1. STANDING COMMITTEE ON APPROPRIATION
Presented by Mr Onesmus Ayaya Chief Financial Officer Department: Water Affairs (DWA) 2 November 2009

2. Presentation Outline Comments on MTBPS MTEF Allocations
Efficiency Savings
Earmarked Funding – MTEF PERIOD
Budget Bids
Departmental Allocation Before and After Transfer of Functions
Rollover of Funds
Virement
Unforeseeable and Unavoidable Expenditure
Earmarked Funding - Current Financial Year
Transfer of Functions
Re-Scheduling of Earmarked Funds 2

3. 1. Job Creation COMMENTS ON MTBPS
Create jobs in rural areas under construction and EPWP
Filling of vacant post in regions to be less dependant on consultants
Appointment of SMMEs to create jobs and trigger economic growth 3

4. Comments on MTBPS 2. Rural development focus
Targeted procurement to support economic opportunities for HDIs
Increased allocations to Working for Water and Working for Fire
Preferential employment opportunities in rural areas where DWA projects are implemented
Utilisation of SMMEs to encourage their contribution to economic growth
Investments in in water resource infrastructure to make more water available for economic growth and development in selected rural areas 4

5. COMMENTS ON MTBPS 3. FIGHTING CRIME AND CORRUPTION
Firm action on findings emanating from investigation of all fraud hotline-reported cases
Targeted internal audit focus on controls around supply chain management
Implementation of awareness campaigns to address fraudulent activities
Use of regular payroll audits to prevent and identify ghost employees
4. ENHANCING THE QUALITY OF EDUCATION
Learning academy established and bursary scheme used to support young engineer
Use of interns to expose young graduates to the world of work 5

6. Comments on MTBPS 5. Contribution to improved health outcomes
Purchase of packaged plants in the fight of Cholera outbreaks
Support to provision of clean running water
Rehabilitation of reticulation and treatment works
Implementation of water conservation and demand management is selected municipalities
Eradication of bucket system in line with human settlement plans
Targeted support to municipalities to address water and sanitation bottlenecks 6

7. MTEF BUDGET ALLOCATION -2010/11-2012/13 INCLUDING EARMARKED FUNDING7

8. MTEF BUDGET ALLOCATION -2010/11-2012/13 INCLUDING EARMARKED FUNDING
PROGRAMMES – NEW STRUCTURE
2010/11
R’000
2011/12
ADMINISTRATION
WATER MANAGEMENT
NATIONAL WATER RESOURCE INFRASTRUCTURE PROGRAMME
REGIONAL MANAGEMENT
WATER SECTOR REGULATIONS
TOTAL ALLOCATION
2012/13
R’000 8

9. RECOMMENDED EFFICIENCY SAVING BY NATIONAL TREASURY -2010/11-2012/13
PROGRAMMES – NEW STRUCTURE
2010/11
R’000
2011/12
ADMINISTRATION
8 642
15 325
WATER MANAGEMENT
5 041
8 940
NATIONAL WATER RESOURCE INFRASTRUCTURE PROGRAMME
32 406
57 469
REGIONAL MANAGEMENT
15 843
28 096
WATER SECTOT REGULATIONS
2 881
5 108
TOTAL ALLOCATION
64 813
2012/13
R’000
20 306
11 845
76 146
37 227
6 769 9

10. MTEF BUDGET ALLOCATION -2010/11-2012/13 EXCLUDING EFFICIENCY SAVINGS
PROGRAMMES – NEW STRUCTURE
2010/11
R’000
2011/12
ADMINISTRATION
WATER MANAGEMENT
NATIONAL WATER RESOURCE INFRASTRUCTURE PROGRAMME
REGIONAL MANAGEMENT
WATER SECTOR REGULATIONS
TOTAL ALLOCATION
2012/13
R’000 10

11. EARMARKED FUNDING -2010/11-2012/13
Description of Earmarked Projects
2010/11
R’000
2011/12
Learning Academy
20 000
Property Management - Rental of Buildings
Additional Capacity – Human Resources
7 000
7 420
Working for Water
Working on Fire
Masibambane -
Bulk infrastructure
Water Services Operating Subsidy
Compliance Monitoring & Enforcement
5 000
10 000
Total
2012/13
R’000
21 000
7 791 -
10 500 11

12. MTEF BUDGET ALLOCATION -2010/11-2012/13 EXCLUDING EARMARKED FUNDING AND EFFICIENCY SAVING
PROGRAMMES – NEW STRUCTURE
2010/11
R’000
2011/12
ADMINISTRATION
WATER MANAGEMENT
NATIONAL WATER RESOURCE INFRASTRUCTURE PROGRAMME
REGIONAL MANAGEMENT
WATER SECTOR REGULATIONS
TOTAL ALLOCATION
2012/13
R’000 12

13. REQUEST FOR ADDITIONAL FUNDING
CURRENT EXPENDITURE – PRIOR TO BUDGET SCALED DOWN
PRIORITY AREA
2010/11
R’000
2011/12
Water Conservation and Water Demand Management
Rainwater Harvesting Programme
51 700
84 400
Natural Resource Management Programme (WfW)
Funding for New Deputy Minister
8 733
9 269
Water Licensing Backlog Eradication
20 000
TOTAL CURRENT EXPENDITURE
676,021
1,055,725
2012/13
R’000
9 732
10 000
2,639,952 13

14. REQUEST FOR ADDITIONAL FUNDING
CAPITAL EXPENDITURE – PRIOR TO BUDGET SCALED DOWN
PRIORITY AREA
2010/11
R’000
2011/12
Olifants River Water Resource Development Project
Mooi - Mgeni Transfer Scheme
Komati Water Augmentation Project
Mokolo and Crocodile River (west) Water Augmentation Project
60 000
56 000
Refurbishment Infrastructure
Regional Bulk Infrastructure
Upgrading and expansion of the National Water Resources Monitoring Networks
17 000
48 000
Dam in Mzimvubu River Catchment -
Emergency Project to Address the Water Crisis at Giyani
TOTAL
2012/13
R’000
58 000
50 000 -

15. REQUEST FOR ADDITIONAL FUNDING
CURRENT EXPENDITURE – AFTER BUDGET BIDS SCALED DOWN
PRIORITY AREA
2010/11
R’000
2011/12
Water Conservation and Water Demand Management
60 000
95 000
Rainwater Harvesting Programme
30 000
33 000
Natural Resource Management Programme (WfW)
27 000
31 665
Funding for New Deputy Minister
8 754
9 291
Water Licensing Backlog Eradication -
TOTAL CURRENT EXPENDITURE
2012/13
R’000
36 000
33 200
9 756 - 15

16. REQUEST FOR ADDITIONAL FUNDING
CAPITAL EXPENDITURE – AFTER BUDGET BIDS SCALED DOWN
PRIORITY AREA
2010/11
R’000
2011/12
Olifants River Water Resource Development Project
Mooi - Mgeni Transfer Scheme -
Komati Water Augmentation Project
Mokolo and Crocodile River (west) Water Augmentation Project
Refurbishment Infrastructure
Regional Bulk Infrastructure
Upgrading and expansion of the National Water Resources Monitoring Networks
17 000
48 000
Dam in Mzimvubu River Catchment
6 000
20 000
Emergency Project to Address the Water Crisis at Giyani
98 000
47 000
TOTAL
2012/13
R’000 -
50 000
40 000

17. Quarter 2 actual expenditure ending in 30 Sept 2009 (Before transfer of functions)
Programme
2009/10 Original Budget
R’000
Adjust-
ments
Adjusted Budget
2009/10
2009/10 Actual
% spent
Available Budget
Administration
795,353
47,231
841,809
329,320
39%
512,489
Water resource management
3,895,794
183,741
4,076,631
1,586,809
40%
2,489,822
Water Services
2,717,039
123,419
2,842,452
922,770
33%
1,919,682
Forestry
485,641
2,006
489,653
261,955
53%
227,698
Total
7,893,827
356,397
8,250,224
3,100,854
38%
5,149,691 17

18. Quarter 2 actual expenditure ending in 30 Sept 2009 (Before transfer of functions)
Economic classification
Programme
Adjusted Budget
2009/10
2009/10 Actual
R’000
% spent
Available Budget
Compensation of Employees
1,408,746
601,836
43%
806,910
Goods and Services
2,355,097
874,252
37%
1,480,845
Interest and Rent on land
782 69 9%
713
Transfers and Subsidies
4,393,951
1,550,832
35%
2,843,119
Payments for Capital Assets
91,648
73,865
81%
17,783
Total
8,250,224
3,100,854
38%
5,149,370 18

19. Reason for under spending
Late submission of invoices in respect of services already rendered.
Projects such as backlogs in sanitation at schools and clinics and Regional Bulk Infrastructure are still at tender phase, the expenditure is anticipated to increase in the third quarter of this financial year
Non-payment of general wage increase, it was anticipated (As projected) that the expenditure will kick in July These increases are now anticipated to be paid in October as per DPSA directive
Protracted delays in reaching agreements with municipalities to transferring staff and water schemes. 19

20. Departmental Allocation- After transfer of functions
Programme
2009/10 Original Budget
R’000
Virement
Rollover and Additional Funding
Shifting of Functions
Adjusted Budget
2009/10
Administration
795,353
(14,086)
35,208
(3,934)
812,541
Water resource management
3,895,794
(65,386)
(27,605)
4,121,003
Water Services
2,717,039
77,466
45,953 -
2,840,458
Forestry
485,641
2006
(487,647)
Total
7,893,827
399,361
(519,186)
7,774,002 20

21. DEPARTMENTAL ALLOCATION – AFTER TRANSFER OF FUNCTIONS
Economic Classification
Programme
Original Budget
2009/10
Virement
Rollover and additional funding
Shifting of Functions
Adjusted Budget
Compensation of Employees
1,327,863
21,366
33,408
(358,582)
1,024,055
Goods and Services
2,115,255
171,962
69,880
(145,968)
2,211,129
Transfers and Subsidies
3,337,704
479,247
296,073
(6,683)
4,106,341
Interest and Rent on land
782
(782)
Payments for Capital Assets
1,114,223
(672,575)
(9 076)
432,477
Total
7,893,827
399,361
(519,186)
7,774,002
N.B. Payment for capital figures for either virement or shifting of functions have an error as they do not add up to the adjusted budget 21

22. Rollover of Funds from 2008/09 Financial Year
Description of Services
Amount Requested
R’000
Amount
Approved
Continuation of the construction of De Hoop Dam
232,253
Implementation of Regional Bulk Infrastructure
5,253
Cholera Outbreak in the Limpopo and Mpumalanga Provinces
40,000
TOTAL
277,506
237,506
Def: Funds appropriated but not spent in a particular financial year may be rolled over to a subsequent year subject to approval of the National Treasury 22

23. Reason why funds were not spent -Rollover of funds
Delays in the conclusion of the negotiations to finalise the memorandum of agreement with the 23 different mines.
Exceptional high rainfall prevented contractors from making anticipated progress
Late submission of invoice in respect of Regional Bulk Infrastructure with multiple errors on calculation of bill of quantities
Reason why funds were not spent -Rollover of funds 23

24. Virement (Shifting of Funds in terms of Section 43 of PFMA
During a financial year, some deviations between actual expenditure and the allocated budget for that specific financial year may occur.
Unforeseen circumstances may require the revision and subsequent adjustment of the original planned projects and/or estimated costs involved in the execution of activities.
Virement is subject to the following
Shifting between programmes may not exceed eight percent (8%)
Virement may not be applied to amount appropriated for transfer to institution
Virement may not be applied to amount appropriated for capital expenditure to defray current expenditure
Virement may not be applied to earmarked funds 24

25. Virement (Shifting of Funds in terms of Section 43 of PFMA
Virement – 2009/10 financial year
Programmes
Virement
Administration
(14,086)
Water Resource Management
(65,386)
Water Services
77,466
Forestry
2,006
Net Effect 25

26. Reason for Virement Programme1: Administration
1.1 Budget of R million was shifted to Water Services due to reallocation of inflationary adjustment that was initially allocated during Estimate of National Expenditure process in this programme.
Programme2: Water Resource management
2.1 Budget of R million was shifted to Water Services and Forestry due to the following reasons:
2.1.1 Unfilled positions as a result of newly created structures;
2.1.2 Re-allocation of water use conservation and water demand management to the respective regions.
2.1.3 Funds were incorrectly allocated under goods and services in this programme for the purchase of machinery and equipment
3 Programme3: Water Services
3.1 Budget of R million was shifted to this programme as result of re-allocation of inflationary adjustment that was initially allocated in programme 1: Administration as well as re-allocation of water use and conservation and water demand management 26

27. Unforeseeable and Unavoidable Expenditure
Section 30(2)(b) of the PFMA and Treasury Regulations 6.6, provides for the allocation of additional funds through an adjustment budget to finance unforeseeable and unavoidable expenditure
Unforeseeable and Unavoidable expenditure relates to expenditure that could not be anticipated at the time of finalising the budget (ENE)
National Treasury has recommended an amount of R124,144 million to Cabinet for approvals. Below are the details 27

28. Unforeseeable and Unavoidable Expenditure
Description of Services
Amount Requested
R’000
Amount
Approved
Difference
Additional Fund for the new Deputy Minister
8,267
3000
(5,267)
Additional funds for the purchase of packaged plants to prevent Cholera
49,000
40,700
(8,300)
Additional fund for Working for Water
74.700
22,127
(52,573)
General salary adjustments
58,317
Drought Relief to the Western Cape1
53 700
TOTAL
177,844
7,823
The difference means that the department must reprioritise the budget and shift budget (virement) to fund the shortfall 28

29. EARMARKED FUNDING
Earmarked funding are allocations earmarked by National Treasury for a specific purpose and may not be used for other purposes. Below are earmarked allocations for 2009/10 financial year before adjustments
Total of earmarked funds amount to R  000
Rent of buildings  
Working for Water  
Working on Fire  
Refurbishment of water scheme  
De Hoop Dam (Phases 2B to 2G)  
Additional capacity: Internal Audit and Finance  
Sanitation at school and clinics  
Regional Bulk infrastructure  
Operating subsidy (Water Services)  
Total earmarked funding 29

30. 2009/10: Earmarked Vs Un- earmarked Before Adjustments30

31. TRANSFER OF FUNCTIONS
The president of Republic of South Africa has announced during his state of the nation address that functions of Sanitation services and Forestry will reside with the Dept. of Human Settlement and the Dept. of Agriculture, Forestry and Fisheries respectively.
Where a function is to be transferred between votes during a financial year, National Treasury must be consulted in advance to facilitate any request for the resulting transfer of funds voted for that function in terms of section 33 of the PFMA. In the absence of an agreement between the affected departments on the amount of funds to be transferred, National Treasury will determine the funds to be shifted.
Transfer of functions: National Treasury approval must be obtained before seeking approval from the Minister of Public Service Administration for a transfer of a function to another sphere of government 31

32. TRANSFER OF FUNCTIONS (cont.)
Budget of R519,186 million will be surrendered to the Department of Human Settlement and the Dept. of Agriculture, Forestry and Fisheries respectively.
1.2 Department of Agriculture and Fisheries
1.2.1 Operational budget in the Office of DDG: Forestry R3.934 million
1.2.2 Forestry Budget (as per ENE) R million
1.2.3 Compensation of employees in respect of
support services R million
1.2.4 Forest land management R2.006 million
TOTAL million 32

33. 1.1 Delays in signing Memorandum of Agreement with the mining sector
RE-SCHEDULING OF FUNDS EARMARKED FOR INFRUSTRACTURE PROJECTS(DE HOOP DAM) FOR OTHER PURPOSE
National Treasury has granted the Department to reschedule earmarked funds of R502 million owing to.
1.1 Delays in signing Memorandum of Agreement with the mining sector
1.2 Delays in reaching Water Supply agreements with individual mines due to the global economic crisis
As result of this, the Department will only be able to spend R98 million of R600 million
The Department therefore requested the National Treasury to utilise R502 million as follows 33

34. 2.1 To further the following infrastructure projects - R297 million
RE-SCHEDULING OF FUNDS EARMARKED FOR INFRUSTRACTURE PROJECTS(DE HOOP DAM) FOR OTHER PURPOSE
DWA requested the National Treasury to reschedule R502 million as follows
2.1 To further the following infrastructure projects - R297 million
Nandoni Water Treatment Works
Inyaka Water Treatment Works
Hluhluwe Regional Water Scheme
2.2 Augmentation to the Water Trading Entity – R205 million is a result of infrastructure projects undertaken by WTE in 2008/09 financial year 34

35. I thank you 35