Department of Water and Sanitation Quarter 3 2020/21 Performance; with Deputy Ministers

Meeting report

The Chairperson welcomed  Members, the delegation from the Department of Water and Sanitation, led by its Deputy Minister. He also welcomed the Chairperson of the Portfolio Committee on Human Settlement, Ms R Semenya (ANC), to the virtual meeting.

The Committee considered and adopted the meeting agenda.

The Chairperson indicated that the Department has sent the Committee an invitation to the Summit to be held on 18 February 2022.

Mr L Basson (DA) requested that the Department introduce the new Director-General to the Members before the briefing commences.

Mr A Tseki (ANC) indicated that he might leave the meeting early due to other commitments.

There were apologies for Minister Senzo Mchunu, Ms N Sihlwayi (ANC) and Ms C Seoposengwe (ANC).

Consideration and Adoption of the Draft Committee Programme for Term One of 2022

Ms G Tseke (ANC) went over the programme with the Committee. She said that the programme is a work in progress, and Members will be alerted about any changes made to it.

The Committee moved for the adoption of the draft programme.

Deputy Minister’s Remarks

The Deputy Minister of Water and Sanitation, Ms Dikeledi Magadzi, introduced the new Director-General (DG), Dr Sean Phillips, and the rest of the team from the Department. She said that the new DG going to help the Department with issues that it has been struggling with.

Deputy Minister Magadzi said that the President had stated, during the State of the Nation Address, that the Department of Water and Sanitation is undergoing institutional reform, fulfilling mandates, and seeing to municipality concerns. Minister Mchunu has visited the nine provinces to identify the challenges in faced by the water services authorities and water users. Some issues brought forward were the lack of technical and financial capacity to deal with water provision, poor operation and management of water sanitation infrastructure, aging infrastructure, inadequate planning, and delays in transformation. Water and sewage spillages were identified in towns and townships.

Ways to strengthen the capacity of water development are being discussed by the municipality, to address these problems discussed.

The President had noted that the mandates of the board need to be reviewed and expanded to work closely with the municipality in order to deliver water to the people. There are also discussions with the Department and the private sector to collaborate and address concerns with water supply. Deputy Minister Magadzi added that it will be certain that stakeholder participation will be at the centre of everything.

Deputy Minister Magadzi said that numerous posts have been filled, such as the DG post, the CFO position, amongst many others. There will be interviews being conducted next week to recruit a Chief Director.

She said that the Department did not perform very well with the expenditure on grants. This matter will be addressed because the Department has identified the challenges and will act accordingly. She said that there are delays in the submission of the IR report to Parliament. The Department has identified the challenges with this and is sorting them out. The IR report will be sent to Parliament soon. The Auditor-General of South Africa (AGSA) is finalising the report.

She said that the Department has not been performing well with the targets put forward for the procurement of women, youth, and the disabled. Moving forward, targets will be met. Training with staff has not been up to expectation. COVID-19 has impacted training significantly and has negatively affected training procedures.

The audit action plan has been approved at 61%, and this will be improved during the next cycle. A total of 854 engineers and scientists have been appointed, and the vacancy rate within the Department is decreasing significantly. Appointing professionals will allow the Department to perform and deliver services to the best of its ability, addressing problems effectively and efficiently.

Deputy Minister Magadzi said that the period under review does not have wasteful expenditure.

Briefing by the DWS: 2021/22 Third Quarter Performance and Expenditure Report

Deputy Minister Magadzi introduced Dr Sean Phillips, the Director-General (DG), to go over the third quarter performance and expenditure report.

Dr Phillips went over the third quarter report with the Committee.

He said that the Bill for the National Water Resources Infrastructure Agency will be submitted by the end of March 2022 to the Cluster, which will be taken to Cabinet and then gazetted to the public.

He said that the Green Drop Regulation is on track and results will be published by the end of March 2022.

There will be presentations and progress reports for the Committee on the major projects that the Department is undertaking.

Dr Phillips handed over the presentation to the Chief Financial Officer to discuss the overview of the financial performance.

See presentation for further details

Discussion

Mr Basson congratulated the Department, the Director-General and the CFO on the comprehensive report. He added that he is happy that the Committee will be getting the Green Drop Report and that he is pleased that the Committee has been made aware of the problems that the Department has been dealing with. He asked when the Committee should expect the Blue Drop Report.

He said that he is concerned about the implementation of water Bills assisting municipalities due to struggles with this in the past. How can these issues that we faced in the past with municipalities be resolved for future reference? How can the water Bill be implemented? Can the implementation progress report be brought to the attention of the Committee?

Ms R Mohlala (EFF) said that the Government Communication Information System (GCIS) website had mentioned a two-day water and sanitation summit. She said that her concern was that the Committee was unaware and was not informed about the summit. She stressed that the Committee should be informed on all events, for transparency, whether or not the Members would like to attend.

She referred to page 20 of the presentation. What were the criteria used for monitoring 90 water users for compliance? What were the problems found on non-compliance on the water users? Did the Department issue a directive on the non-compliance issues? Will the Department undertake further studies on challenges associated with non-compliance and find solutions within the district development model? When were the 992 wastewater systems assessed for compliance with the Green Drop regulatory requirements? Do you have an assessment or report based on this?

She referred to page 22. Can the Department provide details regarding how the proposed establishment will resolve their challenges? What was the accumulative cost and losses of the Clan William Dam?

She referred to slide 28. She asked whether the under-construction column was the same for projected targets.

She referred to page 31. She said that the information around water utilities is unclear. Does it mean that the concept of establishing regional water utilities is scraped? Can the Department explain the rationale?

She referred to page 33. She said that there are challenges in the following areas: procurement, outstanding invoices, withholding conditional grants and payment for capital assets. Can the Department provide a detailed, written report on the challenges with these issues? She added that areas of severe underspending must be addressed.

She referred to page 35. Who are the public corporations and private enterprises that monies are transferred to?

She referred to page 36. She said that critical areas, such as maintenance and refurbishments, reflect 58% under expenditure. What strategic measures are being put forth as part of the risk assessment? Is the condonation on irregular expenditure an old issue that was raised two years ago? Why is there a delay with finalising this? Is the Department still ongoing with the retrieval of funds paid to the service provider? Has the SIU (Special Investigating Unit) resolved the matter of the SAP licenses?

The Chairperson said that there is hope for the report. The Committee appreciates the appointment of the Director-General; it is good that appointments are being finalised. He said that not meeting the targets for small enterprises, given the money spent, is worrisome because it means that at the business level the richer will become richer, and the poor will remain poor.

He said he is worried about the failure of the designated groups being employed. Having 19% of youth employment achieved, out of 30%, is unacceptable. Having only 2% out of 7% of disability employment is also unacceptable; 27% out of 40% of women employment is appalling as well. This needs to be taken care of.

He added that the expenditure of the RBIG is concerning and unsatisfying. RBIG needs to change rural infrastructure and the way through this is largely on the use of RBIG. The condonation on irregular expenditure occurred prior to 2019. There is a time frame that is allocated to charge a person with condonation, and failure of this involves the law. Some employees do not have the means to go on with legal matters with regard to condonement.

The work invitation to the two-day summit and other events needs to be brought to the attention of the Committee earlier.

Responses

Deputy Minister Magadzi apologised on behalf of the Department for the late invitation of the Committee to the Summit. The Department will improve its communication with the Committee.

She said that the Minister said that Summit is important for the next financial year, as it provides further insight on challenges as well as the solutions to these challenges.

Dr Phillips responded to Mr Basson’s question on the involvement with the water board and the municipalities. He said that the Department is working on the engagement between the water board and the municipalities by using the internal construction unit, partnering with the infrastructure fund in the DPSA, getting the private sector more involved within the areas of infrastructure, and using provincial offices more effectively to support municipalities, amongst other things. Within three months from now, these systems will be put in place. He said that the water board will be working very closely with COGTA.

He responded to Ms Mohlala on the underachievement of targets. He says that is a reflection of very poor performance. He said that there is a lot of work to be done to make improvements on procurement and supply chain management. There are weaknesses in planning and implementation within the Department. Measures are being taken to address this.

He said that the National Water Infrastructure Agency (NWIA) and the Bill will be released for public comment. The Bill indicates that the NWIA will be formed by merging the water trading entity, the Trans-Caledon Tunnel Authority (TCTA), amongst others. Its focus will be on financing and construction and management of national water resource infrastructure – not water services infrastructure. The main benefit of creating the NWIA will be that this one entity will own all the water infrastructure assets, and it will have a substantial balance sheet; this will allow it to bring in more finances to enable construction of the water infrastructure needed within the country. This will help alleviate future water shortages.

He said that the budget of the Clan William Dam is R3.9 bn. The total expenditure to date is R921m. He said that there will be presentations done on the Clan William Dam for the Department, where they will address the progress and expenditure of the Dam.

He said that the construction of water utilities is under review by the Department. The focus is on using the water boards to support municipalities more effectively. Regional water utilities are not an idea that is scrapped, but they are not the main focus at the moment.

He added that presentations and detailed written input with procurement and other issues can be made available for the Committee.

Mr Leonardo Manus, Chief Director: Infrastructure Operations and Maintenance, DWS, spoke about issues related to regulation and the Green Drop and Blue Drop assessments. He said that he would first address issues on the non-compliance that was detected. He explained that there are three areas that are being focused on significantly. The first is pollution and how to combat the issue of waste-water using different and new techniques. Interventions are in the process of becoming more formalised, sustained and more effective in the future. The Department is also focusing on dam safety and proper construction that would follow regulations. Overuse is being monitored, and compliance monitoring has improved.

The Blue Drop and Green Drop projects, which have 998 waste retrieval projects, have all been audited. The Green Drop reports are being drafted on these projects and will be released by March 2022. All wastewater services have been audited, and all municipalities throughout the country have been covered. This report will be completed and sent for review by the Committee. The Blue Drop report, which is the drinking water aspect of the Department, has completed a risk assessment as per the World Health Organization water safety regulations. A progress report will be available for the Committee.

Dr Phillips responded to the Chairperson on the SMS positions in slide 6. There are 249 positions in the Department and 186 (~75%) are filled. Focus is on filling the rest of the Director positions that are available.

The Chief Financial Officer responded to Ms Mohlala on the issue of public corporations. Public corporations refer to: Sendibeng Water, Magalies Water and Umgeni Water.

He said that the SCM and Risk Strategy will be reflected on at a later stage.

Condonation process was reported by the Department in 2019. The Chairperson said that the process should be expedited. The Director-General is guiding this issue. The underachievement on designated groups has been recognised and will be worked on.

The Chairperson requested that the Deputy Minister comment on the resolved accruals approach.

Ms Mohlala wanted more clarity on the reasons for the delays on the condonation.

The Chief Financial Officer replied to Ms Mohlala. He said that the cases that are at the disciplinary hearing stage are the cases that still need to be completed so that National Treasury can approve the condonation.

Deputy Minister of Water and Sanitation, Mr David Mahlobo, spoke about the issue of financial management. He said there was an issue of stability of leadership in the finance division. There was a loss of a credible and hardworking member of risk and audit; the vacancy is being prioritised by the DG. There is a turnaround plan on the issue of finances in the pipeline. People are being appointed to positions that they are perfectly suited to by fulfilling the required criteria.

The finance team will be brought back to discuss its progress. The challenges were that the Department has been owing money to numerous people for some time. There were a lot of accruals and projects that were not kicking off. The Director-General and the team have put in place a project management system. Projects will be monitored, reported and visited on-site.

He said that money is needed within the water sector. Water needs to be safe and delivered to communities. He added that he agrees that there were no certain targets that were achieved. The condonation process has not been easy and the amount due is very large. There is discussion with the SIU, the Hawks and other legal entities regarding the issue of condonement. Issues of criminality have affected the Department, and it is now facing the consequences. The Department has very high irregular expenditure; this is being investigated to prevent it from reoccurring.

Processes that are taking long are coming to finalisation. Water and sanitation are human rights matter that is being taken seriously. Issues of infrastructure and institutional arrangement are being dealt with. He added that another crucial factor is how South Africans have contributed towards water pollution and that this should be discussed to determine how to reverse these acts. Members should have data on all projects in order to keep tabs on their progress.

The Chairperson said that the SONA meeting that will be held next week is important and that the Committee must prepare for it. He added that Members that attended the meeting in the Eastern Cape need to bring the report to the Committee for adoption.

Ms Mohlala needed clarity on SAP licenses, retrieval of funds, and the condonation process.

The Chief Financial Officer responded to Ms Mohlala that Parliament will be handling the condonation because only Parliament can handle issues of unauthorised expenditure. He said that SIU is busy with SAP on licenses and recovery. He said that further information is being requested for the retrieval of funds, and the Department is working on retrieving these funds.

The Chairperson responded to Ms Mohlala, on condonation, saying that it is a long process that involves court hearings, and so on.

On Ms Mohlala’s question about the retrieval of funds, Dr Phillips indicated that the process is being carried out by the SIU and the SAP; the process will hopefully be completed soon.

Mr Mahlobo added that the necessary action is being taken to deal with criminality. He acknowledged the Members’ concerns and said that these issues are being attended to. The Members will be kept posted on the progress.

The Chairperson thanked the Members and all participants of the meeting.

The meeting was adjourned.