1. MPUMALANGA PROVINCIAL TREASURY
PRESENTATION TO THE SELECT COMMITTEE ON FINANCE ON CONDITIONAL GRANT SPENDING FOR THE PERIOD ENDED 30 JUNE 2008
“Always Stretching Our Arm, to Accelerate Service Delivery”

2. Conditional Grant Spending as at 30 June 2008

3. Conditional Grant Spending as at 31 July 2008

4. AGRICULTURE AND LAND ADMINISTRATION
The department of Agriculture and Land Administration continues to be the lowest spender in the province.
No expenditure was recorded on the Land Care grant during the first three months and spending on CASP only at 1 percent
Land care has spent 1 % in July 2008 and CASP only 7%
The low expenditure is due to the following:
The department has terminated the services of the implementing agent Mpumalanga Agricultural Development Corporation (MADC) Infrastructure projects have come to a stand still. A forensic investigation has already commenced
The department is having challenges with procurement processes and a lack of Supply Chain Management systems.
The following set of recommendations were presented at the Executive Council Lekgotla that was held on August 2008.
The department must speed up the appointment of an alternative implementation agent so that service delivery is not compromised by the termination of the MADC services.

5. AGRICULTURE AND LAND ADMINISTRATION
Reconciliations of funds already transferred and unspent must be surrendered to the Provincial Revenue Fund. Already R13 million will be surrendered.
The department must revisit the projections as the projected break-even in spending is not realistic.
With respect to Infrastructure grant, the department must indicate to the Provincial Treasury how much can be redirected to other departments that have capacity to spend.
A detailed list of projects on which funds have been spent by MADC should form part of the report.

7. Utilization of the Infrastructure Grant for Department of Education
YEAR
2004/05
2005/06
2006/07
2007/08
2008/09
(1ST Quarter)
R’000
ALLOCATION
EXPENDITURE
30 622
66 153
78 138
PERCENTAGE EXPENDITURE
30,0
35,6
66,7
49,8
45,5

8. 2008/2009 PROJECTS ON PLANNING STAGE (21)
Spending at end of first quarter -30%
Spending at 31 July %
Expenditure of 30% has exceeded the benchmark of 25% for the first quarter of the financial year
The analysis of the expenditure reflects that the funds have been spent on old project that have been in implementation for the past three years.
This is of concern to the Provincial Treasury and an audit of the payments on old projects has already commenced
6 Projects with no scope change, designs and tender documents to be complete 15th August 2008
15 Projects with scope change – “a meeting is to be scheduled with between DPW, DoE & Consultants and way forward will emanate on findings and resolutions of the meeting”
Projects staying long at retention stage

9. Utilization of the Infrastructure Grant for Health
YEAR
2004/05
2005/06
2006/07
2007/08
2008/09
(1st Quarter)
R’000
ALLOCATION
40 553
55 005
46 646
72 790
80 114
EXPENDITURE
25 418
52 683
46 645
63 312
23 301
PERCENTAGE EXPENDITURE
62,7
95,8
100,0
87,0
29,1

10. Infrastructure Grant for Health
Infrastructure Programme Management Plan (IPMP) received in December 2007 without scope definition.
Revised IPMP received in April 2008 and scope definition finalized in June 2008.
Serious failures at planning stages
Delays in awarding of tenders
Slow spending
Which then results in withholding of grant by National Treasury
Maintenance in hospitals need urgent attention
Barberton hospital –operation postponed due to theater equipment not functioning

11. Utilization of the Forensic Pathology Grant
YEAR
2004/05
2005/06
2006/07
2007/08
2008/09
(1ST Quarter)
R’000
ALLOCATION
47 592
42 003
EXPENDITURE
6 446
9 884
PERCENTAGE EXPENDITURE
13,5
23,5

12. Utilization of the Forensic Pathology Grant
Evander – (M2 mortuary postmortems-24 shelves)
The contract was awarded in June Site was handed over to the contractor on 26 June The department of Health and Social Services has waited since 2006 for the awarding of this contract by the implementing agent Public Works.
Ermelo – (M3 mortuary postmoterms-36 shelves)
The contract was awarded on 21 September The estimated completion date is October 2008.
Middleburg (M3 mortuary postmoterms-36 shelves )
The contact was awarded during August The appointment letters were only signed by Public Works on Tuesday 26 August The verification of sites has already commenced. The estimated completion period is February 2009.

13. Utilization of the Hospital Revitalization grant
YEAR
2004/05
2005/06
2006/07
2007/08
2008/09
(1ST Quarter)
R’000
ALLOCATION
68 000
93 000
73 000
EXPENDITURE
26 000
74 000
46 289
17 149
PERCENTAGE EXPENDITURE 38 80
100
42,9
7,02

14. Hospital Revitalization grant
Infrastructure Programme Management Plan (IPMP) received in December 2007 without scope definition.
Revised IPMP received in April 2008 and scope definition finalized in June 2008.
Wrong appointments of contactors and consultants by Public Works (appointment of contactors who have failed in previous projects to manage even larger projects –Rob Ferreira )
Lack of proper monitoring of consultants by the Department of Public Works
Delays by Public Works in dealing with issues of poor performance by contractors and consultants
Failure by Health to monitor the SLA between Health and Public Works
Absence of a dedicated manager for revitalisation projects or a dedicated infrastructure unit
Poor planning by the user Department
Budget for 2008/09 not all allocated

15. Infrastructure Challenges in the department of Education and Health
Delays in concluding the Key Programme Documents
The Operational Support Teams have expressed concerns over the delays in concluding the programme management and implementation plans for the 2007/08 and 2008/09 financial years.
The Provincial Treasury has initiated discussions on these issues with affected departments and has already engaged the department of Agriculture and Land Administration, Department of Education, Department of Public Works and the department of Health and Social Services.

16. Infrastructure Challenges in the department of Education and Health
Lack of forward planning and poor alignment of planning and budgeting cycle for infrastructure projects
Budgets for large multi-year projects are committed to one financial year instead of apportioning the budget in accordance with planned cashflow requirements for the project across the MTEF
Late submission of infrastructure plans to the implementing agents.
Bidding processes too long as the projects are not staggered and thus the evaluation and bid committees are overloaded with a large number of bids.
The risk of placing too much reliance on the OSTs, needs to be carefully managed by the Heads of Departments. The issue of limited capacity of the departments is contributing to this risk through prolonged recruitment processes.

17. Infrastructure Challenges in the department of Education and Health
Timeous and quality reporting on service delivery outcomes
Unavailability of land
Late or poor planning and ineffective communication between the Department of Public Works and Client departments
Shortage of internal project managers and project management units
High rate of variation orders
Lack of accountability both internally and externally with regards to project completion and quality reporting

18. Provincial Treasury Monitoring Mechanisms
Monthly reports to the Budget and Finance Committee;
Submission of quarterly reports to the Portfolio Committee on Office of Premier, Finance and Safety and Security;
Frequent interaction by Provincial Treasury with departments on spending performance and general financial management issues;
Provincial Infrastructure Committee (PIC) meetings between HOD for Finance and the seven HODs responsible for Infrastructure delivery departments
Provincial Programme Steering Committee (PPSC) meetings between MEC’s for Finance and the seven MEC’s responsible for Infrastructure delivery departments
PPSC and PIC meetings are viewed as crucial in the provincial infrastructure delivery as they allow a critical interaction on the growth and development of the province through infrastructure delivery.
Site visits are conducted to verify spending against physical progress (this needs to be enhanced as there are limited number of officials who go out on site)

19. Provincial Treasury Intervention
Continuous engagements with departments in a co-operative manner to jointly seek solutions;
Seven identified departments are fully participating in the initiative.
The impact of the OST support in ensuring that the infrastructure plans are developed and submitted is evident in that all the infrastructure plans for 2008/09 financial year have been prepared and submitted to the National Treasury in line with the grant framework timeously.
The department of Public Works, Education and Health is supported at a strategic level by the Provincial Technical Assistants teams who have been seconded by the National Treasury.
The intervention was introduced during 2006/07 financial year whereby 1 % was used to provide capacity to all seven infrastructure delivery departments
When the DORA increased the provision for capacity building to 4% , this increased the funds that are available to fund the capacity that is provided to departments.
Intervention done without capacitation plans in place
Not yet yielded the desired results (over-reliance, delays in filling of vacant positions)

20. Recommendation
It is recommended that the Select Committee on Finance notes the report on Conditional Grants and Capital Spending for the Mpumalanga Province for the period ended 30 June 2008.

21. Thank you!