1. Capital Expenditure Programme Tariff Consultation 10 October 2016
Presenter: Anthony Els

2. CONTENT Demand growth forecast 2. Augmentation & renewal plan to 2036
3. Capital budget

3. Rand Water Overview Bulk water supplier to 12 million people
2016 average demand ~ 4350 Ml/d
3500+ km of pipeline – mostly > 600 mm
58 reservoirs – average size 100 Ml

4. Demand Growth 2016 Snapshot 4 metros = 84% of demand
Customer base 2015/2016

5. Demand Growth Customer base Historical growth Projected growth
Several decades of growth in the 3 to 6% per annum
An AADD increase from 1000 Ml/d in 1965 to 4350 Ml/d in 2016
Growth started to decline from about 1990
Growth in decade to 2011 averaged 2.5%
Projected growth
Continued decline in annual growth rates (currently 2%)
Decline in both ‘natural’ population growth and inward migration
Expect drop from current 2% p.a. to 1% p.a. by about 2035
Medium term growth of 1.75%
Growth could level off by about 2070

6. Demand Growth Forecast
Domestic usage ~ 71% of total
Natural population growth, inward migration, AIDS, service backlogs, system losses
Factors affecting demand growth
Estimated population in 2010 – 11.7 million
Projected population by 2030 – 14.7 million
Annual rate of growth (%) continues to decline
Population demographic model
Supply 84% of total demand to four metros – Johannesburg, Ekurhuleni, Tshwane, Emfuleni
Metros forecast av. growth of 1.5% to 2% p.a.
Questionnaire model (major customers)
Year
2020
2025
2030
2035
Average Demand (Mℓ/d)
4700
5100
5500
5900

7. Demand growth versus raw water

8. Response to limited resources
WDM plans continue
Municipal customers are required to submit WDM plans when applying for new connections (offset WDM savings against new demand)
WDM initiatives not intended to restrict development
Typically, areas of saving and development nodes are geographically separate
A statistical model is being developed that allows rating of customers water use efficiency, allowing Rand Water to determine focus areas for WDM and monitor municipal performance.

9. Response to 15% cut in water supply
A mandated 15% cut in water supply = 15% less income
Tariff could have been increased above normal, or;
Capital expenditure can be slowed appropriately:
Major projects have long lead times
Current projects underway will be completed. A number of future projects can be deferred.
Spending on some current projects can be slowed and will be formally reviewed in the next financial cycle.
Cutting capital spending has consequences. When the drought is over, it will take time to get capital projects back on track.
Thus, careful consideration is needed when considering capital projects to cut.
Some projects are requires to allow other major infrastructure out of service for renewal. These cannot be slowed.
Spending on replacements and refurbishments is less easily slowed.

10. Supply systems for Planning
Note: Primary = Raw Water + Vereeniging + Zuikerbosch
Rand Water
Eikenhof Supply System
Zwartkopjes Supply System
Palmiet Supply System
Mapleton Supply System
Booster Systems
Primary Systems
Vereeniging Purification System
Zuikerbosch Purification System
Raw Water Supply System

11. Corporate Systems
Booster
Primary
200km

12. Supply systems City of Tshwane Palmiet system Eikenhof system
Mapleton system
Zwartkopjes system
Vereeniging
Zuikerbosch
Primary systems
Vaal Dam

13. Required Augmentation
Augmenting for 2015 to 2030 cycle
Projected growth in peak day demand = 1600 Ml/d over 15 years
Growth split between four booster systems
Northern Jhb
Tshwane
Madibeng
Central Jhb
Southern areas
Eastern Tshwane
Ekurhuleni
Mpumalanga
North west Jhb
West Rand
Rustenburg
Zwartkopjes system 300 Ml/d growth
Palmiet system 600 Ml/d growth
Eikenhof system 400 Ml/d growth
Primary (refurb)
Mapleton system 300 Ml/d growth
Primary
Primary systems 1600 Ml/d growth
Primary

14. Peak demand by pumping station
Design capacity
Projected peak day demands (Ml/d)
(including WDM savings - indicative)
2020
(2025)
2025
(2030)
2030
(2035)
2035
(2040)
Primary Systems
Zuikerbosch
3610
4300
4800
5300
5800
Vereeniging
1200
1300
Booster systems
Palmiet
1875
2000
2190
2380
2570
Mapleton
960
990
1080
1180
1270
Eikenhof
1800
1470
1610
1750
1880
Zwartkopjes
800
760
780
840
880

15. CONTENT Demand growth forecast 2. Augmentation & renewal plan to 2036
3. Capital budget

16. Augmentation & Renewal Planning
Integrated asset management approach
Many projects combine augmentation and renewal (eg pipelines)
Integrate at plant, site and system level
Augmentation - Increase capacity to meet future demands
20 year view of projects based on 35+ year view of demands
Renewal - Extend life of existing assets where appropriate
Refurbish if possible
Replace if condition merits it

17. Asset Portfolios Buildings and property Civil structures Pipelines
Mechanical
Electrical
Process
Automation

18. Infrastructure renewal
Asset category
Replacement value (Rbn)
Design life (yrs)
Annual renewal allocation (Rm)
Pipelines 55
65+
600
Civil 13
50 to 100 70
Mechanical 10
30+
115
Process
15 to 20+
Buildings 5
80+ 35
Electrical 1
20 to 30+ 50
Automation
5 to 10+ 20
Total 95
(1.05%)

19. Infrastructure augmentation
Providing for 2015 to 2030 augmentation cycle
Augment primary capacity, with associated major pipelines and booster pumping capacity
Package of linked major projects for backbone infrastructure
2009 Additional Water Supply (AWS) Scheme
Anchor project for the 2009 AWS Scheme
Purifies and pumps into the network additional 1200 Mℓ/d after completion of phase 2
Station 5 at Zuikerbosch

20. The Primary systems Augmenting for 2015 to 2030 cycle
Projected growth in peak day demand = 1600 Ml/d over 15 years
Growth split between four booster systems
Palmiet system 600 Ml/d growth
Mapleton system 300 Ml/d growth
Eikenhof system 400 Ml/d growth
Zwartkopjes system 300 Ml/d growth
Primary systems 1600 Ml/d growth
North west Jhb
West Rand
Rustenburg
Central Jhb
Southern areas
Northern Jhb
Tshwane
Madibeng
Eastern Tshwane
Ekurhuleni
Mpumalanga
Primary
Primary (refurb)

21. The Primary systems Overview Growth in demand
Increase of 1600 Ml/d from 2015 to 2030
Key augmentation projects
Station 5 at Zuikerbosch (1200 Ml/d in two phases)
BG4, Canal 2 and new Forebay
B19 Lethabo to Vereeniging raw water pipeline (nearing completion)
Lethabo header upgrade
Panfontein Drying Beds Phase 2
Key renewal projects
Vg Engine Room 4 upgrade
Increase sedimentation capacity at Vg
Vg chlorine plant 2 upgrade
Zb Filter House 1 upgrade
Zb Chlorine Plant 4 upgrade

22. Primary Systems – 1600 Ml/d growth from 2015 to 2030
Additional Purification Plant – 1200 Ml/d capacity
Additional raw water pipelines and purification plant upgrades
Vg Sed Tank
R250 million over next 5 years
B19 raw water pipeline
R10 million budget for 2016/17
Station 5 at Zuikerbosch
1200 Ml/d capacity in two phases
R3 258 million budget over 5 yrs
Panfontein Drying Beds
R810 million over next 5 years

23. The Palmiet system Augmenting for 2015 to 2030 cycle
Projected growth in peak day demand = 600 Ml/d over 15 years
Mapleton system 300 Ml/d growth
Eikenhof system 400 Ml/d growth
Zwartkopjes system 300 Ml/d growth
North west Jhb
West Rand
Rustenburg
Central Jhb
Southern areas
Northern Jhb
Tshwane
Madibeng
Eastern Tshwane
Ekurhuleni
Mpumalanga
Primary
Primary (refurb)
Palmiet system 600 Ml/d growth
Primary systems 1600 Ml/d growth

24. The Palmiet system Overview Main customers Growth in demand
Eastern and northern Johannesburg
Central, western and northern Tshwane
Western Ekurhuleni
Growth in demand
Increase of 600 Ml/d from 2015 to 2030
Key augmentation projects
Zuikerbosch to Palmiet B17 pipeline (nearing completion)
Klipfontein Brakfontein pipe H39
Engine Room 3b at Palmiet pumping station (nearing completion)
Palmiet to Klipfontein O6 pipeline
Kensington to Yeoville pumping station
Klipfontein - Brakfontein H39 pipeline
Brakfontein-Lyttleton Heights H43 and H14 pipelines
Key renewal projects
O2 Pipeline and O1/G25
Palmiet Engine Room 1 upgrade
B6 refurbishment

25. Zuikerbosch Purification & Pumping Station
Palmiet System – 600 Ml/d growth from 2015 to 2030
Additional Engine Room – 600 Ml/d capacity
Total of 150 km of pipe between 600 mm and 2100 mm diameter
H43 Brakfontein – Lyttleton
R535 million in next 5 years
O6 Palmiet – Klipfontein R55million in next 3 years
B17 Zuikerbosch - Palmiet R10 million in 2017
H39 (95%)
Engine Room 3b at Palmiet
600 Ml/d operational capacity
R 10 million in 2017
G37/H37
Zuikerbosch Purification & Pumping Station

26. The Mapleton system Augmenting for 2015 to 2030 cycle
Projected growth in peak day demand = 300 Ml/d over 15 years
Eikenhof system 400 Ml/d growth
Zwartkopjes system 300 Ml/d growth
North west Jhb
West Rand
Rustenburg
Central Jhb
Southern areas
Northern Jhb
Tshwane
Madibeng
Eastern Tshwane
Ekurhuleni
Mpumalanga
Primary
Primary (refurb)
Palmiet system 600 Ml/d growth
Mapleton system 300 Ml/d growth
Primary systems 1600 Ml/d growth

27. The Mapleton system Overview Main customers Growth in demand
Central and eastern Tshwane
Eastern Ekurhuleni
Growth in demand
Increase of 300 Ml/d from 2015 to 2030
Key augmentation projects
R5 Vlakfontein to Mamelodi pipeline
Zuikerbosch – Slangfontein B16 pipeline
Engine Room 3 at Mapleton pumping station
S4 Van Dyk Park to Vlakfontein pipeline
Vlakfontein Reservoir 200Ml
Bronberg Reservoir 100Ml
Key renewal projects
Mapleton disinfection plant
M1 pipeline replacement

28. Mapleton System 100Ml Bronberg Reservoir R5 Vlakfontein – Mamelodi
R220 million over next 5 yrs
R5 Vlakfontein – Mamelodi
R280 million over next 5 yrs
200Ml Vlakfontein Reservoir
R271 million over next 5 yrs
S4 Van Dyk Park - Rynfield
R468 million over next 5 yrs
Engine Room 3 at Mapleton
R650 million over next 5 yrs
B16 Zuikerbosch - Mapleton
R612million over next 5 yrs

29. The Eikenhof system Augmenting for 2015 to 2030 cycle
Projected growth in peak day demand = 400 Ml/d over 15 years
Zwartkopjes system 300 Ml/d growth
North west Jhb
West Rand
Rustenburg
Central Jhb
Southern areas
Northern Jhb
Tshwane
Madibeng
Eastern Tshwane
Ekurhuleni
Mpumalanga
Primary
Primary (refurb)
Palmiet system 600 Ml/d growth
Mapleton system 300 Ml/d growth
Eikenhof system 400 Ml/d growth
Primary systems 1600 Ml/d growth

30. The Eikenhof system Overview
Main customers (includes significant mining use)
Western Johannesburg and Soweto
Far West Rand
Rustenburg
Growth in demand
Increase of 400 Ml/d from 2015 to 2030
Key augmentation projects
F34 Waterval to Weltevreden pipeline
F49 Krugersdorp to Randfontein pipeline
Meredale reservoir 1 x 210Ml
Additional Meredale reservoir storage (2 x 100Ml)
Key renewal projects
Replace Eikenhof disinfection plant
Link to Witpoortjie Reservoir F18 pipeline
Replace pipework from Moroka to Zuurbekom

31. The Zwartkopjes system
Augmenting for 2015 to 2030 cycle
Projected growth in peak day demand = 300 Ml/d over 15 years
Northern Jhb
Tshwane
Madibeng
Central Jhb
Southern areas
Eastern Tshwane
Ekurhuleni
Mpumalanga
North west Jhb
West Rand
Rustenburg
Zwartkopjes system 300 Ml/d growth
Palmiet system 600 Ml/d growth
Eikenhof system 400 Ml/d growth
Primary (refurb)
Mapleton system 300 Ml/d growth
Primary
Primary systems 1600 Ml/d growth
Primary

32. The Zwartkopjes system
Overview
Main customers
Northern Emfuleni and Southern Johannesburg
Central Johannesburg (largely developed, low growth expected)
Benoni
Growth in demand
Increase of 300 Ml/d from 2015 to 2030
Key augmentation projects
Amanzimtoti pumping station upgrade
T5 Orange Farm to Ennerdale pipeline
Daleside additional 40 Ml reservoir
Arcon Park to Langerand A13 pipeline duplication
Key renewal projects
Replace Vg-Daleside A6 and A8 pipelines
Lay new Zb-Daleside pipe to allow refurbishment of B1 and B2

33. Balancing and Emergency Storage
Reservoir storage
20 year plan includes additional 1300 Ml reservoir storage
40% to 50% in Eikenhof system to boost emergency storage
Water quality – total volume, through flow, circulation
Availability of appropriate sites
Projects
“Lower” Meredale reservoirs (and associated pipework)
Daleside 40Ml reservoir
Vlakfontein 200Ml reservoir
Bronberg 100Ml reservoir
Hartebeesthoek additional reservoir
Brakpan reservoir

34. CONTENT Demand growth forecast 2. Augmentation & renewal plan to 2036
3. Capital budget

35. Capital budget for 2016/17 Annual budget 2016/17
Augmentation projects – R2.0 billion
Renewal projects – R1.06 billion
Current replacement value – R95 billion
Annual budget 2016/17
Forecast average demand growth of 1.75% per annum to 2030
Equates to about R1.5 bn per annum (Current planned is ~R2.0 bn/a)
Theoretical augmentation spend
Should spend 1% - 2% pa on renewal
Equates to R0.8 – R1.6 billion per annum (Current planned is ~R1.0bn/a, or 1.05%)
Theoretical renewal spend

36. 5-year Capital Expenditure (2017 - 2021) forecast of R18
5-year Capital Expenditure ( ) forecast of R18.8 billion for continuing business
System
Augmentation (Rm)
Renewal
(Rm)
Total
Eikenhof
1 344
470
1 814
Mapleton
2 833
910
3 743
Palmiet
1 281
377
1 658
Primary systems
4 741
1 561
6 302
Zwartkopjes
999
846
1 845
Other & All/spread
500
2 988
3 488
(62%)
7 152 (38%)
18 850

37. Capital expenditure forecast

38. Capital 2017 2036 Zb Eik Red: timing is subject to WDM success Zks
Raw
Capital Vg Zb
Eik
Red: timing is subject to WDM success
Zks
Palmiet
Mapleton

39. Infrastructure renewal
2017
2036
Raw Vg Zb
Eik
Zks
Pal
Mapleton

40. Thank You