Capital Expenditure Programme Rand Water Capital Expenditure Programme Anthony ELS Tariff consultation 14 October 2015

CONTENT Demand growth forecast 2. Augmentation & renewal plan to 2035 3. Capital budget

Demand Growth forecast Customer base snapshot 2014/2015

Demand Growth forecast Factors affecting growth Major customers play dominant role Domestic usage = 70% of total Natural population growth, inward migration, system losses Projected growth in demand Projected demands contractually based on customer forecasts Projected population growth of 3 million from 2010 to 2030 With an annual growth of 1.75%: Year 2020 2025 2030 2035 Average Demand (Mℓ/d) 4700 5100 5500 5900

Demand growth versus raw water

Response to Limitations WDM plans Municipal customers required to submit WDM plans when applying for new connections (offset WDM savings against new demand) WDM initiatives not intended to restrict development Typically, areas of saving and development nodes are geographically separate In future, customers will be measured on WDM performance Potential for deferral of some 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 Response First see effectiveness of WDM initiatives by location Complete current projects but defer future projects

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

Corporate Systems Booster Primary 200km

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

Augmenting for 2015 to 2030 cycle Projected growth in peak day demand = 1600 Mℓ/d over 15 years Growth split between four booster systems 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 Northern Jhb Tshwane Ekurhuleni Central Jhb Southern areas North west Jhb West Rand Rustenburg Eastern Tshwane Ekurhuleni Mpumalanga

Peak demand by pumping station Design capacity Projected peak day demands (Mℓ/d) (including WDM savings - indicative) 2020 (2025) 2025 (2030) 2030 (2035) 2035 (2040) Primary Systems Zuikerbosch 3800 4300 4800 5300 5800 Vereeniging 1400 1300 Booster systems Palmiet 1870 2000 2190 2380 2570 Mapleton 960 990 1080 1180 1270 Eikenhof 1470 1610 1750 1880 Zwartkopjes 800 760 780 840 880

CONTENT Demand growth forecast 2. Augmentation & renewal plan to 2035 3. Capital budget

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

Capital expenditure – top 15 projects Spend R(m) Augment Renew 2009 5-year 2015 AWS 1 Zuikerbosch scheme (System 5) 2812 516 Δ # 2 O6 Palmiet to Klipfontein augmentation 580 150 3 S4 Van Dyk Park to Rynfield pipeline 550 100 4 Mapleton Station upgrade 534 52 5 B1, B2 pipelines refurbishment 454 44 6 B16 Zuikerbosch to Slangfontein pipeline 444 7 Automated meter reading: quality 431 51 8 H43 Brakfontein to Lyttelton Pipeline 430 9 F46 Waterval to Weltevreeden pipeline 398 98 10 Automated meter reading: flow 400 46 11 R5: Vlakfontein to Mamelodi pipeline 360 12 200 Mℓ reservoir at Meredale 336 13 A6, A8 Vereeniging to Zwartkopjes pipelines 307 14 100 Mℓ reservoir at Bronberg 300 15 F49 Krugersdorp-Randfontein pipeline 65 Total 8,636 1,149 49.4% 41.6%

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

Infrastructure renewal Asset category Replacement value (Rbn) Design life (yrs) Annual renewal allocation (Rm) Pipelines 46 65+ 312 Civil 12 50 to 100 242 Mechanical 9 30+ 134 Process 7 15 to 20+ 181 Buildings 4 80+ 98 Electrical 1 20 to 30+ 55 Automation 5 to 10+ 127 Total 80   1,148

Infrastructure augmentation Providing for 2015 to 2030 augmentation cycle 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

Augmenting for 2015 to 2030 cycle Projected growth in peak day demand = 1600 Mℓ/d over 15 years Growth split between four booster systems 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 Northern Jhb Tshwane Ekurhuleni Central Jhb Southern areas North west Jhb West Rand Rustenburg Eastern Tshwane Ekurhuleni Mpumalanga

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 B19 raw water pipeline R30 million budget for 2015/16 Station 5 at Zuikerbosch 1200 Mℓ/d capacity in two phases R516 million budget for 2015/16

Augmenting for 2015 to 2030 cycle Projected growth in peak day demand = 1600 Mℓ/d over 15 years Growth split between four booster systems 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 Northern Jhb Tshwane Ekurhuleni Central Jhb Southern areas North west Jhb West Rand Rustenburg Eastern Tshwane Ekurhuleni Mpumalanga

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 Diepsloot H39 Klipfontein – Brakfontein pipeline R13 miilion budget for 2015/16 B17 Zuikerbosch - Palmiet pipeline R213 million budget for 2015/16 O6 Palmiet - Klipfontein pipeline R150 miilion budget for 2015/16 Engine Room 3b at Palmiet station 600 Mℓ/d operational capacity R43 million budget for 2015/16 Zuikerbosch Purification & Pumping Station

Palmiet Augmentation Palmiet System pipelines for augmentation Description New pipe name Existing lines augmented Diameter (mm) Length (km) Required (year) 1 Zuikerbosch – Palmiet pipeline B17 B4, B6, B10 2100 46 2017 2 Klipfontein – Brakfontein pipeline (partial) H39 H12, H21, H27 1700 14.7 3 Palmiet – Klipfontein pipeline (phase 1) O6 O2 18 4 Palmiet – Klipfontein pipeline (phase 2) O2, part O5 1800 6 2025 5 Kwaggaspoort – Gomsand pipeline H42 H22, H28 1000 9.7 2015 Northridge – Airfield pipeline G37/H47 H3 900 5.8 7 Brakfontein – Lyttelton pipeline H43 H12 portion 1500 26 2022 8 Lyttelton – Kwaggaspoort p/line H14 portion 1200 9 Brakfontein – Kwaggaspoort pipeline - H25, H30 21 2027 10 Kwaggaspoort – Hartebeesthoek pipeline H22, H28, H42 15 2032 11 Hartebeesthoek – Rosslyn pipeline H18, H29 ptn 1400 2030 12 Rosslyn – Soshanguwe pipeline H16, H29 ptn 13 Kensington – Yeoville pipeline O7 New route

Palmiet Renewal Pipeline for renewal Age (yrs) Length (km) Diameter (mm) Anticipated renewal plan (subject to final assessment) G17 South Hills – Germiston 68 10 940 Renovate if steel quality good If replaced increase diameter to 1200mm G18 South Hills - Wychwood 60 9 1140 If replaced increase diameter to 1400mm G19 Meyer’s Hill – South Hills 59 2 1240 G25 Klipriviersberg – Butcher’s Hill 48 5 1450 Refurbish in phases H3 Signal Hill - Northridge 70 50 710 Replace and increase diameter to between 1000mm and 1200 mm diameter H4 Wychwood – Hurlevale 7 If replaced increase diameter to 1000mm J4 Main Reef Road – Knights Road 1,5 400 Replace and increase diameter to 600mm J5 Main Reef Road – Signal Hill 76 13 610 Replace and increase diameter to between 700mm and 1000 mm diameter J6 Keswick Road – Churchill Avenue 65 2.2 760 Replace and increase diameter to 1000mm O2 Palmiet - Klipfontein 42 33 1800

10 year renewal plan for Palmiet ER 1 Objective Maintain 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 ……) Asset Portfolio Summary of assets Results of latest assessment Renewal proposals Estimated 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 plinths Good condition Dependant on pump set 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 applicable N/A Automation Control desk PLC panels Automation not to current RW standards Upgrade to current standards, existing project ……. Objective Maintain design capacity with slight increase from 455 Ml/d 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 ……)

Augmenting for 2015 to 2030 cycle Projected growth in peak day demand = 1600 Mℓ/d over 15 years Growth split between four booster systems 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 Northern Jhb Tshwane Ekurhuleni Central Jhb Southern areas North west Jhb West Rand Rustenburg Eastern Tshwane Ekurhuleni Mpumalanga

Mapleton System – 300 Mℓ/d growth from 2015 to 2030: R3 bn Additional Engine Room – 300 Mℓ/d capacity Total 90 km of pipeline between 1000 mm and 2100 mm diameter R5 Vlakfontein – Mamelodi pipeline R10 million budget for 2015/16 100Mℓ Bronberg reservoir R10 million budget for 2015/16 200 Mℓ Vlakfontein reservoir S4 van Dyk’s Park – Rynfield pipeline R100 million budget for 2015/16 100 Mℓ Brakpan reservoir M1 pipeline replacement R8 million budget for 2015/16 Central Johannesburg Engine room at Mapleton station 300 Mℓ/d additional capacity R52 million budget for 2015/16 B16 Zuikerbosch – Slangfontein pipeline

Soweto priority for WDM 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 Lanseria Waterfal to Weltevreden pipeline R98 million budget for 2015/16 200 Mℓ Meredale reservoir F49 Krugersdorp – Randfontein pipe R65 million budget for 2015/16 Soweto priority for WDM 40 Mℓ Daleside reservoir A6, A8 Vereeniging – Zwartkopjes pipeline replacement B1, B2 pipeline refurbishment R44 million budget for 2015/16 Arcon Park – Langerand pipeline

CONTENT Demand growth forecast 2. Augmentation & renewal plan to 2035 3. Capital budget

Capital budget for 2015/16 Annual budget 2015/16 Augmentation projects – R1.71 billion Renewal projects – R1.28 billion Current replacement value – R80 billion Annual budget 2015/16 Forecast average demand growth of 1.75% per annum to 2030 Equates to about R1.4 bn per annum (Current planned is ~R1.4 bn/a) Theoretical augmentation spend Should spend 1% - 2% pa on renewal Equates to R0.8 – R1.6 billion per annum (Current planned is ~R1.3bn/a) Theoretical renewal spend

5-year Capital Expenditure (2015/2016 to 2019/20) forecast of R17 5-year Capital Expenditure (2015/2016 to 2019/20) forecast of R17.488 bn for continuing business System Augmentation (Rm) Renewal (Rm) Total Eikenhof 1,084 1,127 2,211 Mapleton 3,043 1,388 4,431 Palmiet 1,662 1,157 2,819 Primary systems 3,529 2,255 5,784 Zwartkopjes 562 1,680 2,242 9,880 (56%) 7,608 (44% *) 17,488 (100%) * 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

5-year Capital Expenditure (2015/2016 to 2019/20) year on year changes System Year Augmentation (Rm) Renewal (Rm) Total Eikenhof 2015 492 694 1186 2016 1,084 1,127 2,211 Mapleton 956 734 1690 3,043 1,388 4,431 Palmiet 2,106 929 3,035 1,662 1,157 2,819 Primary systems 3,641 2,096 5,737 3,529 2,255 5,784 Zwartkopjes 453 954 1,407 562 1,680 2,242 7,647 (59%) 5,406 (41%) 13,053 9,880 (56%) 7,608 (44% *) 17,488 (100%)

5 year period beginning 2014/15 5 year period beginning 2015/2016 Capital expenditure per main plant category 5 year period beginning 2014/15 5 year period beginning 2015/2016

Capital expenditure forecast

20 Year View of Projects BG4 2015 2035 BG4 Priority score Timing of red highlighted projects is subject to WDM success Palmiet

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