Jabulani Sindane : DG Trevor Balzer: Acting CFO Richard Machaba : Manager National Transfers

1. Select Committee on FinanceWater Services Operating and Transfer Subsidy10 May 2006Department of Water Affairs and Forestry Jabulani Sindane : DG Trevor Balzer: Acting CFO Richard Machaba : Manager National Transfers

2. Contents • Progress 2005/06 : Water Services Operating and Transfer Subsidy • Revised Allocations 2005/06 and Expenditure • Earmarked Funds : Vote 34 2006/07 • Water Services Operating and Transfer Subsidy 2006/07 • 2006 to 2009 Allocations by Province • General

3. PROGRESS 2005/06 : WATER SERVICES OPERATING AND TRANSFER SUBSIDY Progress to date: • Behind our target, were able to conclude majority of transfer agreements by the target date of 31 March 2006 (39 agreements, 70%) . • Some municipalities, particularly those with weak administrative and technical capacity, where special arrangements will have to be made, provision built into agreements; • Progress can be summarised as follows (to 30 April 2006) : • 43 (out of 58)agreements signed (74%); • 1841 staff transferred (23%); • 3584 staff seconded (44%); • 246 schemes with a total asset value of approximating R4.979 billion transferred (72%), and • Refurbishment total expenditure R362 million (43%).

4. Revised Operating & Transfer Subsidy 20005/06

5. DWAF OPERATING SUBSIDY: OPERATION AND MAINTENANCE EXPENDITURE AS AT 31 MARCH 2006 - 2005/2006 (Not audited)

6. DWAF OPERATING SUBSIDY: REFURBISHMENT 31 MARCH 2006 - 2005/2006(Not Audited)

7. Earmarked Funds : Vote 34 2006/07(Funds may not be used for other purposes than those specified)

8. WATER SERVICES OPERATING AND TRANSFER SUBSIDY Division of Revenue Act 2006: • Allocations for 2006/07 reflected in: • Schedule 6 – Specific Purpose Recurrent Grant allocation, R500 million (where transfer agreements have been concluded) • Schedule 7 – Allocation in kind to Municipalities for designated programmes, R490,5 million (where transfer agreements are still under negotiation and staff still on the payroll of the DWAF ).

9. WATER SERVICES OPERATING AND TRANSFER SUBSIDY

10. 2006 to 2009 DoRA Allocations for OPERATION AND MAINTENANCE, HR AND REFURBISHMERNT (By Province)

11. 2006 to 2009 DoRA Allocations for REFURBISHMERNT (By Province)

12. GENERAL • Specific provision made in Section 13 of the DoRA to adjust allocations to Municipalities once transfer agreements are concluded and staff transfers concluded. • Date for conclusion of transfer agreements 31 March 2006, 43 Agreements have now been concluded, 12 of the remaining 15 should be concluded by 30 June 2006 (7 in circulation and 3 95% complete). • Transfer of staff, budgets and schemes to municipalities by 31 March 2007 • Some schemes (in excess of R100 million in value) will require parliamentary approval before transfer • Conditional Grants will be incorporated into Local Government equitable share from 2008/09 onwards, final breakout 2011/12. • Important condition for transfers : Necessary capacity must be in place in the receiving institution for the implementation of the conditional grant (NT and DPLG will have to assist in this regard).

13. “Some for all forever”