1. ACTING Chief Financial Officer Water Trading Entity
REVENUE MANAGEMENT
Presented by:
MPHO MOFOKENG
ACTING Chief Financial Officer
Water Trading Entity
Date : 16 April 2013

2. Background
The Water Trading Entity (WTE) was established in 1983 under the Exchequer Act as a trading account operating as an integral part of the Department of Water Affairs. The status of government trading accounts was eventually changed through the Public Finance Management Act of 1999, converting trading accounts into trading entities.
The Water Trading Entity has adopted General Recognized Accounting Practices (GRAP) in the financial year under review in accordance with Directive 9, issued in November 2011 by the Accounting Standards Board (ASB)
The Water Trading Entity (WTE) reports directly to the Accounting Officer of the Department of Water Affairs and is comprised of two operating units, the Water Resource Management unit and the Infrastructure Branch.

3. 1. ANALYSIS OF RECEIVABLES Receivables balances at 28 February 2013
CUSTOMER TYPE
BALANCE 2013
R’000
BALANCE 2012
WATER BOARDS
COMPANIES
MUNICIPALITIES
NATIONAL AND PROVINCIAL GOVERNMENT
OTHER
TOTAL

4. 1. ANALYSIS OF RECEIVABLES - FEB 2013
Customer Type
Total
30 Days
Days
Days
Days
Days
151 Days +
Water Board
Water User ass.
Irrigation Board
Water Service Provider
Company
Municipality
District Municipality
Metropolitan Municipality
6 589
National Government
Provincial Government
97 351
48 687
78 979
45 004
Individual
Other
3 076
-4 946
Grand Total

5. Status of the WTE Receivables Book as at 28 February 2013

6. Status of the WTE Receivables Book

7. Provision for impairment of receivables
CUSTOMER TYPE
BALANCE 31 MARCH 2012
R’000
EST BALANCE 28 FEBRUARY 2013
WATER BOARDS
COMPANIES
96 874
97 188
MUNICIPALITIES
NATIONAL AND PROVINCIAL GOVERNMENT
22 746
OTHER
TOTAL

8. Provision for impairment

9. Provision for impairment

10. Strategies to address long outstanding accounts
Our approach is to ensure that our customers agree with the their outstanding balances
This will be achieved through debtor’s circulations and
signing of acknowledgement of debt. By our customers
A debt collection agency has been appointed to assist the WTE to collect all outstanding debt. Part of the scope of the contract is to validate account balances and to assist in proposing adjustments to be performed to restate account balances.
Processes have also been implemented to validate all billing prior to it being recognised in SAP.
3. Possible write-off of incorrect interest charge.
4. We are currently performing line item clearing on the age analysis.
5. Recruitment of staff at regions and cluster to improve revenue management
6. SAP upgrade to Utility module

11. Response 2 CORRECTION OF OPENING BALANCES
It is currently impractical to accurately restate the opening balances of receivables due to the measurement of revenue as we are using registered volumes for CMA’s and some of the NWRI customers.
The following is the strategy to ensure roll out on the metering strategy for NWRI and some CMA customers

12. 2. ACTION PLAN: METERING STRATEGY
CURRENT BILLING STRATEGY
Currently water resource abstraction users pay water resource management (“WRM”) charges and others are dependent on an assurance of water supply through a government water scheme “GWS”).
This response is limited to water utilised from GWS , i.e. National Water Resource Infrastructure (“NWRI”) related use.
The Chief Director: Operations within the NWRI branch is in the process of finalising the water measuring strategy.
The fundamental emphasis of the strategy is that metering remains the most credible and most reliable form of water use volume determination.
Within the strategy, provision is made to determine the water consumed based on metering or any other measuring device (e.g. water releases via canal off takes)

13. Response 1: Cont.
The expected time frame for the implementation of the strategy is three years after the approval of thereof.
The branch has already budgeted for part of the expected capital expenditure to be incurred during the 2013/14 financial year.
Fin Year
Budget Estimate
Activity (Implementation: Draft Bulk Raw Water Use Measurement Strategy)
R12 million
User Classification and Communication
Assess Unit Capacity against Strategy; amend structure and train.
Assess existing meter functionality.
Prioritise Strategic Users (Class 1) for compulsory metering.
Prioritise Bulk Measurement Areas.
Establish Meter Stock.
R19 million
Establish bulk measurement arrangements with WUAs and CMAs.
Prioritise Class 2 Users.
Augment meter stock
Establish Meter Calibration Facility
Establish Seasonal Irrigation Volume Registration
±R10 million
Prioritise Class 3 and 4 for implementation as per the proposed strategy.
Verification of Class 1 meters.

14. Response 1: Cont.
The metering strategy classifies users for the purpose of introducing the prospect for self-reading opportunities, as follows:
Class 1: These would be the Strategic users (e.g. ESKOM, SASOL, major mining houses, etc.). Due to the very high volumes of water used it would be required that the NWRI prioritise these users for high frequency meter readings (monthly) by cluster offices.
Class 2: These would be users that could be identified to do self-reading of meters and provide the NWRI with the readings. This arrangement will be dependent on meters conforming to NWRI requirements, a web-based system available to allow for readings to be submitted to DWA from remote areas. This arrangement will also require verification audit readings at a bi-annual frequency (at least).
Class 3: These would be users whose usage will be administered through a bulk supply agreement. The bulk meter reading could be conducted similar to Class 2 arrangements but would require further reconciliation of usage of all users within the WUA with bulk reading. It will also include irrigation users where seasonal use verification will be introduced.
Class 4: These would be remote, lower volume users that would be required to do self-reading of meters on a monthly frequency. Low frequency verification readings to be undertaken by NWRI staff.

15. Closing Remarks
It is recommended that the Portfolio Committee note the following:
Progress in the implementation of the metering systems for NWRI’s
The age analysis of various categories of customers
Possible provision for impairment of receivables

16. THANK YOU