1. PRESENTATION TO PORTFOLIO COMMITTEE ON WATER AFFAIRS AND FORESTRY
WATER BOARDS : GENERAL ISSUES
19-20 March 2007
Silas Mbedzi
Chief Director: Institutional Oversight

2. DWAF’s LEGAL MANDATE
Water Boards are established & regulated by the Minister of DWAF i.t.o.:
Water Services Act
PFMA & Treasury Regulations
Municipal Finance Management Act
Division of Revenue Act
Municipal Structures & Systems Act

3. DWAF’s OVERSIGHT ROLE Compliance to PFMA
Ensure that various committees of Water Boards operate effectively
Audit committee
Human Resource committee
Procurement committee
Hay Grading remuneration of CEO & Executives
Minister approves stipends of board members: policy document developed to ensure consistency regarding board practices and remuneration

4. DWAF’s CHANGING ROLE DWAF’s present & future role: regulator of WSA
Current role
Business plans are scrutinized to determine whether 5 year plans seem viable & if appropriate services are provided to communities;
DWAF issues directives on corrective measures to be taken
Financial performance is appraised through the Annual Reports; DWAF provides guidance during individual appraisal sessions
Future role (additional to current role)
More close scrutiny is required, i.e. quarterly performance appraisals to determine whether business plans are implemented.
Compare actual performance to projected performance in the business plan.
Consolidate water board financials to DWAF Annual Report

5. DWAF’s FUTURE ROLE AS SECTOR LEADER
Establish norms & standards and ensure compliance, e.g. water quality & drinking water standards.
Provide guidance to Municipalities on sustainable WSI & Institutional Reform Process.
Monitor & evaluate WSIs’ business proposals to determine viability of service provides.

6. INSTITUTIONAL REFORM PLAN
Roles & responsibilities of water boards i.t.o. Water Services Act & Municipal Systems Act
Boundary issues – water boards don’t operate on municipal boundaries
Governance of water boards – Minister appoints board members

7. PUBLIC/PRIVATE INITIATIVES
A need exists to involve private/public sector in water related matters, e.g.
Rand Water with another Municipality or smaller water boards
Midvaal Water Company, DWAF’s interaction needs to be developed
Challenges:
Minister to consider oversight/regulatory responsibility in the PPI

8. CONSOLIDATED FINANCIAL PERFORMANCE OF WATER BOARDS
Total ‘06
Total ‘05
%age
Sales
R5,9 billion
R5,6 billion 5%
Income before interest
R1,1 billion
R1,0 billion 9%
Finance Cost
R420 million
R507 million
-17%
Net income
R875 million
R604 million
45%
Fixed Assets
R9,3 billion
R8,9 billion 4%
Investment
R571 million
R1,094 billion
-48%
Current Assets
R2,4 billion
R3,4 billion
-28%
Current Liabilities
R1,5 billion
R3,5 billion
-57%
Long term debt
R4 billion
R4,3 billion 7%

9. CONSOLIDATED FINANCIAL PERFORMANCE OF WATER BOARDS
Name of Water Board
Revenue
Operating Expenditure
2004/5 (Previous)
2005/6 (Current)
Amount
% of Total
Albany Coast
2,536
0.05%
2,761
1,721
0.07%
1,386
Amatola
88,922
1.59%
95,907
1.62%
36,511
1.42%
41,941
1.57%
Bloem Water
157,478
2.81%
173,667
2.93%
104,074
4.06%
141,093
5.27%
Botshelo
54,577
0.98%
52,045
0.88%
74,540
2.91%
102,453
3.82%
Bushbuckridge
37,716
0.67%
44,563
0.75%
44,467
1.73%
21,169
0.79%
Ikangala
1,175
0.02%
1,383
2,988
0.12%
1,247
Lepelle
159,761
2.86%
179,656
3.03%
63,414
2.47%
73,386
2.74%
Magalies
175,589
3.14%
140,108
2.36%
144,554
5.64%
120,820
4.51%
Mhlathuze
143,710
2.57%
166,437
102,856
4.01%
109,845
4.10%
Namakwa
7,734
0.14%
9,231
0.16%
8,615
0.34%
14,904
0.56%
Overberg
16,559
0.30%
20,473
0.35%
15,353
0.60%
16,397
0.61%
Pelladrift
5,711
0.10%
5,664
5,455
0.21%
5,745
Rand Water
3,460,099
61.84%
3,672,119
61.96%
1,274,793
49.70%
1,331,948
49.73%
Sedibeng
274,896
4.91%
278,388
4.70%
163,322
6.37%
146,416
5.47%
Umgeni
1,008,352
18.02%
1,084,544
18.30%
522,444
20.37%
549,775
20.53%
Total
5,594,815
100.00%
5,926,946
2,565,107
2,678,525

10. FIXED ASSETS & EXTERNAL DEBT
Name of
Water Board
Fixed Assets
R’000
External Debt
Albany Coast
Amatola
Bloem Water
Botshelo
Bushbuckridge
Ikangala
Lepelle
Magalies
Mhlathuze
Namakwa
Overberg
Pelladrift
Rand Water
Sedibeng
Umgeni
12 238
11 562
60 686
64 720
96 133
36 352
9 200
1 280
57 147
75 663
10 596
313
86 795
33 147
32 369
1 843
Total

11. 2005/06 TARIFF COMPOSITION Composition of tariffs:
Johannesburg Water & Rand Water
Raw water 43,33%
Water Board’s contribution 32,01%
Municipality’s contribution 24,66%
(Supported by Lesotho Highlands Project)
Durban Metro
Raw water 7,37%
Water Board’s contribution 41,83%
Municipality’s contribution 50,8%
(Supported by dams built in the 1960’s)

12. PROPOSED TARIFF MODEL
New Guidelines being prepared for determining bulk potable water tariffs
Consulted extensively with SAAWU
In line with Treasury requirements on capital structure of public entities
Ensures that inefficiency costs are not passed on to the consumer
4-step approach proposed
Benchmark input forecast costs
Compile excel cashflow/ financial model
Prepare pro-forma tariff table
Submit to DWAF for approval

13. WATER BOARDS RECEIVING SUBSIDIES
Sedibeng Water R26,5m R33,5m
Botshelo Water R32,8m R29,7m
Bushbuckridge Water R10,3m R13,3m
Magalies Water -R 4,0m R 3,6m
Ikangala Water R 0,0m R 2,5m
TOTALS R65,6m* R82,6m
*Balance of RDP grants received, after project expenditure has been deducted

14. CONSOLIDATED SUBSIDIES PAID TO WATER BOARDS
Declining Trend

15. TOTAL MUNICIPAL DEBT TO WATER BOARDS

16. CORPORATE SOCIAL INVESTMENT

17. BORROWING CAPACITY
National Treasury established guidelines limiting the borrowing powers of water boards (Gazette in 2002)
Water boards need to obtain National Treasury approval to exceed their borrowing limits via DWAF to Guarantee Certification Committee at National Treasury

18. THE END
THANK YOU