BLOEM WATER ANNUAL REPORTING 2006/2007

PRESENTATION TO THE

PORTFOLIO COMMITTEE ON WATER AND FORESTRY

7 MAY 2008

Contents1. Overview of Bloem Water by

Chairperson of the Board

2. Financial performance

3. Infrastructure development

4. State of Water Quality

5. Load shedding

6. Alignment to DWAF strategies

OVERVIEW OF BLOEM WATER PERFORMANCE Functional Board and Board Committees in place exercising oversight and giving

strategic direction to the organisation. Resultant increased confidence of the Board in the management team’s ability to take Bloem Water into the future.

During the latter part of the 2006/7 financial year a transformation strategy was developed and approved in July 2007. The transformation strategy envisaged is not merely an adjustment to managerial control, it involves a composite package of adjustments to work organisation and allocations (to address the operational challenges including addressing the underutilisation of the skills); adjustments to grading of positions and its consequent wage and benefits adjustments within the context of the financial positioning of Bloemwater; and changes to industrial relations generally (spanning the spectrum- from relations with organised labour to enforcing team work and consultation to reducing the length of time of processing disciplinary action and implementation of performance management-ending the legacy of industrial relations characterised by conflict and confrontation in the interests of all the workers who constitute Bloemwater.

The Board is of the view that as a Water Board, Bloem Water is capable of playing a critical role in developing the capacity and supporting water services authorities and municipal water service providers. We anticipate that cognizance will be taken of this ability in the unfolding of the institutional reform process.

Service area

FINANCIAL OVERVIEW External Audit Report

No Qualifications received

Major Achievements in terms of financial performance Solvency Liquidity Going Concern Debtors position improved with proactive debt management process in

place – from 86 days to 64 days. Renegotiation of loans (DBSA 12 -10%), (DWAF 13.5 – Nedbank 9,12%) Cash position improved Debt position remained high due to CAPEX requirements Water sales higher than budgeted Streamlining of pension fund

Net profit of R26,1 million, of which R25.5 million was transferred to capital replacement and development fund and the insurance fund.

Bulk Tariff increase of 4.7% ( R2.78 to R2.91) after consultation with Municipal clients in line with Regulations.

INFRASTRUCTURE DEVELOPMENT

Factors influencing infrastructure development:

Growth in volumes of water supplied (Water Demand) Refurbishment, renovation or replacement of existing assets

Infrastructure development comprises Expansion of Area of Supply (this entails “new" areas of supply); Refurbishment of assets (work undertaken to existing assets to renovate,

upgrade to standard, repair or replace existing assets without increasing system capacity).

Infrastructure development plans, projected to amount to R64 million, is premised on the need to preserve existing capacity, optimize operational and maintenance efficiency and reduce risk of non-supply. Thus the projects range from the installation of standby pump capacity to the installation of chlorine booster stations, telemetry and leak detection.

Much of the immediate infrastructure development that is taking place entails refurbishment of assets and minimal extensions rather than expansion work (although a number of projects currently in its development stages in relation to Naledi Municipality as well as Mantsopa will see expansion projects coming on board in the next year or two as well as extensions of our current treatment plants)

Refurbishment within the next 5 years Description

Priority Proposed date Est. Present Value (million)

Thaba Nchu Bulk/Reticulation Separation Medium 2008 R 0.5

Lesaka Pump Station: Additional Standby Pump Medium 2008 R4.2

OK Pump Station: Additional Standby Pump Medium 2008 R1.2

Thaba Nchu: Replace tanks at rural villages (5 x 6kl) Medium 2008 R0.8

Tienfontein: Transformers High 2008 R1.7

Novo: Transformers High 2008 R3.9

Welbedacht: WTW: Raw Water Connection High 2008 R1.7

Welbedacht WTW: Ammonia & Chlorine Treatment High 2008 R1.8

Welbedacht WTW: Washwater Recirculation Low 2009 R3.0

Welbedacht WTW: Refurbish Filters Medium 2008 to 2010 R3.0

Wel-Bfn Pipeline: Inline Cl2 & pH monitoring High 2008 R0.8

Wel-Bfn Pipeline: Pipeline renovation & relining High 2008 to 2011 R8.0

Wel-Bfn Pipeline: Replace air and isolating valves Low 2008 to2010 R1.0

Wel-Bfn Pipeline: Upgrade connections High 2008 to 2009 R3.2

Wel-Bfn Pipeline: Chlorine dosing at Uitkijk Res. High 2008 R2.0

Wel-Bfn Pipeline: De Hoek rising main repair Medium 2009 R1.0

Reddersburg WTW: Refurbishment Medium 2008 R0.5

Hennie Steyn: Gravity Line (Bethulie WTW) High 2008 R2.8

Bethulie WTW: Extend sludge dams Low 2009to2010 R2.0

Philippolis Supply: New Reservoir Medium 2008 R0.6

Orange River Region: Upgrade Chlorine dosing installations Medium 2008 to 2010 R0.5

Other: Upgrade SCADA/Telemetry System High 2008 to 2009 R6.0

Other: Bloemfontein Office Medium 2008 R3.0

Other Civil houses in regions Medium 2008 R2.0

Other: Additional boreholes in regions Medium 2008 to 2009 R0.4

Other: Cathodic protection systems rehabilitation High 2008 to 2011 R8.0

TOTAL REFURBISHMENT PROJECT COST R63,2

STATE OF WATER QUALITY Throughout our service area particular attention is paid to water quality issues

and complies in all respects to SANS 241 standards.

Our water monitoring programmes which have been in place for a number of years and which have been refined over time are comprised as follows:

2 hourly tests with results recorded throughout the treatment process to monitor amongst others chlorine levels, ph, turbidity and conductivity;

Weekly bacteriological tests conducted by the institute for underground studies at the Free State University as an independent monitor.

Raw water quality monitoring on a quarterly basis as part of a bio monitoring project in the interests of alerting DWAF to raw water pollutants upstream.

Data in respect of water quality is logged via Regional DWAF into the National Water quality register.

STATE OF WATER QUALITY

Programme being developed to extend water quality monitoring programmes, in partnership with smaller municipal clients,in order to ensure quality of water from source to tap. This programme will include setting up functional multi-stakeholder forums to monitor and attend to failures speedily as they arise.

On water quality, the indications are that it would be cost effective at to dose chlorine at a break pressure reservoir in order to ensure a higher end concentration of chlorine, thus safeguarding the bacteriological quality of the water. This is being implemented as part of the Capex programme of the current financial year.

Major challenge relates to the raw water quality, specifically from the Caledon River, where excessive siltation makes water treatment costly from a chemicals and equipment perspective. Regional DWAF approached to assist in the long term resolution of the siltation problem as well as pollutants

IMPACT OF LOAD SHEDDING • Contrary to media suggestions that quality of water

compromised due to load shedding – all systems stop functioning when load shedding occurs thus mitigating any risk of municipal clients receiving untreated water.

• Prior to the Ministerial exemption of water boards from the load shedding programme Eskom was engaged and agreed to minimal time periods of scheduled shuts downs in order to safeguard the reservoir levels and risk to infrastructure and equipment damage due to unscheduled shutdowns.

• Eskom still being engaged on giving effect to Ministerial exemption in Bloem Water service area.

ALIGNMENT OF PROGRAMMES WITH DWAF STRATEGIC OBJECTIVESBloem Water seeks actively to align its programmes and projects with DWAF

Strategies, in particular the following:

Maintenance of a clean financial audit – thus our clean audits

The empowerment of women (the appointment of women into executive (5 of the 8 executives are women) and technical positions – the only women Plant oversee appointed in the history of Bloem Water) – this is over and above the continued training and mentoring that is provided generally)

Water conservation and demand management – through our various programmes and as Implementing agent role vis-a vis Regional DWAF is all embracing and evolving, amongst others, the following:

Quench Your Thirst Centers in Libraries within the communities that we serve. These centers will be set up by Bloem Water staff and shall serve as information and interest sharing centers.

ALIGNMENT OF PROGRAMMES WITH DWAF STRATEGIC OBJECTIVES

Splash festivals held during summer involves inviting children from disadvantaged communities to a water day, together with their teachers, where they learn while they play. The childrens’ knowledge acquisition on water issues is then represented art form on disused concrete water pipes with the assistance of employees. In order to engage the younger learners and to capture their interest a Bloem Water Mascot, named Tody Tap has been created. Tody has become our ambassador for educating the young and creating a role for them play in water conservation.

Water Tours: Engaging in water wise tours involving school children. Learner participation will be encouraged by showing, explaining and raising awareness as to the infinite value of water as a life giving source as well as the career options available in the water sector from tours of the treatment plants, amongst others.

Knowledge Collection Days: Every employee in BW will be requested to consider donating a book on our KCDs. These books shall be given to those schools who are in need of resources such as books, specifically the farm schools in our areas of supply.

ALIGNMENT OF PROGRAMMES WITH DWAF STRATEGIC OBJECTIVES Poverty Alleviation – indirectly through tariff structuring we contribute to poverty

alleviation

Challenges in respect of empowerment of the disabled are being experienced but we commit ourselves to begin addressing this challenge with the speed it requires.

To become more responsive to municipal needs and performance feedback from municipality with the view to addressing gaps in the manner and quality of services to municipalities.

Our approach to social responsibility project and programmes is about much more than sponsoring & being “seen” –our ultimate goal would be to nurture and to enthuse knowledge amongst the communities we serve, to create awareness on the precious natural resource with which we work, to share compassion, to be willing to listen, learn & share our knowledge, to support where need be and to empower ourselves and others in delivering on our public service mandate in the interests of future generations.

CONCLUSION

• In the year under review Bloem Water has become more responsive to municipal needs with regional offices becoming more proactive in problem resolution and improving support and services to Municipalities. In many instances going beyond our mandate of bulk services provider to playing a role in supporting municipalities with operational issues from a reticulation perspective as the sustainability of municipal services is key to our functioning as well as being essential to the communities served.

• Bloem Water’s future remains contingent both on the willingness of actors within and outside to continue to search for better ways of working together and on the availability of resources upon which these agents of change are able to draw- both financial and human – thus the continued efforts at ensuring financial viability and the introduction of extensive learnership and on job training programmes to ensure the continued development of human resources both within Bloem Water and in Municipalities.

• There are exciting possibilities which all stakeholders ought to embrace and unite around in the realisation of our public service mandate.