1. Briefing on Current Expenditure and their Performance Trends
Presentation to the Standing Committee on Appropriation: Water & Environmental Affairs
Briefing on Current Expenditure and their Performance Trends
Presentation by Ms. Nthabiseng Fundakubi Acting Chief Financial Officer 22 March 2011 1

2. Expenditure outcome for the third quarter ended 31 December 2010
Programme
Adjusted Budget
2010/11
R’000
Actual Exp
% spent
Available budget
Administration 58
Water Management 54
National Water Resource Infrastructure Programme 77
Regional Management 57
Water Sector Regulations
82 470 34
Total 62 2

3. Expenditure outcome for the third quarter ended 31 December 2010
Economic classification
Programme
Original budget
2010/11
R’000
Actual Exp
% spent
Available budget
Compensation of Employees 63
Goods and Services 52
Interest and Rent on land -
705
(705)
Financial Transaction In Assets and Liabilities 92
(92)
Transfers and Subsidies 89
Payments for Capital Assets
37 544 3
Total 62
Reason for under spending
Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R70 million will not be spend in this current financial year
Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year.
Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months.
A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. 3

4. Expenditure outcome water services operating subsidy and regional bulk infrastructure as at 31 December 2010
EARMARKED PROJECTS
Adjusted Budget
2010/11
R’000
Actual Exp
% spent
Available budget
Regional Bulk 46
Water Service Operating Subsidy 86 4

5. Reasons for under spending as at 31 December 2010
Unfilled vacant posts as well as challenges of the unavailability of suitable candidates, especially engineers who must meet OSD criteria
Outstanding invoices in respect of Diner’s Club, Phakisa World and Auto Page for goods and services already rendered as a result of disputes
Incorrect submission of payment certificate which prolong the payment period in respect of Accelerated Community Infrastructure Project.
Delays by municipalities in appointing implementing agents in respect of the refurbishment of waste water treatments plants
Delays by municipalities in submitting incorrect payment certificate as result, documents had to be returned to various municipalities
Protracted delays in finalizing transfer of staff to various municipalities 5

6. Reasons for under spending as at 31 December 2010
The Climate Survey Programme which was put on hold . The approval is now granted and part of expenditure is expected to be disbursed in the last quarter of the financial year.
Delays in approval of the Training and Development plans
Late redistribution of the Masibambane budget allocation.
Delays in appointing mechanical and electrical contractors by municipalities. 6

7. Reasons for slow expenditure and possible under expenditure
Long procurement and design process of projects by municipalities
Contract administration problems in municipalities
Non performing contractors
Slow processing of payments by DWA
Limited institutional capacity to project manage
Delays caused by suppliers
Delays in EIA and abstraction permits
WSA reluctant to continue / commit due to partial funding or tenders are much high than estimates 7 7

8. Reasons for under expenditure Projects encountering challenges
Limpopo
Giyani Bulk Water Drought Relief (R 54 million)
Region and Mopani District Municipality differ in the technical options of the project. Slow process to finalise the implementation of the project and Management intervention was needed. Budget reallocated to other Olifantspoort WTW and Mogolakwena BWS
Mametja Sekororo Bulk Water Supply (R 7 million)
The design of the project has been completed but no further action was taken by the Mopani District Municipality for the implementation and Management action was needed. R 7 million has been reallocated.
Moutse Bulk Water Supply (R 20 million)
During the second half of the financial year the Minister requested that R20 million be allocated to the Moutse Project. The approval process took a long time and it is anticipated that only R 13 million will be spent 8

9. Projects encountering challenges
Mpumalanga
Acornhoek Bulk Water Supply (R 37 million)
Municipality did not have the capacity to implement the project and requested the Department to implement the project which took a long time to be approved. There is also a legal action between the department and the previous suppliers. It is expected that the contractor will be on site middle February R 12 million of the budget has been reallocated and later during the year the remaining R10 million has been reallocated to the Bloemendal Project
Bloemendal Bulk Water Supply (R 10 million)
On 30 October 2010 the various stakeholders signed the agreement for the implementation of the project. Due to escalation cost the parties had to agree to the co-funding portion. All agreements are now in place and R 10 million will now be spent 9

10. Projects encountering challenges
North West
Madibeng Water Treatment Works (R 20 million)
The Madibeng Local Municipality is under administration and requested the department to implement the project. The designs developed by the consulting engineer was of poor quality. Magalies Water has been appointed to implement the emergency work and the development of the designs. R 8 million has been reallocated
Free State
Sterkfontein Bulk Water Supply (R million)
Although the project was progressing well the past few years, during this year some problems were encountered with the contractors but this problem has now been resolved. The tender process for the supply of steel pipes took longer than expected and R 8 million has been reallocated to the Eastern Cape 10

11. Expenditure outcomes as at 18 March 2011
Programme
Adjusted Budget
2010/11
R’000
Actual Exp
% spent
Available budget
Administration 87
Water Management 71
National Water Resource Infrastructure Programme
100
2 379
Regional Management 88
Water Sector Regulations 49
Total 89 11

12. Expenditure outcome as at 18 March 2011
Economic classification
Programme
Original budget
2010/11
R’000
Actual Exp
% spent
Available budget
Compensation of Employees 83
Goods and Services 70
Interest and Rent on land -
2 191
(2 191)
Financial Transaction In Assets and Liabilities 91
(91)
Transfers and Subsidies
103
(92 353)
Payments for Capital Assets 99
12 959
Total 89
Reason for under spending
Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R70 million will not be spend in this current financial year
Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year.
Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months.
A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. 12

13. Expenditure outcome water services operating subsidy and regional bulk infrastructure as at 18 March 2011
EARMARKED PROJECTS
Adjusted Budget
2010/11
R’000
Actual Exp
% spent
Available budget
Regional Bulk 90
89 371
Water Service Operating Subsidy
105
(45 640) 13

14. Expenditure outcome as at 18 March 2011
ADMINISTRATION
ECONOMIC CLASSIFICATION
Original budget
2010/11
R’000
Actual Exp
% spent
Available budget
Compensation of Employees 75
80 071
Goods and Services 98
8 676
Interest and Rent on land - 47
(47)
Financial Transaction In Assets and Liabilities 91
(91)
Transfers and Subsidies
11 902
5 085 43
6 817
Payments for Capital Assets
39 994
18 974
21 020
Total 87
Reason for under spending
Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R70 million will not be spend in this current financial year
Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year.
Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months.
A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. 14

15. Expenditure outcome as at 18 March 2011
WATER MANAGEMENT
ECONOMIC CLASSIFICATION
Original budget
2010/11
R’000
Actual Exp
% spent
Available budget
Compensation of Employees 95
6 611
Goods and Services 57
Interest and Rent on land - 19
(19)
Financial Transaction In Assets and Liabilities
Transfers and Subsidies
750
1 089
(45)
(339)
Payments for Capital Assets
9 119
8 058 88
1 061
Total 71
Reason for under spending
Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R70 million will not be spend in this current financial year
Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year.
Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months.
A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. 15

16. Expenditure outcome as at 18 March 2011
NATIONAL WATER RESOURCE INFRASTRUCTURE
ECONOMIC CLASSIFICATION
Original budget
2010/11
R’000
Actual Exp
% spent
Available budget
Compensation of Employees
Goods and Services
Interest and Rent on land
Financial Transaction In Assets and Liabilities
Transfers and Subsidies
100
2 381
Payments for Capital Assets
Total
Reason for under spending
Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R70 million will not be spend in this current financial year
Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year.
Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months.
A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. 16

17. Expenditure outcome as at 18 March 2011
REGIONAL MANAGEMENT
ECONOMIC CLASSIFICATION
Original budget
2010/11
R’000
Actual Exp
% spent
Available budget
Compensation of Employees 85
93 991
Goods and Services 66
Interest and Rent on land -
2 125
(2 125)
Financial Transaction In Assets and Liabilities
Transfers and Subsidies
113
( )
Payments for Capital Assets
101
(10 574)
Total 88
Reason for under spending
Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R70 million will not be spend in this current financial year
Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year.
Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months.
A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. 17

18. Expenditure outcome as at 18 March 2011
WATER SECTOR REGULATIONS
ECONOMIC CLASSIFICATION
Original budget
2010/11
R’000
Actual Exp
% spent
Available budget
Compensation of Employees
61 528
49 559 81
11 969
Goods and Services
54 824 44
69 763
Interest and Rent on land -
Financial Transaction In Assets and Liabilities
Transfers and Subsidies
51 684
12 280 24
39 404
Payments for Capital Assets
2 283
831 36
Total 49
Reason for under spending
Unfilled vacant posts throughout the department contributed to under – expenditure, it is anticipated approximately R70 million will not be spend in this current financial year
Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at the construction phase, the expenditure is anticipated to increase in the following months of the last quarter of this financial year.
Direct transfers to municipalities in respect of Water Services Operating Subsidy could not be transferred to municipalities as result of non-compliance with DORA, these funds are anticipated to be transferred in following months.
A close of business in construction industries during December 2009 holidays had an impact towards the infrastructure expenditure trends as it has been halted during that period. The infrastructure branch indicated that the entire infrastructure budget will be spend before the end of the year. 18

19. Reasons for under spending as at 18 March 2011
Unfilled vacant posts still a challenge however the department embarked on the recruitment drive project
Outstanding invoices from the big accounts; Diner’s Club, Phakisa World, Arivia, AGSA, travel agencies. 19

20. Reasons for under spending as at 18 March 2011
The validation and verification process currently being conducted by a service provider is on a slow pace and is affecting the Enforcement Unit in terms of spending because they are currently waiting for the process to be finalised after which they can take further steps against unlawful water users.
Delays in approving of the service providers 20

21. THANK YOU 21