Water Research Commission, Breede-Gouritz Catchment Management Agency and Inkomati-Usuthu Catchment Management Agency 2021/22 Annual Reports; with Deputy Minister

Water and Sanitation

13 October 2022
Chairperson: Mr R Mashego (ANC)
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Meeting Summary

Video

Water Research Commission

Inkomati-Usuthu Catchment Management Agency

Breede-Gouritz  Catchment Management Agency

At a virtual meeting, the Committee was briefed by the Water Research Commission, the Breede-Gouritz Catchment Management Agency and the Inkomati-Usuthu Catchment Management Agency on their 2021/22 Annual Reports.

The Water Research Commission summarised its performance in each of its four programmes. Revenue had exceeded the budgeted expectation of R338m by 80m, mainly due to increased leverage. The Commission had overspent against its R338m budget, mainly due to high spending on research, development and innovation. It had obtained an unqualified audit opinion.

The Breede-Gouritz Catchment Management Agency had achieved most of its performance targets but had unfortunately received a qualified audit opinion with findings because the auditors had not accepted the Agency’s proof of the existence of debtors. Expenditure increased by R8m, largely due to increases in operational and employee-related costs. Revenue from management charges increased by R4m, largely due to increased charges and more efficient collection. Irregular expenditure amounting to approximately R1.7m had been incurred, although value for money was received in all cases.

The Inkomati-Usuthu Catchment Management Agency shared an overview of water pollution hot spots in the catchment area and assured the Committee that the Agency was working hard to address the problem. It had developed an early warning system for floods, droughts and pollution. 118 out of 147 approved positions were filled. All annual performance targets except one related to cost control target had been achieved. Although it had received an unqualified audit opinion, the external auditor had concluded that the going concern status of the Agency was a critical risk due to the reduction of grant funds from government and the low rate of recovery from water users, which was made worse by poor data quality. Irregular expenditure amounting to R16m had been incurred, of which National Treasury had approved the condonation of R15.4m. There had been R357 000 fruitless and wasteful expenditure.

The Committee asked for assurance about the validity of water quality measurements and tap water quality and asked for an update on the revision of the Water Research Commission Act. They discussed the context of the Breede-Gouritz Catchment Management Agency’s debt problems, which went back to when the Department had managed the water supply in the area. They also asked for clarity on the relationship between the Hoxane water treatment facility, the Nyaka dam and the supply of water in the Bushbuckridge area.

Meeting report

The Chairperson accepted apologies from Dr Sean Phillips, Director-General (DG), Department of Water and Sanitation (DWS), Minister of Water and Sanitation, Mr Senzo Mchunu, and the Deputy Minister of Water and Sanitation, Ms Dikeledi Magadzi.

Deputy Minister of Water and Sanitation, Mr David Mahlobo, invited the Water Research Commission (WRC) delegation to deliver its presentation.


Presentation by the WRC on its 2021/22 Annual Report
Dr Nozi Mjoli, chairperson of the board, WRC, asked Dr Jennifer Molwantwa, Chief Executive Officer (CEO), WRC, to deliver the presentation. She reminded the Committee that Dr Molwantwa had only started working at WRC in April 2022, after the end of the period under review.

Dr Molwantwa summarised the Commission’s performance highlights in each of its four programmes:

- Research and Development (R&D): The KwaMadiba small-scale hydropower plant on the Tsitsa River in the Eastern Cape had been launched, methods to survey non-sewered areas for COVID-19 trends had been developed, and the DWS Natsilt Programme had been launched. All performance targets had been met or exceeded.

- Innovation and Impact (I&I): A green energy system to operate the Kraaifontein Waste Water Treatment Works in Cape Town had been launched, The Water Graduate Employment Programme had assisted 900 science, finance, marketing and environmental graduates and to find jobs, and the Commission’s 5th biennial symposium had been held. All performance targets had been met or exceeded.

- Corporate Services: All performance targets have been met or exceeded.

- Finance: Revenue had exceeded the budgeted expectation of R338m by 80m, mainly due to increased leverage. The Commission had overspent against its R338m budget, mainly due to high spending on research, development and innovation. It had obtained an unqualified audit opinion.

The Chairperson said that he had missed parts of the presentation, and that although the figures were clear, the presentation as a whole was not very convincing.

(see document for further detail)

Presentation by the Breede-Gouritz Catchment Management Agency (BGCMA) on its 2021/22 Annual Report
Mr Bongani Mnisi, chairperson of the board, BGCMA, reported that the feeder canal walls to the Greater Brandvlei Scheme had been raised which would increase the water supply in the area and create employment opportunities. He was excited by the prospect of forming a single catchment management area for the whole Western Cape. The Agency had unfortunately received a qualified audit opinion with findings, because the auditors had not accepted the Agency’s proof of the existence of debtors.

Mr Jan van Staden, acting CEO, BGCMA, provided an overview of the Agency’s performance on seven strategic objectives:

- Water resources planning: The performance target had been achieved.

- Water use management: Some targets related to data capture had not been achieved, which led to the targeted number of confirmation letters sent also not being achieved.

- Institutional and stakeholder relations: The targeted number of water resource management forums supported had been missed.

- Water allocation reform: All performance targets had been achieved.

- Water resource protection: The target for resolving cases of non-compliance had been missed.

- Strategic support: The broad-based black economic empowerment (BBBEE) target had been missed due to the difficulty of finding BBBEE-compliant suppliers.

- Management and governance: All performance targets have been achieved.

Ms Zanele Ngoma, Chief Financial Officer (CFO), BGCMA, presented an overview of the Agency’s finances. Expenditure increased by R8m, largely due to increases in operational and employee-related costs. Revenue from management charges increased by R4m, largely due to increased charges and more efficient collection. She confirmed that the Agency had received a qualified audit opinion with findings. The basis for the qualification was the Agency’s failure to prove the existence of some water users. Irregular expenditure amounting to approximately R1.7m had been incurred, although value for money was received in all cases.

(see document for further detail)

Presentation by the Inkomati-Usuthu Catchment Management Agency (IUCMA) on its 2021/22 Annual Report
Mr Sam Mthembu, chairperson of the board, IUCMA, reported that the Agency had procured services to the value of R20m from BBBEE providers. It had installed a borehole system for the benefit of six small-scale farmers in the Nkomazi Local Municipality. It employed 22 new graduates and awarded bursaries to 14 employees. The poorly maintained wastewater treatment works (WWTW) and low revenue collection rates were concerning. The vacancies on the board had been filled and a permanent CEO had been appointed. An unqualified audit opinion had been obtained. 

Mr Charles Mohalaba, CEO, IUCMA, shared an overview of water pollution hot-spots in the catchment area and assured the Committee that the Agency was working hard to address the problem. It had developed an early warning system for floods, droughts and pollution. 118 out of 147 approved positions were filled. He outlined the Agency’s performance in terms of its annual performance targets. The cost control target had been missed but other performance targets had been achieved.

Ms Sandra Mabunda, CFO, IUCMA, presented an overview of the Agency’s finances. It had ended the year with a R8.6m surplus, compared to the R5.3m loss in the previous year and received an unqualified audit opinion. Despite this, the external auditor had concluded that the going concern status of the Agency was a critical risk due to the reduction of grant funds from government and the low rate of recovery from water users, which was made worse by poor data quality. Irregular expenditure amounting to R16m had been incurred, of which National Treasury had approved the condonation of R15.4m. There had been R357 000 fruitless and wasteful expenditure.

(see document for further detail)

Discussion
Mr G Hendricks (Al Jamah-ah) recalled that he had done a lot of work related to water quality measurement when he was a councillor in the City of Cape Town (CoCT). He had brought the concerns of the academic community about water quality measurements to the Mayor. The measurements used by the City had been found to be out of date for various reasons including climate change. Were the water quality measurements being used valid? Could it be confirmed whether there was urine in South Africa’s tap water?

Mrs R Mohlala (EFF) asked how much progress the Department had made in revising the WRC Act, and suggested that perhaps the WRC’s budget should be increased. What progress has been made in increasing the number of catchment management agencies (CMAs)? This was a matter that the Committee had been raising for some time. She noted that both the BGCMA and the IUCMA had taken over debts from the Department, but there was a lack of accurate information about these debts. Could the Committee be given more information on this matter? How was the Department assisting BGCMA in recovering debts? Had BGCMA’s qualified audit resulted from errors by the Department’s water trading entity?

Ms G Tseke (ANC) said that the presentations showed good performance by the entities, the WRC and IUCMA in particular. It was important for BGCMA to implement a turnaround strategy to improve its audit outcome in the next financial year. She was confident that the leadership would be able to achieve this. How was DWS, the Department of Cooperative Governance and Traditional Affairs (COGTA), and National Treasury planning to assist the two CMAs as they took over historical debts?

The Chairperson appreciated the BGCMA’s honesty in reporting its audit findings but thought some context was missing. The DWS had largely incurred the debts, but supply chain management (SCM) prescripts required the Agency to put debt collection services to tender. This did not make sense. It should be the Department’s responsibility to recover these debts. He asked for clarity on the relationship between the Hoxane water treatment facility, the Nyaka dam and the supply of water in the Bushbuckridge area.

Responses

Water Research Commission

Dr Mjoli recalled that the WRC had requested that the Department prioritise revising the WRC Act in April 2022, as it had not been updated since 1971.

Dr Molwantwa added that there had been consultations with the DWS and legal services on the revision of the Act with the aim of getting the Department to understand the proposals. She said that the WRC's water quality monitoring systems and protocols were internationally recognised. It was not true that South African tap water contained urine. It was true, however, that many WWTWs were not meeting effluent discharge minimum requirements, which impacted water quality. The WRC was looking at the link between water quality and health. The occurrence of outbreaks of gastrointestinal illnesses, for example, could point to poor water quality. Rural areas remained vulnerable as people drank water of subpar standards and got water from rivers or underground.

Breede-Gouritz Catchment Management Agency

Mr Mnisi said that the Agency was committed to implementing its turnaround strategy soon. It had received unqualified audits for the previous 14 years and the qualified opinion in 2021/22 had come as a shock but also a valuable reminder. There had been an investigation and no fraud was found. The problem had been that records of water debts were unclear. The Agency was updating its records as it recovered payments and looking into effective debt collection mechanisms.

Mr van Staden explained how water licensees came to be registered on the Agency’s Water Authorisation Registration Management System (WARMS). The auditors had been unable to confirm the validity of these registrations. He confirmed that the Agency had inherited these problems from the Department, which had previously administered the water licenses. He said that the Agency had various creative means to track water use and predicted that there would be an improvement in the next financial year.

Inkomati-Usuthu Catchment Management Agency

The acting Executive Manager: Water Resources Management, IUCMA, explained that the Agency was predicting that a new dam supplying the Thulamahashe area would be required in the coming years because the pipeline from the Nyaka dam was reaching its capacity limit and groundwater supplies would be insufficient, even with interventions such as alien vegetation clearance. Solving the problem might exceed the expertise of the IUCMA.

Department of Water and Sanitation

Ms Thoko Sigwaza, Chief Director: Institutional Oversight, DWS, reported that two other CMAs, the Vaal-Orange CMA and the Pongola-Umzimkulu CMA, were at a stage where boards of directors were about to be appointed. Another two, the Umzimvubu-Tsitsikama CMA and the Limpopo CMA, would also be established in the future. She confirmed that the country had various norms and standards related to water quality that were complied with. The Department recognised the debt collection challenges. Its revenue section was working on solutions in line with the National Water Act, which promoted decentralisation of water revenue collection. The Department was encouraged by improvements it was seeing in water resource management at local level.

Closing remarks
The Chairperson reminded Members about the oversight visit to Limpopo which was scheduled for the end of October. He denied accusations that had been made to the effect that the Committee had badmouthed the name of Mr Khosi Ramovha, a Limpopo property developer, concerning delays in the Nandoni water project in Giyani.

Ms Mohlala asked if Members could be allowed to share their views about the Giyani matter.

The Chairperson refused, saying that he was making closing remarks.

Ms Mohlala was unsatisfied with this decision because it implied that all Members shared the view expressed by the Chairperson.

The meeting was adjourned.

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