DEPARTMENT OF WATER AFFAIRS & FORESTRY QUARTERLY REPORT ON ESTIMATES OF NATIONAL EXPENDITURE

Financial Results for the period ended 30 September 2004

Water Resource Management Expenditure Analysis Administration Administration spent 48% of its allocated budget and the expenditure is mainly IT, development and maintenance of financial systems, procurement of goods and services and remuneration of employees Water Resource Management Water Resource Management spent 45% of its allocated budget.These funds were mainly spent on the augmentation of the water resources in the water trading account and the construction of water resources projects

Expenditure Analysis Water Resource Management (Cont.) Projection Progress An integrated suite of policies and strategies to facilitate the reconciliation of the availability of, and requirements for, water for all purposes Comprehensive and integrated strategy for managing the country's water resources Water supplied and used for economic and social purposes 6 out of 19 policies have now been completed. The remainder will be completed before the end of this financial year. On target. NWRS is about to be printed by the Government printers At least 80 % compliance on agreements with customers about quantities supplied by March 2005

Expenditure Analysis: Water Services Water Services spent 40% of its allocated budget. The bulk of expenditure was spent to augment operations of water services Projection Progress Reduce backlog of people without access to basic water services. The target of 750 000 people has been set by the sector for the current financial year Water Supply (DWAF) 2004/5 Allocation – R130 million Year to date: R61 million has been spent and 492 thousand people served with water in 2004/05. The DWAF target has already been reached. R1 700million has been allocated to water services under MIG which is now under the management of DPLG

Expenditure Analysis: Water Services (Cont.) Projection Progress Sanitation Supply (DWAF) Allocation for 2004/5 – R30 million Year to date: R26 million has been spent and six thousand toilets have been built in 2004/05. Phase 1 of the sanitation implementation strategy completed and the 2nd phase is 50% complete. Capacity building programme to support municipalities and Implementing Agents is 50% complete More than R500 million is allocated to sanitation within the MIG funds this financial year. Sanitation Sector conditions within MIG were set and agreed to by other stakeholders.

Expenditure Analysis: Water Services (Cont.) Projection Progress Reduce backlog of people without access to basic water services Water Supply Program on target. Interim transfer process to MIG resulted in temporary delays. Sufficient committed projects to achieve target. Development of supporting programs on target Sanitation Supply Initial reports indicate progress on this is behind schedule-mainly due to the MIG transfer process. Note: DWAF target for 2004/2005 to be adjusted. Based on DORA should equal + -25 000 Health and Hygiene. Consolidation of National reports indicate that progress on this is potentially on schedule. Note: Sector target adjusted to 300 000 Health and Hygiene. Detailed support systems in process of development. Backlog studies and investment scenarios developed. Indications are that sector targets will not be met with existing funding.

Expenditure Analysis:Water Services (Cont.) Projection Progress Effective transfer of water services schemes to appropriate institutions 67 Schemes have been transferred to Municipalities with 419 staff . R847 million assets with R37 million transferred to 2 Water Service Authorities All transfer negotiations being conducted in terms of agreed policy. No significance deviations have been identified. Still requires endorsement of the staff transfer framework by all SALGA and receiving institutions. Communications strategy for transfers of water services schemes - Strategy in place. Communications to receiving institutions through provincial transfer structures. Two Transfer newsletters published third due for publication in October 2004.

Expenditure Analysis:Forestry Forestry spent 57% of its allocated budget. These funds were mainly spent on the plantation management, R38 million for the payment of Yorkor and R17 million was transferred to SAFCOL

Presentation to Portfolio Committee 10 November 2004 Financial Management Improvement Plan Department manages four accounts: Exchequer Water Trading Account Industrial Plantations Trading Account Equipment Trading Account National Forest Recreation and Access Trust - All these were qualified before 2003/04 financial year - For 2003/04 only the Exchequer Account was qualified

Presentation to Portfolio Committee 10 November 2004 Concerns raised by the Auditor-General Misallocation of transactions amongst the Vote and Trading entities Insufficient supporting documentation Payments for goods and services Recovery of loans from water boards, irrigation boards, municipalities and the Land and Agricultural Development Bank Internal audit Movable assets

Presentation to Portfolio Committee 10 November 2004 Mechanisms put in place to improve financial management Pre audit Improved record keeping Continuous Training Confirmation from Auditors about previous queries Compilation of asset register Improved financial management systems (SAP, BAS, etc.) Internal Audit capacity improved