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Presentation to the Portfolio Committee: Water & Environment

Presentation by

Mr Onesmus AyayaChief Financial Officer

13 April 2010

Finance

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Outline

• Key challenges• Previous audit outcomes• Expenditure trends• MTEF allocation

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• To ensure sound financial management practices based on the implementation of accountability and governance framework underpinning the Public Finance Management Act, (Act No. 1 of 1999) for both Main Account and Water TradingEntity

This purpose contribute to Strategic Priority No. 6 of the strategic plan in terms of revenue management and implementation of financial improvement plan to address previous audit queries

PURPOSE OF THE FINANCE BRANCH

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KEY FOCAL AREAS IN THE BRANCH

• Supply Chain and Asset Management

• Revenue and debtors management

• Financial Accounting and Reporting

• Management Accounting

• Budget and Planning (including expenditure management)

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CHALLENGES FACING FINANCE

• To sustain unqualified audit • Non-integrated financial systems for Main Account• Sluggish transformation in terms of organisational

systems and processes required to support use of financial recourses to the Department

• Relationship between regions and head office

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CHALLENGES FACING FINANCE (CONT)

• Systems that requires proper implementation and post implementation refinements– long term, user requirements (SAP, LOGIS etc)

• Inadequate capacity (lack of skilled resources)• Extensive infrastructure assets – magnitude,

spatial distribution/location: Auditable assets plans needed

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Solutions to Challenges• Employment of budget controllers to monitor monthly

spending by program managers• Keeping vacant posts to no more that 5% of the

establishment• Implementation of integrated management system with

the help of national treasury• Formulation and implementation of clear assets

management plans• Solution is linking all procurement to business plan

during approvals

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EXPENDITURE OUTCOME FOR THE PERIOD ENDED 30 MARCH 2010

Programme Adjusted budget

2009/10

Actual

2009/10

R’ 000

% spent Available budget

Administration 799 046 776 415 97% 22 631

Water resource management

4 124 998 4 031 775 98% 93 223

Water services 2 849 958 2 648 532 93% 201 426

Total 7 774 002 7 456 722 96% 317 280

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Economic classification

Programme Adjusted Budget

2009/10

2009/10 Actual

% spent

Available Budget

Compensation of Employees

1 024 055 896 203 88% 127 852

Goods and Services 2 211 129 2 047 285 93% 163 844

Interest and Rent on land - 66 - (66)

Theft and Losses - 3 890 - (3 890)

Transfers and Subsidies 4 456 341 4 464 639 100 8 298

Payments for Capital Assets 82 477 44 639 54% 37 838

Total 7 774 002 7 456 722 96% 317 280

EXPENDITURE OUTCOME FOR THE PERIOD ENDED 30 MARCH 2010

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Reason for under spending• Unfilled vacant posts throughout the department

contributed to under – expenditure, it is anticipated approximately R110 million will not be spend in this current financial year

• Late submission of invoices in respect of services already rendered such as Fleet management Services (Phakisa) and IT Services (Arivia.)

• Accelerated community infrastructure programme, which requires counter party funding by municipalities

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KEY PROGRAMMES for 2010/2011

Post government reconfiguration: reorganised

Programme structure is as follows:

1. Administration

2. Water management

3. National water resources infrastructure

4. Regional management

5. Water sector regulation

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Programme 2010/2011

R’ 000

2011/2012

R’ 000

2012/2013

R’ 000

Administration 884 205 902 119 947 829

Water management

364 749 386 574 405 853

National water resources infrastructure

2 241 418 2 520 177 2 739 959

Regional management

4 329 013 5 077 318 5 320 451

Water sector regulation

177 207 204 019 214 140

Total allocation 7 996 592 9 090 207 9 628 232

MAIN ACCOUNT ALLOCATION (INCLUDING EARMARKED FUNDING)

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EARMARKED FUNDINGDescription of Earmarked Projects 2010/11

R’000

Learning Academy 20 000

Property Management - Rental of Buildings 156 000

Additional Capacity – Human Resources 7 000

Working for Water 668 583

Working on Fire 207 923

Replacement of donor funding 200 000

Bulk infrastructure 893 000

Water Services Operating Subsidy 807 682

Construction of Water Services Scheme 191 942

Compliance Monitoring & Enforcement 5 000

Total 5 446 905

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UN-EARMARKED FUNDING

Economic classification 2010/11

(R ’000)

Compensation of Employees 917 528

Goods and Services 1 246 288

Transfers of subsidies 287 008

Payment for Capital 98 863

Total 2 549 687

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DONOR FUNDING

Description of items 2010/2011

R’ 000

2011/2012

R’ 000

2012/2013

R’ 000

Water and sanitation services

350 334 - -

Water and sanitation programme

52 460 52 460 -

Upgrading of hydrometric equipment in Lesotho

- - -

Community water supply and sanitation

7 - -

Twinning arrangements with Dutch water boards

- - -

Total 402 794 52 460 -

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COMBINED BUDGET (EXCHEQUER & DONOR FUNDING)Description of items 2010/11

(R’000) 2011/12 (R’000)

2012/13 (R’000)

Exchequer funds 7,996,592 9,090,207 9,628,232 Donor Funds 402 794

52,460 0

Expenditure Recurrent expenditure 4,035,557 4,205,085 4,385,641 Goods and Services - Exchequer Funds

2,466,220 2,955,915 3,173,212

Goods and Services - Donor Funds

402 794

52,460 0

Compensation of employees 1,166,543 1,196,710 1,212,429 Transfers and subsidies 3,238,487 3,076,768 3,455,007 Provinces and municipalities 890,746 380,723 399,760 Departmental agencies and entities

2,102,743 2,400,653 2,623,459

Households 64,426 114,787 251,152 Foreign governments and organisations

180,106 180,111 180,117

Universities and non-profit organization

466 494 519

Payments for capital assets 1,125,342 1,860,814 1,787,584 Buildings and other fixed assets 1,038,326 1,769,218 1,691,779 Biological Assets 341 360 378 Machinery and equipment 74,196 77,931 81,560 Software and intangibles 12,479 13,305 13,867 TOTAL 8,399,386 9,142,667 9,628,232

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REQUEST FOR ADDITIONAL FUNDING – 2010/11Description of Budget Bids Amount

RequestedR’000

Amount Approved

R’000

DifferenceR’000

Water Conservation and Demand Management 60 000 0 (60 000 )

Rainwater Harvesting Programme 51 700 0 (51 700)

Natural Resource Management (WfW) 200 000 102 573 (97 427)

Funding for Deputy Minister 8 733 3 200 (5 533)

Olifants River Water Resource Development Project 306 000 0 (306 000)

Refurbishment of Infrastructure 1 000 000 0 (1 000 000)

Regional Bulk Infrastructure 1 354 000 54 000 (1 300 000)

Upgrading and expansion of the National Water Resource Monitoring Networks

17 000 0 (17 000)

Emergency Project to address the water crisis at Giyani

98 000 0 (98 000)

Mzimvubu River Catchment 6 000 0 (6 000)

Compensation of Employees adjustment 65 559

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Thank you

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