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Rand Water Capital Expenditure Programme John Critchley Tariff consultation 22 October 2014.

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Presentation on theme: "Rand Water Capital Expenditure Programme John Critchley Tariff consultation 22 October 2014."— Presentation transcript:

1 Rand Water Capital Expenditure Programme John Critchley Tariff consultation 22 October 2014

2 CONTENT 1.Demand growth forecast 2. Augmentation & renewal plan to Capital budget 2

3 Background Historical growth – Several decades of growth in the 3 to 6% per annum – Resulted in increase from 1000 Ml/d in 1965 to 4000 Ml/d now – Growth started to decline from about 1990 – Growth in decade to 2011 averaged 2.5% Projected growth – Continued decline in annual growth rates – Decline in both ‘natural’ population growth and inward migration – Expect drop from current 2% pa to 1% pa by about 2035 – Projecting further, could peak by about Customer base

4 Demand Growth Factors affecting growth – Domestic usage = 70% of total – Natural population growth, inward migration, system losses – Major customers play dominant role Projected growth in demand – Projected demands contractually based on customer forecasts – Projected population growth of 3 million from 2010 to 2030 – Based on AADD of 4200 Ml/d for 2014 and 1.75% annual growth: 4 Projection to 2035 Year Average Demand (Ml/d)

5 5 Demand growth versus raw water

6 Demand growth scenarios and risks Potential for deferred capital expenditure, but: – Major projects have long lead times – Some existing infrastructure approaching full utilisation at peak periods – Require ‘headroom’ to take major infrastructure out of service for renewal Location, location, location! – WDM initiatives not intended to prevent development – Mismatch between areas of saving and development nodes Response – First see effectiveness of WDM initiatives by location – Complete current projects but defer future projects 6 Response to Limitations

7 Eikenhof Supply System Zwartkopjes Supply System Palmiet Supply System Mapleton Supply System Vereeniging Purification System Zuikerbosch Purification System Raw Water Supply System Rand Water Corporate Systems Note: Primary = Raw Water + Vereeniging + Zuikerbosch Booster Systems Primary Systems

8 Corporate Systems Primary Booster

9 9 Eikenhof system Zwartkopjes system Primary systems Mapleton system Palmiet system City of Tshwane Vaal Dam

10 10 Primary systems 1600 Ml/d growth Palmiet system 600 Ml/d growth Mapleton system 300 Ml/d growth Eikenhof system 400 Ml/d growth Zwartkopjes system 300 Ml/d growth Projected growth in peak day demand = 1600 Ml/d over 15 yearsGrowth split between four booster systems North west Jhb West Rand Rustenburg Central Jhb Southern areas Northern Jhb Tshwane Ekurhuleni Eastern Tshwane Ekurhuleni Mpumalanga Augmenting for 2015 to 2030 cycle

11 Peak demand by pumping station 11 StationDesign capacity Projected peak day demands (Ml/d) (including WDM savings - indicative) 2020 (2025) 2025 (2030) 2030 (2035) 2035 (2040) Primary Systems Zuikerbosch Vereeniging Booster systems Palmiet Mapleton Eikenhof Zwartkopjes

12 CONTENT 1.Demand growth forecast 2. Augmentation & renewal plan to Capital budget 12

13 Augmentation & Renewal Planning Augmentation – Increase capacity to meet future demands (quantity & quality) – 20 year view of projects based on 35+ year view of demands – Projects connected to customers per system Renewal – Extend life of existing assets (replace, refurbish, upgrade) Integrated – Many projects combine augmentation and renewal (eg pipelines) – Integrate at plant, site and system level 13

14 Capital expenditure – top 15 projects 14 ProjectSpend R(m)AugmentRenew year2015AWS 1Zuikerbosch scheme (System 5) Δ# 2O6 Palmiet - Klipfontein augmentation Δ# 3Co-generation Δ 4B1, B2 pipelines refurbishment Δ 5Zuikerbosch filter house 1 upgrade 250 0Δ 6B17 Zuikerbosch - Palmiet pipeline 223 Δ# 7H39 Klipfontein - Brakfontein pipeline Δ# 8Zuikerbosch - Chlorine plant 4 replacement 203 3Δ 9Vereeniging - Zwartkopjes system 201 1Δ# 10B16 Zuikerbosch - Slangfontein pipeline 200 0Δ# 11Kensington - Yeoville system 190 0Δ 12Panfontein upgrade 185 7Δ Ml reservoir storage (Soweto) 171 7Δ 14Palmiet Engine Room 1 upgrade 170 0Δ 15Replace M1 pipeline Δ Total6, %34%

15 Buildings and property Civil structures Pipelines Mechanical Electrical Process Automation Asset Portfolios

16 Infrastructure renewal 16 Asset categoryReplacement value (Rbn) Design life (yrs)Annual renewal allocation (Rm) Pipelines Civil1250 to Mechanical Process715 to Buildings Electrical120 to Automation15 to Total80 970

17 Infrastructure augmentation 17 Augment primary capacity, with associated major pipelines and booster pumping capacity Package of linked major projects for backbone infrastructure 2009 Additional Water Supply (AWS) Scheme Anchor project for the 2009 AWS Scheme Purifies and pumps into the network additional 1200 Ml/d after completion of phase 2 Station 5 at Zuikerbosch Providing for 2015 to 2030 augmentation cycle

18 18 Primary system – 1600 Ml/d growth Palmiet system – 600 Ml/d growth Mapleton system – 300 Ml/d growth Eikenhof system – 400 Ml/d growth Zwartkopjes system – 300 Ml/d growth Projected growth in peak day demand = 1600 Ml/d over 15 yearsGrowth split between four booster systems North west Jhb West Rand Rustenburg Central Jhb Southern areas Northern Jhb Tshwane Ekurhuleni Eastern Tshwane Ekurhuleni Mpumalanga Augmenting for 2015 to 2030 cycle

19 19 BG3 raw water pipeline 9 km x 3500 mm Complete Station 5 at Zuikerbosch 1200 Ml/d capacity in two phases R58 million budget for 2014/15 B19 raw water pipeline R65 million budget for 2014/15 Primary Systems – 1600 Ml/d growth from 2015 to 2030 Additional Purification Plant – 1200 Ml/d capacity Additional raw water pipelines and purification plant upgrades Purification plant upgrades Vereeniging and Zuikerbosch

20 20 Primary system – 1600 Ml/d growth Palmiet system – 600 Ml/d growth Mapleton system – 300 Ml/d growth Eikenhof system – 400 Ml/d growth Zwartkopjes system – 300 Ml/d growth Projected growth in peak day demand = 1600 Ml/d over 15 yearsGrowth split between four booster systems North west Jhb West Rand Rustenburg Central Jhb Southern areas Northern Jhb Tshwane Ekurhuleni Eastern Tshwane Ekurhuleni Mpumalanga Augmenting for 2015 to 2030 cycle

21 21 B17 Zuikerbosch - Palmiet pipeline R223 million budget for 2014/15 O6 Palmiet - Klipfontein pipeline R350 miilion budget for 2014/15 Engine Room 3b at Palmiet station 600 Ml/d operational capacity R99 million budget for 2013/14 Palmiet System – 600 Ml/d growth from 2015 to 2030 Additional Engine Room – 600 Ml/d capacity Total 150 km of pipeline between 600 mm and 2100 mm diameter Zuikerbosch Purification & Pumping Station Diepsloot H39 Klipfontein – Brakfontein pipeline R85 miilion budget for 2014/15

22 Palmiet Augmentation 22 Pipelines for augmentation ItemDescriptionExisting lines augmented Diameter (mm) Length (km) Required (year) 1.1Zuikerbosch to Palmiet pipelineB4, B6, B Slangfontein cross connectionB Klipfontein to Brakfontein pipeline (partial) H12, H21, H Palmiet – Klipfontein pipeline (phase 1)O ,5Palmiet – Klipfontein pipeline (phase 2)O2, part O Kwaggaspoort – Gomsand pipelineH22, H Shamrock Road – Northridge pipelineG Northridge – Airfield pipelineH Brakfontein – Lyttelton pipelineH12 portion Lyttelton – Kwaggaspoort p/lineH14 portion Brakfontein – Kwaggaspoort pipelineH25, H Kwaggaspoort – Hartebeesthoek pipelineH22, H28, H Hartebeesthoek – Rosslyn pipelineH18, H29 ptn Rosslyn – Soshanguwe pipelineH16, H29 ptn Kensington – Yeoville pipelineNew route

23 Palmiet Augmentation 23 Pipeline for renewalAge (yrs) Length (km) Diameter (mm) Anticipated renewal plan (subject to final assessment) G17 South Hills – Germiston Renovate if steel quality good If replaced increase diameter to 1200mm G18 South Hills - Wychwood Renovate if steel quality good If replaced increase diameter to 1400mm G19 Meyer’s Hill – South Hills Renovate if steel quality good If replaced increase diameter to 1400mm G25 Klipriviersberg – Butcher’s Hill Refurbish in phases H3 Signal Hill - Northridge Replace and increase diameter to between 1000mm and 1200 mm diameter H4 Wychwood – Hurlevale597940Renovate if steel quality good If replaced increase diameter to 1000mm J4 Main Reef Road – Knights Road591,5400Replace and increase diameter to 600mm J5 Main Reef Road – Signal Hill Replace and increase diameter to between 700 mm and 1000 mm diameter J6 Keswick Road – Churchill Avenue652,2760Replace and increase diameter to 1000mm J7 Keswick Road duplication600,9730Abandon O2 Palmiet - Klipfontein Refurbish in phases

24 10 year renewal plan for Palmiet ER 1 24 ObjectiveMaintain design capacity with slight increase from 455 Ml/d to 500 Ml/d, and standby capacity of 200 Ml/d Summary planMajor replacement programme over next 5 years, excluding building Last assessmentsIntegrated PPCA – October 2013 (see document ……) Asset PortfolioSummary of assetsResults of latest assessmentRenewal proposalsEstimated cost Buildings Brick building with RC sub-structure, pump room, control room, loading bay Building in fair condition and expected to exceed design life Maintenance only Civil Structures Pump plinthsGood conditionDependant on pumpset replacement Pipelines 700 mm diameter steel suction lines 600 mm diameter steel delivery lines Some corrosion noted Refurbish during shutdowns for pump replacement Electrical Motors Switchgear Incomers Motors in fair condition Switchgear in fair condition Replace motors and switchgear with pumps Mechanical 7 x 91 Ml/d capacity two stage pumps, 204 m duty head Suction & delivery isolating valves Overhead crane – 10T capacity Pumps beyond useful life, overhaul not practical Valves in fair condition Replace pumps in 2017 Refurbish valves with pipelines Process Not applicableN/A Automation Control desk PLC panels Automation not to current RW standards Upgrade to current standards, existing project ……. ObjectiveMaintain design capacity (455 to 500 Ml/d), and standby capacity of 200 Ml/d Summary plan Major replacement programme over next 5 years, excluding building Last assessments Integrated PPCA – October 2013 (see document ……)

25 25 Primary system – 1600 Ml/d growth Palmiet system – 600 Ml/d growth Mapleton system – 300 Ml/d growth Eikenhof system – 400 Ml/d growth Zwartkopjes system – 300 Ml/d growth Projected growth in peak day demand = 1600 Ml/d over 15 yearsGrowth split between four booster systems North west Jhb West Rand Rustenburg Central Jhb Southern areas Northern Jhb Tshwane Ekurhuleni Eastern Tshwane Ekurhuleni Mpumalanga Augmenting for 2015 to 2030 cycle

26 26 R5 Vlakfontein – Mamelodi pipeline R22 million budget for 2014/15 L17 Van Dyk’s Park – Brakpan Res pipeline Engine room at Mapleton station 300 Ml/d additional capacity S4 van Dyk’s Park – Rynfield pipeline Mapleton System – 300 Ml/d growth from 2015 to 2030 Additional Engine Room – 300 Ml/d capacity Total 90 km of pipeline between 1000 mm and 2100 mm diameter Central Johannesburg B16 Zuikerbosch – Slangfontein pipeline M1 pipeline replacement

27 27 Soweto priority for WDM Lanseria Southern and Central areas – 300 Ml/d growth from 2015 to 2030 Western and North Western areas – 400 Ml/d growth from 2015 to 2030 H40 Weltevreden – Cosmo City pipeline C6 Zwartkopjes – East Rand pipeline replacement A6 Vereeniging – Zwartkopjes pipeline replacement B1, B2 pipeline refurbishment

28 CONTENT 1.Demand growth forecast 2. Augmentation & renewal plan to Capital budget 28

29 Capital budget for 2014/15 29 Augmentation projects – R1,6 billion Renewal projects – R1 billion Current replacement value – R80 billion Annual budget 2014/15 Forecast average demand growth of 1.75% per annum to 2030 Equates to about R1,4 bn per annum Theoretical augmentation spend Should spend 1% - 2% pa on renewal Equates to R0,8 – R1,6 billion per annum Theoretical renewal spend

30 5-year Capital Expenditure (2015/19) forecast of R13 billion for continuing business System Augmentation (Rm) Renewal (Rm) Total (Rm) Eikenhof Mapleton Palmiet2, ,035 Primary systems3,641 2,096 5,737 Zwartkopjes ,407 Total7,647 (59%)5,406 (41%)13,053 (100%) 30 Note: the share of spend going to renewal of existing infrastructure has increased from 30% to 40% over the recent past. It is intended to increase this share further to ensure continued functionality of ageing infrastructure

31 Continuing business Page 31 Capital expenditure split between main plant categories Note: reservoir spend will increase towards the end of the 5 year business planning horison

32 Capital expenditure forecast

33 20 Year View of Projects (as per IAMP) Palmiet Timing subject to WDM success Priority score BG4

34 THANK YOU 34


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