Rand Water

Rand Water Footprint Rand Water’s capital expenditure programme aligns with national government objectives. It also aligns with the Honourable Minister’s performance agreement with the Presidency (12 Outcomes) The highest recorded peak daily demand is 4677 Ml per day. Revenue grew up by 13% to R7.75 billion. Continued to assist municipalities to improve the blue drop and green drop status. Page 2

Alignment to National Government Objectives: Presidential Outcomes Performance against Shareholder Compact National Parliament DWA National TreasuryAuditor General Shareholder Compact Honourable Minister, Edna Molewa Corporate Business Plan Rand Water Strategy Vision Mission Strategic Objectives KPAs KPIs Annual Report Quarterly Reports AnnualAssessmentofWater Boards Reporting Formats Page 3

Raw Water Source Vaal River Grootdraai Dam Sterkfontein Dam Wilge River Vaal River Bloemhof Dam Vaal Dam Ash River Tu nn el Katse Dam Page 4

Pumping and Distribution Elevation Page 5

Extensive Network at Rand Water’s Disposal Rand Water’s pipe network is over 3000 km. This also coincides with the residence of 12 million consumers. The replacement value of this network is estimated to be over R15 billion. Page 6

7 Rand Water chose to explore the nature of its future 20 years from now, i.e. what Rand Water and the water sector could look like in the future. Rand Water of the Future 1 st July st July st July 2020Now - 1 st July 2015 Technological Innovations Satisfied Markets Served Environmental Redress, Sustainability and Leadership Institutional Reform Policy and Legislation Skills development and world leadership Page 7

Rand Water of the Future – Rand Water – 2030 Role of Group Strategy – Corporate Performance Annual determination of Strategic Goals for the organisation Financial Year Ending 30 th June Number of papers presented to and approved by Board and adopted by relevant stakeholders with regards to organisational preparedness % Completion of projects (Achievement of milestones on priority 1 and 2 projects) Establishment of a Rand Water Academy Number of graduates enrolled by the Rand Water Academy Establishment of a MOU with a mine with regards to acid mine drainage Number of plants operated by / with Rand Water in the production of water from acid mine drainage Growth in turnover from other business (Turnover ~ 2010 ~ R10 m) (2011 ~ R74m) (2012 ~ R161m) Growth in turnover from other business (Turnover ~ 2013 ~ R 378 m) Growth in turnover from other business (Turnover ~ 2014 ~ R371 m) Establishment of a Rand Water Innovation Hub Number of identified Rural District Municipalities supported by Rand Water Page 8

9 Natural population growth, inward migration, AIDS, service backlogs, system losses Domestic usage – 70% of total Factors affecting demand growth Estimated in 2010 – 11.7 million Projected for 2030 – 14.7 million Annual rate of growth (%) continues to decline Population growth for Rand Water area of service Supply 75% of total demand to three metros – Johannesburg, Ekurhuleni, Tshwane Metros forecast ave growth of 2% per annum Major customers Forecast peak day for 2015 – 5300 Ml/d Forecast peak day for 2030 – 6900 Ml/d Increase of 1600 Ml/d over 15 years Growth in demand Rand Water chose to explore the nature of its future 20 years from now, i.e. what Rand Water and the water sector could look like in the future. Rand Water of the Future Page 9

There are four potential sites within the bulk supply network for generating power. The four sites are the Control Works at the raw water canal, and Klipfontein, Brakfontein and Hartbeesthoek Reservoirs on the Palmiet supply system. The project can be strongly financially positive over time and result in the reduction in the cost of energy. An amount of R400 million has now been included in the 5 year investment forecast, starting in 2011/12, to allow for finalization of institutional methodology and agreement with relevant parties. Co-generation Page 10

Page 11 PROJECT RISK MANAGEMENT THE RAND WATER CASE STUDY

Page 12 To be a provider of sustainable, universally competitive water and sanitation solutions for Africa OUR VISION

Page 13  In the financial year, Rand Water saw an increase of 126ML (126million liters) in demand of portable water a day from its customers ( from an average 3980ML to 4106ML against an installed capacity of over 5300ML ).  To ensure that we continue to meet target volume growth over the next few years, we have committed capital to increase our capacity by 600ML by 2016/17.  We stepped up our investment in infrastructure by 18% to R1.75billion in the 2012/13 financial year, using cash generated from operations to fund the bulk of this spending.  Among the key projects commissioned in the year 2012/13 was the BG3 raw water pipeline augmentation project to increase capacity of the raw water supply system from Vaal Dam to our purification and pumping station DELIVERING ACROSS THE BOARD

COO Portfolio Scientific Services Division Operations Division Strategic Asset Management Division THE COO’S PORTFOLIO Page 14

Strategic Asset Mgt Division Capital Projects Assets THE S.A.M. DIVISION STRUCTURE Page 15

Page 16 INTERNAL CHALLENGES 1.Failure of existing infrastructure Ageing infrastructure failing to meet growing demand RW decided to address the issue by investing in huge Infrastructure revamp program, which entailed a series of projects to be undertaken. 2. Staff Capacity and Capability (required skills set) Organizational Redesign exercise in 2010 with the COO’s portfolio being the core, followed by the rest of the business. CHALLENGES AND MITIGATING MEASURES

Page 17 INTERNAL CHALLENGES 2. Staff Capacity and Capability (required skills set) Cont.. Resulted in a massive recruitment drive in 2010 to obtain the required skills to meet the R11bn capex program (Program managers, Project Managers, Quantity Surveyors amongst other critical skills set. ) In 2013 Executives approved a productivity assessment to be undertaken as a means of assessing the organizations current performance. CHALLENGES AND MITIGATING MEASURES

Page 18 INTERNAL CHALLENGES 3. Staff attraction and retention RW continuously bench marks its remuneration packages as a means of ensuring that it’s in line with the market standards. 4.Integrated network/ system Interdependent nature of the system 5.Fraud and Corruption RW has proactive audits undertaken by both the internal audit department and forensic department. Quarterly reports submitted to Audit Committee and Board Active Fraud hot line in place. CHALLENGES AND MITIGATING MEASURES

Page 19 EXTERNAL CHALLENGES 1.Delays in obtaining external approvals Environmental approvals,Water use licenses, Servitudes, Rights and land Issues An internal agreement exists between our Legal Division and SAM – Assets dept. to ensure that Legal department gets a 5 year plan for projects so that they can initiate the process of obtaining the external approvals. The SHEQ department from the risk division is a member of the Asset Committee that plans and prioritizes projects; SHEQ representatives are responsible for identifying all the external approvals that may be required for the identified projects. CHALLENGES AND MITIGATING MEASURES

Page 20 EXTERNAL CHALLENGES 2.Encroachment on RW servitudes and pipeline RW has established an internal task team that looks at existing and potential encroachment threats and develops measures to address or minimise the impact of encroachment on the business. The RW Security Department regularly patrols the RW infrastructure network. CHALLENGES AND MITIGATING MEASURES

Page 21 EXTERNAL CHALLENGES 3.Emergency projects & unsolicited mandates Critical skills burn out Continuous reshuffling of limited critical staff 4.Climatic conditions The negative impact of unexpected changes in weather patterns on our projects CHALLENGES AND MITIGATING MEASURES

Page 22 EXTERNAL CHALLENGES 5.Contractor Performance The need to accommodate emerging contractors (increased micro management of RW’s part) Skills challenges for both established and emerging contractors (e.g. design consultants) 6.Manufacturer challenges Failure to obtain critical components from suppliers and manufacturers (e.g. Valves and Pumps due to the RW standard and size specifications) CHALLENGES AND MITIGATING MEASURES

Page 23 Experience has taught us that; Adequate resources with the correct skills set is critical All project designs, whether done internally or externally should be thoroughly reviewed prior to the commencement of the project. Early acquisition of servitudes and external approvals (Water licenses & Environmental Authorizations) The documentation of lessons learnt for each and every project is important The regular review of lessons learnt prior to new project execution is important. CONCLUSION

Page 24 THANK YOU