1. National Water Resources Infrastructure Portfolio Committee: Water and Environmental Affairs

2. BRANCH BACKGROUND INFORMATION 2

3. 3 WATER TRADING ENTITYNWRI CD: Infrastructure Development CD: OperationsCD: ConstructionCD: EngineeringFinanceRevenue ManagementSupply ChainFinancial AccountingManagement AccountingAssets Management WRM Water use allocationsWater QualityWater use Control Planning and Implementation

4. NWRI Branch Objective 1. The National Water Resources Infrastructure Branch (NWRIB) is responsible for the development of water resources infrastructure to meet regional, social, economic and environmental objectives for all South African citizens. 2. It is responsible for the rehabilitation, operations and maintenance of existing infrastructure to ensure proper and strategic asset management 4

5. ELEMENTS OF THE WATER BUSINESS

6. NWRI Branch Objective 1. The National Water Resources Infrastructure Branch (NWRIB) is responsible for the development of water resources infrastructure to meet regional, social, economic and environmental objectives for all South African citizens. 6

7. Durban Cape Town 461 Major Water Resources Development Projects MOKOLO AND CROCODILE RIVER (WEST) AUGMENTATION PROJECT - Project cost R2.1 billion - Project close-out date, 2015 OLIFANTS RIVER WATER RESOURCES DEVELOPMENT PROJECT - Project cost (Phase 2A) R3.1billion and (Phases 2B – 2G) R13.0 billion - Project close-out dates, 2013 & 2016 (Subject to funding) VAAL RIVER EASTERN SUB SYSTEM AUGMENTATION PROJECT - Project cost R3.0 billion; - Project close-out date, 2012 KOMATI WATER SYSTEM AUGMENTATION PROJECT - Project cost R1.7 billion - Project close-out date, 2013 HAZELMERE DAM - Project cost R116 million - Estimate project close-out date, 2016 CLANWILLIAM DAM - Project cost R1.6 billion - Estimate project close-out date, 2016 MOOI MNGENI TRANSFER SCHEME (PHASE 2) - Project cost R1.7 billion - Project close-out date, 2015

8. Description of projects  MOKOLO AND CROCODILE RIVER (WEST) AUGMENTATION PROJECT Structures include, the building of Pipelines, Pump Station and incorporate existing Exxaro infrastructureStructures include, the building of Pipelines, Pump Station and incorporate existing Exxaro infrastructure  OLIFANTS RIVER WATER RESOURCES DEVELOPMENT PROJECT: DE HOOP DAM (PHASE 2A) AND BULK DISTRIBUTION SCHEME (PHASES 2B-2G) Phase 2A – Construct a 88m High Roller Compacted Concrete Dam and associated infrastructure;Phase 2A – Construct a 88m High Roller Compacted Concrete Dam and associated infrastructure; Phases 2B to 2G – Construct a Network of Pipelines, Reservoirs and Pump Stations.Phases 2B to 2G – Construct a Network of Pipelines, Reservoirs and Pump Stations.  VAAL RIVER EASTERN SUB SYSTEM AUGMENTATION PROJECT Construction of a pipelines from Vaaldam to Secunda and a Pump StationConstruction of a pipelines from Vaaldam to Secunda and a Pump Station  KOMATI WATER SYSTEM AUGMENTATION PROJECT Construction of a pipelines and a Pump StationConstruction of a pipelines and a Pump Station

9. Description of projects cont… MOOI MNGENI TRANSFER SCHEME Construction of a 37m high Composite dam, pipelines and a Pump StationConstruction of a 37m high Composite dam, pipelines and a Pump Station  HAZELMEREDAM Increase the existing dam capacity by installing radial gatesIncrease the existing dam capacity by installing radial gates  CLANWILLIAMDAM Increase the existing dam capacity by increasing the wall highIncrease the existing dam capacity by increasing the wall high

10. NWRI Branch Objective 2. It is responsible for the rehabilitation, operations and maintenance of existing infrastructure to ensure proper and strategic asset management 10

11. Distribution of assets

12. 12 Distribution of asset value

13. 13 Asset ClassExtentReplacement Value (R bn) Buildings2 572Number2 301 Canals8 036km29 073 Dams and weirs359Number72 002 Measuring Facilities3011Number7 381 Pipelines1 063km8 044 Pump stations57Number1 673 Reservoirs51Number631 Treatment works62Number69 Tunnels171km18 354 Other77Number85 State owned land343 237Ha6 792 Servitudes51 849Ha769 TOTAL147 174 Extent of Assets

14. 14 WTE TOTAL INCOME 2012/13 WTE TOTAL INCOME R 8.6 billion TOTAL NWRI INCOME R8.1 billion Augmentation R1.7 billion Water related sales R 2.3 billion Other income R446 million TCTA revenue R 3.7 billion TOTAL WRM INCOME R484 million Augmentation R154 million Water relater sales R330 million

15. NWRI

16. 16 DDG:NWRI (vacant) CD: Infrastructure Development (vacant) D: Capital Projects D: Risk Management CD: Engineering Services D: Technical Engineering Support Services D: Mechanical Electrical Engineering D: Civi l Engineering (vacant) D: Integrated Environmental Engineering CD: Construction Management D: Construction Support (vacant) CD: Infrastructure Operations (vacant) D: Strategic Asset Management D: Northern Operations D: Eastern Operations D: Southern Operations D: Central Operations CFO Deputy CFO CD: Financial Management D: Asset Management D: Revenue Management D: Management Accounting D: Supply Chain Management (vacant) D: Financial Management - - - - - - - - - -- *Finance is a support function to NWRI **All Senior Manager’s posts have been advertised

17. Chief Directorate Structure

18. DIRECTORATEPURPOSE i. Capital ProjectsProject management services for the planning and implementation of water infrastructure projects from the fiscus. IN some instances, this is done jointly with the TCTA in cases where there is a need for off-budget funding. ii. Risk ManagementIdentification of potential project risks and management of risks. 18 1. Infrastructure Development - Promotes business principles in the management of infrastructure, including management of business risks and those associated with infrastructure implementation. COE: R13.4 m Goods and services: R4.0m Projects: R909.7m

19. 19 2. Engineering Services - Provides engineering, scientific, environmental services and support through the implementation of mandated projects for existing and new water resources infrastructure - including civil, mechanical, electrical, hydrological and environmental services. COE: R44.7 m Goods and services: R13.0m Movable Assets; R1.5m DIRECTORATEPURPOSE i. Mechanical and Electrical Engineering Responsible for design, specification, quality control and contract administration of mechanical, electrical and electronic (telemetry, control and communication) systems for new and existing bulk water resource infrastructure. ii. Civil EngineeringDesign, specifications, quality control and site supervision during construction of new construction projects and rehabilitation of existing infrastructure; and administration of civil contracts.

20. DIRECTORATEPURPOSE iii. Integrated Environmental Engineering Project implementation done according to social, economic and ecological best practices for sustainable water resources infrastructure development, operation, maintenance and rehabilitation. This include the use of our infrastructure for hydro-power and eco-tourism purposes through PPP. iv. Technical Engineering Support Services Supplies technical support services for new projects as well as betterments/ alterations/ decommissioning of existing bulk water infrastructure projects.

21. 21 3. Construction Management- Provides actual construction services to DWA through the use of an internal construction company. Services supplied by this company include the building of new infrastructure and rehabilitation of existing infrastructure. COE: R33.2m Goods and services: R26.9m Movable Assets: R58.5m DIRECTORATEPURPOSE i. Construction SupportConstruction of new water resources infrastructure; and supply administrative, human resource, financial; and safety and security support for 5 Construction Units ii. Construction Equipment (sub-directorate) Fleet management, manufacture and refurbish mechanical equipment; as well as procurement, operation, maintenance, rebuilding and disposal of construction equipment

22. 22 4. Infrastructure Operations and Maintenance - The strategic purpose of the Operations and Maintenance component is to ensure that the bulk water resource infrastructure is operated and maintained in a safe and sustainable manner. COE: R479.2 m Goods and services: R717.1m Projects: R1.3b

23. DIRECTORATEPURPOSE 1. Strategic Asset Management Technical Support Services for four clusters (Operations, Mechanical, Electrical and Civil Engineering) for the operation, maintenance, refurbishment and rehabilitation of existing bulk water resource infrastructure. Acts as custodian of all departmental dams by ensuring dam safety standards are adhered to. COE: R26.4m Goods and services: R35.5m Projects: R349m Movable assets: R3.5m ii. Northern Operation Ensures that bulk water resource infrastructure is operated and maintained in a safe and sustainable manner. The function is split into three area offices (Hartbeespoort, Groblesdal and Tzaneen). Revenue: R378m COE: R142 m Goods and services: R78m Projects: R107.4m Movable Assets: R4.7m iii. Eastern Operations Ensures that bulk water resource infrastructure is operated and maintained in a safe and sustainable manner in KwaZulu-Natal. Revenue: R243m COE: R38.7 m Goods and services: R123m Projects: R48.5m Movable Assets: R2m

24. 24 DIRECTORATEPURPOSE iv. Central Operations Ensures that bulk water resource infrastructure is operated and maintained in a safe and sustainable manner in Gauteng, Free State and the Northern Cape Regions. Revenue: R1.4b COE: R203 m Goods and services: R410m Projects: R606m Movable Assets: R7.3m v. Southern Operations Ensures that the bulk water resource infrastructure in the Eastern and Western Cape Provinces is operated and maintained in a safe and sustainable manner. The Southern Operations Directorate manages a number of bulk water supply schemes that can be roughly divided into Urban Supply Systems, Irrigation Schemes and Stand-Alone Schemes. Revenue: R308m COE: R67.8 m Goods and services: R78m Projects: R118m Movable Assets: R3.2m

25. Entity links ENTITYLINKS WITH ENTITY Trans-Caledon Tunnel AuthorityResponsible for implementation of off-budget projects 25

26. International obligations INTERNATIONAL OBLIGATIONPROGRESS ON IMPLEMENTATION LHWPPhase 2 includes the design and implementation of Polihali weir and dam, road construction, pump storage, and project management unit KOBWA 26

27. OVERVIEW: BRANCH PERFORMANCE PLAN FOR 2012/13 27

28. Strategic Objective: To ensure the availability of water supply Output: Augmentation projects developed for energy, domestic, mining, agriculture & industrial sectors PERFORMANCE INDICATOR TARGET FOR 2011/12PROGRESS IN 2011/12 TARGET FOR 2012/13 Percentage of project completed as per project implementation programme Olifants River Water Resource Development Project (ORWRDP Phase 2A) 90% 86%99% Cost allocated: R285million Olifants River Water Resources Development Project (ORWRDP Phase 2C- D) (Bulk distribution works) 3% 4%30% Cost allocated: R300 million Vaal River Eastern Sub- System Augmentation Project (VRESAP) 100% Commissioned – final snags addressed 28

29. 29 PERFORMANCE INDICATOR TARGET FOR 2011/12 PROGRESS IN 2011/12TARGET FOR 2012/13 Percentage of project completed as per project implementation programme Mokolo and Crocodile River (west) Water Augmentation Project (Phase 1) (MCWAP-1) 13% 45% Cost allocated: R100 million Komati Water Supply Augmentation Project (KWASAP) 26% Cost allocated: Off budget Mdloti River Development (Raising of Hazelmere Dam) 10% 42% Cost allocated: R43 million

30. 30 PERFORMANCE INDICATOR TARGET FOR 2011/12 PROGRESS IN 2011/12TARGET FOR 2012/13 Percentage of project completed as per project implementation programme Olifants-Doorn River Water Resources Project: Raising of Clanwilliam Dam 1% 8% Cost allocated: R51 million Mooi-Mgeni Transfer Scheme (MMTS- Phase 2) 26% 70% Cost allocated: Off budget Greater Letaba River Water Resources Project (GLeWAP) (N’wamitwa Dam) 3% 0% RID outstanding 8% Cost allocated: R60 million

31. 31 PERFORMANCE INDICATOR TARGET FOR 2011/12 PROGRESS IN 2011/12TARGET FOR 2012/13 Percentage of project completed as per project implementation programme Greater Letaba River Water Resources Project: (Raising of Tzaneen Dam) 0% RID outstanding 8% Cost allocated: R14 million (Mopani emergency works) 0% RID outstanding 17% Cost allocated: R70 million Lesotho Highlands Water Projects Phase II Establish Project management Unit; approve Project Charter; appoint designers Designers appointedComplete design of advanced infrastructure Cost allocated: Off budget

32. 32 PERFORMANCE INDICATOR TARGET FOR 2011/12 PROGRESS IN 2011/12TARGET FOR 2012/13 % of infrastructure maintained as per maintenance plan 80%52% Delays in appointment of maintenance contracts Shortage of technical skills 90% Number of Conveyance systems rehabilitated 62 Delays in procuring PSP services Lack of technical skills 5 S1 Balancing Dam-Oranje-Riet - Northern Cape Qamata GWS 5, Ncora GWS 2, Fish Sunday GWS Klipfontein Canal Eastern Cape Vlakfontein Canal -Mpumalanga Voelvlei GWS -Western Cape Cost allocated: R897 million Number of rehabilitated dams 895 dams Cost allocated: R 350 million

33. Risks Risk Treatment 1. Qualified Audit opinion for the NWRI Branch 1) Ensure that the policy management system is in place and used to develop and maintain the Branch's policies. Due date: 30 November 2012 2) Commence the review of all policies and procedures. Due date: 01 April 2012 3) Implementation and maintenance of the NWRIB finance turnaround strategy. Due Date: 31 March 2012 and on-going 4) Finalisation of the funding model and business models Due Date: 30 June 2012 5) Develop SHEQ policies and procedures. Due Date: 31 January 2013 6) Customisation and implementation of the latest version of SAP. Due Date: 31 October 2012 7) Review, and approve the new delegations of authority. Due Date: 31 March 2012

34. RiskRisk Treatment 2. Inability by the Branch to attract and retain the required skilled, knowledgeable and experienced people within the organisation that will address the current professional and technical staff profile 1) Ensure that the required recruitment and retention strategy and plan is developed for the Branch. Due date: 31 March 2012 2) Regular reports from Chief Directorates concerning vacancies and status of filling of key positions and recommend the filling of those vacancies as a matter of urgency. Due date: 31 March 2012, and on-going 3) Ensure that Branch can leverage on Occupation Specific Dispensation (OSD) to retain and attract technical scarce resources Due date: 31 March 2012 and ongoing

35. RiskRisk Treatment 3. Inability to guarantee sustainable provision and maintenance of bulk raw water to customers due to the aging and current condition of the water resource infrastructure - ineffective strategic water infrastructure asset management 1) Ensure that the required EPP and water infrastructure plan are in place together with associated contingency and redundancy plans Due date: 30 November 2012 2) Ensure that appropriate funding is requested in order to undertake required preventative as well as backlog maintenance for 2012/2013 Due date: 31 November 2012 3) Situational analysis undertaken in order to draw attention to the gravity of the water infrastructure condition, potential penalties by Eskom and this used as an appropriate lobbying mechanism - use made of the asset management report Due date: 31 March 2012 4) Obtaining Cabinet buy-in on the seriousness of the Water Resource Infrastructure situation via the intervention actions of the DWA accounting officer - cabinet submission Due date: 30 September 2012 5) Ensure that strategic asset management has a formal IAM strategy, framework, system in place and that appropriate asset management life-cycle models are used Due date: 30 October 2012

36. 6) Management should also design and implement procedures to ensure that the revaluation of assets is correctly accounted for in the financial statements and that the disclosure made in the financial statements comply with IAS16. Due date: 31 January 2012 7) Implementation of an asset information management system. Due date:31 March 2013 8) Ensure review of Asset Management Plan on annual basis. Due date: 01 April 2012 9) Finalise the integrated infrastructure plan Due Date: 31 March 2012 10) Revision of the pricing strategy + the issue of capping Due date: October 2012 11) An adjustment to procurement landscape/legislation Due Date: 31 March 2012 12) Develop long-term operations and maintenance plans Due Date: 31 March 2012

37. RisksRisk Treatment 4. Inability by the Branch to continue to live out its mandate after a business, financial, information technology or natural disaster has occurred. 1) Ensure that a business continuity implementation plan (BCP) is developed for the Branch which includes business recovery, disaster recovery, incident management, emergency management and crisis management + measuring and monitoring system Due date: 31 March 2013, and on-going 5. Inability to complete approved new augmentation projects developed for energy, domestic, mining & industrial sectors as timeously planned and within budget and specifications 1) Integrated governance /institutional structure for project implementation - final Due date: 31 July 2012 2) Infrastructure funding model to be developed and implemented Due Date: 01 April 2012