1. Vote 36: Water and Sanitation
Presentation to the Portfolio Committee: Water and Sanitation
Presenter: Ulrike Britton | Chief Director: Urban Development and Infrastructure | 28 June 2017

2. Outline PFMA reporting requirements
2016/17 Pre-audited expenditure outcome
Compensation of Employees
Virements
Commitments
Accruals and payables
Conditional grants
Spending performance
Indirect grants
Water Trading Entity
Challenges and recommendations

3. PFMA reporting requirements
Section 40 of PFMA – accounting officer’s reporting responsibilities
S40(1)(c): Submit financial statements within 2 months after the end of the financial year to National Treasury and Auditor General
S40(1)(d): Submit annual report and audited financial statements within 5 months of the end of the financial year to National Treasury
S40(4)(c): Submit revenue and expenditure information to National Treasury within 15 days of the end of each month

4. 2016/17 Pre-Audited Expenditure Outcome
2016/17
2015/16
Rand thousand
Adjusted Appropriation
Post adjustment shifts
Final Appropriation
Actual Expenditure
Variance
Expenditure as % of final appropriation
Programme
Administration
(65 208)
42 813
97.2%
99.9%
Water Planning and Information Management
(65 157)
54 053
92.8%
97.7%
Water Infrastructure Development
47 855
99.6%
99.1%
Water and Sanitaton Services
40 428
( )
137.5%
96.1%
Water Sector Regulation
(27 685)
36 707
88.5%
96.6%
TOTAL -
( )
100.7%
98.8%
Economic classification
Current payments
(15 935)
46 589
98.5%
97.5%
Compensation of employees
93.5%
Goods and services
(15 941)
(53 684)
103.3%
97.8%
Transfers and subsidies
15 906
20 673
99.7%
Provinces and municipalities
147
14 229
100.0%
Departmental agencies and accounts
12 905
700
Higher education institutions
3 400
(2 419)
981
0.0%
2 000
1 000
50.0%
Foreign governments and international organisations
419
539
Public corporations and private enterprises
Non-profit institutions
2 766
1 297
4 063
3 337
726
82.1%
1 998
681
34.1%
Households
39 268
3 557
42 825
39 327
3 498
91.8%
37 496
35 157
93.8%
Payments for capital assets 26
( )
103.7%
98.6%
Buildings and other fixed structures
25 937
( )
104.3%
98.7%
Machinery and equipment
(22 857)
86 401
62 003
24 398
71.8%
86 450
86.0%
Software and other intangible assets
27 892
(3 054)
24 838
23 959
879
96.5%
29 196
29 031
99.4%
Payment for financial assets 3
4 850
4 849

5. Compensation of Employees
2016/17
Pre-audited outcome
Declared R62 million in adjustments budget as unspent
Shifted R65 million in adjustments budget

6. Personnel
Source: Vulindlela

7. Virements Section 43 of the PFMA
Accounting officer may utilise the saving in a main division of the vote to defray excess expenditure in another main division of the same vote, unless the relevant treasury directs otherwise.
May not exceed 8 per cent of the amount appropriated in the main division
Does not authorise utilisation of a saving in:
Specifically and exclusively appropriated allocations
Transfers to other institutions
Capital expenditure to defray current expenditure

8. Virements Treasury Regulation 6.3.1
(a) Compensation of employees and transfers to other institutions, excluding transfers for levies and taxes imposed by legislation, may not be increased without the approval of the relevant treasury
(b) new transfers to other institutions may not be introduced without the approval of the relevant entity;
(c) allocations earmarked by the relevant treasury cannot be used for other purposes, except with its approval
(d) virement of funds from compensation of employees to transfers and subsidies for the payment of severance packages are excluded from provisions (a) and (b).

9. 2016/17 Virements Virements included in the adjustments budget
Virements approved by National Treasury post adjustments budget
From To
R65 million – CoE
R72 million – bucket eradication
R37 million – goods and services
R21.6 million – office equipment
R 12 million – property payments (municipal services)
R4.4 million – software licenses
R4 million – leave gratuities
From To
R4 million – various goods and services
R4 million – Water Research Commission
R2 million – transfers to higher education institutions
R2 million – Transfers to the Strategic Water Partners Network
R – transfers to higher education institutions
R – Transfers to Limpopo Watercourse Commission
R – goods and services
R – Transfers to households

10. Commitments (pre-audited)

11. Accruals and payables (pre-audited)

12. Conditional Grants

13. Regional Bulk Infrastructure Grant – variability in indirect grants

14. Indirect Grants and the Constitution
Constitutional provisions on concurrent functions
Water and sanitation services in Schedule 4 Part B of the Constitution
S139(1) – If a municipality cannot or does not fulfil an executive obligation in terms of the Constitution or legislation, the relevant provincial executive may intervene by taking the appropriate steps to ensure the fulfilment of that obligation…
Issue a directive to the municipality
Assume responsibility for the relevant obligation
Dissolve the municipal council
S154 – National and provincial government must, by legislative or other means, support and strengthen the capacity of municipalities to manage their own affairs, to exercise the powers and to perform their functions

15. Bucket Eradication Programme
Background
DCoG request for funding in the adjustments budget of R1.7 billion in 2013
DHS, DCoG and DWS (then DWA) set up inter-ministerial committee on bucket eradication
Programme approved at the Presidential Coordinating Council in October 2013
Scope
To eradicate bucket systems across SA by 31 March 2014
Water-borne: top structure, erf connections, main sewer lines, excluding bulk water supply and upgrading of waste water treatment works
Dry sanitation: Ventilated Improved Pit Latrine or Urine Diversion, top structure, digging and lining of pit

16. Bucket Eradication Programme
Cost
Waterborne sanitation – R20 000/unit
Dry on site sanitation – R12 000/unit
Total cost – R1.76 billion
X R20 000
Budget allocation
R899 million in 2014/15 and R975.4 million in 2015/16 allocated from the Human Settlements Development Grant
2014 National Macro-Organisation of the State
Establishment of the DWS
Sanitation function shift from DHS to DWS
Budget shifted in 2014/15 adjustments budget

17. Bucket Eradication Programme

18. Water Trading Entity

19. Water Trading Entity

20. Water Trading Entity – key issues
About 45 per cent of total budget to TCTA
Undertaking projects with no funding/revenue source
Undertaking water services projects
Weak alignment between expenditure and expected revenue
Budget reductions on transfers from the DWS
Debtors book

21. Challenges Variability in planning and budget
AG 2015/16 report highlights that:
“department did not have documented policies and procedures to guide the operations with regard to the Regional Bulk Infrastructure Grant and the Municipal Water Infrastructure Grant (now Water Services Infrastructure Grant).
A manual/policy did not exist to support payments in having a proper reconciliation system per project in place to ensure that all information pertaining to the project are reconciled on a monthly basis.”
Expansion of scope of the bucket eradication programme
Supporting municipalities to execute their functions
Aligning programmes and projects to government’s fiscal consolidation programme

22. Recommendations
Implement policies and procedures on programme and project management, as highlighted by the Auditor General
Reconvene the Inter-Ministerial Task Team (with Human Settlements and Cooperative Governance) on bucket eradication
Recommendations to the Presidential Coordinating Council

23. Thank you