1. ANSWERS TO PORTFOLIO COMMITTEE’S QUESTIONS
20 March 2007
Silas Mbedzi
Chief Director: Institutional Oversight

2. COMPLIANCE WITH PFMA/MFMA
All WBs complied with most of PFMA & MFMA requirements
Some WBs did not comply with quarterly reporting on Shareholders Compact - new requirement of the PFMA
Quality of reporting is problematic
Some WBs don’t comply with sec 41 of MFMA
National Treasury ensures compliance with LG MFMA
CSI/ADVERTISING/FUNCTIONS
Purpose: To market themselves

3. FIVE YEAR BUSINESS PLANS
11 WBs submitted BPs to Minister
Albany Coast-, Ikangala-, Namakwa- & Pelladrift Water did not submit BPs, being small WBs - delays due to the non-completion of Sec 78 processes
In future all WBs must submit as required in PFMA
DWAF’s analysis of BPs is done annually & can be made available to Portfolio Committee
BORROWING LIMITS
Limits are determined by National Treasury
Umgeni- & Mhlathuze Water requested in the past to borrow more than the set limit – process to be followed through Minister of DWAF & Guaranteed Certification Committee of NT to approve request

4. STIPENDS OF BOARD MEMBERS
Stipends are determined by the Minister
All water boards are complying
Policy on stipends ensures consistency & equal treatment of Board Members
DEMOGRAPHICS OF WATER BOARDS
Water Boards are well represented i.t.o. race & gender – persons with disabilities need to be accommodated more

5. CAPACITY
Water Boards have adequate capacity
Some WB’s assist Municipalities with their operations
EXTERNAL DEBT
National Treasury applies borrowing limits - in line with the PFMA requirements
All water boards are in compliance
STRATEGIC PLANS ALIGNED
WB’s Strategic Plans are all aligned with their Annual Reports and that of DWAF (Some work still need to be done on specific targets)
Quarterly reports are also an alignment with Strategic Plans

6. DO REGIONAL OFFICES COMPILE REPORTS
Not yet, but Regional Offices will be the direct contact with WBs on day-to-day operational issues
MUNICIPAL CONTRACTS WITH WBs
Municipalities sign short term contracts
Municipalities have power to choose with whom they want to do business
DWAF & DPLG need to address the signing of contracts
Sec 78 process complicates process of signing of agreements

7. PRESSURE TO COLLECT DEBT
Most municipalities do not ring-fence monies received from water charges
Municipalities do not regard payment of accounts to WBs as a priority service
Bulk of WBs operate in rural areas where affordability is very limited or non-existent
In terms of Treasury Regulations WBs must exhaust all avenues to recover debt
Most WBs have a policy on writing off of unrecoverable debt

8. AMATOLA WATER TRANSFER AGREEMENT
Resolution has been taken to finalize the institutional reform issues
Issues are being addressed by Directorate: Water Services Sector Development
LEPELLE NORTHERN WATER’S FINANCIAL STATE
Several meetings were held to resolve matter on BaPhalaborwa debt
Efforts are continuing to reach an amicable solution as indicated by Lepelle

9. MAGALIES WATER: ACCOUNTING APPROACH
Meeting was held between DWAF & Magalies on 28 March 2006 to discuss matter
MW appointed new external auditors
They recommended significant changes in the format, content & presentation of FS to be fully compliant with GAAP & IFRS
These changes resulted in 2 key qualifications for FS
R4 million subsidy – for the operation of rural water schemes, which will end in 2008/2009

10. SENCE IN MAINTAINING A WATER BOARD FOR ONE MUNICIPALITY
DWAF embarked on sec 78 process for Ikangala Water
Albany Coast Water
Botshelo Water & Central District Municipality
Some pilot municipalities
Studies will provide DWAF with indicators of the options to be followed

11. DEBTOR DAYS – MORE THAN 90 DAYS WB’s have to follow up with WSAs
Minister intervened between:
Lepelle N & Baphalaborwa
Mhlathuze & Mkhanyakude
Umgeni & Umsunduzi
Botshelo & Central District Municipality
Bushbuckridge & Bohlabela/BBR Municipality and lately Mbombela

12. SUBSIDIES: DWAF ASSISTANCE TO REDUCE DEPENDENCY
Requested WBs to reduce on operational expenses & improve systems
Section 78 process is under way with Central District Municipalities
Clear decline in subsidies
Will ultimately be phased out (approximately 3 years)

13. INSTITUTIONAL REFORM: IMPACT ON WB’s
Implementation of plans are on tract
Plans dependent on:
Municipalities signing contracts
Section 78 process concluded in favour of WBs
Serious negotiation required
Relations between WBs & Municipalities must be developed (DWAF has undertaken to play a direct role in strengthening relations)

14. INSTITUTIONAL REFORM;SECTION 78 PROCESSES IN TERMS OF THE MUNICIPAL SYSTEMS ACT AND THE TRANSFER OF ASSETS FROM DWAF TO WSA AND THEIR IMPACT ON WB’S
A full process exposure and the inter-relationship between the 3 will be done during closing which will entail:
Outlining the process being followed
Where the process is
The envisaged outcome of the process
The role of WSA in the unfolding process
Intervention by DWAF

15. CONCLUSION
Processes are subject to compliance with legislative requirements and are therefore time-consuming
Correct procedures & full compliance with policies & agreements necessitates extended negotiations & interaction with various interested parties
DWAF is committed to conclude all processes effectively & efficiently within the shortest time limit possible within the parameters of relevant legislation

16. THE END
THANK YOU