1. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 1 NATIONAL DEPARTMENT OF HEALTH PRESENTATION TO STANDING COMMITTEE : APPROPRIATIONS 12 AUGUST 2009

2. INTRODUCTION The final appropriation for the National Department of Health for the year 2008/09 was R15,851,169. Of the R15,851,169 appropriated, an amount of R14,362,786 is a provision for Conditional Grants. This is 91% of the total allocation for Vote 14. Actual total expenditure amounted to R15,464,470 which is 97.6% of the appropriated amount. Under expenditure amounted to R386,699m which is 2.4% of the total appropriated. The Conditional grants under expenditure makes up 93% of the total under expenditure.

3. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 3 NATIONAL DEPARTMENT OF HEALTH EXCLUDING CONDITIONAL GRANTS.

4. NDOH BUDGET & ACTUALS EXCLUDING CONDITIONAL GRANTS 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 4

5. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 5 SUMMARISED REASONS FOR THE OVERALL UNDERSPENDING The under spending of R3,9m in Programme 1 was due to the delays experienced in the relocation to the newly upgraded Civitas Building resultant from incomplete processes between the contractors and the Public Works Department. Although the funds are committed, the payments could not be made during the year. Programme 2 under spent by R38m due to the slow progress on the mortuaries to be built as well as payment of invoices with the Forensic Pathology Services Conditional grant at provincial level. Affected province is Northern Cape (R10.2m).

6. SUMMARISED REASONS FOR THE OVERALL UNDERSPENDING Funds earmarked to NGO’s under programme 2 could not be released in full before year-end. Three NGOs were affected viz; Lovelife (21m) earmarked for last quarter. A report for the 3 rd quarter utilization was still awaited. SAAVI (2m) earmarked for VAT, the funds were only available after the Adjusted budget. The contract expired in Jan’09, hence transfer not effected and NICDAM HIV&AIDS governance and leadership project (2m). Programme 4 under spent by R10m due to the supply chain processes delays in finalizing a tender for an audit of Nursing Colleges project. Roll-over was requested.

7. SUMMARISED REASONS FOR THE OVERALL UNDERSPENDING The under expenditure in Programme 5 amounting to R323,904m was attributed to withheld funds from the Hospital Revitalization and the Forensic Pathology Services conditional grants for some provinces due to delays with awarding of tenders as well as construction processes of approved projects including invoices which could not be paid before year end due to cash flow limitations. The affected provinces are Western Cape (R170,381m) and Mpumalanga (R153,523). The remaining unspent funds under programme 5 was for the completion of the District Health Information systems project.

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9. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 9 DETAIL REASONS FOR OVER/UNDER SPENDING (un-audited) Comprehensive HIV & AIDS Gauteng : (88.9%) –Incurred expenditure could not be paid in time due to cost containment measures implemented on Goods & Services. Mpumalanga : (105.2%) –Enrolled more that anticipated patients on ART. Overspent on Laboratory and Drugs Western Cape : (110.3%) –Target for patients on ART over achieved, translating to over expenditure. Roll overs had to be requested at provincial level since National had transferred all provincial allocations.

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11. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 11 DETAIL REASONS FOR OVER/UNDER SPENDING (un-audited) Forensic Pathology Services The under expenditure resulted from the delay in appointing contractors and acquisition of land Department of Public Works for the Northern Cape province. National withheld the transfer of funds. WC and FS requested their roll over from their provincial Treasury. Roll over has been requested.

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13. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 13 DETAIL REASONS FOR OVER/UNDER SPENDING (un-audited) Health Professions Training & Development Five provinces spent their full allocations. The provinces which under spent their allocations have requested the roll over from their provincial treasuries. Affected provinces are : Eastern Cape, Limpopo, Mpumalanga and Northern Cape. The reasons for under expenditure are attributed to capacity (no dedicated/appointed staff).

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15. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 15 DETAIL REASONS FOR OVER/UNDER SPENDING (un-audited) Hospital Revitalization Eastern Cape : (77.0%) –Delay in awarding tenders at St Elizabeth and Fronteir Hospitals –Late receipt of equipment invoice delayed payment till April 2009 Free State : (83.2%) –Cash flow problem which affected payment of invoices. –Commitments amounted to 99% of grant.

16. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 16 DETAIL REASONS FOR OVER/UNDER SPENDING (un-audited) Hospital Revitalization (cont.) Mpumalanga : (42.1%) –Lack of capacity to manage the grant. The province is currently busy with filing vacant posts –Themba hospital : delays in appointment of contractors –Ermelo hospital : contract terminated due to poor performance, resulting in delays of equipment procurement which was budgeted at R 17 m –an amount of R153m was withheld by NDOH due to under expenditure. Northern Cape : (73.2%) –Cash flow problems in processing payments –Delays in starting of construction at Upington and Kimberley Mental Hospitals

17. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 17 DETAIL REASONS FOR OVER/UNDER SPENDING (un-audited) Hospital Revitalization (cont.) Western Cape : (58.1%) –George, Valkenburg and Vredenburg hospitals delays due to under funding in 06/07 and 07/08. Peer review process delayed Khayelitsha project resulting in tenders being awarded 2 months late –At Paarl hospital, the decanting process was more complex than anticipated. –Mitchell’s Plain hospital project over projected expenditure by R 14m. –The Province has requested rollover for 09/10. –An amount of R170m was withheld by NDOH due to under expenditure.

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19. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 19 DETAIL REASONS FOR OVER/UNDER SPENDING ( un-audited) National Tertiary Services Grant Eastern Cape : (82.3%) –Procurement of Oncology Equipment for the MTS. Awaiting delivery of the equipment. –The grant will cover R83.5m. The balance to come from equitable share (total tender is for R 94 m) Mpumalanga : (66.4%) –Delays in procurement of equipment. –Specialists appointed too late in year. –Errors in capturing payments, delays in passing journals –Orthopaedic Surgeon sick for 2 months, delays in services in hospital and outreach programs

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21. CONCLUSION The Department takes cognizance that under expenditure is not a desirable outcome, however, in some instances, controls had to be put in place to ensure compliance with legislation such as the PFMA and Supply Chain regulations, which unfortunately resulted in the under expenditure. The funds are however committed and will be spent as soon as approved, with the exception of the Revitalization grant for Western Cape, which might have to be deferred, due to the short time left for the current financial year, to spend the full roll over.

22. 2016/02/17STANDING COMMITTEE ON APPROPRIATIONS 22 NATIONAL DEPARTMENT OF HEALTH The End