National Water Resource Infrastructure Agency (NWRIA) Draft Bill; with Deputy Ministers

Meeting report

Opening remarks
In a virtual meeting, the Chairperson noted that he was driving and was in an awkward situation. He asked attendees to show their faces when speaking during the meeting.

In reply to Deputy Minister David Mahlobo asking why attendees should show their faces, the Chairperson replied that it is an official directive.

The Committee Secretary expanded on the Chairperson's response. She explained that it was for broadcasting purposes as well as for media representatives to be able to recognise the faces of the speakers. There has been a complaint that members of the Portfolio Committee do not show their faces.

Deputy Minister Mahlobo stated that he would only reveal his face when speaking.

The Chairperson said that the Portfolio Committee was falling behind the parliamentary schedule and that the Committee must ensure that it was up to date.

It was noted that the Minister and Director-General were unable to attend the meeting because they were out of the country in Stockholm.

Deputy Ministers' introduction
Deputy Minister, Ms Dikeledi Magadzi, said that the aim of the meeting was for DWS to give a briefing to the Committee about the Bill that had been presented to Cabinet. The Bill would assist the Department to be able to fast-track water and sanitation infrastructure in South Africa. The TCTA would form part of the Agency that assists the department. There was a need for an agency that would be able to make sure that the Department delivered to the people of South Africa.

Deputy Minister Mahlobo referred to the Draft Bill as an "important piece of work". Cabinet led by President Cyril Ramaphosa had looked at the matter of the Bill. The Bill was aligned with the Sixth Administration's promise to tackle infrastructure. The TCTA would be forming part of the state-owned entity and would be used to raise funds from the markets. This was part of the social compact and the role of the private sector to do that. It would also draw the necessary capacity to help with matters of water security for South Africans in accordance with social development. The Deputy Minister assured the Committee that there were no intentions to privatise the water sector. The state would continue to play an important aspect in looking at the matters of the proposed Bill.

The state would continue to intervene in issues of water affordability. In the Fourth Administration, the Bill was brought towards the end of that term but was halted during the Fifth Administration. The Department was reliant on the Committee’s input during the process of finalisation of the proposed Bill and, in addition, for public awareness purposes. The Deputy Minister said that all those the proposed Bill seeks to serve must have an input towards it.

National Water Resource Infrastructure Agency (NWRIA) Draft Bill: briefing
DWS Acting Director-General and COO, Ms Nthabiseng Fundakubi, briefed the Committee on the progress of the Draft National Water Resource Infrastructure Agency (NWRIA) Bill to address water security and socio-economic growth and development. These were highly dependent on the development, operation and maintenance of the national water and resource infrastructure. The Draft Bill would amend the National Water Act (NWA), Water Services Act (WSA), and Water Research Act (WRA). The amendment of these Acts will result in the quickest way of addressing the most pertinent gaps and legislative challenges experienced in the water sector, particularly in the equitable allocation of water resources and its regulation. The Draft Bill did not replace or supersede any of the Acts that were currently in use and it would not cause any of the institution emanating from these Acts to be replaced. The entire review of the National Water Act and Water Services Act will be realised at a later stage to fully incorporate the National Water Policy Review, 2013 and National Sanitation Policy, 2016. The Draft Bill had been submitted to Cabinet for approval for consultation and eventually for public comments.

The Bill was drafted as the Department's response to the country's urgent need for mega water resource infrastructural projects. As such, the Bill would address operations and maintenance. However, due to fiscal constraints, the Department requires significant financial assistance. The Department relied on the institution TCTA because it could not raise capital directly on the financial markets. This was a one-time vehicle created to finance and implement a viable economic project. According to the PFMA, NWRIA would be able to raise commercial and development finance both domestically and internationally. The financial model used by the TCTA for raising finances was backed by off-take agreements. The DWS, with the introduction of the Bill, would then expand this by leveraging the assets on NWRIA’s balance sheet.

The Bill sought to incorporate and establish NWRIA as a juristic person wholly owned and controlled by the state. The Agency will incorporate the TCTA, part of the Infrastructure Branch of the Department, and the Water Trading Entity in DWS as a state-owned company in schedule 2 of the PFMA. The national water assets would be transferred to NWRIA once it is established.

Objectives
- ensure sustainable, equitable and reliable supply of water from the national water resources infrastructure.
- meet SA constitutional obligations of human dignity, life, safe environment and access to water – and national and regional social and economic objectives of the policy.
- utilise its asset base and the cash flow to raise funds to develop infrastructure for social and economic development purposes.
- fund the cost of national water resources infrastructure development operations and maintenance
- perform the treaty and non-treaty functions being performed by TCTA.

Overview of the Bill
The six chapters were outlined (see document):
Chapter 1: Definitions and Purpose
Chapter 2: Establishment of Agency
Chapter 3: Governance of Agency
Chapter 4: Chief Executive Officer and Chief Financial Officer
Chapter 5: Financial Matters, Reporting, Accountability
Chapter 6: Transfer of National Water Resources Infrastructure and Disestablishment of TCTA
Chapter 7: Powers of Minister
Chapter 8: Miscellaneous Provisions

Progress on National Water Resources Infrastructure Agency Bill
The Bill was presented to Cabinet on 17 August 2022, and publication for public comment for a 90-day period was approved. The Gazette notice had not been signed. Upon being signed, a government gazette notice would be published in September 2022.

Once all the consultation has taken place, the final Bill would be submitted to Cabinet for approval for submission to Parliament. This was estimated to take place in April 2023. If all the consultations go well, the Bill would be submitted to Parliament in July 2023. Thereafter, there would be a consultation with the unions as a major stakeholder. There would be a change management that would be implemented for employees that would be transferred to NWRIA. Lesotho being the lenders to the TCTA would be asked for consultation.

In conclusion, there would be risks that must be mitigated – human resources management and labour relationships being one of them. The matter of financing is another risk as there would be a merger of two entities which work in different systems. Inaccurate projection and limited market interest form part of the risks that require management. Revenue management is another risk to mitigate. DWS would be required to develop comprehensive risk management and planning.

Discussion
As Members did not raise their hands on the virtual platform to show interest in discussing the presentation, the Chairperson asked if the Members were happy about the presentation and wished not to deliberate.

Ms G Tseke (ANC) raised her hand and thanked DWS for the presentation. She was pleased with the presentation and the progress outlined in the presentation. [She was interrupted by noise in the background and the request by DM Mahlobo to switch on her camera. She politely declined and said she had problems].

Ms Tseke said the proposed Bill had been discussed for a long time. Even President Cyril Ramaphosa had mentioned it in some of his previous State of the Nation Addresses. Her concern was around the timeframes. July 2023 would be the time when political parties would be preparing for general elections. Would the Bill make it before the end of the sixth term? If the Bill were to be presented to the National Assembly, that would require participation from the Committee. Would the Bill therefore materialise during the Sixth Term? The DWS should implement ways to fast-track the proposed Bill. The proposed Bill would then be more appreciated. In 2023, all political parties would be taking part in programmes associated with National Elections for 2024 and that might affect participation of the Committee on the Bill. She suggested that the proposed Bill be dealt with urgency.

The Chairperson said he still did not see any further hands from the Members and asked Deputy Minister Magadzi if there was a way to fast-track the processes associated with the proposed Bill.

Responses by DWS
Deputy Minister Magadzi stated that the question was important. The Fourth Administration ceased to pursue the Bill and it was brought back in the Fifth Administration. However, DWS would be looking at ways to fast-track finalisation of the Bill to the first quarter of 2023. The Chairperson would be informed. There would be a lapse with the National Council of Provinces upon final processing. She requested the Committee to give the DWS time to deal with the matter.

Ms N Sihlwayi (ANC) agreed with the Bill. However, she had raised several matters about the Water Resource Act. DWS had not briefed the Committee on how those matters were addressed. Finalising the proposed Bill would help the Committee see what has transpired.

Deputy Minister Mahlobo responded to the question about timeframes. The 90 day consultation period would start in September and end in the middle of December 2022. Therefore, the introduction of the Bill would take place in early January 2023. The only sticky issue would be the lack of consultation with relevant stakeholders. In 2021, there was a lack of consultation with NEDLAC. Ms Tseke should not be concerned about the timeframes as the DWS had figured a way to work around them.

The proposed amendments to the National Water Act would be brought to the Committee’s attention. The National Water Act – recognised as the best legislation at the time – had proved to have areas of concern after 24 years. DWS would brief the Committee more on the matters of concerns. The Department intervened in the municipalities by invoking Section 63 to address the concerns. Once the briefing had been done, the Committee and the Department would determine if there was a need for amendments.

The Chairperson said that since there were no hands, the Members had come to the acceptance of the proposed Bill.

The meeting was adjourned.