PORTFOLIO COMMITTEE PRESENTATION

1. PORTFOLIO COMMITTEE PRESENTATION PRESENTED TO: Parliament 17 – 18 April 2013 PRESENTED BY: Ms N R Mlonzi (Board Chairman) Mr M Msiwa (Chief Executive )

2. Contents Feedback from Previous Year Portfolio Committee Presentation 2011 / 2012 Annual Report Strategic Direction Performance Targets Budgets - 2012/ 2013 - 2013/2014 Tariff Annual Work Program Implementation of PAJA and PAIA 2

3. 20 April 2012 Portfolio Committee Areas for Improvement Feedback All Water Boards to clearly show Bonus and Salaries of CEO and SNR Managers separately Amatola Water Secondary Business is greater than its Primary and AW should relook at this Currently Amatola Water is running at a deficit and steps need to be taken to turn this around DWA and National Treasury to assist AW to turnaround if necessary Secondary Business Debtors Days need to be reduced Board member must be present These items will be all be covered during the presentation 3

4. AW Bulk Service Delivery 4

5. 2011 / 2012 Annual Report • 3 Blue Drop Awards received and improved blue drop scores on all plants • Retention of OHSAS 18001 accreditation • Revenue R423 mil and 30 835 megalitre for financial year • Implementation of financial ring-fencing of Sec 29 and Sec 30 activities • Significant reductions in costs as part of financial turnaround • 2010/2011 financial figures were restated with a deficit of R40 million not R15 million as initially reported • A reduced deficit of R8 million was made in the 2011/2012 financial year • Amatola Water received an qualified audit report in 2011/12. The qualification was for Irregular expenditure , the auditors did not get reasonable assurance in respect of completeness of the irregular expenditure 5

6. Debts Significant improvement in liquidity hence: Payments to DWA Amatola Water is paying all current Debt to DWA Agreement busy being finalised to pay historical debt of about R45 million. There is disagreement on the application of the Raw Water Pricing Strategy relating to abstraction works. Amatola Water has no loans Amounts Owed to AW Current debts being paid Historically Section 30 debt (120days or greater) of R19 mil OR Tambo DM – R 4.2 Mil Amathole DM – R10 Mill Dpt Public works R4.8 mil

7. New Strategic Direction New focussed, sustainable Amatola Water delivering on its gazetted function and contributing to National Imperatives 7

8. Strategic Plan • Recognizing that Amatola Water, established in 1998, is unlike other water boards as its consumer base is rural communities not metro’s or industrial. • Amatola Water currently does not have consistent economies of scale and serves in a province riddled with poverty, inequalities and sub standard performance of water services delivery • Amatola Water in the past has got lured into doing increased section 30 activities trying to help municipalities in any way possible with water services provision. This is unsustainable, financially not viable and has led to loss of focus on its reason for establishment • As an entity of the state Amatola Water needs to clearly understand why it was formed and its part in the Government service delivery, that as it performs well it will contribute to overall Government effectiveness. • As a state entity, the new strategy developed is a 20 year strategy aligned with national imperatives such as those included in the National Development Plan and Institutional Realignment and Reform. 8

9. Amatola Water Understood Mandate Is detailed planning from source to tap making sure that there are no bottle necks FIELD (A) FIELD (B) Department: Water Affairs Water Boards Water Services Authorities (WSAs) 9

10. Strategic Product Is detailed planning from source to tap making sure that there are no bottle necks Secondary (B) activity Secondary (A) activity Primary activity Source: DWA 2012: Water Boards reform - Overview Report 10

11. Strategic Plan • Amatola Water understands its role in contributing to the NDP decent standard of living through the provision of bulk water services in the Eastern Cape. It will do this by: • Focusing on Sec 29 Activities: Amatola Water has set a target in 5 years to have a 70/30 split between Sec 29 and Sec 30 Activities and by 20 years a 90/10 split. • Contributing to a decent standard of living in its area by adopting a design standard of 750l per household per day supporting social and economic development in rural communities that it serves • Upgrading its works, were appropriate to meet this standard in collaboration with DWA and WSAs • A significant focus on governance and adoption and implementation of King III principles • Sec 30 activities must be ring-fenced, profitable and surpluses used to augment sec 29 infrastructure 11

12. VISION AND MISSION Vision: “To be the dominant Bulk Water Service Provider in the Eastern Cape”. Mission: “Amatola Water provides sustainable bulk, quality, clean water to Water Service Authorities enhancing equitable access of water services to all” 12

13. SELECTED PERFORMANCE TARGETS 13

14. 2012/13 To Date For the financial 2012 / 2013, From July 2012 to February 2013 Amatola Water has made a surplus of R10 million, a significant turnaround from the past. 14

15. 2014 BUDGET • For the 2013/14 budget ; these are the key areas: • Improved Efficiency • Increasing Primary Revenue and reduction in Secondary 15

16. Initial Tariff 2013/ 2014 Average Tariff Increase 9.34% 16

17. Reduced Tariff (Eskom) 2013/ 2014 Average saving in cents of 5.3 Reduction in average tariff increase from 9.34% to 9.27% Full reduction / saving past onto WSA’s Electricity 9.677% of total tariff 17

18. Work & Capex Program 18

19. Amathole District Municipality Upgrade • To implement its strategy and perform its mandated roll Amatola Water together with its partners Amatole District Municipality and DWA will be expanding capacity and water service delivery within the ADM region • In support of the turn around strategy, National Treasury and DWA has enabled this capex program over the next 5 years implemented closely with the ADM, the WSA, and DWA. • 4151 new households connected (Backlog) • 63510 households upgraded from 25l per person a day to 750 l per household standard with related socio economic benefits • Increased Sec 29 activities for AW aligned with new strategy 19

20. PIA Work • King Sabata Dalindyebo Presidential Intervention: • Supporting Rural Livelihoods– Current allocation R595 mil from RBIG and projected to R1.2 billion. To supply 50km radius of Mthatha ( KSD, Mhlontlo & Nyandeni LM’s) • Upgrade infrastructure to provide capacity to meet NDP vision of running water in every household (particular rural focus) & upgrade Mthatha and Mqanduli sewage systems • Development of a sustainability plan for infrastucture 20

21. KSD Presidential Intervention 21

22. Annual Work Programme (cont.) Eradicating Backlogs R681 million PIA contracts (ORTDM, JQDM, ADM, Ndlambe, Ikwezi, Koukamma, SRVM, Kouga LM’s) 70 156 people to be supplied over MTEF Job Creation (MTEF) PIA Contracts – 8551 temporary jobs Bulk Infrastructure upgrade – 19 permanent jobs Blue Drop Certification ISO 17025 laboratory in 2013/14 22

23. Implementaton of PAJA & PAIA • Amatola Water currently implements and complies to these on a ad-hoc basis as needed • When the Board’s financial position has improved further, this approach will be reviewed 23

24. Summary • Amatola Water current financial position is stabilizing • Its future strategic direction is a focus on Sec 29 activities which it wants to grow to be 90% of its business in 20 years • Its focus is on supporting a decent standard of living as per the NDP of the rural people in the province that it serves by improved standards of water services • This will be accomplished by working closely with its partners in service delivery DWA and the relevant WSA’s 24

25. THANK YOU 25