PUBLIC HEARINGS ON THE DIVISION OF REVENUE BILL Select Committee on Finance 7 March 2007 PUBLIC HEARINGS ON THE DIVISION OF REVENUE BILL

DOR Bill Comments This presentation will focus on the following: Comments on certain clauses in the DoR Bill Ring-fenced allocation in MIG for bucket sanitation The new Water Services Regional Bulk Infrastructure Grant (WSRBIG), The new Water Services to Schools and Clinics Grant. The Water Services Operating Subsidy.

DOR Bill Comments: clauses 20 &23 DWAF engaged with National Treasury on DoR Bill and want to thank NT for accommodating the DWAF suggestions in Section 20.(Bulk WS Grant) Section 23 (2) (a) still creates a serious problem for DWAF because it will hamper the monitoring and oversight role—all around the principle of project registration. The Bill says “may” but with such conditions that project registration may not happen in practice. Sect 25 (b) Motivation for project registration: MIG is a conditional grant and as required by the Bill, the transferring officer must ensure compliance of the conditions in partnership with sector departments. Professional project management requires knowledge of projects. Sector targets and goals with the associated management demands knowledge of projects. Regulatory role of DWAF requires knowledge to ensure performance e.g. access to basic services, drinking water quality etc. The present format and existence of this section forbids and undermines these actions by the transferring officers and sector departments

DOR Bill Comments Why project registration? Project registration is not an approval by DWAF In order to measure performance and ensure that conditions are in place DWAF must “know” about a project and have the details of such a project. It will be impossible to measure performance against the water and sanitation backlogs without a register of such projects. It gives a practical window for DWAF to exercise the Minister’s responsibility to ensure that municipalities address the backlogs. It also makes it possible for the Minister to report on progress-without registration it would be impossible to report especially to Parliament. Cabinet Lekgotla confirmed that DWAF should be more hands-on in order to ensure that targets are met. Sect 25 (b) Motivation for project registration: MIG is a conditional grant and as required by the Bill, the transferring officer must ensure compliance of the conditions in partnership with sector departments. Professional project management requires knowledge of projects. Sector targets and goals with the associated management demands knowledge of projects. Regulatory role of DWAF requires knowledge to ensure performance e.g. access to basic services, drinking water quality etc. The present format and existence of this section forbids and undermines these actions by the transferring officers and sector departments

Conditional Grants Ring-fenced Bucket Eradication (last year and part of MIG) Bulk Infrastructure (New and not part of MIG) Schools and Clinics Water & Sanitation (New) Operating Subsidy

Summary of Conditional Grants over MTEF period Bucket Eradication R 1,000 billion Bulk Infrastructure R 1,400 billion Schools and Clinics R 0,665 billion Total for the 3 Capital Grants :R 3,065 billion Operating Subsidy R 3,025 billion

Bucket eradication Ring-Fenced allocation in MIG Multi year allocation: 2006/07 - R400 m 2007/08 - R1 000 m Targets for the MTEF Eradicate all remaining buckets (132 671), by Dec 2007

Bucket eradication Specific conditions: The allocation is for bucket eradication in established areas (i.e. formal townships). Expected outputs: - Eradication of all buckets in established areas by Dec 2007

Bucket eradication Specific Challenges: Community expectations (VIPs vs waterborne) Inadequate water resource & bulk sewerage infrastructure to support waterborne sanitation Procurement processes of municipalities (take time to appoint contractors) Unavailability of local contractors due to many infrastructure projects underway

Bucket eradication progress Province Feb 2005 backlog Buckets eradicated April 05 March- 06 Buckets April 06-June 06 Buckets Eradicated (July 06-Sep 06) Buckets eradicated Oct 06-Dec 06 Buckets eradicated Jan 2007 Backlog ( as at end Jan 2007) EC 48,417 11,742 13,154 4,200 2,691 16,630 FS 127,658 16,685 8,831 5,768 1,120 6,463 88,791 GT 5,169 3,844 200 1,125 KZN 750 LP 80 MP 15,172 11,737 3,435 NW 35,189 8,220 670 3,449 2,744 232 19,874 NC 16,691 8,221 1,149 950 1,649 107 4,615 WC 3,128 927 332 223 10 1,636 Total 252,254 62,206 24,136 18,002 8,427 6,812 132,671

Bulk Infrastructure What is Regional Bulk Infrastructure? The infrastructure required to connect the water resource, on a macro or sub-regional scale, (over vast distances), with internal bulk and reticulation systems. “Macro” is defined as large bulk infrastructure serving extensive areas across multi-municipal boundaries “Sub-regional” is defined as large bulk infrastructure serving numerous communities over a large area normally within a specific district or local municipal area.

Bulk Infrastructure Multi year Allocations Grant Conditions 2007/8 R300 million 2008/9 R450 million 2009/10 R650 million Grant Conditions Only funding of social development components (economic components to be funded by loans, own sources etc) Regional bulk Water & San infrastructure only

Bulk Infrastructure Grant Conditions (see Section 20 of DoRB) All municipalities that can benefit be invited to participate in the Feasibility study. Feasibility studies take account of the IDP and WSDP All participating municipalities to agree and understand All participating municipalities to enter into an agreement setting out rights and obligations.

Bulk Infrastructure Challenges Cooperation between a number of stakeholders and especially several municipalities will require resources and time Feasibility Planning of some schemes may not be in place yet. Funding arrangements for economic elements (loans or own funding) can be time consuming- the PPP unit in NT willing to help.

Bulk Infrastructure Progress Targets Discussions were held with municipal and provincial stakeholders Policy and criteria booklet has been compiled Document on detail application procedure to follow Process well underway to compile a project list. Targets The full budget for 2007/8 will be allocated and spent Quarterly reports will be provided.

Schools and Clinics This grant has been created to eliminate backlog in access to water and sanitation at schools and clinics. An amount of R 665 million is available over the MTEF cycle. Ensure access to all identified clinics by 2007/08 and all identified schools by 2009/10 allocated as follows: 2007/08 R 105 million 2008/09 R 210 million 2009/10 R 350 million

Schools and Clinics Agreed Principles : Governance & Structure R665 m will be additional to funds already available through the Provincial Infrastructure Grants. Although funds controlled by DWAF, project planning and implementation will be a collaborative team effort between DWAF, DoE, DoH, PDE and PDH. National Governance Structure to be operational by end March 07 which will include a dedicated Program Manager within DWAF. Provincial structures are being established. (The E. Cape structure is already functioning) 9 Regional Program Managers & Support Offices being established. Schools and Clinics

Schools and Clinics Agreed Principles: Backlog Definition Backlogs have been classified as “facilities with no access” and “facilities with inadequate access” In the rollout of this program backlog definitions should be structured as follows: No Services at all Insufficient number of service facilities Unacceptable technical service type Unsustainable Service Unacceptable condition Unacceptable Health & Hygiene practices & management

Schools and Clinics Agreed Principles: Priorities Clinic Backlog will be eradicated within the available funds in 2007/08. Thus agreed with DoE that Clinics will be prioritised above Schools in the first year. Within the schools backlogs, schools with no facilities will be prioritised where practical and feasible in the context of the total solution. Allocations will be made in relation to the existing backlogs Schools and Clinics

Schools and Clinics Agreed principles : Implementation Various implementation models will be used. These will include: Using existing contracts / Implementing Agents of Provincial Departments Using MIG projects (municipalities) to connect schools to new water and or sanitation schemes currently being rolled out Using various organisations as Implementing Agents on behalf of DWAF Using contractors appointed directly by DWAF Schools and Clinics

Schools and Clinics Agreed Principles: Fund Allocation This allocation will be dealt with as a Schedule 7 allocation. The prioritisation of projects is being done in collaboration with the Departments of Health and Education (national and provincial) and these allocations are expected to be ready at the end of March 2007 and will be published in terms of section 22 of the DoR Bill. Schools and Clinics

Schools and Clinics Expected Outputs: Provide acceptable and sustainable water and sanitation services to All Clinics that currently have no services in 2007/08 period. All Schools that currently have no services. Some Schools that currently have unacceptable services, within budget constraints Specific Challenge As the program develops more detailed information, final funding requirements will be determined. Schools and Clinics

Operating Subsidy Multi year allocations Conditions 2007/8 R 1,040 billion 2008/9 R 1,130 billion 2009/10 R 0,855 billion Conditions All receiving WSA’s to conclude formal agreements by 31 March 2007 Transfer of appropriate staff by 31 March 2008 The necessary capacity must be in place in the receiving WSA’s for implementation of the grant DWAF to continue monitoring implementation till 2011/12

Operating Subsidy Output Challenges Operating of water services schemes and improved revenue collection Schemes refurbished to standards outlined in the agreed policy framework and transferred All affected staff transferred Challenges Finalising the staff transfers by end of March 2008. Formalising of refurbishment plans by WSA’s.

Operating Subsidy Progress 52 agreements signed (90%) 1734 staff transferred (21%) 4434 staff seconded (54%) 1628 schemes with a total asset value of R 5,880 million transferred (91%) Refurbishment total expenditure R 319 million (45%) Targets Six outstanding agreement signed 38 schemes refurbished and transferred 5748 affected staff transferred

Thank you