications. How were water losses in informal areas monitored and managed? He added that when it came to community awareness and outreach programmes, the norm was to hand out pamphlets and not to engage further with the community, leaving people without crucial and necessary information. He asked what effective mode of awareness the municipality was using. One of the effective methods to reduce water usage was to “name and shame,” as the names of those with high water usage would be published in local news reports.

Mr Mutsamai asked what security measures the municipality had considered to monitor the treatment plants.

Mr Gxoyiya emphasised that there was need to educate the community on water use, preservation and reporting water leaks. With regard to non-adherence to the master plan, he asked who the culprits were and when the municipality intended to get the situation under control. He referred to an instance where a water meter was shown to indicate water usage when there was in fact none, and asked whether the consumption of water could be correctly accounted for from source to destination.

The Chairperson inquired if the situation was not caused by a political agenda, and was a money-making scheme. 

The Municipality responded that water was supplied to industrial areas.

With regards to vandalism, there was a security plan that was currently being put in place which involved smart technology. For the time being, the metro police were assisting with security.

The Municipality admitted they had failed in the area of community awareness and would need to improve in this area.

They assured the Committee that the situation had no political relevance, and was not a money-making scheme.

They acknowledged that there had been a decline in the budget for water and sanitation, which had contributed to a number of unfavourable outcomes.

There was a water meter replacement programme in place, and the employed plant operators were qualified.

The money spent of the delivery and distribution of tankers and JOJO tanks was estimated at R1.8 million per week, and the programme had been planned to last for a month.

The Chairperson commented that the situation in Tshwane seemed to be stable.

The meeting was adjourned.