National Water Resources Infrastructure Agency SOC Limited Bill: deliberations

Meeting report

Opening remarks

The Chairperson welcomed the Members and the delegation from the Department of Water and Sanitation (DWS) and Parliamentary Legal Services. He apologised for the delay in the beginning of the meeting, noting challenges with transportation for the Members. He said the meeting was supposed to have been in December last year, but it could not continue due to unforeseen circumstances, and he hoped that the meeting would continue as planned. The purpose of the meeting was for the Committee to be briefed on the National Water Infrastructure Agency SOC Limited Bill and to discuss its merits clause-by-clause, which would help the Committee decide if it was comfortable with its merits.

He said he would allow the team from Parliamentary Legal Services to go through the Bill clause by clause and the Committee would discuss any issues they wanted changed or issues they needed to clarify. According to his understanding of the Bill, as it was, it did not clarify the role or need for the Portfolio Committee to participate in its deliberations, as the meeting was also not catered for in the document. The Bill suggested that there was no room for the Portfolio Committee to participate in it. The Committee was not stated as a role player, so the Chairperson wanted that issue clarified.

Ms Lindiwe Lusenga, Deputy Director-General: International Water Cooperation, DWS, introduced the delegation from the Department to the Committee.

Clause by clause consideration of the National Water Resources Infrastructure Agency SOC Limited Bill

Ms Phumelele Ngema, Parliamentary Legal Advisor, said her colleague Ms Aadielah Arnold would go through the Bill clause by clause on her behalf, as she was expected in another meeting with another Portfolio Committee, and asked to be excused from the meeting. She said they would not read through the entire document but would summarise the clauses in the Bill to ensure that the meeting went more quickly, and the Members would notify them of the changes they needed to be made.

The Chairperson asked Ms Arnold to start with Chapter One of the Bill and its clauses.

Ms Arnold, Parliamentary Legal Advisor, read through Chapter One of the Bill, which focused on the definitions which were used in the Bill and the purpose of the Bill.

Ms Ngema said the provisions in sections 8 and 11 of the Bill did not specify the role that should be played by Parliament and the Portfolio Committee, and referred only to the Minister as the important role player in the appointment of the Executive and Non-Executive Board Members. However, the Committee would have to indicate if it desired to partake in those processes during the meeting.

The Chairperson said the legal team should advise the Committee on whether it should play a role, and what its role should be.

Ms Ngema said that in this case, the Committee had to state its desire to be involved in the deliberations and the extent of that involvement because other legislation that created statutory bodies like that normally specified the extent of the involvement of Parliament. The Committee had to state its desire to be involved, and then the legal team would consider the extent of their willingness to participate, with guidance from the relevant legislation.

The Chairperson asked Members if they agreed to answer the question of the Committee’s involvement in the Bill later in the meeting, and the Members agreed.

Ms Arnold continued with clause 1 of the Bill.

Ms Bronwyn Naidoo, Director: Legal Services, Department of Water and Sanitation (DWS), said the Department agreed with those proposed amendments.

Ms Arnold summarised clause 2 of the Bill, which dealt with the purpose of the Act.

The Chairperson said it should be clarified whether the Trans-Caledon Tunnel Authority (TCTA) was classified as a juristic person and if it was, what the difference was between the TCTA and the National Water Resources Infrastructure Agency (NWRIA) as juristic persons.

Ms Arnold said the Bill provided for the establishment of the TCTA, and the continued functions that used to be performed by the TCTA would now be performed by the NWRIA. The Agency was a model to take the objective of funding and establishment of the national water resources infrastructure.

The Chairperson said these changes should be clarified in the Bill so that they could be understood clearly by the public, but the explanation given made sense. The NWRIA performed the same functions as the TCTA, but went beyond what the TCTA sought to achieve.

Mr S Moore (DA) said there was a discussion around the NWRI which was defined in Chapter 6 of the Bill dealing with the disestablishment of the TCTA and the establishment of the NWRIA, and he wanted to know if the Committee should deal with that discussion in that chapter or during the discussion of the definitions.

The Chairperson said it must be dealt with when they reach Chapter 6 to avoid going back and forth.

Ms Arnold summarised Chapter 2 of the Bill, starting with clause 3, which dealt with establishing the Agency.

Mr Moore said this section would need to be revised to state the involvement of the Committee within the document.

Mr N Myburgh (DA) agreed with Mr Moore, noting his concern at the wide-ranging and unmonitored powers afforded to the Minister in the Bill. He felt that the Minister was given too much power to rule over the Agency, especially with the dominant role the Minister had in the appointment of the executives, and this was concerning. 

The Chairperson said the legal advisors had said that if Members were of the view that the Portfolio Committee must have a role, they must mention it and state the extent of that role. The Minister was the final decision maker, so the Committee must state whether it wanted to be taken on board with specific decisions before they went to the Minister for finalisation. The Committee must know the role that it wanted to play in the Bill so that the scribes could include that role in the Bill.

Ms R Mohlala (EFF) said on clause 3 (6), which states that the Minister may not, except as provided for in an Act of Parliament, sell or otherwise dispose of any shareholding of the Agency, the Act of Parliament referred to must be clarified.

The Chairperson said there might be some contradictions to that statement in the next clauses as well.

Mr Myburgh said the clause was trying to say the Minister must not sell or dispose of any shares of the Agency unless they could prove that an Act of Parliament allowed them to do so.

The Chairperson said the Minister could sell or dispose of shares only if allowed by an Act of Parliament. 

Ms Mohlala asked if the specific Act of Parliament should not be added to the sentence for clarity purposes.

The Chairperson clarified that the clause states that if the Minister intends to sell or dispose of shares of the Agency, the Minister must first clarify what the Act of Parliament informed that decision, meaning the Minister was not allowed to sell or dispose of the shares of the Agency.

Mr Myburgh said that although the clause provided a safety net in that the Minister must act within the law, it might be some consolation to be specific in the clause.

The Chairperson said people did have the tendency to try and use the law to suit their intentions, so the Bill must guide against that.

Mr Moore was concerned about the Bill referring to the Minister as the shareholder. While government held a specific percentage of the shares, and the Minister was the representative of government, the Agency’s shareholders were not all government-owned, so the clause did not protect against any manipulation that may occur because of that.

The Chairperson said Mr Moore’s point should be noted, although it would be dealt with in Chapter 6.

Ms Naidoo referred Members to clause 3 (6), and said the word ‘shareholding’ should be replaced with the word ‘shares’. Clause 3 (9) reaffirmed the role of Parliament’s oversight role and involvement in the Bill, as it states that the Companies Act and the Public Finance Management Act (PFMA) applied to the Agency.

Ms Arnolds summarised clause 4 on the Memorandum of Incorporation of the Agency, and clause 5 on the application of the Companies Act to the Agency.

Ms Naidoo said should there be any inconsistencies in interpretation of legislation between the Companies Act and the NWRIA Bill, the NWRIA Bill, once enacted, should prevail.

The Chairperson asked why there should be a super law that undermined an Act of Parliament, because this meant that if the Agency acted inconsistently with an Act of Parliament, then its actions must supersede the law. This should not be the case, because any action inconsistent with the law was illegal. He said clause 5 should be scrapped from the Bill.

Mr Myburgh said the Department should first clarify the clause.

Mr Moore asked if the clause was used in other similar agencies, because it did not make sense to include it in the Bill.

Mr Myburgh said the words ‘inappropriate’ and ‘inapplicable’ must be clarified.

Ms G Tseke (ANC) agreed that the Department must explain their inclusion of the clause, because it did not make sense.

Ms Arnold said section (4) of the Companies Act states that if there is an inconsistency between any division of the Act and the divisions of any other national legislation, then a revision of both Acts is applied concurrently to the extent that it is possible to apply and comply with one of the inconsistent revisions without contravening the second. This meant that both legislations would be applied as far as possible.

Section 9 of the Companies Act provided for special applications regarding state-owned companies (SOCs) such as the Agency. For example, if one wanted a special arrangement under the Companies Act, then there was an exemption that must be followed, which would be submitted to the Companies Commission. Therefore, the Companies Act applied to the Agency, and to remove any uncertainty and inconsistencies, section 5(4) of the Companies Act was clear and sufficient, and should there be a need for a different arrangement, there would have to be an application for an exemption.
 
Mr Myburgh said with the information from the legal advisor, it made sense to remove clause 5 (2) of the Bill because clause 5(1) states that the provisions of the Companies Act apply to the Agency.

Ms Arnold said the easy solution would be to reject clause 5 entirely, because it was already stated in clause 3(9) that the Companies Act and the PFMA apply to the Agency.

Mr Moore wanted to know the intention behind having the Bill overriding the Companies Act in the first place.

The Chairperson disagreed.

Ms Arnold also felt it would be prudent to hear the Department’s thinking in including clause 5 from a policy-making point of view.

The Chairperson said the Department agreed it must be removed, so that decision should supersede any explanation.

Mr Moore said it would be fair for the Department to explain itself, because it was strange for them to want the Bill to supersede the Companies Act, so there must have been a reason for them to do so. It was important to understand the intention, because this was an important piece of legislation that the Department was trying to put forward, and this must be interrogated.

The Chairperson said they were trying to coerce the Committee to contravene the Companies Act, and the Committee disagreed and that should be all that mattered. Whatever their explanation may be, it was still wrong to contravene an Act of Parliament.

Ms Mohlala agreed with Mr Moore that the Department must clarify why it had included the clause, because it could come up again later.

The Chairperson said the document had been presented to the Committee so that it could amend, adjust, agree, and disagree with its contents, and that was what it was doing. It would be wrong for the Committee to justify its decisions, so unless the Department wanted to justify why the clause should remain in the Bill, then they would be allowed to justify the reason behind the inclusion of the clause. The Department did not resist the removal of clause 5, so the meeting must continue.

Ms Mohlala said the clause could perhaps be rephrased if the explanation from the Department was sound.

The Chairperson disagreed, reemphasising that it was illegal to act against an Act of Parliament and that the Department was comfortable removing the clause.

Mr Myburgh said he understood why Mr Moore and Ms Mohlala wanted to know why the clause was included in the first place, because it may appear again later in other clauses. What became the status of the draft legislation after the Committee decided that it did not want a specific clause or decided to add another?

The Chairperson said the Committee's decisions became Parliament's recommendations, because Parliament would pass the Bill. If the Department felt there was something that still needed to be discussed before the Bill was passed, it would call the Committee to discuss it again until a solution was found.

Mr Moore said hearing the explanation for the inclusion of the clause would allow the meeting to move forward. For the Committee to remove the clause without understanding why it was there in the first place may affect the rest of the Bill, which would mean going back to fixing the mistake again.

The Chairperson said Mr Moore and Ms Mohlala were starting an unnecessary debate on the matter, because the issue was simple.

Ms Arnold said the legal team was in the process of deliberating on the Bill, considering any proposed amendments and inputs from the relevant stakeholders, and discussing the contents of the Bill. If the Department felt that a specific change should not be made, they must state so to the legal team during this period, and the legal team working with the Department would capture all the proposed changes as directed by the Committee into a proposed draft A-List. The proposed draft A-List would be brought back to the Committee with the amendments to see if any further changes needed to be made, and the result of that would become the B-Bill, which was what the Committee would vote on and accept, and that would go to the National Assembly to be passed.

The Chairperson said that was how the process was supposed to go, and allowed the Department a five-minute caucus break.

Ms Naidoo said it was not the intention of the Department to create a super law, but they had applied standard practice as done in their founding legislation. She gave an example of the South African National Roads Agency Limited (SANRAL), which had the same clause which catered for eliminating uncertainty, as the Companies Act was amended frequently, and this was to ensure that in such an event, the provisions that were in the Bill would prevail.

Mr Myburgh said that with the explanation that was given, it made more sense to use section 5(4) of the Companies Act.

The Chairperson asked if the Department was insinuating that the decision made by the Committee to remove clause 5 should be reconsidered, given the explanation. The Department argued that the Companies Act was frequently amended. If another amendment was made, it may contradict the Bill, so in that situation, the Bill should supersede the Companies Act.

Mr Moore was happy to hear the explanation from the Department, and wanted to hear what the Parliamentary Legal Service had so say about the issue.

The Chairperson said the legal team was happy to have clause 5 in the Bill, because clause 5(4) of the Companies Act did consider that the Companies Act was frequently amended. 

Mr Moore asked the Department to state whether they agreed with the Chairperson’s explanation or not.

Ms Arnold said clause 5(2) of the Bill states that a provision of the Companies Act does not apply in circumstances where any special or contrary agreement was made by the Bill, because such a provision was clearly inappropriate or inapplicable. It referred to situations where there was conflict, and it was inappropriate to apply the clause. Clause 5(4) of the Companies Act states what clause 5(2) of the Bill was saying, but in a clearer way, because it states that if there were two pieces of legislation, they both could apply concurrently if they did not contravene each other. Clause 9 of the Companies Act says should the Agency, for example, wish to have a contrary arrangement to what the Companies Act provides for, then the Agency must apply for an exemption to the Companies Commission. Therefore, clause 5 in the Bill must be removed.

Mr Moore supported the removal of the clause from the Bill.

Ms Naidoo said that although the Department was not opposed to removing the clause from the Bill, their motivation for keeping it would be for the ease of doing business and for providing stability to its lenders, regulators, and all those who were affected by the Agency.

Ms Arnold summarised clause 6 of the Bill on the objects of the Agency, and clause 7 on the functions of the Agency.

The Chairperson asked if his assumption that in clause 7(1)(l)(ii), the other parties included municipalities and legislatures for purposes of maintaining and sustaining reliable national water resources' infrastructure.

Ms Tseke said that in clause 7(1)(iii), Parliament should be included in the list of people who the Minister should consult for the approval of the five-year strategic plan.

The Chairperson said the Members were now starting to put clarity into the where, how and why the Portfolio Committee must be involved in the Bill.

Mr A Tseki (ANC) asked if his assumption that all the functions of the TCTA would be included in the Bill was correct.

Mr Moore agreed with the inclusion of Parliament in clause 7(1)(iii), and proposed the removal of the phrase “but were not limited to” in clause 7(1)(p), because he felt that would allow the Agency to do anything, which could cause problems in the future. He felt the Agency should be limited to specific functions and services.

Ms Mohlala wanted to know whether clause 7(1)(m) would also include private properties.

The Chairperson said the Agency was a public institution so private property would not be included.

Ms N Sihlwayi (ANC) said it was important to associate the Bill with its intention and purpose and not base it on assumptions. She did not agree with Mr Moore's suggestion that the Agency could do any business that was outside of water resource infrastructure management.

Mr Myburgh said he understood Mr Moore’s point, because there had been situations in the past where people or entities acted beyond their jurisdiction, and he made an example of the "fire pool" in Nkandla.  

The Chairperson said the Committee that went to Nkandla had confirmed that it was not a swimming pool but a fire pool, and clarified that the problem with leaving things up for interpretation was that people could interpret them according to their own understanding and draw their own conclusions, which caused problems. 

Ms Naidoo said Parliament could be included as part of the stakeholders to be consulted by the Minister for the approval of the five-year strategic plan, and that was also accounted for by clause 3(9) through the Companies Act and the Public Finance Management Act (PFMA), for which Parliament had oversight responsibility on. In clause 7(1)(l)(ii), the other parties included water services authorities, water usage associations and others. Private property could not be included in the interventions because the Agency was a public institution, as stated by the Chairperson, and in this case, the Bill refers to other legislation that may impact transfers of immovable property and the other expropriation clauses that may be inconsistent with this legislation. Regarding the removal of the phrase “but not limited to,” she referred Members to clause 44, which detailed how this clause would be executed and how the additional functions would be performed.  

Mr Moore said he would be comfortable with that if the Department inserted the words “subject to clause 44” at the end of the sentence, because it was unclear. He added that there seemed to be an assumption during the break that the DA was opposed to the legislation. He stated this was untrue because the party understood why the Department was pushing for the legislation to be passed. Their concerns were based on the Minister being granted too much power through the legislation, and there must be some control on the powers a Minister was allowed to have in such an institution, because someone with ill intent could easily abuse those powers. 

The Chairperson said he understood Mr Moore’s point, but warned him against talking in the meeting about things that were said outside of the meeting.

Ms Mohlala proposed that clause 7(1)(m) should include private property.

The Chairperson said that it could not be included.

Mr Myburgh said it was already there as immovable property, which included all kinds of property.

Ms Mohlala said she had understood that the clause did not cover private property.

The Chairperson said it was covered under immovable property.

Because that statement was broad, Mr Myburgh wanted to know who the other key stakeholders referred to in clause 7(1)(iii). He said the functions of the Agency talked about the attraction, development, and maintenance of appropriate skills, creating jobs, etc., but it was a well-known fact that in the country, people were appointed to positions because of who they knew, instead of what they knew, which had had a devastating impact on service delivery and governance across the board.

When talking about water infrastructure, the most critical of all the services would be removing cadre deployment in creating the Agency. Senior members of the governing party, including former Ministers of Finance, had said that cadre deployment had been the death of service delivery in the country. It would be amiss of the Committee if it did not address this issue and ensure that people were appointed because of their proven qualifications and skills for the positions.

The Chairperson said the functions of the Agency in clause 7(1) stated that to fulfil its objects, the Agency must (e) attract, develop, and maintain appropriate skills, which was against cadre deployment. He said Mr Myburgh must refrain from acting like cadre deployment was done only by the ANC, as the DA had also done that in the past by appointing an individual who had failed as the Deputy Speaker of the City of Tshwane. 

Ms Mohlala said they would have to leave soon because they had other meetings. 

The Chairperson asked Ms Mohlala not to interrupt him whilst he was speaking, as she had not interrupted Mr Myburgh. He was addressing the political statement made by Mr Myburgh.

Mr Myburgh interjected to say his statement was not political; he was addressing a serious issue.  

The Chairperson said the Members must deal with Chapter 3 of the Bill.

Ms Mohlala wanted to speak on an issue in Chapter 2.

The Chairperson was reluctant to allow her to raise the issue because she had interrupted him while speaking, noting that she should have addressed it when she had time to speak. He then allowed her to continue.

Ms Mohlala suggested the addition of "Parliament" in clause 7(1)(d), instead of the pricing strategy established by the Minister in terms of section 56 of the National Water Act. She asked whether the Department had begun the process of drafting the regulations of the Bill, which would provide substantive processes of its implementation.

The Chairperson said Parliament could not determine water prices, because that was the duty of the Department. The duty of Parliament was oversight.

Ms Mohlala said having the Minister doing everything would cause problems for the Agency.

The Chairperson said in this instance, the Minister was guided by the Act, although he agreed with her that in instances where it was not enshrined in the Act, the powers of the Minister must be limited.

Mr Myburgh said his question regarding the key stakeholders had not been answered.

Ms Lynette Milne, Financial Consultant, DWS, said that in this instance, given that they were a schedule 2 public entity, the agreements with key stakeholders already existed, so currently, that would be Rand Water, because they were an off-taker of mega projects that were currently being built, as well as the City of Cape Town, Eskom, Sasol, etc., which were off-takers that were currently in place. The long-term strategic plan and the master plan, as well as pricing and approval of pricing, stayed with the Department. The Agency would execute infrastructure build projects based on the Minister's directive. In putting that into a five-year plan, the Department must consult with the key stakeholders because they had to ensure sufficient funds and skills to implement the projects.

Mr Myburgh said there was nothing that mentioned who the key stakeholders were in the definitions and purpose of the Bill, and they needed to be specified and defined.

Ms Milne said the list would be endless, because that would also include billing and collecting, which would also include about 77 000 customers that they were selling to, so the key stakeholders mentioned were impacted by the national water resource infrastructure, and they included operations and maintenance. It would be an endless list to try and put into legislation.

Mr Myburgh said not naming at least a few of them in the Bill was meaningless.

The Chairperson said if they named only a few in the Bill and left out others, it would still be a problem.
 
Mr Moore said his point on clause 7(1)(p) had not been responded to.

Ms Naidoo said she had referred Members to clause 44, which detailed how this clause would be executed and how the additional functions would be performed. 

The Chairperson asked members to move to Chapter 3 of the Bill.

Ms Ngema said in clause 7(1)(a)(iii), where a Member had suggested the inclusion of Parliament as part of the stakeholders that would be consulted by the Minister for the strategic plan, there were various other strategic plans that the National Water Act addressed, and they did not indicate the process of involving Parliament. Therefore, in this instance, perhaps they would insert the National Assembly, because when they inserted Parliament, it meant the process must include all the Houses of Parliament. If it was just the National Assembly as the structure that had the oversight function over the executive, that was another manner of limiting the process, where only the Committees that were affected by the establishment of the Agency could participate.

Regarding clause 7(1)(m), she said there was a slight concern regarding interest in movable or immovable property, but the Members were correct that the word ‘property’ was inclusive of both public and private property. It was unclear what the Bill was referring to regarding interest, and suggested the removal of the word and to leave the phrase open for clear certainty.

On clause 7(1)(p), she said there was a redundancy because if there was a provision that already spoke about additional functions in clause 44, and then said they were not limited to that, the scope was too broad. In order to allow the additional functions, whether expressed or not expressed, the phrase that had been suggested was ‘but not limited to’, and although it speaks to water management institutions and water services authorities, the other Acts that were already in place would not be overlooked for purposes of the functioning of the Agency. She warned against overexcitement and overregulating to an extent where they were unsure where they were extending and limiting. Regarding the water user, she said the other Acts gave enough scope of explanation, and should be covered.

The Chairperson said the legal team could help the Committee by correctly putting their suggestions in the legislation.

Mr Moore left the meeting, as he had another commitment.

Ms Arnold summarised Chapter 3 of the Bill on the governance of the Agency, starting with clause 8 on the governance and composition of the Board, clause 9 on the role of the Board, and clause 10 on the principles to guide the Board, as well as clause 11 on the appointment of non-executive Board members.

Ms Mohlala was concerned that the Minister was responsible for developing a list of candidates, conducting due diligence on candidates regarding conflict of interests, as well as managing the Cabinet approval processes. There was a call for greater transparency and quality of appointments, as most of the appointments in departments and government institutions normally lacked integrity, and some were not transparent as they did not allow space for adequate public engagement.

She proposed an amendment to the Bill that would allow Parliament as an oversight body to play a role in the appointment of the Board members of the Agency, to ensure transparency and accountability. While she understood that Parliament may not be directly involved in the appointments, she felt that Parliament’s involvement could ensure transparency and accountability in the process of appointments through parliamentary oversight and the review of the appointment processes.

The Chairperson said the writing of the clauses allowed what Ms Mohlala was saying, to happen, as the Bill stated that the Board would have about 13 people. The Minister of Water and Sanitation and the Minister of Finance would each appoint one person. The Minister of Water and Sanitation would appoint a nominations committee, which would deal with short-listing and interviewing candidates. It would then recommend them for appointment to the Minister. The nominations committee would recommend about 16 people to the Minister, and the Minister would appoint people.

On the 11 people that the Minister would appoint, criteria would be followed, including ensuring that the people had the requisite skills, knowledge, and experience in the areas of governance, audit, legal and risk management, project finance, treasury management and financial management, etc. The Minister would not do all that work on his own, as the nominations committee would do that on his behalf. The clause continued to say the nominations committee, in making recommendations, must include members with at least ten years’ experience, where each member must at least be a chief financial officer of a listed company, a senior engineer in a management position in the water sector, an attorney or advocate of the High Court of South Africa with experience in commercial law and the law governing public entities, etc.

The Bill did not necessarily give powers to the Minister to act alone, as the Minister would appoint a committee to recommend people and the Minister would only make the final appointment decisions. The Chairperson understood Ms Mohlala’s request to have the Committee take part in the process of nominations, but emphasised that the Committee could not make the final decisions on who got appointed, as that was the duty of the Minister.

Ms Mohlala proposed that the Parliamentary Committee become the ultimate decision maker on who got appointed.

The Chairperson said that could not happen, because the Committee was an oversight body.

Mr Myburgh asked if it was necessary to have so many Board members appointed, and suggested a lower number to cut costs. He also wanted to know what the phrase ‘suitably qualified and experienced’ referred to.

The Chairperson said the document was clear on the qualities the people appointed must have.

Mr Myburgh said the document did not say that, and there was no certainty on what 'suitably qualified and experienced' meant.

The Chairperson said it was there in the document.

Mr Myburgh said clause 9 did not specify when the strategic plan must be produced.

Ms Naidoo said it was in the PFMA.

Mr Myburgh said the strategic plan must be there when the Board started its term, because if the Board had to create a strategic plan after it started its term, problems would arise.

The Chairperson said the document stated that a strategic plan must be in place within 12 months of the start of the term.

Mr Myburgh said a timeline for the strategic plan must be specified, and in clause 9(f) he said the code of conduct must already be in place by the time the Board was appointed because it did not make sense for them to start their work without a code of conduct, which the Minister must still approve, otherwise they would have no one to hold them accountable.

In Clause 11, he had a problem with the Minister’s role in establishing a nominations committee, because if the nominations committee recommended people that the Minister did not like, the Minister could easily tell them to look for other people. This could not be considered good governance practice, and this was a free hand to people who wanted to abuse power. He said the government writes legislation for the worst-case scenario and for politicians who did not know the limits of their power, and this must be fixed. He proposed that only the nominations committee, and not the Minister, could decide who got appointed to the Board. 

He said the document also stated that in establishing a nominations committee, the Minister must ensure that the nominations committee is constituted with members that are fit and proper, suitably qualified, and experienced to serve on the nominations committee. The guidelines and imperatives must be clearer on what this means. The nominations committee needed independence from the Minister. Referring to clause 11(5) he asked whether ten years’ experience was required for each person listed.

The Chairperson said it was written clearly on the document that each of the people must have ten years' experience.

Mr Myburgh said it was unclear to him. He added that clause 11(8) proved his point about the Minister being allowed to decide not to appoint people that the nominations committee recommended.

The Chairperson asked what the Minister should be expected to do if he received a recommendation that did not meet the requirements.

Mr Myburgh said that would be an invalid recommendation in the first place. He added that the fact that the Minister could reject a set of recommendations from the nominations committee was wrong.

Ms Naidoo said the aspect that would cause the Minister to reconsider was if the number of people was insufficient and not the suitability, as the document referred to the insufficient number of suitable people.

Mr Myburgh wanted to know what the adequate number would be.

The Chairperson said the number was 11 plus 50%, which equates to about 16 or 17 people.

Mr Myburgh said it must be rephrased in the document to be concise and clear.

Ms Mohlala agreed with Mr Myburgh.

The Chairperson said Mr Myburgh had raised an important point in that if the Board was appointed with no existing code of conduct, and they were expected to create one after their appointment, that would cause problems, and said there must be an existing code of conduct so that the Board could adhere to it. He said the President appoints a Minister, and the Minister signs a contract that binds him or her to deal with the Department alone. The Minister appoints boards to help him or her to fulfil the Minister’s duties, and the Minister oversees the work of those boards. Therefore, it was wrong to say the nominations committee must have the final say on appointments of the Board members when the Minister would have to account when the board fails.

The Chairperson allowed a 10-minute comfort break, and said he would allow Ms Sihlwayi to speak after the break.

Ms Sihlwayi said the Minister was the head, must have control over government’s policies, and could not allow anything to happen without his or her awareness. The fear that a Minister may abuse power would always exist, but it was standard practice that a Minister should be the presiding decision maker of the Department.

Ms Arnold suggested that Parliament could give approval for the list of names provided by the nominations committee. Regarding the number of people to be recommended, the stipulations in clause 11 could be followed. She did not believe there was a separation of powers, as government was a single entity that must work together.

Ms Naidoo said there was a separation of powers, and each must execute their role responsibly. Although Parliament’s oversight role was appreciated, it might be a violation of the separation of powers if Parliament participated in the appointment of Board members, because this was the role of the Minister.

Mr Myburgh said what they were asking for was a greater sense of independence of the nominations committee from the Minister. They were not denying the role of the Minister in making the appointments, but the nominations should come from a more independent and professional body. Clause 11(2)(a) stated that the Minister must establish a nominations committee consisting of the number of persons that the Minister may determine, meaning the Minister could choose one person to do the job, which would not be a fair and justifiable situation, so a feasible and sensible solution must be found for this.

The Chairperson said the sub-clauses following from that gave clear guidelines on how the Minister should go about appointing the nominations committee, and there was also a guideline for the nominations committee to consider before making recommendations to the Minister. The Minister, using those guidelines, could determine whether a person was a suitable recommendation or not. The separation of powers model meant the executive did the work that it was appointed to do, and the legislature did oversight on the work of the executive.

Ms Mohlala said the Chairperson was taking the matter personally, and was supposed to respond to clause 2(a), which stated that the number of people in the nominations committee may be determined by the Minister. Clause 11(7) says the Minister must appoint two non-executive members of the Board, consisting of one member designated by the Minister and one suitably qualified and experienced member designated by the Minister of Finance, and there were no guidelines for the Minister of Finance.

The Chairperson said clause 8 states the two executive members appointed in terms of section 24 were the chief executive officer (CEO) and the chief financial officer (CFO), and the CFO could be appointed only by the Minister of Finance.

Mr Myburgh said the Chairperson was confusing the executive and non-executive members.

Ms Ngema said the discussion showed that there was ambiguity in how clause 11 was drafted, and that was compounded by the confusion when reading clause 11(7) and clause 24. Initially, she was under the impression that clause 11(7) spoke to the appointment of the CFO, but clause 24(4) says the CEO must, with the approval of the Board, appoint a CFO after an open and transparent recruitment process by inviting applications for the post. This caused a lot of confusion between the clauses, and needed to be fixed.

Ms Milne said it was common practice for non-executive directors in state-owned companies that had complex businesses to appoint an ex-official director, which could be someone from Treasury or from another department. In selecting the kind of skills that the Minister of Finance would be looking for, the Minister would take into account of the nature of this business and the number of guarantees that were covered, and would need to find the commensurate skills to be able to serve on the Board of the Agency. This was also common in other government agencies such as SANRAL, as it strengthened the governance.

In summary, there would be 11 non-executive directors, two of them coming from the Department of Water Affairs, and one from Treasury. Additionally, there would be the CEO, who would be sitting on the Board, and the CFO, and it was correct that the CEO appointed the CFO. The reason for the number of directors was because of the nature of the business, and it would need the different specialisations coming together to be able to serve the water needs of the country. The Treasury and financial experience was required because the Agency was changing the existing business model of the existing TCTA, and would incorporate that into something that would take those skills to serve the country better.  

Mr Tseki suggested that the Committee receive advice from the legal team regarding the number of members of the nominations committee that the Minister could appoint. He suggested that the Minister could appoint between three and five members.

Ms Naidoo agreed with the numbers suggested by Mr Tseki, and asked Members what they thought.

Mr Myburgh said the question he asked was what constituted suitably qualified people.

The Chairperson asked what Mr Myburgh suggested the number should be.

Mr Myburgh said to avoid the situation whereby the Agency was another lapdog of the Minister, some form of independence must be established. The Minister should appoint not less than three and not more than five people to the nominations committee. At least one of those must be appointed by the Institute of Chartered Accountants of South Africa. The other must be appointed by a suitable institution that deals with water engineering and infrastructure, and then the Minister could appoint the rest.

The Chairperson said white males led most water boards and institutions in general. As much as he understood Mr Myburgh’s point that they were qualified and had all the experience needed, he could not support a decision that supported the promotion of only white males into leadership positions because there was no equal representation of all the demographics of South Africa.

Mr Myburgh said that was an inappropriate statement to make -- the Chairperson was promoting the racism the Constitution was trying to fight against. He said the Chairperson had misrepresented what he had said, and left the meeting.

Mr Tseki said the idea of using people from trusted institutions for the nominations committee was important. The type of people who should form part of the nomination committee was already implied in the clause, and it would not make sense to appoint people who had no knowledge of water infrastructure or its governance. He supported Mr Myburgh's suggestion to appoint two individuals from independent bodies to form part of the nomination committee.

The Chairperson asked if individuals who had the requisite experience, knowledge and skills but were not registered with the suggested institutions, would be automatically disqualified from being members of the nominations committee. The membership of such institutions was paid for, so if the said people could not afford to pay to be part of the institutions, that would mean they were not in the running to be appointed for the nominations committee, which would work against the equalisation of demographics in the country.

Mr Tseki said not all the five members should be from independent institutions, but the demographics must still be met, considering the experience of the people.

Ms Tseke said the Members were talking about two different things. Mr Tseki was talking about the nomination of three to five members, while the Chairperson was talking about experience and qualifications and the inclusion of demographics. Mr Myburgh was talking about the nomination committee members and what the suitably qualified members meant.

Ms Milne said the best way to judge the water resource sector was to understand it, so the nominations committee should consist of people who had knowledge in engineering, finance, and risk management applicable to that sector. Those were the suitably qualified people who could be trusted with the responsibility of being on the nominations committee.

Ms Naidoo suggested that the skills stipulated in clause 11(4) should be considered the requisite skills for the nomination committee members, and should be stated as such in the Bill document.

Ms Mohlala said the two non-executive Board members who would be appointed by the Minister of Water and Sanitation and the Minister of Finance should be from the independent water resource bodies, as suggested by Mr Myburgh, but should not be limited to that. The role could also be open for experienced people who were not necessarily from those independent institutions.

Ms Arnolds summarised clauses 12, 13, 14 and 15.  

Mr Tseki asked for some clarity on clause 13(1), clause 15(1), and clause 15(3).

The Chairperson said when a Board member’s term of office expired, the position was vacant , and that was why there must be new appointments.

Ms Mohlala asked if Parliament could be involved in appointing non-executive Board members in clause 13(1) in terms of monitoring, evaluation and oversight. She suggested that subsection 4 of the clause must be deleted because if the proper monitoring, evaluation and oversight were done, there would be no need for an extended term of office.

The Chairperson said a non-executive member of the Board would hold office for five years, because the Minister was appointed to be a Minister for five years, so the Minister could not appoint people and then leave them to be Board members of the predecessors. The non-executive Board members could be recommended for re-appointment to ensure continuity, but they could not stay in the position longer than a second term. The six months' continuation was to ensure that handovers were done correctly to the predecessors, because the positions could not be left vacant, and the extension could not exceed six months.

Ms Mohlala asked if six months was not too long.

The Chairperson said sometimes even six months was not enough because of the amount of work that was needed for the handover to be done. He asked the Department and the legal team to avail themselves for another meeting to finish deliberations on the Bill, because it did not seem that they would finish deliberating on the document during the meeting.

Ms Arnold summarised clause 16 to clause 23. 

Ms Ngema said in clause 17(4) the word ‘completely’ should be removed from the sentence, as it added no meaning.

The Chairperson said he could not understand the sentence.

Ms Naidoo said the sentence meant that board members may be part of two different board committees, but the composition of a committee must not overlap, meaning the members of the same committee could not be the same members of a different committee.

Ms Mohlala asked what that would mean regarding the checks and balances of the committees.

Ms Naidoo said the members of the same committee could not be the same members of a different committee, and noted that the sentence must be changed to make more sense.

Mr Tseki said he was expecting that the list of committees that the Board must establish would include a committee dealing with water issues, considering that this was a water agency.

Ms Milne said there was room for that to happen, and the statement in the Bill said there should at least be a social and ethics committee and an audit and risk committee on the board, meaning there could be more.

Ms Mohlala said in 17(5) that a limited number of specialists would be procured, and there should be timeframes within which they would operate to cut costs.

The Chairperson said that would be interfering with the work of the board.

Ms Naidoo's comment was inaudible.

The Chairperson said the numbers were determined in the Charter.

Ms Mohlala asked why that was not stated in the Bill.

The Chairperson said the Charter was available for Members to read.

Ms Milne said the Charter took account of the special skills in the composition of the skills of the Board members, and specialised skills were augmented in the sub-committees where they were not found in the Board.

Mr Tseki’s question was inaudible.

Ms Milne said that in the specificity of the Bill, they did not rewrite what was in the PFMA and in the Companies Act, and they would reference the two acts in the policies and procedures.

Ms Arnolds summarised Chapter 4 from clause 24 to clause 30 dealing with the Chief Executive Officer and Chief Financial Officer.

The Chairperson said the Committee would arrange a virtual meeting next week to complete the remainder of the clauses with the Department and legal team.

The meeting was adjourned.