1. PRESENTATION TITLE Presented by: Name Surname Directorate Date BRIEFING THE PORTFOLIO COMMITTEE ON WATER AND SANITATION ON BULK WATER TARIFFS INCREASES FOR THE FINANCIAL YEAR 2015/2016 Presented by: Name Surname: Mr. Anil Singh Designation: Deputy Director General: Regulation Date: 25 February 2015

2. Index Purpose of the presentation Background Comments to WB tariff proposals Causes of higher than CPIX increases Proposed tariff increases Challenges noted during analyses 2

3. Purpose of the Presentation To brief the Portfolio Committee on the consolidated Water Board tariff proposals for the 2015/2016 bulk water tariff cycle process. 3

4. BACKGROUND Legislative Mandate: Water Services Act 108 0f 1997 Section 28 Water Boards (WB) are bulk water providers to other water entities and are established by the Minister. Section 29 The primary activity of a Water Board is to provide water services to other Water Services Institutions within its area Section 30 A water board may perform an activity other than its primary activity, only if it is not likely to limit the water board’s capacity to perform its primary activity 4

5. BACKGROUND (2) Local Government: Municipal Finance Management Act (MFMA) Section 42 The MFMA provides for any national or provincial organ of state which supplies water, electricity or any other bulk resource to a municipality or municipal entity for the purpose of providing a municipal service to consult extensively and in a comprehensive manner on any proposed changes in the tariffs that may impact on the municipal services. WB has a duty to submit tariff proposals to amend bulk water tariff every year and to adhere to timelines in terms Circular 23 of MFMA and s42(5) Tabling of the amended pricing structure in parliament by the Executive Authority. S42(4) 5

6. Comments to WB Tariff Proposals DWS granted SALGA extension until the 31 st January 2015 to submit their comments. SALGA provided comments on the tariff proposal for 08 WB out of 09 WB (88 %). SALGA supported tariff proposal of 5 WB (55%) 2 WB (22%) tariff proposals were not supported by SALGA – due to lack of clarity and substantiated information. SALGA didn’t express opinion on the tariff proposal of 1 WB ( 11% ) – due to lack of clarity and substantiated information. 6

7. Comments to WB Tariff Proposals...(2) Currently 09 WBs are serving 54 WSAs countrywide Water Services Authorities (WSAs) were consulted by their serving WBs. Out of 54 WSAs consulted only 07 WSAs (12.9%) provided written comments. 6 WSAs didn’t support tariff increase proposal due to the following: -Affordability -Percentage increase higher than CPIX Only 1 WSA accepted tariff increase proposals. 7

8. Causes of higher than CPIX increases CPIX was taken into account. Increase direct cost drivers. -Raw water prices (13% - 18.8%) -Energy costs (12.7% - 18.5%) -Chemicals (6.50% - 10%) -Maintenance cost (11%- 14%) -Salaries (around 08%) 8

9. PROPOSED TARIFFS INCREASES WATER BOARD2014/15 TARIFF2015/16 TARIFF% TARIFF INCREASE Amatola7.257.848.08% Bloem4.856.0015% Bushbuckridge4.694.965.7% Lepelle Northen5.245.808.50% Magalies4.315.4910% Mhlathuze3.333.539.44% Rand Water5.966.8214.5% Overberg5.506.5115.19 Sedibeng8.149.008% Umgeni5.025.328.2% 9

10. Challenges noted during the analyses In accordance with S 42 (5) of MFMA, all WB’s proposals must be tabled on or before 15 March to take effect by 1 July of the same year. Timelines in terms of Circ ular 23 provides that WB should submit their proposals by the 25 of January of each year.  SALGA requested extension of time is submitting their comments, which was granted until end of January 2015, thus - WB submitted their proposals without SALGA comments, which were received after 31 st January 2015. - Some tariffs proposals were submitted to DWS with insufficient documentation in terms of :- 5 year projections; non-adherence to guidelines.  Raw water prices not yet approved. 10

11. THANK YOU 11