DEPARTMENT OF WATER AFFAIRS AND FORESTRY PRESENTATION TO

DEPARTMENT OF WATER AFFAIRS AND FORESTRY PRESENTATION TO THE SELECT COMMITTEE ON LAND ENVIRONMENTAL AFFAIRS 14 November 2006

Presentation Outline • Introduction by DG • Programme 1: Administration • Programme 2: Water Resource Management • Programme 3: Water Services • Programme 4: Forestry 2

PROGRAMME 1: ADMINISTRATION CORPORATE SERVICES AND FINANCE

Programme 1: Administration Corporate Services

Highlights • Creation of a Forestry Branch and Gender and Disability Directorate • Implementation of the RSA/Cuba secondment agreement • Implemented a learnership program (water services) • 8% improvement on appointment of women in decision making positions • Improved IT platform • HR root cause analysis • Draft bill on establishment of NWIA • Reviewed internal governance structures 5

Challenges • Strengthening the implementation of a turnaround strategy for HR • Building capability of the department deliver • Increase public awareness and understanding of the work of DWAF • Finalization of transfer programme to Water Services Authorities • Development and implementation of transformation strategies/plans 6

Department-wide performance improvement plan • Implementation of normative performance standards • Quarterly Branch performance reports • Mechanisms for effective implementation of performance management and development system • Interventions in place for building a team organisation • Leadership and management development programme in place 7

Programme 1: Administration Finance

Annual Financial Statements • Expenditure 2005/06 financial year Ø Total Expenditure : R 9 010 077 000 Ø Exchequer : R 3 889 150 000 (Including FDA of R 172 062 000) • Ø Trading Accounts : R 5 292 989 000 Spending Ø Head Office and 9 Regional Offices in 4 programmes ü Administration: R 278 378 000 ü WRM: R 1 613 594 000 ü WS: R 1 524 895 000 ü Forestry: R 420 919 000 Ø Trading Accounts ü Equipment Account: R 78 148 000 ü Water Trading Account: R 5 214 841 000 • Spending level Ø 2004/05 = 99% spending level Ø 2005/06 = 94. 4% spending level 9

Reports of Auditor General on Financial Statements • Vote 34 Exchequer Account ü Qualification: (a) Asset management, (b) Independent checks and reconciliation (c) BAS and PERSAL reconciliation (d) Commitments. ü Emphasis of Matter: (a) Monitoring, (b) Performance information. Ø Water Trading account ü Disclaimer of audit opinion ü Qualifications in respect of : (a) Financial statements, and (b) Non adherence to accounting framework. ü Emphasis of matter in respect of; (a) Lack of Policy framework, (b) Performance information. 10

Reports of Auditor General on Financial Statements Ø Equipment Trading account ü Disclaimer of audit opinion ü Qualifications in respect of: (a) Financial statements, (b) inadequate monitoring, (c) Fixed assets. ü Emphasis of matter in respect of: (a) General Computer controls for CEMS, (b) Performance information, (c) Inadequate monitoring. Ø National Forest Recreation and Access Trust Ø Unqualified audit Ø Emphasis of matter in respect of operation of National Forest Recreation Trust. 11

Finance Management Improvement Plan • • Restructuring, separation of the Trading and Main account activities on-going engagement with Office of Accountant General (OAG) to implement programme of support national accounting firm contracted to provide temporary resources in DWAF to improve financial management while recruiting suitable staff implementation of SAP as preferred Enterprise Resource Planning (ERP) system to support trading activities. – system went live on 4 October 2006 – implement accrual accounting for trading activities and comply with section 40(1) of PFMA extensive training programme for staff – computer literacy, – accrual accounting – application of SAP in DWAF Implementing asset management strategy – Compliance with National Treasury’s requirements, including Generally Accepted Accounting Practice (GAAP). – include re-valuation of DWAF’s fixed assets; Build on successes achieved by Audit Steering Committee – members from DWAF and Office of Auditor-General, 12 – will oversee and monitor progress on 2006/07 audit

Budget 2005/06 Programm e Admin Initial Appropriation Additional Appropriation Final Appropriation 272491 87583 369873 Final Expenditure 278378 Water Resources 1506657 125388 1613594 1503464 Water Services 1405075 122899 1524895 1510998 Forestry 373189 Total 3557412 42354 423944 420919 378224 3935636 3717058 13

Budget 2005/06 Expenditure (31 March 2006) Programme Final Appropriation Expenditure Roll Overs to 2006/07 369873 278378 72962 95% Water Resources 1613594 1503464 100246 99. 4% Water Services 1524895 1510998 99. 1% Forestry 423944 420919 99. 3% 3330 3329 99. 9% 3935636 3717058 173208 98. 8% 94. 4% 98. 8% Admin Theft and Losses Total % Utilised (including roll overs) 14

Water Trading Account Income Statement Analysis 2006 Actual 2005 2004 Budget Actual Budget Revenue Non-Tax revenue 3, 067, 879 2, 538, 000 2, 469, 012 2, 491, 408 2, 372, 769 1, 947, 361 Sale of goods and services 3, 066, 456 2, 536, 608 2, 464, 319 2, 488, 645 2, 370, 138 1, 947, 361 1, 423 1, 392 4, 693 2, 763 2, 631 Transfers received 1, 608, 065 628, 777 1, 356, 017 1, 544, 612 1, 360, 928 1, 825, 573 Total revenue 4, 675, 944 3, 166, 777 3, 825, 029 4, 036, 020 3, 733, 697 3, 772, 934 4, 802, 118 3, 050, 117 6, 905, 602 5, 233, 389 4, 558, 366 3, 357, 213 701, 240 300, 463 727, 409 730, 635 695, 843 626, 387 Goods and Services 2, 877, 094 2, 225, 101 4, 932, 929 3, 504, 040 2, 911, 368 2, 423, 685 Depreciation 1, 223, 753 524, 522 1, 245, 235 713, 385 679, 414 285, 255 271, 671 74 70 Interest Expenses Current Expenses Compensation of Employees Other Expenditure Interest and dividends Transfers and subsidies Total expenses Surplus / (Deficit) 31 31 29 412, 754 419, 755 436, 225 5, 214, 872 3, 469, 872 7, 341, 827 -538, 928 -303, 095 -3, 516, 798 307, 141 425, 813 147, 343 5, 233, 389 4, 984, 179 3, 504, 556 -1, 197, 369 -1, 250, 482 15 268, 378

Equipment Trading Account Income Statement Analysis 2006 Actual 2005 Budget Actual 2004 Budget Actual Budget Revenue Non-Tax revenue 77, 526 55, 798 67, 170 53, 506 50, 958 48, 384 Sale of goods and services 77, 502 55, 798 67, 158 53, 477 50, 930 48, 384 12 29 28 Interest 24 Transfers received 3, 034 2, 535 2, 500 80, 560 58, 458 69, 705 56, 041 53, 458 48, 384 78, 148 52, 825 37, 321 48, 070 45, 781 8, 203 0 0 0 70, 865 43, 869 29, 827 14, 793 14, 089 7, 283 Total revenue 2, 660 8, 956 7, 494 33, 277 31, 692 0 0 Expenses Current Expenses Compensation of Employees Goods and Services Depreciation Other Expenditure Interest and dividends 0 0 Transfers and subsidies 0 78, 148 52, 825 37, 321 48, 070 45, 781 2, 412 5, 633 32, 384 7, 971 7, 677 8, 203 0 Total expenses Surplus / (Deficit) 16 8, 203 40, 181

Programme 2 Water Resources Management

Context • Improved rainfall compared with 2004/05, mainly due to above-average falls during the last four or five months. Most areas (except south-western Cape and northern KZ-N) received average or above-average rainfall • Continued restrictions on water use necessary in many areas • Ongoing support to municipalities’ drought relief activities • Water stored in all major dams increased from ± 67% of total full supply capacity in March 2005 to ± 90% in March 2006 18

• Water Allocation Reform Programme launched; public consultation on approach completed; draft regional implementation plans largely completed and aligned with Do. A and DLA programmes; Challenge: speed up programme • Authorisation of water use 254 licences issued Challenges: shortening licensing time and making application easier; ensuring BBBEE fully integrated into licence procedures • Working for Water Targets exceeded (881 000 ha), 2 million person days of employment and 11 150 employment opportunities created (103% of planned: 54% women, 18% youth, 1% disabled) 19

Assistance to resource poor farmers – some examples • Eastern Cape – Rehabilitation of irrigation schemes • • • Zanyokwe R 100 000 (586 ha) Keiskammahoek R 20 000 (819 ha) Shiloh R 13 million (420 ha) Qamata R 1. 2 million (1959 ha) Tyefu R 1 million (694 ha) • Northern Cape – Recommendations for use of 4000 ha of water in Lower Orange WMA – R 6. 9 million subsidies for O&M for 440 resource poor farmers 20

Assistance to resource poor farmers – some examples • KZN – 47 resource poor farmers in Impala received subsidies for pumping costs, canal costs, capital subsidies • W Cape – Lutouw equity project – Subsidies provided (Ceres Koekedouw, Lutoux) – HDIs to benefit from new infrastructure eg raising of Clanwilliam Dam, Osplaas Dam in Hex Valley – 20 ha purchased by LORWUA for use by resource poor farmers • 10 rainwater tanks completed , 58 in progress in 26 villages in Limpopo, FS, KZN and EC provinces • Challenges: closer alignment with local and provincial government 21

• Water Use Efficiency Various water use efficiency projects with municipalities COWEP implemented in various places in Northern Cape, Mpumalanga; North West and Limpopo • Catchment Management Agencies 3 CMAs established (Breede, Crocodile-West/Marico, Mvoti-Mzimkulu), 4 proposals gazetted for comment (Usutu-Mhlathuze, Thukela, Gouritz, Olifants/Doorn) Inkomati CMA Governing Board, CEO appointed; Business Plan submitted • Capacitation of Stakeholders involved in consultation processes Education and awareness programmes in schools for 22 efficient use of water

• Water User Associations 2 new WUAs established 7 irrigation boards transformed • Transfer of O&M responsibilities to WUAs Transfer process continued for Boegoeberg, Vaalharts, Sand-vet and Lower Olifants River WUAs • Water Resources Monitoring Data collected from all networks. Microbial, Eutrophication and River Health networks expanded • Shared Watercourse Institutions Establishment of Limpopo Basin Commission awaiting ratification by basin states; First Ministerial meeting for Orange-Senqu Basin 23 Commission held.

• Co-operation and Relationships Participated in AMCOW ministerial and technical meetings SADC Regional Water Strategy and Acton Plan developed, SA appointed as Implementing Agent for SADC HYCOS Agreements in place/ being developed with China, Cuba, Netherlands, Russian Federation, Algeria and Tanzania Coordination of SA Water Sector tsunami relief and reconstruction work in The Maldives and Sri Lanka • Global Participation UNESCO Regional International Hydrological Programme – SA elected to Council • Overseas Development Assistance from EU, UK Df. ID, France, Belgium (Flanders), 24 Switzerland, Norway, Ireland China

Annual review and oversight of entities (05/06) • Evaluation of audited financial statements – Bloem Water (shortfall on pension), – Botshelo (property removed from balance sheet) – Umgeni Water (water services assets reflected in their books) – Forensic investigations where weakness identified – Bloem Water; Bushbuckridge, Ikangala and Botshelo • Delays in appointment of Sedibeng and Lepelle Boards • Not fully compliant with PFMA – eg must supply Executing Authority with quarterly reports – only 2 fully compliant • Not fully compliant with MFMA – eg problems with tariff process this year – not supplying monthly reports to Treasury • For 2006/07 to 2010/11 period – all water boards submitted shareholders compacts on time DWAF – four water boards, (Mhlathuze, Bushbuckridge, Overberg and Lepelle) requested to amend shareholders compacts 25

Oversight of WRC/TCTA • DWAF developing oversight framework TCTA and WRC to submit corporate plans and budgets in compliance with PFMA • TCTA – Performing well – Excellent international credit rating – Operates on the basis of directives from Minister – aligned with strategic objectives of DWAF and government • WRC – Discussions held with DWAF on closer collaboration and alignment 26

Programme 2 – WRM Continued NATIONAL WATER RESOURCES INFRASTRUCTURE BRANCH

BERG RIVER WATER PROJECT PLANNED: • Continue with construction ACHIEVED: • Franschhoek First Policy rolled out: ØEmployment; ØProcurement; and ØTraining maximised for local communities. • EMP implementation continued: ØSocio-economic strategies; ØDesign guidelines; ØEnvironmental specifications; ØRiver monitoring programme; and ØEnvironmental monitoring. 28

BERG RIVER WATER PROJECT ACHIEVED (cont. ): • Socio-economic strategies: ØPublic participation; ØCompensation & mitigation; ØEmployment, training & procurement; ØSocial monitoring; and ØSustainable utilisation Plan. • Construction progress: ØAdvanced works (access roads, village works, housing) substantially complete; ØRockfill placement – 70% complete; ØIntake tower – 65% complete; ØSpillway – 30% complete; and ØSupplement - 52% complete. -Impounding of reservoir by June 2007. 29

Raising of Flag Boshielo Dam PLANNED: • Commissioning of raised dam ACHIEVED: • Construction - 94% complete. v. Completion delayed by spillage after heavy late summer rain. 30

ORWRDP 2 A: De Hoop Dam PLANNED: • Finalise detailed planning and design for commencement of construction. ACHIEVED: • Planning of dam complete; • Land valuation – 80% complete; • Draft EMP’s – 80% complete; • R 555 design – 95% complete; Artist’s impression: Proposed De Hoop Dam • Dam tender design – 85% complete; 31

VRESAP • Projected expenditure (R million) – Actual cost to date : 607, 626 – Total Project Cost : 2 491, 200 – The project fully funded from financial markets. Achieved: – Supply and install steel pipes - 60% complete; – Supply and install mechanical, electrical and civil structures - 60% complete v. Project to be completed by October 2007 32

Programme 3 Water Services

Strategic objectives • Ensure basic water supply and sanitation (1) • Ensure effective delivery of WS (2) • Ensure effective WS institutions through(3) • Effective transfers of DWAF WS schemes to appropriate institutions (4) – Effective operation & management • Support WS in Africa (5) – Achieve Africa MDG & WSSD targets 34

Basic Water and Sanitation Supply. Achievements in 2005/06 Water • During the year under review, a further 1 million people were served with water, lowering the backlog to 3, 3 million people without basic water supply and another 4, 9 million with basic water service below the RDP standard. • There has been an overall improvement in access to services from 59% to 93% since 1994. 83% of the population now have access to basic services at RDP level. Sanitation • 800 000 people have received basic sanitation, leaving the backlog at 15, 3 million people without access to basic sanitation facilities • Since 1994, access to sanitation in the sector improved 35 from 49% to 69%

Basic Water and Sanitation Supply Bucket eradication programme • 35 108 buckets were replaced Water and sanitation supply to schools and clinics • 2688 schools still do not have an acceptable water supply, but 299 schools have received water during the year under review • 293 received sanitation facilities • 2100 clinics lack acceptable basic water supply • 281 clinics are still without sanitation. Free State, Gauteng , Northern Cape and Western Cape have no backlogs in clinic sanitation. Free Basic Water and Free Basic Sanitation • 80% of population with infrastructure has access to free basic water, an improvement of 5% from the 2004/05 financial year. • The free basic sanitation programme has not started yet, and a policy is being developed in this regard. 36

Challenges • Capacity constraints, especially technical and programme management skills in WSAs. • Sustainability of infrastructure and ongoing service delivery is at risk as WSAs are focussing primarily on new infrastructure, neglecting operation and maintenance • Poor communication and cooperation at all spheres of government down to community level, e. g. lack of alignment between housing development and other infrastructure programmes • Inadequate funding in MIG to address bulk infrastructure • Poor cost recovery, lack of clarity on indigent policy and inability to cross subsidize due to poor financial administration • Delivery of water and sanitation to schools and clinics has also been slow • Capacity and financial constraints of Departments of Do. E and Do. H to enable them to deliver services to schools and clinics • Lack of infrastructure, leading to the poorest of the poor not 37 gaining access to Free Basic Water

Challenges • No political voice for DWAF as a sector leader at provincial level. Therefore strengthen relationships with Premier & MEC for local government. • Protocols at provincial level. • Current collaboration platforms focus on WS: there is now a need to include WR – boundaries • Need for a Provincial Water Sector Plan – bringing everybody together. N. B. Lack of integrated water management at WSA level; the need to look very strategically at the role of water services in economic growth and development, and alignment with other programmes 38

Support to Local Government. Our Approach • First strengthen the governance functions • Link the functions to the WS challenges - WS Development Plans (WSDPs) as part of the municipal Integrated Development Plans (IDPs) • Coordinate initiatives whilst moving to a needs driven, institutionally based support approach (WSCBBP) – Placements in municipalities (on diminishing funding scale) – Transfers and support – Sustainability audits – WSDP and FBW support – Regional Information Centres - access to 39 information and planning data

Support Programmes • Summits were held in all nine provinces, leading to a highly successful National Water Summit. • Emanating from the summits, provinces are being supported in drafting (or improving) their Water Sector Plans, • Training programmes for councilors were developed and implemented after the local government elections • DWAF provided support and funding to certain municipalities for water demand management and water conservation however, more work still needs to be done in this regard 40

Support Programmes Free Basic Services • Data verification, formulation of indigent registers and FBS policies • Under-capacitated provinces continued received support on implementation of FBW, especially in Limpopo and Eastern Cape Bucket eradication Programme • Municipalities assisted with bucket eradication strategies • Specialist teams (21 engineers), with a focus on bucket eradication, have been deployed to municipalities through the National Sanitation Programme. In Free State alone, 7 engineers deployed. Provinces with greatest cahellnges, FS, EC and NW MIG programme and provisions • MIG project planning support to accelerate implementation - particularly with respect to improving the quality of MIG technical 41 reports prior to submission

Support Programmes Water Services Development Plans • WSDP support being provided to WSAs, mainly to improve alignment with the IDP and implementation. • Focus also on supporting Provinces with PGDS WSA and WSP capacity building (WSCBBPs) • Funding and capacity made available for WSAs and WSPs to identify and address their critical functional areas WSA Checklists • Assessment of support requirements relating to legal compliance and regulatory capacity Transfer programme • Support regarding transfer capacity requirements scoping, refurbishment and O and M Section 78 assessments • S 78 assessments and the implementation of relevant 42 service delivery mechanisms for the water sector

Support Programmes Project Consolidate • DWAF regional offices have specific Project Consolidate plans to support LG. • Support includes secondment of DWAF officials, learners, appointment of services providers and facilitating sharing of lessons and skills between municipalities. One Stop Shop concept • The One Stop Shop concept was developed and piloted in North West- to be rolled out to other provinces 43

Transfers Achievements • 46 transfer agreements concluded. Two agreements, Rustenburg and Mokopane, still outstanding • 332 water schemes transferred Planned interventions • Transfers to be part of branch Regions • A plan to resolve challenges around staff transfers, targeting mainly EC and Limpopo, to be developed 44

SECTOR COLLABORATION PLANNED ACHIEVED Formalize intergovernmental relations with Local Government at provincial level – 9 regions All regions have initiated the process IGR excellent in FS, NC, MPU. 9 Provincial water sector plans NOT ACHIEVED PLAN OF ACTION WC- major challenges EC and Limpopo need to revive collaboration and mobilize political support Need to support regions engage MEC’s & formalise reporting to the Premier’s Coordinating Committee 8 regions developed provincial water plans except for MP. FS developed the 5 year plan for LG Formalise 7 regions signed collaboration with collaboration DOE through 2020 documents with DOE Vision programme 45

Planned strategic interventions for the next year • Development of an action plan, together with DPLG and municipalities, to speed up delivery in both water and sanitation • Scale up capacity of DWAF to support LG through the restructuring process • Mobilisation and building of capacity in the whole sector • Strengthen intergovernmental relations and improve on communication • Finalise the Free Basic Sanitation policy and finalisation of guidelines for provisioning of FBW to communities without infrastructure • Hands on support and involvement in provisioning of water and sanitation to schools and clinics • Development of a comprehensive development and support approach for water services providers (via 46 WSAs)

Programme 4 Forestry

Transformation And Growth Of Sector • Draft Forest Sector charter initiated with working groups for sub-sectors • Challenges – New round of negotiations required once new codes released from DTI (expected end October 2006) – Funding of Forest Enterprise Development GROWTH OF SECTOR Challenges – Mitigating market failures in long rotation timber – Leverage SAFCOL resource (KLF = 30% of country’s sawtimber) – Protection/ expansion of remaining resource – Review of W Cape exit strategy 48

Forest Enterprise Development • 39 bee-keeping projects running countrywide • 5 community owned ornamental and medicinal plant nurseries supported • Provided training in business management, marketing and technical aspects of enterprise training to beekeepers and medicinal nursery people • R 1. 6 m spent on supplying material, infrastructure, and training – funded by DANIDA • R 2 m funding secured through NDA for beekeeping. None spent yet. • Enterprise development reflected in PGDS/P of Limpopo and EC 49

Sustainable Management Of Plantations • 4 workshops held to assist small growers and assist with license applications for afforestation • Research project initiated to assess small growers livelihoods and choices • Linked growers with buyers in Vhembe district • Facilitated linking of land reform beneficiaries with forestry management company in Mpumalanga TWK • Firewood harvesters in indigenous forests in Port St Johns area organised to ensure sustainability and commercialisation of enterprise Management of DWAF plantations: • TUP, fire and theft many times industry equivalent • 5575 ha burned; • TUP 7291 ha (reduction from 8416 ha) = 15% (industry norm is 34%) 50

Payment Of Lease Rentals Payment of lease rentals to land reform beneficiaries not achieved Challenges: • Identification of beneficiaries by DLA • Negative impacts on forests (fires) • Leveraging R 70 m for development BLYDE EXIT STRATEGY IMPLEMENTED • Exit being implemented • Challenges: Manage job losses TRANSFER OF MANZENGWENYA – MBAZWANA Transfer of estates to land claimants not achieved Challenges: Obtain agreement with tribal authority and communities Maintain plantations effectively until transfer 51

International Development And Cooperation • UNFF attended; Africa group led by SA • African Forest Law Enforcement and Governance initiative supported • Congo Basin Partnership supported • Management of cross border fires not achieved due to non-availability of neighbouring countries for cross border fires strategies • FAO international code of best practice for planted forests co-drafted • World Forests Report supported • Russian and Chinese agreements signed • CBD report submitted 52

Afforestation Promoted • Forestry in PGDP/S of Limpopo and EC • Licensing process partially streamlined within DWAF Challenges: • Funding especially for longer rotation crops (longer investment horizon) • Forestry needs to engage more actively with LAACs 53

THE END Thank you. ? 54