PRESENTATION OF THE 2005/06 ANNUAL REPORTPRESENTATION OF THE 2005/06 ANNUAL REPORT19 MARCH 200719 MARCH 2007

IN THE NCOP BUILDING IN PARLIAMENTIN THE NCOP BUILDING IN PARLIAMENT

Presented By:

Ms. TP. Nyakane – Maluka (Chairperson of BWB) Mr. RS. Matsebula (Chief Executive)

Table of ContentsTable of Contents

Section A: The Chairperson’s StatementSection A: The Chairperson’s Statement Vision, Mission & Strategic ObjectivesVision, Mission & Strategic Objectives

Appointment and Composition of the Board.Appointment and Composition of the Board. Board CommitteesBoard Committees Governance of the InstitutionGovernance of the Institution Institutional PerformanceInstitutional Performance Major ChallengesMajor Challenges

Section B: The Chief Executive’s ReportSection B: The Chief Executive’s Report

VisionVisionTo be the best public water services utilityTo be the best public water services utility

MissionMission“BWB strives to provide sustainable water, sanitation and “BWB strives to provide sustainable water, sanitation and support services through optimal utilization of appropriate support services through optimal utilization of appropriate

resources and contribute in water resource management to resources and contribute in water resource management to enhance socio-economic development”.enhance socio-economic development”.

Strategic ObjectivesStrategic Objectives

1.1. Providing sustainable water and sanitation ServicesProviding sustainable water and sanitation Services2.2. Pro-actively engaging in water resource managementPro-actively engaging in water resource management3.3. Providing support services to clientsProviding support services to clients4.4. Exploring and exploiting strategic ways for Exploring and exploiting strategic ways for

organizational financial sustainability and business organizational financial sustainability and business development activitiesdevelopment activities

5.5. Continuously participating in community development Continuously participating in community development through corporate social responsibilitythrough corporate social responsibility

Appointment and Composition of the Appointment and Composition of the BoardBoard

Appointment: March 1, 2006 – February 28, Appointment: March 1, 2006 – February 28, 2010.2010.

Comprises 9 non executive directorsComprises 9 non executive directors Ms. TP. Nyakane – Maluka (Chairperson)Ms. TP. Nyakane – Maluka (Chairperson) Mr. R. Ngomane (Deputy Chairperson)Mr. R. Ngomane (Deputy Chairperson) Mr. C. PhiriMr. C. Phiri Mr. BL. MavusoMr. BL. Mavuso Ms. N. KubayiMs. N. Kubayi Mr. B. QokoseMr. B. Qokose Mr. N. NxumaloMr. N. Nxumalo Mr. M. MakhweyaneMr. M. Makhweyane Ms. B. NgobeniMs. B. Ngobeni

Board CommitteesBoard Committees

Executive Committee: Ms. TP. Nyakane - Executive Committee: Ms. TP. Nyakane - MalukaMaluka

HR Committee: Ms. B. NgobeniHR Committee: Ms. B. Ngobeni Audit Committee: Mr. S. NdlovuAudit Committee: Mr. S. Ndlovu Remunerations Committee: Ms. TP. Nyakane - Remunerations Committee: Ms. TP. Nyakane -

MalukaMaluka Technical Committee: Mr. M. MakhweyaneTechnical Committee: Mr. M. Makhweyane Business Dev. & Compliance Committee: Ms. Business Dev. & Compliance Committee: Ms.

N. KubayiN. Kubayi Finance and Tender Committee: Mr. C. PhiriFinance and Tender Committee: Mr. C. Phiri

Governance of the InstitutionGovernance of the Institution

Policies:Policies: Procurement PolicyProcurement Policy Fraud Prevention PolicyFraud Prevention Policy

Appointments:Appointments: Chief ExecutiveChief Executive Chief Financial OfficerChief Financial Officer Internal AuditorInternal Auditor

Progress on Forensic Audit (2003/4)Progress on Forensic Audit (2003/4)

Chief Executive: Mr. SG. NkunaChief Executive: Mr. SG. Nkuna Suspended: July 13, 2005Suspended: July 13, 2005 Invited for a disciplinary hearing: March 13, Invited for a disciplinary hearing: March 13,

20062006 Resignation letter: March 10, 2006Resignation letter: March 10, 2006 His CCMA application failedHis CCMA application failed Criminal and Civil case against himCriminal and Civil case against him No benefits paid to him until cases are No benefits paid to him until cases are

concluded.concluded.

Progress on Forensic Audit (2003/4)Progress on Forensic Audit (2003/4)

Acting CFO: Mr. RH. MalulekeActing CFO: Mr. RH. Maluleke Suspended: July 13, 2005Suspended: July 13, 2005 Invited for a disciplinary hearing: April 21, Invited for a disciplinary hearing: April 21,

20062006 Resignation letter: April 20, 2006Resignation letter: April 20, 2006 The Board is defending at the CCMA for The Board is defending at the CCMA for

alleged constructive dismissal.alleged constructive dismissal. Criminal and Civil case against himCriminal and Civil case against him No benefits paid to him until cases are No benefits paid to him until cases are

concluded.concluded.

Institutional PerformanceInstitutional Performance

Internal Audit:Internal Audit: Price Waterhouse CoopersPrice Waterhouse Coopers Appointment of Internal Auditor is in progress.Appointment of Internal Auditor is in progress.

MoU’s:MoU’s: The MoU with Bohlabela District Municipality is being The MoU with Bohlabela District Municipality is being

negotiated with the new WSA (BLM).negotiated with the new WSA (BLM). The MoU with SALGA-Mpumalanga is being The MoU with SALGA-Mpumalanga is being

implemented.implemented. Strategic Business FocusStrategic Business Focus

Name ChangeName Change Repositioning Head QuartersRepositioning Head Quarters Improved relationship with Local & Provincial Improved relationship with Local & Provincial

Government and SALGA-MpumalangaGovernment and SALGA-Mpumalanga. .

Major ChallengesMajor Challenges

Signing of Service Level Agreements & Cost Signing of Service Level Agreements & Cost Recovery.Recovery. Disestablishment of Bohlabela District Disestablishment of Bohlabela District

Municipality (WSA)Municipality (WSA) New Councilors as a result of the Local New Councilors as a result of the Local

Government General Elections.Government General Elections. Alleged water quality problems in the Alleged water quality problems in the

Mbombela Local Municipality area.Mbombela Local Municipality area.

THANK YOUTHANK YOU

The Chief Executive’s ReportThe Chief Executive’s Report

1.1. BackgroundBackground2.2. Institutional ArrangementsInstitutional Arrangements3.3. Water Service: Water Resource, Water Service: Water Resource,

Production Maintenance and Production Maintenance and Distribution.Distribution.

4.4. Corporate ServicesCorporate Services5.5. Financial PerformanceFinancial Performance6.6. AchievementsAchievements7.7. ChallengesChallenges8.8. Targets for 2006/07Targets for 2006/079.9. Acknowledgement Acknowledgement 10.10. ConclusionConclusion

BackgroundBackground

Establishment: December 1997 in accordance with Establishment: December 1997 in accordance with the Water Services Act, Act 108 of 1997the Water Services Act, Act 108 of 1997

PFMA Listing: A National Government Business PFMA Listing: A National Government Business Enterprise, listed as Schedule 3 (b).Enterprise, listed as Schedule 3 (b).

Governance: 9 non executive directors (as the Governance: 9 non executive directors (as the accounting authority appointed by the minister of accounting authority appointed by the minister of DWAF) and the CE as the accounting officer. DWAF) and the CE as the accounting officer.

Nature of Business: Bulk water service provider to Nature of Business: Bulk water service provider to support municipalities. support municipalities.

Employees: Employees: 252 people.252 people. Socio-economic profile of the service area: Rural & Socio-economic profile of the service area: Rural &

semi-urban villages (1.2 million people in BLM and semi-urban villages (1.2 million people in BLM and MLM areas).MLM areas).

Institutional Arrangements: BLM AreaInstitutional Arrangements: BLM Area

Agreement: MoU ceded from the previous WSA (BDM).Agreement: MoU ceded from the previous WSA (BDM). Personnel: Transferred from DWAF to BWB in 2000.Personnel: Transferred from DWAF to BWB in 2000. Infrastructure: Infrastructure:

Original infrastructure was handed to BWB in 2000.Original infrastructure was handed to BWB in 2000. New infrastructure is handed over to BWB after New infrastructure is handed over to BWB after

completion to operate and maintain.completion to operate and maintain. Ownership of this infrastructure is not yet clarified.Ownership of this infrastructure is not yet clarified.

Income: DWAF grants for salaries of DWAF transferred Income: DWAF grants for salaries of DWAF transferred personnel and operation and maintenance of the personnel and operation and maintenance of the original schemes.original schemes.

The ultimate plan: Service level agreement for bulk The ultimate plan: Service level agreement for bulk water services in the BLM area.water services in the BLM area.

Institutional Arrangements: MLM AreaInstitutional Arrangements: MLM Area

Agreement: Tender Document (2 year contract Agreement: Tender Document (2 year contract with DWAF to a Month-Month with MLM until with DWAF to a Month-Month with MLM until completion of the section 78 processes).completion of the section 78 processes).

Personnel: Transferred from DWAF to BWB in Personnel: Transferred from DWAF to BWB in 2001.2001.

Infrastructure: Handed to BWB in 2001 to Infrastructure: Handed to BWB in 2001 to operate and maintain and later transferred to operate and maintain and later transferred to MLM on January 1, 2006.MLM on January 1, 2006.

Income: Monthly payment certificates to MLM.Income: Monthly payment certificates to MLM. The ultimate plan: Service level agreement for The ultimate plan: Service level agreement for

bulk water services in the MLM area.bulk water services in the MLM area.

Water Service: Water ResourcesWater Service: Water Resources

Raw Water Abstraction;Raw Water Abstraction; 5 rivers: Klein Sand, Sand, Mutlumuvi, Sabie and 5 rivers: Klein Sand, Sand, Mutlumuvi, Sabie and

CrocodileCrocodile And 3 dams: Acornhoek, Edinburgh and Inyaka.And 3 dams: Acornhoek, Edinburgh and Inyaka.

Strong Resources: Sabie river & Inyaka dam (62% Strong Resources: Sabie river & Inyaka dam (62% lowest level recorded). lowest level recorded).

Weak Resources: Weak Resources: Mutlumuvi river (no flow during dry season),Mutlumuvi river (no flow during dry season), the Crocodile river (put sand bags to control flow to the Crocodile river (put sand bags to control flow to

the pump station).the pump station). Edinburgh and Acornhoek dams.Edinburgh and Acornhoek dams.

Water Services: ProductionWater Services: Production

BWB operates 13 schemes;BWB operates 13 schemes; 9 water schemes in Bushbuckridge Local 9 water schemes in Bushbuckridge Local

Municipality (BLM), Municipality (BLM), 3 water schemes and 1 sewage treatment 3 water schemes and 1 sewage treatment

system in the Mbombela Local Municipality system in the Mbombela Local Municipality area (since 2001).area (since 2001).

Average abstraction, production and loses;Average abstraction, production and loses; 47.7 Ml/d, 45.5 Ml/d and 6.6% respectively: 47.7 Ml/d, 45.5 Ml/d and 6.6% respectively:

BLM areaBLM area 67.9 Ml/d, 65.3 Ml/d and 3.8% respectively: 67.9 Ml/d, 65.3 Ml/d and 3.8% respectively:

MLM areaMLM area Average Daily Production: 100.8 Ml/d.Average Daily Production: 100.8 Ml/d.

Sampling Schedules:Sampling Schedules: Thrice per day at all the works for operational Thrice per day at all the works for operational

purposes.purposes. Twice per month from water resources water works Twice per month from water resources water works

and distribution networks.and distribution networks. Ad-hoc samples are collected as and when required Ad-hoc samples are collected as and when required

to investigate specific pollutants.to investigate specific pollutants. Compliances: 100% for both physical and bacteriological Compliances: 100% for both physical and bacteriological

characteristics and 98% for chemical characteristics.characteristics and 98% for chemical characteristics. Non compliance: Kabokweni ponds effluent due to the Non compliance: Kabokweni ponds effluent due to the

breach of the ponds. breach of the ponds. Neither Cholera nor Typhoid were identified in the Neither Cholera nor Typhoid were identified in the

drinking water and raw water resources.drinking water and raw water resources.

Water Quality MonitoringWater Quality Monitoring

Planning and DevelopmentPlanning and Development

Current Role: Current Role: Contribute during development of WSDP’s and IDP’s Contribute during development of WSDP’s and IDP’s

of the WSA’s.of the WSA’s. Monitor implementation of Bulk Water infrastructure Monitor implementation of Bulk Water infrastructure

projects.projects. Completed Bulk Water Projects;Completed Bulk Water Projects;

Inyaka WTW phase 1B: 5 to 25 Ml/dInyaka WTW phase 1B: 5 to 25 Ml/d Acornhoek WTW: 3 to 6 Ml/dAcornhoek WTW: 3 to 6 Ml/d Shatale WTW: 0.3 to 1.2 Ml/dShatale WTW: 0.3 to 1.2 Ml/d Thulamahashe WTW: 3.5 to 7 Ml/dThulamahashe WTW: 3.5 to 7 Ml/d

Current Bulk Water Projects;Current Bulk Water Projects; Inyaka WTW: 25 to 50 Ml/dInyaka WTW: 25 to 50 Ml/d Hoxane WTW: 26 to 53 Ml/dHoxane WTW: 26 to 53 Ml/d Bulk pipelines from Inyaka to Acornhoek & MaritiBulk pipelines from Inyaka to Acornhoek & Mariti

Corporate ServicesCorporate Services

Employees: 252 people (85 people in the MLM area Employees: 252 people (85 people in the MLM area and 167 people in the BLM area).and 167 people in the BLM area).

Labor Unions: NEHAWU, PSA and SAMWU.Labor Unions: NEHAWU, PSA and SAMWU. Employment Equity: Employment Equity:

3 females were appointed during the financial 3 females were appointed during the financial year; 2 accounting clerks, 1 x PA to CEO.year; 2 accounting clerks, 1 x PA to CEO.

The workplace skills plan: It was submitted to the The workplace skills plan: It was submitted to the ESETA, focusing on process operators.ESETA, focusing on process operators.

Compliance to OHSA:Compliance to OHSA: Health and safety representatives together with Health and safety representatives together with

safety committees were established.safety committees were established.

Marketing and CommunicationMarketing and Communication

Customer Services:Customer Services: The in-house call centre attends to customer The in-house call centre attends to customer

complaints from the WSA and community members on complaints from the WSA and community members on a daily basis.a daily basis.

Community Programs:Community Programs: The arts competition “ Water for health and economic The arts competition “ Water for health and economic

development”development” Monthly visits to WTW’s by student doctors, nurses Monthly visits to WTW’s by student doctors, nurses

and schools.and schools. Conducted water conservation education Conducted water conservation education

programs at schools.programs at schools. Participated during National Water Week and Participated during National Water Week and

Arbor week.Arbor week. Conducted “Captain Crime Stop programs” with Conducted “Captain Crime Stop programs” with

the SAPS at schools.the SAPS at schools.

Financial PerformanceFinancial Performance

In the BDM/BLM Area;In the BDM/BLM Area; Total Billed Water Sales @R2.67/kl: R44.6m.Total Billed Water Sales @R2.67/kl: R44.6m. Amount Recovered (from WSA’s plus grants): R25.5mAmount Recovered (from WSA’s plus grants): R25.5m BLM Debt: R 19.1mBLM Debt: R 19.1m BDM Debt: R 26.4m. (carried over from previous BDM Debt: R 26.4m. (carried over from previous

financial year)financial year) In the MLM Area;In the MLM Area;

Project net income: R14.8million.Project net income: R14.8million. Loss : R66 879.00 (salary increases and other changes)Loss : R66 879.00 (salary increases and other changes)

BBBEE policy compliance: 20 % was recorded.BBBEE policy compliance: 20 % was recorded. The independent auditor’s report;The independent auditor’s report;

Qualifications; Recoverability of debt and signing of SLAQualifications; Recoverability of debt and signing of SLA Emphasis of matter; regarding ownership of Emphasis of matter; regarding ownership of

infrastructure.infrastructure.

Latest Developments Towards Improved Latest Developments Towards Improved Cost RecoveryCost Recovery

Challenges in the MLM Area;Challenges in the MLM Area; Alleged water quality problemAlleged water quality problem Resolved to settle the matter and establish a long Resolved to settle the matter and establish a long

term relationship.term relationship. Challenges in the BLM Area;Challenges in the BLM Area;

Establishment of a Water Task Team;Establishment of a Water Task Team; Billing Points (identify and implement) Verification Billing Points (identify and implement) Verification

of water loss at bulk distributionof water loss at bulk distribution Conclude Service Level Agreements (within 3 Conclude Service Level Agreements (within 3

weeks)weeks) Credit control measures: Reduce water supply by 50% Credit control measures: Reduce water supply by 50%

with effect from April 7, 2007.with effect from April 7, 2007. Bohlabela District Municipality Debt;Bohlabela District Municipality Debt;

Involved DPLG to recover the money from the Involved DPLG to recover the money from the disestablishment committee.disestablishment committee.

100% Compliance to water quality standards100% Compliance to water quality standards IDP’s and WSDP: Participated in the formulation, IDP’s and WSDP: Participated in the formulation,

compilation and review.compilation and review. BBBEE Policy Compliance: 20%.BBBEE Policy Compliance: 20%. Extended Coverage: Extended Coverage:

Completion of Phase 1B of Inyaka added about Completion of Phase 1B of Inyaka added about 15Ml/day.15Ml/day.

Implementation of the distribution plan.Implementation of the distribution plan. Service Quality:Service Quality:

Uninterrupted service in spite of the difficult Uninterrupted service in spite of the difficult financial situation.financial situation.

Effective support to BLM and MLM: Planning, Effective support to BLM and MLM: Planning, Repairs.Repairs.

AchievementsAchievements

Targets for 2006/07Targets for 2006/07

Service Level Agreements: pursue the signing Service Level Agreements: pursue the signing with WSAwith WSA

Recover debts from BDM and BLM.Recover debts from BDM and BLM. Increase investment of infrastructure: Increase investment of infrastructure:

Refurbishment/maintenance.Refurbishment/maintenance. Cost recovery at retail: BWB and BLM will set Cost recovery at retail: BWB and BLM will set

up systems for billing and collection: Sustain up systems for billing and collection: Sustain water services.water services.

Maximize production to address service Maximize production to address service backlogbacklog

Business Expansion: Expand operations to Business Expansion: Expand operations to neighboring municipalities.neighboring municipalities.

Improve reporting to the executive authority Improve reporting to the executive authority and all stakeholders.and all stakeholders.

Establish corporate head quarters in a Establish corporate head quarters in a strategic area.strategic area.

Improve on employment equity: Engineer and Improve on employment equity: Engineer and Director Director

Support to CMA: Coordinating WRM activitiesSupport to CMA: Coordinating WRM activities.. Improve on BBEEE by 5% Improve on BBEEE by 5%

Targets for 2006/07 (Cont.)Targets for 2006/07 (Cont.)

ChallengesChallenges

WSA: Disestablishment of BDM require fresh WSA: Disestablishment of BDM require fresh negotiations with BLMnegotiations with BLM

Poor Cost Recovery: Resulting in limited Poor Cost Recovery: Resulting in limited resources to maintain, repair and resources to maintain, repair and refurbishment infrastructure.refurbishment infrastructure.

Business Competition: Difficult to match Business Competition: Difficult to match standard of internationals due to lack of standard of internationals due to lack of financial resourcesfinancial resources

Infrastructure: Infrastructure: Lack of ownership dis-empowers the water boardLack of ownership dis-empowers the water board Insufficient Capacity.Insufficient Capacity. Severe drought (Rivers and dams).Severe drought (Rivers and dams).

AcknowledgementAcknowledgement

BWB is acknowledges;BWB is acknowledges; DWAF Regional and National for institutional support.DWAF Regional and National for institutional support. Bushbuckridge Local Municipality (BLM) for business..Bushbuckridge Local Municipality (BLM) for business.. Mbombela Local Municipality (MLM) for business.Mbombela Local Municipality (MLM) for business. Ehlanzeni District Municipality (EDM) for support.Ehlanzeni District Municipality (EDM) for support. SALGA – Mpumalanga and DPLG for partnering with us.SALGA – Mpumalanga and DPLG for partnering with us. South African Association of Water Utilities (SAAWU) for South African Association of Water Utilities (SAAWU) for

guidance.guidance. The Portfolio Committee on Water Affairs and Forestry The Portfolio Committee on Water Affairs and Forestry

for guidance.for guidance. Your collective contributions have made us a better Your collective contributions have made us a better

institution.institution.

CONCLUSIONCONCLUSION

Bushbuckridge Water acknowledges that;Bushbuckridge Water acknowledges that; there is a duty on all spheres of government to ensure there is a duty on all spheres of government to ensure

that National government priorities are implemented that National government priorities are implemented in a manner, which is efficient, equitable and in a manner, which is efficient, equitable and sustainablesustainable..

eradication of poverty and attention to service eradication of poverty and attention to service backlogs are top on the national agendabacklogs are top on the national agenda

water has also become a key pivot for socio-economic water has also become a key pivot for socio-economic development.development.

Provision of water services has become a major hard Provision of water services has become a major hard stick for measuring performance of Government.stick for measuring performance of Government.

Cooperation of all spheres of Government is inevitable to Cooperation of all spheres of Government is inevitable to address service backlogs.address service backlogs.

THANK YOUTHANK YOU