1. Capital Expenditure Programme
16 October 2017
Presenter: Anthony Els
Capital Expenditure Programme
Tariff Consultation

2. SECTION CONTENT Demand growth forecast
2. Augmentation & Renewal plan to 2037
3. Capital budget

3. Supply Area Overview 2016/2017 average demand: 4084 Mℓ/d
3500+ km of pipeline: mostly > 600 mm
60 reservoirs: 20Mℓ to 650 Mℓ
600 Bulk meters ≥ 100mm

4. Potable Demand
Snapshot
4 metros = 83% of demand

5. Potable Demand Potable water users Historical growth Municipalities
Mines
Direct Users
Historical growth
AADD increase from 1000 Mℓ/d in 1965 to 4084 Mℓ/d in 2016/2017
Several decades of growth in the 3% to 6% per annum range
AADD Growth from 2007 to 2017 averaged ~2.4%
Currently at ~2%

6. Forecasting Demand in future
Domestic usage is ~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 pop. growth rate is declining)
Population demographic model
Supply 83% 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)

7. Demand Growth Forecast
Current growth
Currently at ~2% (was negative last year during restrictions)
Projected growth
After compiling and correlating data, a decline is seen in both ‘natural’ population growth and inward migration:
Medium term growth of 1.80% p.a.
By 2035 a growth rate of 1.25% p.a.
Growth may level off by about 2070 (0%)
Year
2020
2025
2030
2035
Average Potable Demand (Mℓ/d)
4700
5100
5500
5900

8. Identical
growth
gradient
Possible future abstraction licence
Scenario 1: growth as per
Infrastructure Planning
Projection (no WDM)
Scenario 2: Demand
progressively
reduced 7.5%
Historical Abstraction
Current proposed
abstraction licence
Scenario 3: Demand quickly reduced
By 15% for 5 – 8 years, before
growing again (currently mainly due to
2016 restrictions: WDM only partially
contributed to low 2016/2017 AADD)

9. Response to limited raw resources
Integrated Vaal River System (IVRS) Project 1600
Committee to establish common ground on usage and abstraction (RW, DWS, SALGA, COGTA)
Water conservation.
Measurement: RW statistical model
Problem area indication
RW sets up and monitors demand targets for RW users;
Develops and implements appropriate protocols for:
Medium term: compliance with abstraction limit of 1600 m³/annum set by DWS until 2025 (until Lesotho Highlands Ph II).
Shorter term drought and emergency situations, using a phased approach
Monthly target monitoring:
Measurement shows that 3 months into the year, customers are cumulatively 5% over ttl. license target.
There is currently no contractual enforcement….

10. Response to limited raw resources
Water Demand Management efforts (medium term)
Municipal WDM focuses on municipal delivery infrastructure (closing gaps on unaccounted-for water). However:
Acknowledgement of - and action on - high night flow areas required
Abnormally high household leaks need fixing in homes.
Municipalities are currently required to have WDM plans
Rand Water have not yet seen a reduction in projected growth based purely on WDM efforts. Much better results were seen during restriction periods:
Emergency actions; short term; when required:
Phase 1: Notify municipalities to reduce minimum night flows (MNF)
Phase 2: RW assists distressed RW bulk systems from other RW systems
Phase 3: RW intervention: restrict top 25 meters by quantity (may change to top 25 meters, prioritized by least efficient recent water usage)

11. Knock-on effects of restricting growth
Actively reducing demand growth reduces income stream
Fixed costs remain = a less efficient operating model
Slower growth requires reactively slowing the augmentation programme as follows:
Long lead time large projects currently underway would be completed
Several future projects identified for deferral. However:
Some augmentation projects are required to facilitate renewal. These projects cannot be slowed.
In 95% of renewal project cases, deferral is not an option: renewal completion dates are based on condition, not demand growth
Cutting capital spending has consequences: if growth resumes, it takes time to get capital projects back on track

12. SECTION CONTENT Demand growth forecast
2. Augmentation & Renewal plan to 2037
3. Capital budget

13. 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

14. Supply systems City of Tshwane Palmiet system Eikenhof system
Mapleton system
Zwartkopjes system
Primary systems
Vaal Dam

15. Corporate Systems
Booster
Primary
200km

16. 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

17. Peak demand by pumping station
Design capacity
Projected peak day demands (Mℓ/d)
Yellow = WDM change (indicative)
2020
(2025)
2025
(2030)
2030
(2035)
2035
(2040)
Primary Systems
Zuikerbosch
3810
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

18. Augmentation & Renewal Planning
Augmentation: Increase capacity to meet future demands
20 year view of projects based on long term view of demands
Renewal: Asset management approach
Operate and maintain asset;
Monitor asset condition;
Refurbish and extend life of existing asset when appropriate;
Replace when economical and if condition merits it
Integration of augmentation and renewal
Renewal and augmentation can facilitate each other (e.g. pipelines)
Integrated at plant, site and system level

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

20. Asset Replacement Value
Buildings
Civil
Pipelines
Electrical
Mechanical
Process
Automation
All Assets
Raw Water 74
1,619
2,083
1,403 29
5,208
Vereeniging
1,254
881
1,997
172
1,508
3,122 12
8,946
Zuikerbosch
1,972
4,158
264
1,707
7,016 20
15,137
Eikenhof
275
1,572
17,241
128
1,258
239 4
20,717
Zwartkopjes
1,499
847
8,850
126
892
242 3
12,459
Palmiet
204
2,867
19,635
105
1,020
220 2
24,053
Mapleton
164
1,165
13,283 81
856
151
15,703
Total
5,442
13,109
63,089
876
8,644
11,019 44
102,223

21. 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

22. 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)

23. The Primary systems Overview Growth in demand
Increase of 1600 Mℓ/d from 2015 to 2030
Key augmentation projects
Station 5 at Zuikerbosch “anchor project” (1200 Mℓ/d in two phases)
BG3 (complete).
BG4, Canal 2 & Forebay in future
B19 raw water pipeline from Lethabo to Vg (nearing completion)
Lethabo pipe header upgrade
Panfontein Drying Beds Phase 2
Key renewal projects
Vg Engine Room 4 upgrade
250 Ml/d Sedimentation Tank at Vg
Vg Chlorine plant 2
Zb Filter House 1 renewal
Zb Chlorine Plant 4 renewal

24. 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 (renewal)
B19 raw water pipeline
R10 million budget for 2016/17
Station 5 at Zuikerbosch
1200 Mℓ/d capacity in two phases
R1 910 million budget over 5 yrs: aug
Panfontein Drying Beds
R490 million over next 5 years (augment)

25. 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

26. 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 (in commissioning)
Engine Room 3b at Palmiet pumping station
Germiston to Lombardy O6 pipeline
Klipfontein to Brakfontein H39 pipeline
Brakfontein-Lyttleton Heights H43 (and H14 pipeline)
Kensington to Yeoville pumping station
Key renewal projects
O2 Pipeline and O1/G25
Palmiet Engine Room 1 upgrade
B6 refurbishment

27. 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
R724 million in next 5 years (aug)
O6 Germiston to Lombardy
R460 million in next 5 years (aug)
H39 Phase 2: Dale Road to Modderfontein
R350 million in next 5 years (aug)
Kensington – Yeoville system
R400 million in next 5 years (aug)
B6 Renewal:
R240 million over 5 years (renewal)
Engine Room 3b at Palmiet
600 Mℓ/d operational capacity (aug)
R 10 million in 2018 (commission)
G37/H37
B17 (commission in 2017)
Zuikerbosch Purification & Pumping Station

28. 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

29. 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
Zuikerbosch – Slangfontein B16 pipeline
Engine Room 3 at Mapleton pumping station
S4 Van Dyk Park to Vlakfontein pipeline
Vlakfontein Reservoir 200Mℓ
Bronberg Reservoir 100Mℓ
R5 Vlakfontein to Mamelodi pipeline
Key renewal projects
Mapleton disinfection plant
M1 pipeline replacement

30. The Mapleton system Mapleton System 100Mℓ Bronberg Reservoir
R124 million over next 4 yrs (aug)
R5 Vlakfontein, Mamelodi
R432 million over next 4 yrs (aug)
200Mℓ Vlakfontein Reservoir
R330 million over next 5 yrs (aug)
S4 Van Dyk Park - Rynfield
R468 million over next 5 yrs (aug)
210Mℓ Brakpan Reservoir
R134 million over next 5 yrs (aug)
M1, M6 replacement
R237 million over next 5 yrs (renew)
N1 Selcourt - Wildebeestfontein
R300 million over next 5 yrs (renew)
B16 Zuikerbosch - Slangfontein
R570 million over next 5 yrs (aug)
Engine Room 3 at Mapleton
R660 million over next 5 yrs
B16 Zuikerbosch – Slangfontein system

31. 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

32. 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
Replace F18 pipe at Witpoortjie Reservoir
Replace pipework from Moroka to Zuurbekom

33. 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

34. 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

35. 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 210Mℓ reservoir
Bronberg 100Mℓ reservoir
Hartebeesthoek additional reservoir
Brakpan 210Mℓ reservoir

36. SECTION CONTENT Demand growth forecast
2. Augmentation & renewal plan to 2037
3. Capital budget

37. 2018
2037
Raw
Augmentation Vg Zb
Eik
Red projects: timing can be altered to suit WDM success
Zks
Palmiet
Mapleton

38. Infrastructure renewal
2018
2037
Raw Vg
Infrastructure renewal Zb
Eik
Zks
Pal
Mapleton

39. Capital budget for 2017/18 Annual budget 2017/18
Augmentation projects – R1.79 billion â
Renewal projects – R1.23 billion á
Overall: R3.02 billion á
Annual budget 2017/18
Forecast average demand growth of 1.8% to 2020, (1.75%->2025, 1.6% -> 2030, 1.2% -> 2035)
Roughly equates to a need for ~R1.6 bn p.a.
2018 planned is R1.2 bn (R1.5 bn for 2019)
Appropriate Augmentation spend
RW should be spending 1% - 2% p.a. of replacement value on renewals
This equates to R0.8 – R1.6 billion p.a.
Planned for 2018 is R1.23bn/a (1.16%). 2019: R1.5bn (1.4%)
Appropriate Renewal spend

40. Replacement value (RM) 2018 renewal allocation (Rm)
Renewal spending
Asset category
Replacement value (RM)
Design life (yrs)
2018 renewal allocation (Rm)
Pipelines
63 090
65+
432
Civil
13 110
50 to 100
248
Mechanical
8 644
30+ 58
Process
11 020
15 to 20+
150
Buildings
5 442
80+ 51
Electrical
876
20 to 30+
111
Automation 44
5 to 10+
137
Total
1 187 (1.16%)

41. New projects entering scoping in 2017
Item
System
Project Description
Indicative ttl cost Rm 1
Primary
Stabilization of embankment at Intake 1 – refurbish 65 2
Pipe A18 replace portions of pipe 60 3
Laboratory Extension at Vg 64 4
Palmiet
Pipe O6 augmentation (Phase 2) Germiston to Lombardy East
710 5
Pipe B6 refurbishment (Phase 1)
310 6
Pipe G25 slip lining/refurbishment
105 7
Mapleton
Reservoir new 80Mℓ at Selcourt
112 8
Pipe L10 New Era to Modder East replacement
126 9
Pipes M2/M5 Servaas stasie to Heidelberg ptns refurbish/replace
117 10
Pipes K2/K7 Kleinfontein to Modder East replacement 97 11
Pipes K3/K6 Apex to Government Areas replacement 12
Eikenhof
Pipes D1, E4, E6 replacement between Zuurbekom and Libanon Pumping Station.
325 13
Pipes F6, F11, F13 Roodepoort P.S to Krugersdorp Res.
260

42. 5-year Capital Expenditure (2018 - 2022)
forecast of R19.8 billion for continuing business
System
Augmentation (Rm)
Renewal
(Rm)
Total
Eikenhof
1 088 á
2 432 á
Mapleton
3 395 á
1 014 á
4 409 á
Palmiet
2 198 á
714 á
2 912 á
Primary systems
3 145 â
1 627 á
4 772 â
Zwartkopjes
1 073 á
2 085 á
Other & All/spread
258
2 607
2 865
8 450 á á
Percent of total
Aug: (57%â)
Renewal: (42%á)
100%

43. Capital Expenditure: Augmentation + Renewal forecast

44. Thank You…