1. 1 HIGH LEVEL OVERVIEW WATER SECTOR FINANCIAL PERFORMANCE 25 February 2010 Masibambane Coordinating Committee Meeting

2. 2 Content oOverview of Water Sector Expenditure as at 31 December 2010 oChallenges with Water Sector Financial Information oDetailed expenditure analysis per quadrant oDonor Budget Allocation for 2010/11

3. 3 WATER SECTOR 2009/10 FINANCIAL SUMMARY: 31 DEC 2009 BudgetActual% Donor ProjectsR516mR166m32 Prog 3R2,795mR1,688m60 BudgetActual% CapitalR3,985mR2,010m50 RecurrentR8,060mR6,081m75 2009/2010 WS Grand total budget = R19.5b 2009/10 Expenditure to 31 Dec 2009 = R12.8 13 4 2 Quadrant 4 Non DWA Non WS specific Quadrant 3 DWA WR specific Quadrant 2 Non DWA WS specific Quadrant 1 DWA WS specific BudgetActual% Prog 2 - CurR1,797mR1,143m64 Prog 2 - CapR2,169mR1,679m77 BudgetActual% RecurrentR47mR5m9 n/a – information not available Total Q2 Bud= R12.1b Exp= R8.1b Total Q1 Bud= R3.3b Exp= R1.9b Total Q3 Bud= R4.0b Exp= R2.8b Total Q4 Bud= R0.05b Exp =0.005b

4. 4 CHALLENGES WITH SECTOR INFORMATION Information on actual expenditure is unavailable for the following items: Equitable Share-This is unconditional grant with no formal reporting requirements, only Payment Schedules could be availed by CoGTA Financial Management Grant and Local Government- Expenditure Reports available for up to 30 June 2009 Municipal Systems Improvement Grant-Expenditure Reports available for up to 31 August 2009

5. 5 CHALLENGES WITH DONOR FUNDING –The delay in receipt of funds from donors led to limited implementation of donor projects in 2009/10 financial year –Expenditure to 31/12/2009 has therefore been low due to the risk averse approach adopted by the Accounting Officer in 2009/10 in regard to expenditure on donor funds informed by the audit risk related to spending funds not yet received. –The delay in receipt of funds was been occasioned by administrative matters arising from the donors’ side –The CFO has authorized limited use of Voted Funds to support donor projects as the department awaits the receipt of funds –There is no realistic expectation of receiving the outstanding R350m out of the R476m budgeted for 2009/10

6. Overview of Expenditure Performance April to December 2009

7. 7 QUADRANT VIEW OF WATER SECTOR BUDGET & EXPENDITURE TO 31 DEC 2009 Quadrant 1: DWA - Water Services Specific Quadrant 2: Non-DWA - Water Services Specific 2009/2010 BudgetExpend. % Expenditure BudgetExpenWS BudgetWS Expend. % WS Expenditure R'000 - Municipal Infrastructure Grant (MIG) (45%) 8,852,830 4,465,481 3,983,774 2,009,466 50% - Donor Funding (EU, DCI, Flemish, Swiss515,987165,50332% > EU (Contract signature - Sep 07) 480,000 143,99430% Hospital Revitalisation Grant (5%) 3,490 1,992 174 10057% > Irish Aid 35,987 21,51060% Integrated Housing and Human Settlement Dev Grant (5%) 12,442 10,350 622 51783% > Flemish - -0% Infrastructure Grant to Provinces (2.5%) 9,300 6,811 233 17073% > Swiss - -0% 515,987 165,503 32% - Current Budget Prog 3: Water Services 719,225 326,65345% 33,730,6564,484,6333,984,8032,010,25450% - Indirect Grant Water Services Operating Subsidy 1,113,778 809,09173% - Water & Sanitation @ Clinics and Schools 350,000 206,48259%- Equitable Share (34%) 23,847,558 17,884,877 8,059,628 6,080,85875% - Bulk Infrastructure 611,500 345,37356% 2,794,503 1,687,59960% 23,847,55817,884,8778,059,6286,080,85875.4% Total 3,310,490 1,853,10256%Total57,578,21422,369,50912,044,4308,091,11267.2% Quadrant 3: DWA - Non-Water Services Specific Quadrant 4: Non-DWA - Non-Water Services Specific 2009/2010 BudgetExpend. % Expenditure BudgetExpenWS BudgetWS Expend. % WS Expenditure R' 000 Programme 2 - Water Resources Current 1,689,004 1,071,140 63.4% - Local Government Financial Management Grant (10%) 299,990 41,867 29,999 4,18714% Augmentation of Trading Account + Infrastructure 2,169,201 1,678,48677.4% - Municipal Systems Improvement Grant (10%) 200,000 5,272 20,000 5273% + KOBWA 107,835 71,89066.7% Total 3,966,040 2,821,51671.1%Total499,99047,13949,9994,7149.4% Figures based on Transfers, NOT actual ExpenditureTotal Sector19,370,959 12,770,44465.9% Latest information available as at end of August 2009 Latest information available as at end of June 2009

8. 8 QUADRANT 1: DONOR FUNDS EXPENDITURE PER PROVINCE REGION EXP TO DEC 31 BUDGET 2009/10 EXP TO BUDGET Sector Partners (SALGA, DCGTA, CBOs, DoH, Regional Offices, Municipalities, etc) 90,451,879270,702,54033% Eastern Cape 6,181,89120,722,32630% Free State 2,541,19525,000,00010% Gauteng 11,900,60117,806,54767% KwaZulu Natal 1,000,00020,000,0005% Limpopo 21,509,62135,987,00060% Mpumalanga 10,108,48420,800,00049% Northern Cape 11,794,83133,200,00036% North West 1,849,54328,920,0006% Western Cape 8,165,42919,394,00042% Total 165,503,472492,532,413 34%

9. 9 QUADRANT 1: PROGRAMME 3: WATER SERVICES BY REGION Key Focus Area Expenditure Year to 31.12.2009 BudgetVariance Exp Ytd vs Budget Policy and Regulation46,02471,44225,41864% KFA10A Provisioning Policies1,4502,6441,19455% KFA11A Water Sector Policies34,04852,96218,91464% KFA12A Institutional Policies4,4396,4402,00169% KFA14A Africa Initiative111112199% KFA18A Water Services Administration5,9769,2843,30864% Operations1,641,5752,723,0611,081,48660% KFA10B Water and Sanitation Services625,6501,295,708670,05848% KFA11B Water Sector Support79,766132,15752,39160% KFA12B Institutional Support30,28565,15634,87146% KFA13B Transfers22,50613,984-8,522161% KFA14B Africa Co-operation0919 0% KFA18B Water Services Support74,277101,35927,08273% KFA21B Operations of Water Services809,0911,113,778304,68773% R 1,687,599R 2,794,503R 1,106,90460%

10. 10 QUADRANT 1: PROGRAMME 3: WATER SERVICES BY REGION Regional Expenditure Year to 31.12.2009 BudgetVariance Exp vs Budget KwaZulu Natal121,686206,27184,58559% Mpumalanga212,076337,776125,70063% Eastern Cape193,404363,492170,08853% Northern Cape106,298127,83521,53783% Western Cape15,49537,53922,04441% North West83,704163,37679,67251% Free State61,343133,55172,20846% Limpopo716,1931,000,182283,98972% Gauteng54,41170,04615,63578% Head Office - Ops76,377282,993206,61627% Head Office - P&R46,02471,44225,41864% FORESTRY Mis allocationds588 0 -588 R 1,687,599R 2,794,503R 1,106,90460%

11. 11 QUADRANT 2: MIG EXPENDITURE PER PROVINCE Province MIG BUDGET 2009/10 as per DoRA Q3 MIG Cumulative Expenditure 2009/10 Estimated MIG WS Budget 2009/2010 (45% of DoRA allocation) Q3 - MIG WS Cumulative Expenditure (2009/10) % MIG WS Expenditure 2009/10 EC1,968,928,935880,961,579886,018,021396,432,71145% FS745,500,913347,625,000335,475,411156,431,25047% GT282,058,395110,783,000126,926,27849,852,35039% KZ2,107,578,7061,238,566,000948,410,418557,354,70059% LP1,446,349,765835,573,278650,857,394376,007,97558% MP838,913,989387,561,000377,511,295174,402,45046% NC307,242,339118,423,000138,259,05353,290,35039% NW892,573,549374,236,000401,658,097168,406,20042% WC271,363,918171,751,908122,113,76377,288,35963% Grand Total 8,860,510,509 4,465,480,765 3,987,229,729 2,009,466,34450%

12. 12 EXPENDITURE ANALYSIS QUAD. 2: EQUITABLE SHARE Province Equitable Share Sector Budget 2009/10 WS - Equitable Share Budget 2009/10 Equitable Share Transfer to Dec 2009 WS Equitable Share Transfer to Dec 2009 (34% of Total Transfer) % of WS Transfer to Budget EC3,518,385,0001,219,197,5902,638,792,392897,189,41374% FS2,255,756,000803,936,3501,691,815,719575,217,34572% GT3,991,532,0001,574,355,3972,993,647,6371,017,840,19765% KZ4,373,543,0001,485,235,0283,280,114,0181,115,238,76675% LP2,914,792,000959,933,3792,186,093,935743,271,93877% MP2,303,532,000665,849,1751,727,649,756587,400,91788% NW2,197,506,000681,844,9661,648,127,643560,363,39882% NC736,676,000214,650,750552,507,655187,852,60388% WC1,555,836,000454,625,0131,166,127,747396,483,43487% Grand Total 23,847,558,000 8,059,627,648 17,884,876,502 6,080,858,01175%

13. 13 QUADRANT 3: DWAF WATER RESOURCES 2009/2010 BudgetExpend. % Expenditure R' 000 Programme 2 - Water Resources Current 1,689,004 1,071,14063.4% Augmentation of Trading Account + Infrastructure 2,169,201 1,678,48677.4% + KOBWA 107,835 71,89066.7% Total 3,966,040 2,821,51671.1%

14. 14 EXPENDITURE ANALYSIS QUADRANT 4: NON-DWAF, “NON WATER SECTOR” (CAPACITY BUILDING GRANTS) Quadrant 4: Non-DWA - Non-Water Services Specific 2009/2010 BudgetExpenWS BudgetWS Expend. % WS Expenditure R' 000 - Local Government Financial Management Grant (10%) 299,990 41,867 29,999 4,187 14% - Municipal Systems Improvement Grant (10%) 200,000 5,272 20,000 527 3% Total499,99047,13949,9994,7149.4% Latest information available as at end of June 2009 Latest information available as at end of August 2009

15. 15 Update on Donor Budget allocation process for 2010/11

16. 16 During the 2010/11 financial year the sources of funding are two fold- i.2009/10 Budget allocations that are unspent “roll overs” at 31 March 2010 ii.A once of amount of R200m for 2010/11 earmarked by National Treasury for MSB3 exit strategy (this is essentially the final year that MSB 3 donor funding will be available) On the 2 December 2009 Top Management appointed an internal task team to make recommendations regarding the allocation of the above funds to key priority areas To date the following progress can be reported regarding the 2010/11 MSB 3 Budget Allocation process- –Work session held on 22 January 2010 with all (“MSB”) Project Managers where they were briefed about Task team role, 2009/10 “roll overs” were determined using cash flow projections from all project –On 28 Jan 2010 Task Team appointed smaller work group to make recommendations and interface with MSB project managers regarding their 2010/11 budget requests and motivations –On 16 Feb 2010 Work Group presented recommendations to Task Team who have made their input and this will now be factored into DBA 2010/11 and a submission is being prepared for presentation to Top Management for their consideration and approval. Update on Donor Budget Allocation 2010/11

17. END 17