1. TCTA “Drawing on ancient wisdoms… …and cutting edge know how
…to the benefit of all”
Portfolio Committee
13 October 2005

2. Agenda Mandates Highlights Future Financial Going concern
Progress on projects
Scorecard
Future

3. TCTA the Organisation Who is TCTA? What do we do?
Established in 1986 to manage the funding and financial risk management of the Lesotho Highlands Water Project
PFMA ~ Schedule 2 Public Entity
Report via Minister of Water Affairs and Forestry to Cabinet and Parliament
What do we do?
Design
Construction
Funding and debt management
Income and risk management
Natural environment and social impact management
MISSION STATEMENT
TCTA is a specialised liability management
body for bulk water supply development in
the most cost-effective manner to the
benefit of the water consumer.

4. Water Supply Chain 

5. Footprints

6. Mandated Responsibilities
TCTA
Integrated Treasury
Management and
Financial Advisory
Services 20%
Liability Managers for
Bulk Raw Water
Infrastructure Development
80%
Implementation & Funding
Water Board
DWAF
LHWP
BWP
VAAL PIPE LINE
National Water Pricing Strategy
OTHER
WATER
BOARDS
UMGENI WATER
Implementation and
Funding
(on behalf of
Government)
Spring
Grove
NWI
Agency
Implementation and
Funding
(on behalf of
Government)
ORWRDP
(On behalf of
Government)
LHWP
BWP
VAAL PIPE LINE
Governed by a
service level
agreement for high
level strategic
services.
Tarifing and
debt management
services
Implementation, Funding and Risk
Management
Recourse to income
stream of BWP
Implementation, Funding and Risk
Management
Recourse to income
stream of VRESAP
Funding and Risk Management
Government Guaranteed
Debt book
R 20 billion
Total Project size
R 1.6 billion
Total Project size
R 2.4 billion
Debt under
Management
R 3.5 billion

7. [ Project Phases ] National Planning DWAF Project Planning DWAF
Project preparation Mainly TCTA
Operation and maintenance DWAF/TCTA
Project implementation TCTA

8. The Vaal River Eastern Sub-System
VRESS
Komati
Subsystem
Usutu
Subsystem
Users
Demand by 2030
Heyshope
Subsystem
Eskom
338 mil m3/a
Zaaihoek
Subsystem
461 mil m3/a
DWAF
Sasol
123 mil m3/a
Grootdraai
Subsystem
Witbank
Subsystem
TCTA Revenue based
on sales out of VRESS to
Eskom & Sasol
Middelburg
Subsystem
Vaal Pipe Line
160 mil m3/a

9. Olifants Water Resource Project: Location

10. The Olifants Water Project: The Project Complexities
Water Resource Development R 3.65 Billion
National Government
Treasury
Bankable
Un-Bankable
National Government Level
Mining portion economically viable, not currently commercially viable
Social portion of project
Grant Funding
Other Social Funding
Water Services Development R 2.0 Billion
Provincial and Local Government
DPLG
Bankable
Un-Bankable
Municipal Infrastructure Grant
Provincial Infrastructure Grant
Other Funding
Domestic & Industrial users willing and able to pay
Free basic water
Provincial & Local Governments
Funding Sources: DBSA, EIB, INCA, ADB, Commercial Funding and Capital Markets etc
IDP’s
Challenges:
Balance National Governments risks of initially funding the project against social requirements and risks of impairing economic development

11. Financial Highlights

12. Changes in accounting treatment
GAAP adjustments
During the current year, a change in the accounting policy with regards to enduring benefit was effected resulting in the enduring benefit being treated as an intangible asset instead of a tangible asset. This change necessitated the reversal of the revaluation reserve (R125 million) which in turn has the effect of reducing the accumulated depreciation. This change in accounting policy has been processed retrospectively resulting in a reduction in enduring benefit of R116 million as at 31 March 2004.
Reporting on IFRS
The financial statements have been prepared in accordance with Revised International Accounting Standards and new International Financial Reporting Standards (“IFRS”) for the first time. TCTA has elected to early adopt IFRS effective 01 April 2004.
Amounts for 2004 fully restated
Impact on the impairment of the assets
The adjustments from GAAP to IFRS relate only to the accounting treatment for the enduring benefit which is changed to the cost model where before the revaluation model was adopted.

13. Income Statement for the year ended 31 March 2005
R’Million
Restated
2004
Revenue *
1 655
1 541
Other Income
229
224
Royalties paid
228
208
Operating expenses 88 75
Operating surplus
1 568
1 482
Finance cost
2 206
1 558
Net deficit for the year
638 76
* Income is based on the part of the bulk raw water tariff due to TCTA at 122,4 cents per cubic metre (2004 : 116,1 cents per cubic metre), based on million cubic metres (2004 : million cubic metres) of water sales from the Vaal River system million cubic metres of LHWP was delivered into the system for the year

14. Balance Sheet as at 31 March 2005
LHWP
2005
R’million
BWP
VRESAP
TOTAL
RESTATED TOTAL
2004
ASSETS
Non-current assets
15 529
195 8
15 732
15 951
Current assets
2 811 65 2
2 878
742
Total Assets
18 340
260 10
18 610
16 693
EQUITY AND LIABILITIES
Reserves and deficit
(2 810) -
(2 206)
Non current liabilities
14 375
100
14 475
16 188
Current liabilities
6 775
160
6 945
2 711
Total equity and liabilities

15. Funding: 2004/05 LHWP : Capital market R 2 329 million
Repay Money market R 73 million
Foreign loans R 21 million
Average rate 7.84%
BWP:
Loan funding : R 216 million
(including refinanced bridging facility)
Average rate %
Capital charge received R 38 million

16. Funding Requirements per Project
Financial Year
LHWP
(R’million)
BWP
VRESAP
TOTAL
2005/2006
3 306
280
685
4 271
2006/07
1 074
308
1 212
2 594
2007/08
1 033
138
972
2 143
2008/09
2 892
246
408
3 546
2009/10
1 399
-27
1 372
2010/11
2 522
Total
12 226
945
3 277
16 448

17. LHWP & BWP: Total Sources of Funding
Capital Market Bonds 82 % Foreign 6 %
Other funding 18 % Local 94 %
Fixed 72 %
Floating 28 %

18. Going Concern

19. Going concern : pilars
Balance between affordable, predictable tariff and a reasonable peak of debt
Income flows calculated to breakeven on a smoothed basis over the period of debt repayment
Reasonable repayment / peak of debt needs to be balanced with future large augmentation

20. Tariffing Principles Revenue Risks Tariffing Principles
Integrated approach to water pricing
Economic useful life of assets
Timing of future augmentation
Water consumed vs water delivered
Constant
tariff in
real
terms
End
user
affordability
Debt
outstanding

21. Vaal River system : Debt, income and payments
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
4,000,000,000
4,500,000,000
5,000,000,000
5,500,000,000
3/2006
3/2008
3/2010
3/2012
3/2014
3/2016
3/2018
3/2020
3/2022
3/2024
3/2026
3/2028
3/2030
Rand -
5.0
10.0
15.0
20.0
25.0
30.0
Rand Billion
LHWP1 Debt Curve
LHWP1 Payments
LHWP1 Revenue

22. Vaal Pipeline Project Status

23. Project Timeline Construction: Environmental: Item Contract Status
Timing
Construction:
Pre-qualification of contractors
VO20
VO21 
Appointment of contractors
Oct 05
Nov 05
Commence with construction
Dec 05
Commence commissioning
Jul 07
Delivery of water
Oct 07
Environmental:
Environmental Impact Assessment Report to DEAT
Jul 05
Record of Decision issued by DEAT
VO20: Pipe-line installation and supply
VO21: Civil structures and mechanical, electrical, instrumentation piping works

24. Project Timeline (cont.)
Item
Status
Timing
Funding:
Credit rating agency appointed 
Credit rating announcement
Oct 05
Bridging finance
Aug – Oct 05
Long-term project funding
* Discussions with potential funders
* Funding evaluation
* Funding finalised / Signing of agreements
Sep – Oct 05
Oct – Nov 05
Nov – Dec 05
Commercial Paper Programme
Revenue:
First receival of revenue
Oct 07

25. Berg Water Project Status

26. Project Status: 31 March 2005 Project Component % Complete Start Date
Completion Date
Access Roads
100 %
February 2004
January 2005
Construction Village
70 %
October 2005
Dam Contract
30 %
June 2004
December 2007
Supplement Scheme
0 %
July 2005

27. Overall view of the Dam Site

28. Project Status Dam : Progress on embankment and plinth
Contractor : BRPJV
Contract value : R548 million

29. Project Status ACCESS ROAD TO DAM SITE CONTRACTOR: DWAF
CONTRACT PERIOD: 8 MONTHS
CONTRACT VALUE: R 18 MILLION

30. La Motte Village POWER/DONICO JV: 40 HOUSES
BIP 632 cc (FRANSCHHOEK): 20 HOUSES
BIP 611cc (DWARS RIVER): 20 HOUSES

31. Project Timeline River monitoring started September 2002
Infrastructure Construction
Access Road
Construction Housing
Feb 2004 – Nov 2005
Feb 2004 – Dec 2004
Jan 2005 – Nov 2005
Dam Construction
June 2004 – Dec 2007
Supplement Scheme
July 2005 – Aug 2007
Target Date for Impoundment
May 2007
Commencement of Water Supply
Summer 2007

32. Score card

33. Social empowerment : Training
Training provided by the dam construction contractor
1 426 attendees 
Training provided by the Working for Water programme
609 workers for days. 
SMME training
TCTA facilitated local SMME training. This training support was specifically provided in preparation for the La Motte housing contract.

34. BEE : Spend by contractors
Black economic empowerment
Targets are based on 25% of the total contract value of R 548 million. 
Group
Target
Cummulative % to date
Cummulative value to date
Black Enterprise (BE)
15%
39,77%
R14,7 million
Black Economic -
Empowerment
20%
34,65%
R12,8 million
Local business 5%
9,81%
R3,6 million
SMME
10%  

35. BEE: Procurement – R263 million2%
51%
35% 3% 9%
Black companies
Black empowered companies
Black influenced companies No
Did not submit EDA

36. TCTA diversity profile
Senior
Management
All
Management
49 %
51 %
54 %
46 %
50 %
Male
Female
62 %
38 %
54 %
46 %
50 %
Black
White

37. Future

38. NWRIA: Road Map 1 April 2005 Construction unit Ring fenced into
Branch within DWAF.
OBJ: Implement effective systems and process to support business by 1 April 2006 and start drafting the Agency Bill.
1 April 2006
Move clusters (4) into Branch and apply systems. Finalise draft bill.
1 April 2007
Manage and run branch as proto Agency for one year before Incorporation into Agency.
1 April 2008
Start operating as an Agency.

39. Roadmap to Establish Agency
Business
Case
2005
2006
2007
2008
Branch
establishment
Branch detailed
design
Branch fully functional and
improve systems
Agency implementation
planning
Agency
legislation
TCTA staff
integration
accreditation
Establish institutional
regulatory capacity
TCTA alignment of
systems & governance
TCTA project
Branch as a self -
sufficient
business unit
Cabinet
decision
TCTA support
and review

40. TCTA Drawing on ancient wisdom’s and cutting edge know how… …to meet the growing demands of a water stressed sub-continent and… …promote the dream of an African wide renaissance

41. Thank You Questions …. TCTA Martie van Rensburg
Chief Executive Officer
Telephone: (012)
Website: