PRESENTATION TO PARLIAMENT CONDITIONAL GRANTS AND CAPITAL EXPENDITURE 3 MAY 2006

Outline Background Allocations and transfers conditional grants Actual expenditure - conditional grants Actual expenditure – CAPEX Monitoring capacity – 2005/06 Service Level Agreements Conclusion

Background Report based on preliminary 2005/06 results Spending on the majority of grants satisfactory Spending patterns reflect improved capacity and effective monitoring mechanisms

Allocations and Transfers – Conditional Grants Total amount of R1,434,939,000 allocated under grants from National Government Total amount of R1,434,939,000 received Grant Allocated Received R’000 Comprehensive HIV and AIDS Grant 251,468 Health Professionals Training and Development 192,373 Hospital Management and Quality Improvement 23,778 Hospital Revitalization 223,939 Integrated Nutrition Programme 26,954 National Tertiary Services 691,451 Forensic Pathology Services 24,976 Total 1,434,939

Actual Expenditure – Conditional Grants Total budget of R1,434,939,000 Total expenditure of R1,285,893,000 Variance between budget and actual expenditure of R149,046,000

Actual Expenditure – Conditional Grants (Contd.) Allocated Spent Variance Comments R’000 Comprehensive HIV and AIDS Grant 251,468 239,550 11,918 Expenditure misallocated, to be allocated against grant Health Professionals Training and Development Grant 192,373 180,090 12,283 Development portion not spent pending finalization of posts – rollover to be requested Hospital Management and Quality Improvement Grant 23,778 19,514 4,264 Expenditure due to shortage of capacity at institutions, as spending on grant was decentralized Hospital Revitalization Grant 223,939 125,710 98,229 Under spending due to delays in project implementation as a result of appeals against contract totalling R99 million – rollover to be requested Integrated Nutrition Programme 26,954 - National Tertiary Services Grant 691,451 Forensic Pathology Services Grant 24,976 2,624 22,352 Under spending due to late receipt of funding – rollover of funds to be requested Total 1,434,939 1,285,893 149,046

Actual Expenditure – Conditional Grants (Contd.)

Actual Expenditure - CAPEX Total capital budget of R1,031,952,000 Actual expenditure of R943,216,000 Variance of R88,736,000 Variance mainly due to the following: Under spending due to delays in project implementation as a result of appeals against the contract awarded for the high rise building at King George V Delays in the acquisition of assets for the development of Forensic Pathology Services due to the late receipt of the grant

Monitoring Capacity – 2005/06 Improved monitoring capacity during 2005/06 Mechanisms included: Monthly reports by relevant managers Monthly meetings with external service providers (e.g. Public Works, Ithala, IDT) Monthly project implementation reports by external agents Monitoring focussed on progress with implementation of projects and the related financial implications Project management capacity is being enhanced through the creation and filling of the relevant posts for further enhancements to the monitoring process

CONTRACT MANAGEMENT KZN Public Works Yes 25 September 2003 The Department utilizes the following agents for infrastructure delivery: KZN Public Works Ithala Development Corporation Independent Development Trust The relationship with the above is through signed SLAs The details of the SLAs are as follows: Agent SLA in place Date signed KZN Public Works Yes 25 September 2003 Ithala Dev Corp 22 March 2005 IDT 16 September 2004

CHALLENGES Delays in implementation of projects due to appeals against tender awards Delays in filling certain key project monitoring posts pending finalization of restructuring process Delays in project implementation by the Public Works Department, resulting in continuous delays in addressing the infrastructure backlog especially in rural areas Impact of the multi-year nature of projects on funding requirements and planning

Fast tracking infrastructure delivery Department currently utilizes Dept of Works to undertake all development of physical structures in the Province Challenges of capacity due to countrywide skills shortage Impact on delivery Outsourcing of some of the infrastructure delivery services to alleviate impact Outsourcing through sourcing of skills and expertise from the Private sector through PPP Model to be introduced as a pilot with lessons learnt replicated to reduce infrastructure backlogs during the 2006/07 financial year Particular focus on construction of clinics, residential accommodation and Revitalization projects SLA with clear milestones and performance plans among DOH, Works And Outsourced Service Providers

Conclusion Thank You