Department of Water and Sanitation & Trans-Caledon TA 2020/21 Annual Report, with Ministry

Meeting report

The Chairperson said that  National Treasury had not submitted its 2021/22 Annual Report to Parliament. He was not saying that it was acceptable for anyone else not to submit, but when it was Treasury then fundamentally there was a problem. The Committee needed to call in Treasury as a matter or priority and urgency because Treasury had a long-standing dispute [on the presentation of its finances] with the Auditor-General. Just as the Committee was dealing with the Road Accident Fund, where he thought the Committee was making progress, Treasury was landing the Committee in a major problem because then it opened the floodgates for everyone. He just wanted to flag that matter. It did not relate to the Department of Water and Sanitation.

Ms B Van Minnen (DA) raised a point of order that an echo from the speakers made it difficult to hear.

The Chairperson asked the sound and vision team to deal with the acoustics in the chamber. There was a large delegation from the Department in the meeting. The Chairperson asked that the Department officials introduced themselves and state when they had joined the Department. It helped the Members construct a timeline and to know who they were dealing with. He would hand over to the Deputy Minister to make opening remarks. Thereafter, the Director-General would go through the presentation, covering the salient points. If the Members did not finish [their comments and questions], it was okay. The Committee would then make time to continue with this because the issues were many. He welcomed the Members to the meeting.

Department of Water and Sanitation presentation on the 2020/2021 Annual Report
Ms Dikeledi Magadzi, Deputy Minister of Water and Sanitation, greeted the Members. The Department felt elated to account to the Committee and the people of the Republic of South Africa on the workings of the Department. She noted that there were a number of things that the Department was going to be presenting to the Committee. The Chairperson had already indicated the irregular, and fruitless and wasteful expenditure that the Department had to account for. She said that there were other Treasury issues that the Department needed to tell the public about. The people needed to know what the Department was doing. Focus would be on the main account but the Department would also be dealing with other issues as and when Members raised these issues. The Department took this engagement and presentation very seriously. It believed in discussion and, with the Committee’s guidance, the Department would be able to provide the services that the people of South Africa were anticipating. She said that the Minister would be joining the meeting virtually. The Director-General would be leading the team. He would be able to introduce which officials were present. The Department was serious about the work that it was doing. The Department believed that as the Committee would be probing, guiding and advising, the Department would be better out of the engagement with the Committee. The Department was ready and eager to make a presentation to the Committee. She introduced the Director-General.

The Chairperson handed over to the Director-General and asked for the delegation to introduce themselves. The Departmental officials introduced themselves and when they joined the Department. The Chairperson said it was good that a lot of vacancies had been filled by the Department. One of the major issues with the Department previously had been vacancies and too many people acting in positions.

Dr Sean Phillips, Director-General, Department of Water and Sanitation (DWS), took the Members through all the documents that the Department had submitted to the Committee. The presentation on the 2020/2021 Annual Report detailed the Department’s strategic priorities, which included a plan for a range of major projects to augment national bulk water infrastructure and to lead the development of other water resources, including groundwater and desalination. The presentation covered the filling of posts within the Department. A total of 23 Senior Management posts have been filled since the start of the 2021/2022 financial year, including the Director-General post. The Chief Financial Officer and all other Deputy Director-General posts were also filled. The Minister had recently approved a revised organogram with minor amendments to the organogram approved by the Minister of Public Service and Administration in 2020 to enable the Department to better implement the strategic priority of improving municipal water services. The presentation provided an overview of non-financial and financial performance and the Audit-General’s report. The Department had spent 85% of its budget and 62% of targets had been achieved overall. The previous audit qualification was resolved in the 2021/22 financial year. The main vote received a qualified audit opinion with findings. The Water Trading Entity (WTE) received an unqualified audit opinion with findings. Feedback was provided on the financial recovery plan. The final part of the presentation dealt with investigations. [Please see the 120-slide presentation for full details]

Financial highlights 2020/2021
• During the 2020/2021 financial year, the Department spent 85% of its total budget—88% of the budget for Compensation of employees had been spent; 91% of the budget for goods and services; 100% of the budget for transfers and subsidies; and 51% of the budget for capital assets.
• The Department (inclusive of the Water Entities) has developed and is currently implementing a Financial Recovery Plan, the efforts for which have resulted in an improved control environment including unqualified audit opinions in the subsequent financial years.
• Of the reported unspent funds for the year, there were invoices in the process of certification and commitments still to be billed. In this regard, a rollover request was submitted to National Treasury.
• Assets consist mainly of project advances to the Water Boards, unauthorised expenditure from previous years awaiting Parliament’s approval, and contingent assets currently before court.
• Liabilities including accruals and payables showed reduced values in line with the financial recovery plan.

Summary of unauthorised expenditure [R641-million]
• No unauthorised expenditure incurred in the 2021/2022 and 2022/2023 financial years.
• [Unauthorised expenditure incurred in prior years was] reported to National Treasury for processing to Parliament. The outcome is awaited.
• The amount of R292.269 million relates to overspending of the vote in the 2016/2017 financial year, mainly due to the payment of expenditure on the Bucket Eradication Programme.
• The amount of R 348 840 million relates to over spending of the main division within the vote and is attributable to the expenditure incurred on War on Leaks Programme without a budget in the 2017/2018 financial year.

Summary of fruitless and wasteful expenditure [R224-million]
• Fruitless and wasteful expenditure relates mainly to costs that could not be recovered and capitalised to projects; these were incurred on internal and external construction projects.
• Investigations are being accelerated to enable finalisation before the end of the 2022/2023 financial year.
• Further incidents were noted on the WTE and are currently at an assessment stage

Summary of irregular expenditure [R16 562-million]
• Of the irregular expenditure of R16.562 billion, an amount of R 8.817 billion is in the process of condonation. R 2.035 billion has been submitted for investigation and R5.709 billion is under assessment.
• A panel of Professional Service Providers Forensic Audit and Investigators, are assisting in accelerating the investigations in progress.
• Current cases include:
- Main Account Proper process not followed when appointing the official to the post of the Deputy Director.
- WTE Emergency procurement not supported by National Treasury in the previous financial year.

Irregular expenditure condoned by National Treasury
• In total, the amount of irregular expenditure condoned by National Treasury is R1.488 billion.
• The Department ensures that remedial actions are taken, to ensure that a similar irregular expenditure is not incurred in future.
• The Department strengthened and enhanced internal controls for procurement processes, procedures and contract management to address root causes of irregular expenditure.

To date, the total accumulative irregular expenditure per financial year amounts to R16.562 billion; this figure has been adjusted from R17.812 billion due to the condonation approved by National Treasury.

Progress on forensic investigation cases 2019/2020 to 2022/2023
• A total of 228 cases were reported to the Internal Audit Unit.
• 135 forensic investigation cases were investigated by the Department’s Internal Audit Unit during the period 2019/2020 to 2022/2023.
• 98 of the allegations were confirmed to be true while 37 were unfounded.
• 20 cases are currently under investigation.
• 73 cases have not been investigated yet.
• Other cases will be investigated by external services providers to expedite them.
• A panel of investigators has been appointed to expedite these cases.
• These cases resulted in sanctions against the transgressors. These sanctions included dismissal, demotion, suspension without pay, and written warning letters.
• These cases resulted in an amount of R996 883.24 being recovered through civil recovery processes and a judgment of R27 510 067.17 in favour of the Department.
• 74 awareness sessions during the period 2019/2020 to 2022/2023 wherein 1 781 officials were trained about anti-fraud and corruption measures.

Trans-Caledon Tunnel Authority presentation on the 2020/2021 Annual Report
Mr Percy Sechemane, Chief Executive Officer, TCTA, briefed the Committee on the 2020/2021 Annual Report. The presentation provided an account of the organisational performance of the TCTA. This included debt management, projects in implementation and projects in operation and maintenance. The presentation also included a financial summary. This included details on the financial highlights, external audit opinion, and irregular expenditure. The AGSA, the external auditor of TCTA, issued an unqualified audit opinion with no matter of emphasis

Progress update on irregular expenditure incurred
• The majority of reported irregular expenditure relates to contracts that were entered into in prior years.
• There has been an improvement in the procurement control environment, and this resulted in a few incidences of non-compliance being reported in the current financial year.
• A new procedure manual and consequence management guideline were developed to enhance the process for management of irregular, and fruitless and wasteful expenditure.
• A Loss Control Committee is in place to quantify the losses and make recommendations to the Chief Executive Officer (CEO) on the actions to be taken.

The underlying operating model for TCTA has remained the same as it has been in previous years, and continues to assure the long-term solvency of TCTA, as well as the ability to meet all its obligations as they fall due and to continue to operate as a going concern.

Discussion
Ms N Tolashe (ANC) said she wanted to hear more from the CEO. It sounded liked Mr Sechemane was in between his employees and the regulations from Treasury. [PMG clarification: The speakers in the discussion below were referring to National Treasury Supply Chain Management Note No 3– see TCTA slide 13 and previous PMG reports on SCOPA meetings.] Mr Sechemane did not articulate his stance insofar as his responsibilities were concerned according to the two things he had extensively articulated. He had said that workers followed their policies and that the regulations were compulsory from Treasury.  Mr Sechemane did not explain his personal role and responsibility to the Committee insofar as the matter was concerned. Mr Sechemane had said that the TCTA had a class action. It would definitely be there if the CEO was unable to articulate to the Committee. The CEO carried the responsibilities. It could not be that he seemed to be neutral on the matter. He did not stand for his workers nor for Treasury. Where was the Office of the CEO in this matter? This all related to the Mr Sechemane’s responsibility as the CEO.

The Chairperson said that the Chair of the board was present. That was important because there was a board process which he had flagged but not yet arrived at. That needed to be noted. The Chairperson noted that there needed to be clarity on the CEO’s own position on the matter.

Mr Sechemane responded that compliance was compliance. He discussed the reason why the TCTA took action against everybody that was concerned. The problem was that some of these things had happened in earlier years. Some people had left the organisation or could not be determined who was at fault in terms of what had happened. He had decided that consequence management would be taken against everybody despite it being a situation where there was no financial loss. If there was a policy that was in place or it got an instruction note then TCTA had to comply. Everything else comes afterwards. He asked why were these things taking so long. It was almost five years that the TCTA had been engaging with Treasury. He was just trying to explain that situation. If one had to comply because there was a particular legislation in place or an instruction note, then the board had to follow it and deal with other issues later. That explained the difference between the TCTA and Treasury regarding why there had not been condonation. Treasury said that until those letters were signed by people who acknowledged that they were wrong, these would not be passed. There had been a lot of communication between TCTA and Treasury on these particular items. His position was that if there was a piece of legislation in terms of the Public Finance Management Act (PFMA) or an instruction note on how things were to be done, then it had to be done that way. The TCTA went through the particular process. The board looked at the whole unit and made sure it applied consequence management. He was looking into the future. At least there had been a revision to note three which then put back the authority with the Office of the Chief Executive to make those calls. Then that would be audited by the AG when it did the audit. It was not because he was not sure where he stood. The TCTA understood that it had to follow PFMA in terms of what needed to happen. He was also frustrated in terms of how long this had sat in the TCTA’s books. The TCTA went into the market on behalf of the Department to borrow money. When one looked at the irregular expenditure it really did not look good in terms of what the TCTA had done. It was not a very good thing for the TCTA to still have in its books. He hoped that it could be dealt with once and for all.

The Chairperson said that he wanted a response from the board on the matter of the TCTA.

Ms V Mente (EFF) said that two things were at risk riding on the answer in particular that the Committee was given. Non-compliance with the legislation was going to be viewed even by the disciplinary committee (DC) as “by the way” if it could be justified by the head of the Department. She was looking at the list of the condonations. How could one justify a CEO that delayed issuing a contract and, as a result, had to resort to emergency appointment of such service that was required? That had its own consequences because there were many other laws that one did not have to follow. People did not have water now. A dam was at risk. A person was allowed to not comply with a law of finding the proper people and for them to be assessed in time in order for them to be appointed on merit. She noted that the TCTA was opening a door of non-compliance. The TCTA was opening a door for corruption.

Mr Gerald Dumas, Board Chairperson, TCTA, said that he did not differ with what the CEO had alluded to in terms of consequence management and in terms of ensuring compliance. The board was not going to justify non-compliance. Some issues had been advanced by some of the employees who were now supposed to face disciplinary hearings. The board had to look into the matter but it was not going to compromise on the issues. What was confusing was the fact that although there was legislative compliance, the major issue was Note Three. The Director-General and CEO had alluded to it as well. It has since been reviewed and was now in line with the TCTA’s policy and also with the Construction Industry Development Board (CIDB). That did not actually justify that there should have been non-compliance. The TCTA was going to pursue the matter further. He was trying to reassure the Committee that the TCTA was not saying it would not proceed with consequence management. The board’s position was clear. He said TCTA did comply with CIDB and the framework. It did not understand why it should now be taken to task. The major issue was that the TCTA did not comply with Note Three. At the time of transgression, Note Three was applicable. The fact that it was no longer applicable and was now in line with TCTA policy was not material at all.  

The Chairperson said that it was a very grey area. He was not clear why the TCTA was not in receipt of the Revised Note Three when it came out and then how employees somehow now fell into the crack of this. There was something missing in terms of the non-receipt and timelines of Note Three. Did Treasury not communicate it to the TCTA? Or did TCTA not notice it when it arrived and employees were left in the lurch? Who was responsible, before it was put on the employees? Why did the TCTA not receive Note Three?

Ms Tolashe said that something was not okay here. Did the TCTA not think that it was already opening up for those employees to get off scot-free from court? What would be the implications? Was the board ready to take responsibility financially and otherwise? She did not think that the board had a case.

Mr Dumas emphasised that this was a historical issue. It could not be justified by saying that the then board was not aware because it was applicable then. Neither could it justify that the employees were not aware of it. Whether they were aware or not, it was applicable. It was not an area that the board was going to be discussing anyway. In his opinion, it was not material. It was in place. The current board could not say that Treasury did not communicate. That was not an issue. The then board should have been aware of Note Three. They should have made sure it was implemented and they should have complied with it.

The Chairperson said it was material. It was material because it spoke to the basic prescripts of cooperative governance. It spoke to internal communication. It spoke to fiduciary responsibility insofar as the handling of policy was concerned. It was policy management. If it was a reality of the previous board, then it needed to be looked into. If Parliament changed the standard operating procedure (SOP) of Committees and sent it to the Chairperson, but he did not communicate to the Members, then the Members would continue on the previous SOP. If there was an outrage, then it could not be immaterial. It was material. The board needed to take responsibility. He did not see how the employees took the fall. The Committee would come back to this matter. He was not clarified. He asked for the TCTA to put together a more cogent response and a timeline for all the issues. It needed to be tied down nicely but it must not fall through the cracks. The Chairperson allowed Mr Sechemane to provide a last response.  

Mr Sechemane responded to the issue related to the delays in contracts and how that affected procurement. He referred to the cases of deviations and variations that the TCTA had submitted to the Committee. [See the electronic copies on the PMG web page for this meeting.] In all cases, the TCTA would have gone into the open market to get competitive bidding in terms of what it did. However, sometimes there was no market response. Procurement made sense in terms of Section 217 of the Constitution. The Constitution required that [all organs of state] go through a competitive bidding process. Sometimes non-responsive bids were received in terms of what needed to be done. The TCTA would always have gone through a competitive bidding process first. However, if the market was not responding to what the TCTA was looking for, then it would get into the situation that he was explaining. The TCTA would have gone into the market. Usually, it would go more than once. The TCTA had all the proof and supporting documentation that it would have gone into the market first. It was not a situation where it was just opening the door for things not to happen as they were supposed to. In most cases, as a State Owned Enterprise (SOE), it was limited by market responses in certain instances. In some cases, the market did not respond in line with whatever it had put out. If it appointed them, then it was again going to be an audit finding to say that the TCTA had appointed somebody that did not meet the criteria in the first place. It was a grey area in terms of performance and being able to hit the targets when one needed to… but it was forced to get into that situation. He noted that between the TCTA and Treasury no one was able to say who was responsible for Note Three being applied accordingly. He could not speak to the things that had happened before he arrived at the TCTA. The TCTA had looked at the risk and said that it needed to have a process. It was their responsibility to check with Treasury all the time to see what was new that had been published. He noted that because there was no financial loss, there was absolutely no situation where people were getting off scot-free. Instead, the TCTA went through the consequence management process to get to the condonation. The TCTA had looked at the process and he had assigned people to look at that and periodically check with Treasury in terms of the new developments. That was why the TCTA was aware of a revision of Note Three. It was the responsibility of the organisation to make sure that they knew when there were changes to legislation. It was unacceptable for people to say that they were not aware. The TCTA took the appropriate action but controls were also put in place to ensure that this did not happen where they would say that they did not pick up on something as important as this. That was how the TCTA was addressing the matter going forward.   

The Chairperson said that, ultimately, someone must be held responsible.
 
Ms Mente said that the Committee had received a lot of information [from DWS]. She referred to the main account and the establishment of a panel resolving to have a forensic investigation on the fruitless and wasteful expenditure. The Department did not apply its mind or focus on the matters. She referred to the fruitless and wasteful expenditure of the national office. The Department was going to appoint forensic investigators for accommodation. She wanted to check if she heard that correctly. It would be accommodation for people the Department knew did not pitch up in that paid accommodation. Now the state had to spend more money to investigate. Why must the Department pay a forensic investigator to investigate what the Human Resources (HR) and finance departments had on record? This was not in order. The policy on transport and penalties on vehicle licensing should say that the driver of a particular vehicle should be liable for the renewal of the license, or the supply chain office should have someone who was responsible for the licensing of the fleet. That was how it worked in corporate [environments]. There were so many people employed at the supply chain management office it could not be that there was not a single person who was responsible for licensing vehicles, and now a forensic investigator needed to be appointed. Now the forensic investigator needed to investigate that person who failed to ensure that the fleet was up to date with maintenance and licensing. SCOPA could not agree to go and appoint a forensic investigating firm to investigate people that the Department knew. There was nothing to investigate. It was straightforward. The Department knew what happened. That money needed to be taken from them for failing to do their duties. It was simple. It did not even require a disciplinary committee. A DC would come as a matter of failure to adhere to your duties and job description. This could not go to forensic [investigation]. It was even worse with the matters raised in internal audit. There was a Mr Basson who appeared on almost every page. The risk was that these things were going to go for condonation without being clearly dealt with. She asked how to deal with these things. Either the person went through a disciplinary process within the organisation to establish whether the person was still fit and proper to run such an office. It cannot be that someone was erring for so many months and the only thing that happened was that the Department placed your name on paper. The forensics still needed to come and process the person. There was even a Mr Tshabalala on the first page. The description said major contributors towards the losses could not be capitalised to the asset but not limited to areas as follows: compensation of employees, accommodation for officials. How did the Department compensate people who had not gone there? Maybe she was understanding the policies of government wrongly. Were people first compensated before they went? Or would people go, then account and then be compensated? How were people compensated for something they had not done? Then that person needed to be forensically investigated. Forensic investigators did not come cheap. That was her biggest problem. Forensic investigators, who do not come cheap, would be paid for something already known. It was known in the previous Parliament. It was carried over. The nice thing was that there was a new Director-General. Maybe a new broom would sweep much cleaner. There were a lot of them, but it was an indication that not a lot of thinking was applied in providing this report. She warned the Department to be careful of malicious compliance. She said that there could not be forensic investigators for the two instances that refer to Qamata; there was no such project that was taking place at that particular time. She was doing research in that same area. There was nothing like that. There was no such project taking place in Qamata. So, what was the Department going there to do? She discussed condonations. There was a R46 billion, or was it a R46 million, that had been written off? Now it was sitting at R16 million [slide 23 gives a figure of R16.562 billion]. There were condonations that the Department wanted to do but were not approved. There was a condonation on Giyani Water Project, where a borehole cost almost R1.2 million. A Rolls-Royce of a borehole. There was still no resolution there. The Department was looking for condonation, but the Committee had not seen anyone being dealt with in terms of the law, in terms of the Department. The Committee had not heard how much money was being paid back from those projects, yet the State must forget there was such a loss. It must be condoned, taken off the books and if the AG agreed with her that was not correct. There should be a clear way forward on getting back that money and dealing with the people involved. However, the Department could not ask the State to forget that it lost billions, which at some points was even inflated to more than ten times. But, the State must forget that there was such and it must not be reflected anywhere when there had never been proper consequences and a clear way forward. The Committee could not close the Covid-related matters. When the Committee went to KZN and the Eastern Cape, there was a lot on the interventions of Covid where water tankers did not reach people. She would find the areas in due course and send them to the Department.

Dr Phillips referred to the tables where the Department had indicated that it was going to deal with the backlogs of both irregular and fruitless and wasteful investigations by assisting internal audit with externals [e.g. slides 24 and 25]. At the top of each of the tables it said that, the purpose of the investigations was to investigate the cases identified and that the investigations would be done either by either the external investigators or by the internal audit unit. The Department’s internal audit unit would do the straightforward cases. Some of the straightforward cases were already in process. It needed to be remembered that these were the tables of the backlog so until the investigations were finished and completed, they still remained part of the backlog. Some of the straightforward cases had already been dealt with by the Department or were in the process of being dealt with. He assured the Committee that the Department would not waste money appointing forensic auditors where it was unnecessary and did not make sense to appoint external forensic auditors. The straightforward cases would be dealt with internally. He responded to the questions on condonations. He discussed the Giyani Water Project. It indicated in the table [in slide 24] that the employee was charged and found not guilty through the disciplinary process. The Department had to follow disciplinary processes as prescribed in terms of the Public Service Bargaining Chamber's agreements regarding how public service disciplinary processes had to be managed. The Department went through all of those processes. It did not agree with the finding of the presiding officer. It indicated in the report that the Department had taken the presiding officer’s decision on review with the Labour Court. The Department continued to follow proper process and would see the matter through to conclusion. The Department had not just left it.

Mr Frans Moatshe, Chief Financial Officer (CFO), DWS, said that only those cases that were more complex were the ones that would be dealt with, especially where there were implementing agents and those transactions were transversal between the Department as well as the implementing agents. The compensation of employees referred to in the WTE fruitless and wasteful expenditure related to labour costs that the Department had incurred on projects. There was an element of either the costs were excessive or they did not contribute to the betterment of the asset that was supposed to be constructed. For example, there could be a project established and if material was not procured timeously there were costs. There could also be instances of inefficiencies. Like the Department appointing labourers that were more than what the client on that project was signing off. Those costs were then not capitalised and were put aside as either losses or fruitless and wasteful expenditure. He confirmed that the project listed, which was for April 2021 in the Eastern Cape, was the Qamata one. It was certainly a project. He confirmed that it was there and it was implemented by the Department’s construction south office. He discussed the R46 million, the losses, and the write-off. That related fruitless and wasteful expenditure resulted from the Giyani Project. The implementing agent was appointed to implement the project and their standard rates were applied to all these projects. It happened for a certain period that the percentage claimed was more than the percentage in the Department's policy. The implementing agent indicated that there was an arrangement at that stage. They shared some correspondence but this was not signed. It indicated that they were allowed to recoup those extra percentages because they were going to appoint another company. Through assessment and audit findings, it was then determined that that extra percentage paid should be recorded as fruitless for that time because the implementing agent paid its management fee. So, it was not entitled to any extra fee since they were paid as indicated. Those amounts were investigated to determine exactly what happened, whether there were any incidents of fraudulent outcomes from the Department side and the implementing agent. It was recommended that that portion of the management fee be written off. Hence, the Member was correct that the fruitless and wasteful expenditure went from around R60 million to the R16 million that had been mentioned. That was the write-off that was effected. There was also another write-off of Amatola Water Board in the same financial statements. At the early stages of condonations for the Giyani Project, the Department supplied Treasury with the actions that it had taken. The Department also had to await the other processes of SIU as well as the High Court matter. Hence, the amount was still showing in the Department’s register.

Mr A Lees (DA) said that the TCTA had its own board. What was the TCTA’s relationship with the Department? How did it work?

Mr Sechemane said that the TCTA was an entity of the Department. The State is not allowed to go into the market to borrow money. Initially, in terms of setting up the TCTA, it looked at the Lesotho Highlands Water Project. Based on the success thereof, the Department decided that there could be other projects that TCTA could be used for. The TCTA got its mandate from the Minister, in terms of a directive. The Department would do the planning of where water was needed. Then it looked at how it would source the water. Sometimes for big projects, the Department would tell the TCTA to go into the market to actually borrow the money, project manage the building of this particular infrastructure and then hand it over to the Department. TCTA remained dealing with the debt aspect of that because it was TCTA that went into the market to actually borrow the money.

Mr Lees said that was the way he understood it. The TCTA’s customer was the Department.

Mr Sechemane responded that its primary customer was the Department.

Mr Lees said that the TCTA could service its debt so well because the Department paid it so well. Was that correct?

Dr Phillips used the Lesotho Highlands as an example. It was a project for which the TCTA raised money. Water was supplied from the Lesotho Highlands Project to Gauteng, to the Vaal River System. Rand Water extracted the water from the Vaal River System. Rand Water had to pay the Department for that water. It went into the Department’s trading entity account. The Department then paid TCTA money from the trading entity account for them to be able to pay off the loans. The model was one of sustainable financing where the costs of the financing must be covered by revenue generated from the sale of water.

Mr Lees said that the point he was making was that the fact that the TCTA could service its debt was a consequence of the Department raising the money from Rand Water, wherever the money comes from, channelled through the Department to the TCTA. He had a question and he was not sure the people in front of him could answer. This debt may or may not be guaranteed with Government guarantees. As he understood, the TCTA was trying to raise debt on its own balance sheet.

Dr Phillips said that all the TCTA’s debt was guaranteed. That was the key difference between the TCTA and the National Water Resource Infrastructure Agency (NWRIA) the Department wanted to establish. The TCTA did not have a balance sheet like the NWRIA would have. The TCTA did not own the assets. Currently, DWS owns all the assets. The Department’s intention with the NWRIA was to transfer the ownership of the assets to the NWRIA so that it had a very substantial balance sheet. The Department hoped that the NWRIA could prove itself to the market overtime, that it would be able to raise finance without Treasury guarantees. That would mean it should be able to raise more finance than currently was the case because the TCTA was limited. Treasury had to be careful about the number of guarantees it extends. The TCTA was limited in the extent to which it could borrow because it only borrowed on the basis of Treasury guarantees.

Mr Lees thanked Dr Phillips for that clarity. His question for Treasury was, did the debt that currently resided in TCTA reflect on the sovereign balance sheet? He suspected that it did not, as a contingent liability. He needed to look at the book and the list. Whether or not it did, once the new entity was set up, and that entity built up the balance sheet to the point that Dr Phillips hoped that it would—so it would be able to borrow on its own resources—that entity was funded via the Department, whether it was sales or water. Would that operational modus operandi change?

Dr Phillips responded that it would change. When the Department created NWRIA, it was going to merge the TCTA and the Water Trading Entity. It would no longer have revenue collection in the Department. The revenue collection would move to the new entity. The WTE that was currently in the Department would move to the NWRIA.

Mr Lees said that what concerned him was that it sounded good and the Committee needed to support it. But in the event that this new entity became another Eskom which simply could not meet its debt obligations, that debt would end up back on the taxpayers' shoulders. That was the real concern here. That these entities were set up, they looked good on paper but were so badly managed that, at the end of the day, the money was not collected. Eskom’s collections were shocking. Then the taxpayer had to bail the entity out because water was an essential service. It was not like South African Airways (SAA), where there were plenty of other airlines and it could just be shut down. That was a concern. Although, in concept,   he would support it. The Committee needed to be well-informed as to exactly how the entity was going to do it and how it was going to collect. Dr Phillips indicated that the Minister was kind of looking at the actual consumer end. This led back to the discussion he had just had.  The fact that the payments to the TCTA, as it was now, happened was because some of those consumers paid them for their water. The large majority of consumers in South Africa today do not pay. They used relatively small amounts and there was a particular state allocation to cover those costs. The majority did not pay. However, in terms of the municipalities, the majority of municipalities were not collecting from those who could pay and should be paying. This debt burden sits with the municipalities and would ultimately move all its way up to this new entity, if it was allowed to. There were already interventions in municipalities. They were put under administration. It made zero difference to collections at the end of the day. Then the municipality goes back into administration. He discussed uThukela District Municipality. It was in its third or fourth iteration of administration. It was bankrupt. That did not stop the mayor from running around with three SUVs and a horde of bodyguards, of course. This intervention by the Minister to help or assist, what did it entail to put these municipalities under administration? He was thinking of district municipalities in most of the country which h96
3ad the water services obligations. What exactly was the hope of the Minister to be able to achieve there? How was the Department going to do it?

Mr Senzo Mchunu, Minister of Water and Sanitation, said he had been appointed Minister on 5 August 2021. The Department went to all the provinces, spending three days in each province, with an additional day in the Western Cape because it had to take a trip to the West Coast. In all those working sessions, the Department interacted intensively with all the water services authorities in the country. This culminated in a two-day summit in February 2022. The conclusion that the Department reached after those intensive interactions was that indeed water should not impede economic development. People needed to enjoy their rights in the Constitution and attest to the Department’s mantra that ‘water is life’. But municipalities complained they did not have the capacity to deliver at the level expected on water and sanitation. The Department did not have the capacity. What does capacity mean in this instance? It means that as far as the function of water and sanitation was concerned, most of them had very limited numbers of employees there. Even if they had close to adequate numbers employed, they did not have adequate training and skills to perform the duties that had to do with water and sanitation. There were a number of other things that required some level of education. He provided an example. In Gqeberha, there was a workforce of around 800 workers. The head of water there had experience but not necessarily a degree. In other municipalities, one would find that numbers were very limited. Skills were very limited. Expertise in water-related matters was limited. Budgets were also limited. The Department had not been good at monitoring the little available to municipalities over the years. The Department had been satisfied with grant money leaving Pretoria and then there would be a little accounting on the part of municipalities after they received this. The result of this was that over the years, huge amounts of money had been spent. Expectations of the people on the ground remained very high, but delivery was very slow. The Department was honest and noted that something needed to be done. It was a question of capacity. Municipalities also said that their infrastructure was ageing, actually meaning that it was decayed. It was rotten. The lowest of the cities’ leaks would be around 26%. Most of them were at 40%. There were some as high as more than 50% of non-revenue water. That included leaking pipes. That was the second major problem. Looking at the record of municipalities and their capacity to do a turnaround, one did not find any. This was what was in the background. He was a Minister in South Africa and the Constitution said that water is a right. There was section 54 that gave him overall responsibility and section 63 gave him authority to make interventions where necessary, together with section 139. On that basis, the Department would intervene depending on the level of problems and practical results of engagement on the ground. In some cases, the Department had to intervene directly with section 63, and 139. In some cases, the Department intervened but not with 63. It just made an intervention and reached an agreement through a memorandum of understanding or an agreement with a relevant municipality. The Department wanted to work with the municipalities to follow its mandate and ensure that the municipality followed all procedures from procurement to every other thing, designs and actual implementation of the project. Most municipalities had agreed to this and the Department was working with them. The other intervention the Department was doing was working with the private sector. In most cases, when the Department intervened, it used its Water Boards. The Department gave the Water Board a directive to go out and implement, working with the municipality. The Department convened meetings. In some cases, it established steering committees. In some cases where it was not necessary, the Department at an official level, the DDG Water and Sanitation, would lead depending on the nature of the problem. The Department did this with one objective, to get water to the citizens of the country. Then politics could be spoken after. The Department did this with the purpose and focus of delivering water. Right now, the Department wants to enter into a conversation with eThekwini. They had received some funding from Treasury for water and sanitation. He saw the mayor making a statement that it was not enough. The Minister called him and said they needed to talk. The Department would receive a presentation on the extent of the damage to the water and sanitation in eThekwini. His take, coming from KZN and interacting from time to time with people from Durban, [was that their estimates of damage] would far exceed what Treasury had made available. The Department wanted to engage that municipality and the municipality would make their own presentation. The Department and the municipality would then come together to say what was the extent of damage and the related costs. Then they would talk together in terms of what needed to be done. If it was not done now, already there was a lot of effluent that was getting into the water system in eThekwini River and into other systems that supplied water to eThekwini. The Department could not just sit by. The Department looked at the practical and pragmatic situations and used various intervention methods. Then the Department would implement those.

Mr Lees thanked the Minister for his words. The Committee looked forward to the successful practical implementation of the obvious concern and knowledge that the Minister and his team had [on how to address] the shortcomings in municipalities. That was something to watch as the Committee went forward. He illustrated the TCTA’s relationship with the Department. The Minister then referred to the Water Boards. Their relationship was much the same as the TCTA. Although not quite the same, because their customers paid them directly. Every single one of the Water Boards had failed to produce its annual report on time, for at least the past five years. Even for the current year, he did not think that a single one of the Water Boards had submitted their annual report on time. He did not have a great deal of confidence in the Water Boards. He would be very concerned if the Department relied on the Water Boards. Why were the Water Boards not producing annual reports on time? Did the Department have any influence there?

Minister Mchunu responded that the Department’s governance and financial accountability on the side of Water Boards had been quite low. He recognised that. The Department met all of them in the provinces. The Department spent time with them and checked three things. One, governance. Two, financial accountability. Three, their record of delivery and capacity thereof. The Department concluded that it was very low, too low. There were others whose capacity was actually fine. It only needed to be accelerated and maintained at the highest level. One was Rand Water. Not that Rand Water was spotless. The Department was working with them to ensure they made an effort to get to the highest level, which was where the Department wanted them to be. It was not that the Water Boards were not able to prepare their Annual Reports. They had just been sluggish due to the low governance standards that they had become accustomed to. For example, they were used to preparing reports to the Minister every year, asking for an increase in tariffs. One of the things that the Department had said to them was that this year the Department was signing those for the last time. The next time the Water Boards did this, they would have to make elaborate presentations as to why they were increasing tariffs, more than just saying that it had to be an annual affair. That was what the Department wanted to do. He wanted to persuade the Members that even if they did not have confidence in the Water Boards, they should have confidence in the Department. The Department took overall responsibility for them. The Department had applied its mind and saw that the Water Boards needed intervention in these three areas to turn around. The Department had the Water Boards under its microscope. The Department acknowledged that it needed to do that because many institutions were under investigation. Then there were some boards with a long record of having no CEO or CFO—in some cases, both. The Department dealt with institutions that were otherwise very important and had a huge potential to improve water services. There was a marked decline at local government level, across the board. On the previous day, he had met all the metros in Gauteng. They needed to improve. They had to improve water management, particularly ensuring water was used cautiously. The Department had even established a “water room” for Gauteng, to identify a set of issues that the water room would monitor on an ongoing basis to increase efficiency to the level that was required. Water Boards had huge potential but they needed to be made viable. The Department disestablished the board for Sedibeng because it realised that if it did not do that very soon, it would find itself managing Sedibeng. The Department disestablished them. The Department was reconfiguring them. The Department was in the process of amalgamating boards, finishing Umgeni Water and Mhlathuze Water in December. The Department wanted to maximise all the economies of scale and ensure that this one board was viable so that government could get the results it wanted. He asked the Members to have confidence in the Department and to have confidence in the measures that the Department was taking. The Members needed to have confidence in the processes that were underway. The Department had applied its mind and could prove it. The Department could keep the envisaged changes under the Committee’s own microscope. Six months to nine months down the line, the Department knew it would be doing a huge turnaround in this regard. There would be improved services of water and sanitation on the ground.

Dr Phillips responded to the question about the annual reports. The Minister had put a lot of focus on improving the governance of the Water Boards since he came in and things were improving. He discussed the 2020/2021 annual reports. Three of the Water Boards had submitted late, all for reasons similar to why the Department’s own annual report was submitted late: issues were still being finalised with the Auditor-General. He noted Mr Lees’ question about how the Department’s support and intervention in municipalities were assisting with addressing the billing and revenue collection issues.

Mr Risimati Mathye, Deputy Director-General: Water and Sanitation Services Management, DWS, discussed the Department’s interventions with municipalities in the country. One of the things the Department noticed was that basic information did not exist in these municipalities. The municipalities did not know how much water was coming into their system. If a municipality started with not knowing how much water got into its system, it would not know how much it was billing its clients. The Department realised that to correct the problems, it had to intervene and help municipalities develop a water balance. That was one thing the Department was doing with the Ugu District Municipality, in KZN. By developing a water balance, one should at least be more accountable on the amount of water losses, be it physical losses or non-revenue water. The Department was intervening at that level to help municipalities develop a water balance, how much water came to the water system and the infrastructure. The Department then moved to the next step. The Department asked the municipalities how much they were actually billing their clients. The Department reconciled that with the amount of money that the municipalities received. The Department had picked up at Ugu that the infrastructure was quite old. They still had some of their old asbestos cement pipes which needed replacement. Before correcting the metering, one needed to start with the infrastructure pipe replacement. The Department’s intervention started with the bulk infrastructure and then moved over to attending to leakages, meter replacement and fixing leaks in the meters. All these integrated together improved the revenue because much money would not be spent doing a [full Operations and Maintenance (O&M) programme]. As the infrastructure replacement was done, that [additional] money would go to other functions. The Department’s intervention with Ugu encompasses these four aspects: Improving the water balance, measuring water, improving pipe replacement and dealing with leakages in metering. These would improve the billing capacity because the municipality would keep more money in their bank account.  

Ms Van Minnen asked for the Department to expand on the regulatory interventions regarding pollution. Was it in terms of municipalities, industry, mining? What was happening in that space? Were there any big water polluters that were being looked at? Water pollution was a massive issue the country had. She wanted some more information on the matter.

Dr Phillips said that the Department had an internal regulation unit. It was very active. The Department monitored pollution through its regional offices. The Department issued directives to both private industries and to municipalities where there was pollution. It issued repeat directives. In some cases, it took municipalities or companies to court in order to get the directives adhered to. That was the current situation, and the Department did have plans to strengthen it.  

Mr Xolani Zwane, Deputy Director-General: Regulation, Compliance and Enforcement, DWS, said that the Department had plans where it was engaging the municipalities. The Department also had many problems with the mines which created a lot of pollution of water resources. The Department used the Water Act, where it gave directives or warnings. The Department would send an intention to say it wanted to issue a directive unless the issues were redressed. If [a polluter of water] sent plans that did not meet the Department’s requirements, it would issue a directive. The Department also tried to assist municipalities [and water polluters] and worked with them in developing those plans. Teams were also allocated at regional level to assist municipalities.

Mr Leonardo Manus, Chief Director: Infrastructure Operations, DWS, said the Department had formalised training for its environmental management inspectors (EMIs). This was done together with the Department of Environmental Affairs so that the Department could internally strengthen itself, as far as the Blue Scorpions team was concerned. This was done so that the EMIs had the necessary skills to monitor compliance and enforcement. The successful training of these officials within the Department would also give them additional capacity and power regarding enforcement. That would especially assist in the space of the private sector. The Department had revived the incentive-based regulation programme called the Green Drops Certification Programme that assisted the public sector in terms of the municipalities. A new level of accountability had been placed on municipalities to make sure that they not only comply with the standards for effluent that left the waste treatment works, but that they looked at the complete system of management, especially the various categories of wastewater management. The municipalities were sensitised through this programme. The Department guided them towards the areas where they needed to give the necessary attention. The [Green Drop] report that the Department issued in 2022 was the first since 2014. It had not been a good report, but it had been a good step in the right direction in terms of holding local authorities accountable. The Department was also trying to see how it could increase and tighten up on legislation. The Department was trying innovative means to bring accountability beyond the point of only looking at incentive-based regulation but to ensure that it had the right capacity to have the necessary outcome that the Department wanted.

Dr Phillips said the Department also wanted to strengthen the link between regulation on the one hand and support and intervention on the other hand with municipalities. Currently, it is not yet systematic and consistent enough. The Department wanted to develop a set of decision rules where directives were issued when the Department’s regulatory branch identified non-compliance. If non-compliance was repeated, then it would be escalated to another level until, eventually, it might become a section 193 intervention due to repeated non-compliance with directives. The Department needed to get to a stage where there was a very close link between support and intervention and monitoring through regulatory mechanisms. Support and intervention would become automatic on the basis of the results of regulatory monitoring.
 
Ms Van Minnen said that was something to keep an eye on. The other issue she wanted to discuss was condonations. She knew it was a very common problem with government departments that officials left before any disciplinary action could be taken. They either moved to a different department or got away with it scot-free. She referred to the issue of Mr Sifiso Mkhize. There was a Hawks report on that. It was also reported to the Public Protector. Looking at the condonations it came up again and again. This was someone who there were recommendations about for criminal proceedings but who had left the Department. Disciplinary action could not be taken. Was there any update on what was happening with that particular matter? It was indicative of the kind of problem that one saw across all Departments.

The Chairperson said it was worth pointing out that Ms Van Minnen was referring to the former Director-General.

Mr Michael Motsatsi, Chief Audit Executive, DWS, responded that the Hawks were still investigating the case. The Hawks were currently doing the financial analysis and would then return to the Department. The last update he received was on Friday of the previous week. They were still active on the case and the Department provided them with the necessary support required, including documentation and access to personnel.

Ms Van Minnen asked the Chairperson that the Committee receive updates on that because it was particularly indicative of a problem seen across departments. This was a serious matter. It was a matter that had also gone to the Public Protector back in 2001. It was something where there should be a paper trail.

The Chairperson said he would check the date the law enforcement agencies would be appearing [in Parliament] and then the Committee would advise them that they could give an update on that day. He noted that there were quite a lot of condonations that needed discussion.

Dr Phillips said that there was a different matter related to the same individual, which was a good example of how it worked when an official who resigned from the Department had joined another department. That other government department was now implementing the disciplinary action resulting from the case in DWS.

Mr Motsatsi said that the case continued sometime in October for a period of three days. The Department was sending its representative to lead evidence as part of the support. The other department was responsible for carrying out the disciplinary action. The Department supported and monitored until the case was concluded.

The Chairperson asked which department this was?

Mr Motsatsi replied that it was the Department of Finance in Gauteng.

Ms Van Minnen said she was pleased to hear that there was at least some cross-departmental communication. The Committee would keep an eye on that.

The Chairperson said that it reminded him of the follow-up that the Committee still needed to do with Correctional Services on the issues around its CFO who left the Municipal Demarcation Board with a [disciplinary] matter [pending] and then emerged at Correctional Services. The Committee would flag that matter so that it could do a follow-up.

Mr Motsatsi added that there was also a civil recovery case against the company in question to try and recover the money that had been spent.

The Chairperson said that the Committee would await the outcome but that it was a step in the right direction.

Ms Tolashe said she wanted to get the CEO’s response to her initial question. She said that Mr Sechemane’s response just sounded like malicious consequence management. That was the conclusion she took from his explanation. Indirectly it was agreed that there was a possibility of them losing the case. Employees were not responsible, with all the explanations that were given. The TCTA did it just for the sake of doing it. She wanted the board to note this. She heard at some point that they were not there and that they had come. That was always the case. The Committee would expect both the board and the CEO to carry that responsibility. She discussed the explanation given to Ms Mente on the issue of Qamata. Ms Tolashe said that she was from that area. She and Ms Mente were from the Chris Hani District Municipality. How did the Department directly monitor its projects that were all over the country? The Department spoke very convincingly about what it was doing in all other municipalities, especially in KZN. How could the Department speak with its eyes closed on the progress and frustrations that that project was going through? She resided in Chris Hani District Municipality. She understood all the difficulties that that municipality was going through and the AG’s report that was quite appalling for the third consecutive year. The section that spoke about water was the one that suffered most. She did not know how the municipality collected revenue because she stayed there and there was no collection. She wanted to put that to the Department. She still wanted to see the Qamata project. She heard the Minister speak about how the Department worked with Water Boards. The reports stated that the Water Boards were not playing along. Or the Department was busy ensuring they were in line with what was expected of them. She was concerned. Was she correct in saying that some of the problems would only be resolved in the next ten years? It was like the Department started from scratch, like it never existed. Everything was being fixed or being established or there was still an investigation that was taking place. Did the Department see any end? There were issues that the Committee needed to note and had to consider, especially under unauthorised expenditure in the report that the Department tabled. It stated that the Department was to consider the explanation and evidence given to it on the unauthorised expenditure of the Department. A recommendation needed to be made to Parliament whether or not to approve the unauthorised expenditure. Or whether the unauthorised expenditure should be treated as a direct charge against the Revenue Fund or charges against the funds allocated for the following years that had been alluded to nor the future years. She asked the Director-General to take the Committee in his confidence, how possible was that with what the Committee had just heard from the presentation? She asked the Director-General to put himself in the Members’ shoes.

Mr Manus responded to the question about the Qamata projects. This concerned rehabilitation projects that the Department was currently undertaking in terms of existing irrigation infrastructure, canals and balancing dams. These would not be new projects but just to sustain the agricultural economy in the area of those canal systems and balancing dams that had been part of that area. It would be more on the periphery of the settlement areas. He discussed the balancing dams the Department had been doing through the internal construction unit. It was to ensure that those dams remained in an operable state or to extend their usable life to sustain the hydraulic balance in terms of the canal systems within that area. The rehabilitation of conveyance systems was being funded through the revenue the Department received from its water use charges. Those projects were continuing. They had not been as efficient as the Department wanted them to be. That was the reason why the CFO had spoken in terms of the fruitless and wasteful expenditure that had been there because the payments of some of the staff could not be capitalised in terms of the usable output. The Department was working on its efficiency of it. Monitoring those projects was part of the Department’s Strategic Asset Management Unit. The Department had an internal unit that looked at existing infrastructure that had either been owned and developed by the Department or transferred to the Department. Some provincial agricultural infrastructure had also been transferred to the Department. Through the Strategic Asset Management Programme, the Department also rehabilitated and refurbished the infrastructure to extend its life. Those two projects [in Qamata] would then fall under the scope of that programme.

Mr Mathye said the Department had identified that there was a huge gap in terms of project monitoring. The Department had established a project dashboard. This dashboard would have live data. All the Department’s big projects would be populated in this dashboard. The Department should be able to monitor how far the project was, how much money was being spent and whether it was ahead or behind schedule so that the Department is able to intervene. This was done throughout the country where the Department was developing all of these projects. In the near future, the Department should be able to have this system in place and well-populated. The Department was taking it a step further. This dashboard would be presented to the Minister in the coming couple of weeks.

Dr Phillips said there were some projects the Department implemented internally by its construction unit. The Department was trying to improve the efficiency of its construction unit, by improving its procurement processes. The construction largely focused on national infrastructure such as the conveyance infrastructure which Mr Manus had mentioned. The other type of projects that the Department managed was the municipal water and sanitation services projects which were funded through grants. Those the Department monitored very closely. Regional offices liaised very closely with the municipalities, and monitored regularly including site visits for all of those projects.

He believed there was light at the end of the tunnel regarding the irregular expenditure. The Department now had plans to go through all the processes it had to go through in terms of the law and the regulations to deal with that irregular expenditure. Currently, the Department’s annual reports were blighted by the fact that it kept carrying over the old irregular expenditure from previous financial years. The Department now had plans in place to beef up its forensic capacity so that it could deal with backlog cases and provide properly motivated requests to Treasury for condonations. Once all that had been done, it would no longer be carrying over this huge amount of irregular expenditure in its annual report every year. There was light at the end of the tunnel. The Department was working towards having an annual report which did not have these huge historical irregular expenditures in it year after year.

Mr Moatshe said that Ms Tolashe was correct about the unauthorised expenditure. The Department was implementing a financial recovery plan. It was an ongoing and living document that the Department had been implementing over the years. The Department had done a root cause analysis. The Committee would recall that some of the challenges related to bank overdraft, and commitments which were not funded. The Department had moved with the compliance issues. It ensured that none of the projects it was implementing, including the interventions, were implemented without funding. The Department would like the Committee to consider the unauthorised expenditure. The Department had put measures in place to ensure that it had exit plans on those two projects on leaks and bucket eradication. The issue previously was that the Department did not manage the budget properly. The Department ended up with adverse expenditure. Accruals and payables at some point were R2 billion. He agreed that there was light at the end of the tunnel. The Department was hopeful that it would eradicate all of these legacy balances.

Dr Phillips said that the Department was focused on making sure that it provided Treasury with all the necessary information and that it took all the steps necessary so that Treasury was in a position to make recommendations to Parliament.

The Chairperson noted that the law enforcement agencies’ meeting was on 23 November.

Ms A Beukes (ANC) said leaders could not be hopeless because leaders must install hope. She noted that when she arrived [in the meeting] most of the officials were already there and were vibrant and excited. She thought she would get that spirit in the Department’s report but did not. Was it to ease the Committee or the Department? The Minister was asking the Department that the Committee needed to trust them. The Committee would trust the Department. The Director-General agreed that the Department was in a tunnel. Where exactly in the tunnel was the Department now, out of ten? The Department had a forensic investigation unit. Was it not effective or was it not functioning or was it a capacity problem? The Director-General said that the Masilonyana Water Project was 98% completed. The Committee visited that project on 24 August, and it was far from complete. She disagreed with the Director-General. The problem with the Department was its coordination, communication and its regulation. What was the format of interaction with Bloem Water and the municipality? How did the Department measure the quality of that specific project? She focused on the Rand Water closeout report. One of the issues stated in the report was the handover of tanks to municipalities but figures for Mpumalanga, Eastern Cape and KwaZulu-Natal were excluded because the data was inaccurate. There were missing or damaged tanks, especially in Gauteng and the Northern Cape. What happened to those tanks? Who was responsible for the coordination of that programme? What was the process of consequence management? She could not accept the fact that the report spoke of missing tanks. She was from the Northern Cape and her constituency was the Kamiesberg Municipality. The people needed those tanks because it was sitting with a problem there. Almost 16 small rural areas did not have water currently. How could she accept a report that said tanks were missing or damaged? Under the challenges of that report, it said there was a lack of capacity to implement the work assigned to Water Boards in municipalities, non-responsiveness of some district municipalities, and prevalence of using specific contractors by municipalities. She did not understand this statement because the Department needed to always look for value for money. How did the Department appoint a service provider that did not have the capacity? In the case of the municipalities, how did the Department evaluate the technical capacity of those municipalities? One of the challenges was the prevalence of using specific contractors. If the Department wanted value for money, how was it stating this as part of the challenges? She discussed lessons learned in the report. It said the requirement for tanks was exaggerated hence there were still tanks in storage. Where were the tanks? She asked the Department to please give it to Kamiesberg Municipality because they needed it. The Department could not present a report of Rand Water that said there were still tanks in storage whilst people were sitting without water. In Kamiesberg Municipality, a school burned down because of the lack of water. The Department really needed to look into these things before it accepted the report from Rand Water and came and present it to SCOPA because of compliance. She wanted an explanation from the Department on underperformance versus overspending.

Dr Phillips responded to the question of where the Department was in the tunnel out of ten. It was a bit difficult to say because it was said ‘if you are frank about your weaknesses, you are 50% towards solving them’. From that perspective, the Department was five out of ten because it was being frank about its problems and what needed to be done about them. From the figures and tables that the Department had presented, it was not a pretty picture. There were huge amounts of irregular and fruitless and wasteful expenditure from the past that needed to be dealt with. However, the Department did have plans to deal with it. The Department felt it could deal with that backlog by March 2024. That indicated that the Department was maybe around six out of ten. The reason why the Department needed to get additional support was because the Department had a huge backlog of investigations which had built up over many years. It probably went back over ten years. There was a period when internal controls in the Department were inadequate, resulting in many cases of irregular, fruitless, and wasteful expenditure. That was the reason why the Department had a big backlog. The internal controls in the Department had been strengthened, so it did not envisage going forward that it would have nearly as high levels of fruitless, wasteful, and irregular expenditure in future. The Department’s target was zero irregular and zero fruitless and wasteful expenditure. The capacity within the internal audit unit was not adequate to deal with the huge number of cases. It would not make sense to permanently employ a large number more people in the internal audit unit to deal with the temporary backlog. That was why the Department decided to outsource it to forensic auditors because it was a temporary backlog. Once the Department dealt with the backlog and with its improved internal controls, then it did not think that a backlog would develop again. It thought its existing internal audit unit was stronger and more capacitated than previous years. Once it dealt with the backlog, it thought that the internal audit unit would be able to deal with cases on an ongoing basis.

Mr Manus discussed the closeout of the Covid report. The Covid programme was something quite out of the ordinary. It was a decision taken at the National Command Centre and Rand Water was given the responsibility for the implementation thereof. That included providing services in an area where normally services would not necessarily be rendered, especially in informal settlements. A primary control measure as far as the risk of Covid was concerned was to get people to wash their hands. It was determined that in informal areas where there were no services at that point in time, they needed to be given some level of access to water services. That included the water tanks and tinkering of water services. Carting or tinkering was the most expensive ways of giving water to people. It was for that period. At the end of August, when the categorisation of Covid was lowered, that project was stopped. Water supply was then supposed to be returned to a normal point where water service authorities would once again take responsibility for providing water services. That was when implementation was stopped. Ms Beukes was right that there were tanks still left at that point. Some of the tanks were damaged through vandalism. The Department required its implementing agent to ensure that these had been reported to the South African Police Services, because they had appointed other Water Boards and other implementing agents to assist them. Some tanks were left in the ownership of the various municipalities. Most of them were in KZN because the demand was higher in that area, noting the distances and topography. If there was a demand, as the Member said there was in Kamiesberg, the Department would engage with Rand Water in terms of storing those tanks.  The tanks had been stored there, in case they were needed during some disaster. The Department would provide an answer about Kamiesberg within the coming few days—on whether there was a viable means by which it could [move the tanks there].

Dr Phillips said that when the Department spoke about a project, it meant a specific scope of work allocated to a particular contractor. It might not address all the issues in a particular area. The particular project that the Department was talking about was refurbishing the wastewater treatment works. There might need to be other things which needed to be done in the area related to wastewater treatment which was not within the scope of the project.

Mr Mathye said that the condition on the ground might not be as expected because this project came in two phases. Phase one was what was being spoken about now. In August, there were still some issues that were still outstanding. Hence, the completion date was basically set for end of September. They were doing site visits to finalise some of the snag list. Some of the snag list was the landscaping which was not done properly and issues of fencing. Those were the issues that were being finalised. The signoff for that phase should be completed by the coming Friday. With the intervention by DWS, Bloem Water and the municipality were now doing the comprehensive conditional and viability study for phase two. This went to the overall treatment works. For now, with the current intervention, the treatment works would be able to work and function properly until phase two kicked in. That was the separation of the two projects.

Dr Phillips responded to the question of underperformance versus spending. The Department’s performance relates its APP targets and the degree to which it achieved its APP targets. There was not always a close correlation between APP targets and spending. Some of the APP targets required lots of expenditure and other APP targets did not require much expenditure. There was not a linear relationship between APP targets and expenditure. The Department’s main concern for the present and the previous financial years was under expenditure. The Department felt it was very bad that it underspent against its budget and it had to give the money [back] to Treasury in the context of the water challenges that the country faces. Management focused on reducing that under-expenditure in the current financial year. The improvements to procurement were one of the key measures that the Department was taking to reduce under-expenditure. The Department was also more actively monitoring and engaging with the municipalities to improve the expenditure on the grants. That included doing cashflow management between different projects and municipalities so that DWS did not underspend because some municipalities were moving slowly. The Department could put more money into the projects which were moving more quickly and then fund the slow-moving projects later so that it did not underspend in a financial year.

Ms M Mohlala (EFF) said that when the Minister was addressing the Committee, he said that the Department's sole intention was to ensure that it provided water to the people. Her concern was that the Department was underspending on regional bulk and water service infrastructure grants. What were the major challenges? Those challenges impacted the Department's failure to provide water to the people. What were the reasons for that? Was the Department engaging with Eskom to exclude water treatment works from load shedding as this impacted service delivery? The country was facing a load shedding crisis. The country was also facing water shedding. What was the Department doing when there was load shedding? The majority of the people in rural areas in the country also faced the problem of water shortage. What was the Department doing to ensure that it remedied that problem? In some instances where the Department spent a large part of its appropriation, the actual achievement was far below. The Department had not achieved exactly as what it had spent. She asked for the Department to address the Committee in that regard because it was not understandable. A chunk of money was being spent but when one looked at service delivery or achievements, it was far less. She asked the Department to respond.

Dr Phillips said that he had tried to explain before that the performance targets in the annual report related to the performance targets in the Annual Performance Plan. There was not a direct relationship between those APP performance and expenditure. Some of the targets might require very little money to achieve. In other areas the Department would spend a lot of money and it did not have so many targets related to that expenditure. The Department’s biggest area of under-expenditure was on projects. There were two types of projects.

One was the projects which were implemented by the Department itself for the infrastructure which the Department was responsible, the national bulk water infrastructure. In that regard, the Department’s biggest challenge was weaknesses in its procurement. The Department’s procurement was inefficient. It was not appropriate for construction procurement. It was not in line with Treasury’s framework for infrastructure delivery and procurement management. It did not fully utilise the suite of procurement approaches available through the CIDB. The Director-General was working with the CFO on that. A new infrastructure procurement strategy was put in place in the Department, which was compliant with the infrastructure delivery and management framework. The Department was implementing a new infrastructure procurement policy. The Department was starting to train all of its staff. It was going to be implementing the strategy which would mean that it would be procuring its infrastructure and construction more smartly and more efficiently than it has done in the past.

The second category of projects was where the Department provided grant money to municipalities. The main reason the Department had under expenditure on those was because sometimes the municipalities had weaknesses in planning or project management or in their own procurement. With those projects, the municipalities did the procurement; sometimes their procurement processes were also weak, resulting in delays and under-expenditure. Sometimes some of the projects were delayed because of unforeseen circumstances, for example, unforeseen ground conditions which means that it was harder to complete the project than planned. Sometimes it was partly due to weak procurement processes that municipalities appointed contractors who struggled to deliver. He said that increasingly across the country, projects were disrupted by groupings, sometimes calling themselves “business forums” which disrupt the project because they would like to be more involved in the project and would like to be given subcontracts or contracts. There were a multitude of reasons why there were delays on some of the Department’s funded projects. The main management action introduced by the Department to reduce municipal under-expenditure against the grants was to proactively monitor it. The Department was allocating more money for those projects that were moving quickly and could absorb more money in a financial year. For those projects which were moving slowly in municipalities, the Department was doing cash flow management to use some of that money for the faster-moving projects. In the following financial year, the Department would move money back to the slow-moving projects. In that way, the Department intended to reduce its under-expenditure against the grants on a year-by-year basis. This was what the Department should have been doing all along. It was why Treasury introduced the Medium Term Expenditure Framework. It allowed the Department to have three-year allocations to projects to manage projects on a multi-year basis. The Department needed to manage it properly so that there was no under-expenditure.

The Department regularly engaged with Eskom on load shedding. He discussed the impact of load shedding on municipal water supply and the Water Boards. The severe load shedding experienced has had a very negative impact on water supply because the Water Boards and many of the municipalities had found it difficult to pump water to the reservoirs to ensure that the reservoirs had sufficient water. This has resulted in a number of challenges with water service delivery across the country. In addition, institutions like hospitals have suffered because they were not able to get water. This was because of the related problem of the water levels in the reservoir being too low due to insufficient electricity to pump the water to the reservoirs. The challenge was that in some areas, it was very difficult for the municipality and Eskom to agree that a hospital or pumping stations could be isolated from load shedding because of the nature of the electrical system and the design of the electrical system. It was not possible for the municipality to exclude a certain limited area from load shedding. It had to load shed over bigger geographic areas. If the municipalities were to exempt all of those areas from load shedding, then they would not be able to meet the targets that had been set on them by Eskom to reduce power consumption to ensure that there was no electricity grid failure. There were those complications. It was not a simple matter of saying that the Department could engage with Eskom and prevent any impact on water supply due to the load shedding. For technical reasons, it was not possible to completely isolate the pumping stations and the hospitals from the rest of the local electrical grid system so that any impact on water supply could be prevented.

Mr Manus said that the Department did engage Eskom. Reservoirs were basically the control measures in terms of that risk. Sometimes the reservoirs could be filled in the period when the electricity was on. Eskom had engaged the Department in areas such as Grabouw. There were areas where there was no reservoir. Due to some strange design, the water was pumped directly into the system. The Department asked Eskom to exclude those areas. The Department took it case-by-case in such areas where there was high risk. Unfortunately, it was not always possible to identify all the areas of water supply as areas that should be exempted from load shedding. The Department continuously engaged with Eskom on the Department’s own infrastructure. At the pump stations that the Department took responsibility for, it had to continue operating to ensure that it supplied adequate bulk water supply to Eskom itself to ensure that they could produce electricity at their power stations. The Department’s infrastructure was also part of their “start up regime”. So should there be an extreme event and the country went into a complete blackout, the Department formed part of Eskom’s start up procedure. That was the reason why the Department continued having that conversation with them.

The Chairperson raised the investigations into irregular expenditure, and fruitless and wasteful expenditure. There were about 813 cases that the Department would be investigating with a date for completion of March 2024. The Committee would be interested in a milestones timetable. The Committee could not wait for 2024. The Department needed to eat away at the 813, which he was sure the Department had in its project plan for dealing with this. The Committee needed regular updates with the expectation that by March 2024, the Department would have completed the 813 cases. It was not open-ended for the Committee. It was not going to wait for March 2024. A second area that required the Committee’s attention was the municipal debt. The Department also needed to look at municipal debt to Eskom. It was clear that there was a fundamental challenge in the municipal space to service debt to entities, water boards and Eskom. This was a frank discussion that needed to be had with the Department of Co-operative Governance and Traditional Affairs (COGTA). It was a revolving door. It held a gun to the State’s machinery. Where the water could not be shut down because of the people, municipalities were getting revenue, but they were not servicing debt or doing other things. The financial management and integrity of the revenue generation were called into question. That would require the Committee’s attention.

The Committee was interested in the financial implications of the amalgamation and merging of boards and entities, as the Department had discussed, and what it meant moving forward.

The slide on condonations [slide 24] featured the desalination plant in Richards Bay. An employee was charged on 25 March. Sanction awaited hearings that were held on 3 and 4 October. Had that happened? The same applied to the unlimited SAP licenses on the same employee where the sanction would follow a hearing would have taken place on 3 and 4 October.

He raised the issue of the former Director-General, who was now at the Department of Finance in Gauteng. It was quite interesting that the former Chief Director was the employee transferred to the Gauteng Department of Finance. Why was it so easy for them to have moved? How could implicated people move together to the same Department? The Committee needed to flag the HR processes that were used there. A written submission would help. It was quite strange that people from one Department charged within the same issue could move together.

Dr Phillips said that most of the Chairperson’s inputs were for noting. The Department would provide the Committee with a project plan for the investigations. The hearing on the disciplinary case related to Richards Bay and the SAP contracts took place on 3 and 4 October. A couple of days previously, there was a submission of written arguments on what the sanction should be. The Department was hopeful that the presiding officer would now issue the sanction shortly.

The Chairperson flagged three and a half worth of pages of fruitless and wasteful expenditure on accommodation in the spreadsheet. It was R1.8 million. This should not be something that should be a headache. It should not even be something that was there, but it had become a norm. The Department was saddled with R1.8 million worth of fruitless and wasteful expenditure on accommodation. He noted that if the basics could not be nipped in the bud, there was bound to be this kind of headache. He read out the expenses for catering, cell phones, and penalties for vehicles. He wanted an explanation for the double payment which amounted to R13.9 million. The fruitless and wasteful expenditure related to transportation covered three pages. He did not see how some of these things should be there. He did not raise this out of the ignorance that the Committee did not know the journey the Department traversed with financial management. The Committee was flagging that with certain things, the Department needed to move on with speed. He was interested in the explanation of the double payments. The others he could see were just pure negligence of people. Double payments spoke to financial controls within the Department’s own systems and operations.

Ms Mente said the question became, what transaction out of all these line items was worthy of forensic investigation and why? The Director-General answered that it was not all of them, so which one was worthy of it and why? She raised the issue of the condonations. She hoped that the Members of the Committee were online so that they were not coerced into hiding the monies stolen through the systemic approach and which used the systems of the legislature to write-off. She noted the reasons for condonation and non-approval of the condonation was that Treasury had sent the condonations to Parliament, which she presumed was the Portfolio Committee. She hoped that the Committee was not going to be coerced into this. This could not be condoned. She said the War on Leaks had been ongoing and no one accounted for it. Now it had to be condoned, billions of rands. It must be condoned but no one had ever accounted for it. She asked if any directors involved in the War on Leaks were present in the meeting. Were any of the people mentioned on the condonations as officials involved in that transgression present? If they were here, why had they not been taken to task? The Committee was not going to be coerced into hiding wrong things and non-compliance with the law. She noted that malicious compliance was very dangerous. For 2021/2022, the Committee was told that officials in the Eastern Cape were paid more than R3 million. The Deputy Director-General said that it was an ongoing project of revamping or maintenance and that it was not new projects. Whether it was new projects or revamping, in 2021/2022, she had researched irrigation. There was no project happening. In the previous financial year, there was absolutely nothing happening there. Ms Tolashe was close to Qamata. The Department should not comply with things it did not know because the Department might be talking to Members who lived with those people in the area. It could not be that they were still being investigated when nothing was happening in the area. There should be an account of what was happening in the area. Why would the AG say its fruitless and wasteful expenditure? It meant that it was money that was paid in vain. It was actually worth nothing. There was no value for money. She had asked a question earlier on that was not answered. She did not know if she was not heard. She noted the report on the Covid-19 water tankers. She did not get an answer to that. The pricing of the water tankers was not in sync. The number of tankers provided by the Department was not equivalent to the number of tankers delivered on the ground. There were breakdowns per province in the Department’s report. The Department had given a breakdown per province of the water tankers. She asked if the Committee could get a closing report on the water tankers. How much did they cost? At some point in Madibeng Municipality, in a small village, a water tanker cost R20 000. That cost must be explained because a 5000-litre water tanker costs R3 000. The water tanker was installed for R20 000. It was missing just a couple of days after being installed. How did it get to be missing? The Department would say it was not their fault. She said it was their fault because if it was constantly full, no one could move it. So, it was installed but there was never water, which was the case in many water tankers. The tankers would be installed but there was no water. It defeated the purpose of washing hands. This spoke back to what mechanism the Department used to monitor what was happening on the ground. She said that could be answered in writing because the Committee needed a thorough background on how much it cost the Department. She highlighted a project in Umzimvubu, R125 million, that was never accounted for. It was never accounted for but in the report, it sounded like something which the Committee must just browse through. It was similar to the report of Giyani and other Limpopo projects indicated. On this one, she asked the Chairperson that the Committee hears of all the projects being dealt with that could not be finalised. 

Mr Lees said that the Department was looking for co-funding of R1 billion for a pipeline in Spionkop. It was in the Department’s report. He noted uThukela District Municipality was bankrupt. What exactly was the economic aspect? How was that defined? Could the Department pay the full cost?

The Chairperson said that in the Department’s condonation schedule, page two, there were the transfer payments. The paragraph stated that National Treasury submitted a consolidated recommendation report of unauthorised expenditure, including all affected departments, to the Standing Committee on Public Accounts in January 2020. No response had been received from SCOPA on the outcome and National Treasury would communicate as soon as a response was received. The Chairperson said the Committee could not respond to something it had not received. He had told Treasury that the Committee had not received that consolidated report. The only thing Treasury sent the Committee was something around R100 000 referring to the Department of Correctional Services. The Committee had tried to pin down a date and it did not work. That was the only correspondence that the Committee received. The Chairperson told Treasury if it had the consolidated report that it be sent it to the Committee. The Committee had not received it. As soon as it did, it would receive the Committee’s attention.  

Dr Phillips said he agreed that this fruitless and wasteful expenditure was a sign of weak internal controls in the Department. The CFO had been focusing on improving internal controls. It was expected that the situation would improve as a result. Fruitless and wasteful expenditures were completely unacceptable.

Mr Moatshe said that there were admin failures concerning transport and no-shows. He responded to the question about which cases would be referred for forensic investigations and how double payments arose. When the Department went back to perform reconciliations on the commitment schedules of various provinces, it found that some of the invoices that the implementing agents submitted were identical to the supporting documents for the contractors or service providers. There were instances where the Department could see that those service providers’ invoices were of the same invoice number and reference number. The Department took it out of expenditure and recorded it as fruitless and wasteful. Those were the cases that the Department requested that the forensic team looks into because, at face value, it could be seen that there was a problem. They needed to go deeper to trace payments and ascertain whether those claims were submitted in error. The forensic team needed to go back and see the flow of money, and whether those service providers on the side of the implementing agents were indeed paid. Those were the type of cases where the Department sought forensic investigations. There were other cases, for example, where officials had already begun to pay. The Department had raised debts and was in the process of closing the books. The Department was following up on those. The Department noted that the oversight over the regions was a bit of a problem. There was a point where even the commitments could not be accounted for fully. As the Department went back into history to reconcile all these records, some of these anomalies were noticed. One of the biggest interventions that the Director-General signed was that no one was permitted to release any improper expenditure without bringing that to the attention of the CFO. It should not actually happen. In the past, expenses could be processed and only later on, be submitted for investigation. The Department was dealing with preventative controls to avoid this from happening.

Mr Motsatsi said that the cases that needed to be investigated externally related to the losses in the construction unit. The Department had to go to the root causes of such and determine whether officials were negligent and whether such fruitless and wasteful expenditure was avoidable or not avoidable. Then it had to determine whether the Department had to take disciplinary action against the officials or even recover money. Especially in the instances of double payment, that money would have to be recovered.

Dr Phillips responded to the question about the condonation report and the spreadsheet provided. The Department was asked whether, concerning the War on Leaks if any of the officials mentioned in the spreadsheet were present in the meeting. He responded in the affirmative. The report said “Acting Director-General,” but now the official was the Deputy-Director General for Water Resource Management, Ms Deborah Mochotlhi. As indicated in the report, the original SIU proclamation indicated that officials should be held responsible for the War on Leaks unauthorised expenditure. There was an investigation and Ms Mochotlhi was asked to respond to the allegations. On the basis of the response, the Department took a decision not to charge. That decision had also been supported by internal audit regarding their investigations. The internal audit needed to look into it thoroughly and determine whether there was a chargeable offence which any officials committed—exactly which officials and exactly which chargeable offence—and whether disciplinary charges should be laid. In this instance, internal audit concluded that Ms Mochotlhi had not committed a chargeable offence. The chargeable offence related to earlier steps in the process of the continuation of the project without a budget allocation, for which Ms Mochotlhi was not responsible.

Mr Manus responded to the questions relating to Covid. Ms Mente was correct about the unit cost of the raw material which would be the tank itself. One of the issues the Department could expand on was that these tanks were procured during lockdown level five, when everything was closed. Rand Water had some difficulty in that regard. In addition to the raw unit cost, some pedestals had to be built from masonry or concrete in certain areas. That added to the costs. The Department would also provide the Committee with a breakdown of that detailed information.

He responded to the comments raised on Qamata. The deliverables had not been there to actually see a capitalisation of what was done, so that when one took the input cost, there was an output that could be capitalised and put back in the asset register. That was why a decision taken that the expenditure should be regarded as fruitless and wasteful. Certain projects were deferred or put on halt because procurement processes had caused problems for the Department. It was a causative factor towards the Department’s inefficiencies. The internal audit unit would investigate it further to identify further causative factors to that inefficiency that was there or in certain places would still be there. There was a decision taken at that stage to halt some of these projects until all the ducks were in a row. The Department had found it had many projects and it could do less because it was pulled thin at that point in time. Certain areas were halted to limit fruitless and wasteful expenditure. During the research that Ms Mente mentioned, she might have encountered the project when it was halted. Others were also halted to have that minimisation effect.

Dr Phillips said that one of the reasons why the Department was putting so much emphasis on improving its procurement particularly related to its construction unit, was to deal with the fruitless and wasteful expenditure. The Department’s procurement had been so poor that, at times, its workers in the construction units sat and did nothing on sight because they did not have the necessary materials, supplies, or even diesel to work. That was why it was such an important issue for the Department. Both in terms of delivery and getting rid of fruitless and wasteful expenditure. Sometimes the construction unit had a project to do but nothing was happening on the ground because the procurement had been so poor in the past that the Department had not been able to give them the necessary supplies to do the work. He noted that maybe the matter of Umzimvubu should be discussed in a separate meeting. The Department had spent money on designs for Umzimvubu. It had most of those designs and there was a legal process underway to settle with the design consultants to obtain the remainder of the designs so that was reaching finalisation. The Department had also been spending money on the preliminary work on the access roads.

Mr Mathye said that one thing that had not been fully communicated to the country when it came to water was that water had been regarded for years as a social good. Water was not only a social good but it was also an economic good. There was a value for it. He noted that one of the conditional requirements was that the project owner needed to have some level of beneficiation. It needed to locate who in the surrounding would be able to have off-take agreements. These off-take agreements spoke to the ability to pay for the water they would receive. When the Department did its conditional assessment and feasibility study of this project, it took this into account to ensure that it ring-fenced the risks because the grants were coming from Treasury. There were conditions that if such a project would be implemented, then was the project beneficiary able to have further off-take agreements. Were those off-take agreements valid enough that by the time the water was piped from point a to point b, would point c, who was off-taking the water be able to reticulate and pay for that water? The whole socio-economic beneficiary and visibility study spoke to that. He noted the bankruptcy of certain municipalities. The Department was having some interventions. The following week, the Department would be meeting with uThukela and Umgeni to look at an intervention plan and alternative solutions to try and get to the end goal. The end goal was to still get water to the people.

Dr Phillips said that Treasury gave the Department these grants to address backlogs of access to potable water by communities. Sometimes municipalities also had economic goals and wanted to invest in water infrastructure to enable economic activity. That was the economic component of a project as opposed to the social component of the project. The grants were supposed to focus on the social component of the project, which was about addressing backlogs to access potable water for communities.

The Chairperson asked the Deputy Minister if she had any concluding remarks. The Committee had heard the Department. However, the Committee would only be convinced by the practical implementation and tangible outcomes following all the great things the Department had said. For now, they were a statement of intent. The Committee was also not ignorant to what was happening in the Department: - that it was at the epicentre of the corruption syndicate which prevailed in the country in the previous years. Whether it was there or not there now would be dependent on the outcomes of these things that the Department had laid out. The risk was that the country would be sent into a humanitarian crisis if the water space was corrupted. Not that corruption was acceptable elsewhere, but in this space, water is life. The Department was killing the people if it corrupted this space. There was also the risk to food security and all sorts of other realities. The Committee had heard the Department, but the only thing that would convince it was if it saw successful consequence management, recoveries of finances, speed, and urgency. Those were the sentiments that the Committee had on all the issues it raised. The Committee would continue with the journey of water. It had outstanding oversight visits to the projects in the collapsing and failing municipalities, which the Committee needed to interact with. He noted that the SIU would be a strategic partner. The Chairperson thanked the Department and the Members. The Chairperson handed over to the Deputy Minister to make concluding remarks.

Deputy Minister Magadzi said that the Department had heard the Committee. She echoed the sentiments of the Minister. She asked the Committee to trust the Department. The Department was here to execute what the people of the country said that it should be able to do. She noted that the Department's organisational structure had taken a shape that would be able to deliver on the mandate of the Department. The Department had reorganised itself in such a way that it would be able to see deliverables. The Department was also looking at the entities and the Water Boards. The Department had to go down to the roots. The Department was working together with the municipalities and the Water Boards. Capacity would be shared amongst the entities so that the Department would be able to fast-track delivery.
The Department could not do it alone. It would be doing it with the people of the country. The Department needed to work very hard and work together with Treasury. The Department faced the challenge of decaying and vandalised infrastructure. Communities needed to work with the Department so that there were no people vandalising the infrastructure being invested in. The Department had heard the Committee. The Department believed that the guidance, the advice and the leadership that the Committee had given was something that the Department would continue working on. Most of the issues that the Members had raised were issues that were a reality. The Department needed to deal with corruption and every other thing that had been said. She was happy that the Chairperson said that the Department used to be known for corruptible programmes. The Department would definitely be able to deliver. The Department would ensure that it was no longer the Department of the past when there was corruption. The Department would be able to provide service. “Water is life. Sanitation is dignity.” That was the mantra that the Department was living up to. She thanked the Committee for giving the Department an audience. The Department would bring all the outstanding matters to the Committee as quickly as possible.

The Chairperson thanked the Deputy Minister. The Chairperson noted that the Committee would meet with the Eskom board the following day.

The meeting was adjourned.