Annual Report 2004-05: Department of Water Affairs and Forestry

1. DEPARTMENT OF WATER AFFAIRS AND FORESTRYANNUAL REPORT 2004-05 SELECT COMMITTEE ON LAND AND ENVIRONMENT BRIEFING ON ANNUAL REPORT15 NOVEMBER 2005 Venue S35

2. CONTENTS • Part A : General information • Part B : Programme Performance • Programme 1 : Administration • Programme 2 : Water resources Management • Programme 3 : Water Services • Programme 4 : Forestry • Part C : Human Resources Oversight • Part D : Report of the Audit Committee • Part E : Annual financial Statements

3. LEGISLATIVE MANDATE (1) • National Water Act, 1998 (Act No. 36 of 1998): • to ensure that South Africa’s water resources are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner, for the benefit of all persons. • Water Services Act, 1997 (Act No. 108 of 1997): • tocreate a developmental regulatory framework within which water services can be provided. The Act establishes water services institutions, and defines their roles and responsibilities. • Schedule 4 of the Constitution of the Republic of South Africa vests the responsibility for water supply and sanitation in Local Government. • National and Provincial Government has a responsibility to support and strengthen the capacity of municipalities to manage their own affairs (S155.7)

4. LEGISLATIVE MANDATE (2) • National Forests Act, 1998 (Act No. 84 of 1998): • to ensure that South Africa’s forest resources (indigenous and plantation) are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner, for the benefit of all. • National Veld and Forest Fire Act, 1998 (Act No.101 of 1998): • to create a framework to prevent and combat veld, forest and mountain fires throughout the country and thereby limit and reduce the damage and losses caused by fires to life, fixed property, stock, crops, fauna and flora and veld in South Africa. • Constitutionally, fire fighting is a local government function. • Provincial and National Governments are facilitating role players. • Section 20: Environment Conservation Act, 1989 (Act No. 73 of 1989): • gives DWAF the mandate to permit all landfill sites. Under the Environment Conservation Amendment Act, 2003 (Act No. 50 of 2003). • this function is to be administered by the Department of Environmental Affairs and Tourism but transfer of the function has not yet taken place.

5. PUBLIC ENTITIES REPORTING TO THE MINISTER (1) • TRANS-CALEDON TUNNEL AUTHORITY (TCTA) : • Trans-Caledon Tunnel Authority (TCTA) established in terms of the 1986 treaty on the Lesotho Highlands Water Project (LHWP) between Lesotho and South Africa to implement the project on the South African side. • This was done under the 1956 Water Act. • TCTA is governed by a board of directors to whom the Chief Executive and management report. Government control of the TCTA is exercised through the Minister’s power to appoint all board members. • TCTA is a public entity listed in schedule 2 of the Public Finance Management Act of 1999. In terms of section 3(b) of the Act, chapter 6 applies. • TCTA is authorised by the National Treasury to borrow R 24 billion up to March 2006 for the LHWP and R 1,5 billion up to March 2006 for BWP. The borrowing limits are reviewed on a regular basis.

6. PUBLIC ENTITIES REPORTING TO THE MINISTER (2) • KOMATI RIVER BASIN WATER AUTHORITY (KOBWA) : • KOBWA is a bi-national water authority of the Kingdom of Swaziland and the Republic of South Africa formed under the Treaty (ratified in 1992) on the Development and utilization of the Water Resources of the Komati River Basin. • KOBWA is tasked with the implementation of phase 1 of the Komati River Basin Development Project, comprises the Driekoppies Dam (phase 1a) near Schoemansdal in South Africa and the Maguga Dam (phase 1b) near Pigg’s Peak in Swaziland. • The purpose of the project is to promote rural development and alleviate poverty in the lower Komati Valley by increasing the productivity of the land through irrigated agriculture. • Past year the focus was on the operation and maintenance of the two dams with the objective of optimising the benefits from this shared water project while meeting the international obligations to Mozambique.

7. PUBLIC ENTITIES REPORTING TO THE MINISTER (3) • WATER RESEARCH COMMISSION (WRC): • WRC is a public entity listed in schedule 3A of the Public Finance Management Act of 1999 • Established in terms of the Water Research Act (Act No 34 of 1971) with the mandate to co-ordinate, promote, encourage, finance and manage research in respect of the occurrence, preservation, utilisation, conservation, control, supply, distribution, purification, pollution or reclamation of water supplies or water resources. • WRC is given further responsibility to accumulate, assimilate and disseminate knowledge with regard to the results of such research and the application thereof, and to promote development work for the purposes of such application. • The Water Research Act makes provision for a Water Research Fund to be administered by the WRC, the income of which is derived from rates and charges levied either on land irrigated, or on water supplied to users by the State, water boards and local authorities. • Past year R 77 million was made available for research projects and research support services, including knowledge dissementation and technology transfer. • Research projects of the WRC supported 465 post graduate students, of whom 274 were previously disadvantaged individuals (PDIs).

8. PUBLIC ENTITIES REPORTING TO THE MINISTER (4) • WATER BOARDS : • Established in terms of Chapter Six of the Water Services Act (No 108 of 1997) • The primary activity of a Water Board is to provide water services to other water services institutions within its service area in terms of formal service provision agreements with the water service authorities (municipalities). • The role of Water Boards has transformed significantly through changes in legislation which has established Water Boards as public sector water service providers whose primary activity is to support municipalties, in meeting their constitutional mandate to provide water services. • Many Water Boards have developed good relations with local municipalities while others have still not established formal agreements and there was continuing uncertainty as a result of Section 78 processes being undertaken in terms of the Municipal Structures Act. • In general, financial performance and governance of Water Boards is good, problems have been experienced in Botshelo Water, Bushbuckridge, Ikangala and Bloem Water and interventions are ongoing.

9. PUBLIC ENTITIES REPORTING TO THE MINISTER (5) • ESTABLISHED WATER BOARDS (15) • Albany Coast Water Board • Amatola Water Board • Bloem Water • Botshelo Water • Bushbuckridge Water Board • Ikangala Water • Lepelle Northern Water • Magalies Water • Mhlathuze Water • Namakwa Water • Overberg Water • Pelladrift Water Board • Rand Water • Sedibeng Water • Umgeni Water

10. Programme 1: Administration • TWO MAIN COMPONENTS • CORPORATE SERVICES • FINANCIAL ADMINISTRATION • PURPOSE: The programme provides for the management of the Department, including: policy formulation by the Minister and senior management, centralised administrative, legal and office support services, departmental personnel management , financial administration and information technology (IT).

11. Corporate Services • Legal Services : • provides legal support to the Department • Mandate includes the drafting of legislation, regulations, delegations, government notices and assignments, drafting of international agreements and contracts to ensure that State interests are protected. • Manages, co-ordinates and deals with claims, court litigation and all other forms of legal action by and against the department in cooperation with the State Attorney and outside advocates. • Assists the Department in the enforcement of legislation administered by the Department. • Provides legal opinions or advice on any matter. • Provides administrative support to the Water Tribunal. • Transformation: • During past year a common understanding was build of the need to integrate transformation into the core business of the Department. • Through its Anti-Racism campaigns the Department developed a partnership with the SA Human Rights Commission to assist in combatting racism and xenophobia. • Workshops on human rights, racism and diversity were held in all nine regions.

12. Corporate Services • Human Resources Development: • Strategy devised to implement the Work Place Skills plan implemented during 2005. • Negotiations on incorporation of LGWSETA into the PSETA and ESETA. • Pilot learnerships implemented in water purification, waste water treatment and water reticulation • Human Resources Management: • The pension management process was strengthened. • Performance Management and Development Strategy was implemented. • Provided increased support to restructuring process in line with Res7 of 2002. • Communications: • Organised, co-ordinated and implemented campaigns such as Water and Arbor weeks, and national campaigns such as 16 Days of Activism, Woman’s month, Heritage and World Aids Days • These activities formed part of the unit’s major activities with resounding successes marked by participation of the highest level in government.

13. Corporate Services • Administration: • Responsible for provisioning services, office services, protection services, land requirements and land usage, and transport. • A key activity was the successful implementation of the National Treasury procurement integration process. • Land and servitudes were successfully acquired and affected persons compensated. • Land is being acquired for the raising of the Flag Boshielo Dam which acquisition should be finalised by end October 2005. • Approximately 36 applications for development around dams were received and co-ordinated

14. Financial administration • Budget Restructuring: • The budget was simplified by restructuring from eight (8) programmes to four (4) thus making management and accountability clearer (Administration, Water Resources, Water Services and Forestry). • Implementation the provisions of the PFMA, including separating the trading account activities from the main Exchequer account activities, opening separate bank accounts for these different activities as well as implementing procurement processes in line with the Act.  • Accrual Accounting: • Developed processes to implement accrual accounting including a full asset management system in accordance with the PFMA. • The risks affecting the department have also been assessed and strategies have been developed to address them. • A turn-around strategy is being implemented to address the audit qualifications.

15. Programme 2: Water Resources Management (WRM) • Purpose: • Ensures that the country’s water resources are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner for the benefit of all people. • Measurable objective: • To ensure the allocation of water resource to promote optimal social and economic development and the availability of sufficient water at an agreed level of reliability and of an appropriate quality to meet the needs of the industrial, power generation, mining, agricultural, small business, municipal and domestic sectors and to meet international water sharing agreements while ensuring that water resources are protected to enable sustainable water use.

16. WRM : Main Achievments • National Water Resources Strategy (NWRS): • National framework for managing water resources was set in place when the NWRS, First Edition, 2004, was approved by Cabinet in September 2004, and established by Government Notice in January 2005. • Internal Strategic Perspectives (ISP): • Publication of nine more ISP’s – departmentally completed the coverage of sub-national management strategies for all 19 water management areas. • Provincial Liaison/Planning: • Steps taken to improve liaison arrangements with provincial planning authorities to ensure alignment between water management strategies and provincial growth and development strategies. • Sector Leadership: • Progress on the process of establishing new international, national and catchment-based water management institutions, moving the Department towards its role of sector policy maker and regulator by facilitating international cooperation in shared river basins, separating operational and regulatory functions, and decentralising the responsibility for managing water resources.

17. WRM : Main Achievments • Limpopo Commission: • Agreement to establish the Limpopo Basin Commission was signed by South Africa, Botswana, Zimbabwe and Mozambique, all of whom share the waters of the basin. • 2nd Phase LHWP: • Agreement concluded with Lesotho (at ministerial level) to proceed with feasibility study for second phase of the Lesotho Highlands Water Project concluded • Maputo Basin: • Agreement reached to undertake joint basin study of the Maputo basin (with Mozambique) • Orange River: • Pre-feasibility study for a joint South Africa-Namibia management plan for the lower Orange River substatially completed • Water Resources Infrastructure Management: • The Department began the process of separating the management and further development of national water resources infrastructure from its other activities and established a new Infrastructure Branch with effect from 1 April 2005. A study conducted of institutional options for the management of water resource infrastructure in South Africa and preparation of a business case for the establishment of an Agency by April 2008.

18. WRM : Main Achievments • Establishment of CMA’s: • Inkomati Catchment Management Agency established by Government Notice, nominations for the governing board were submitted to the Minister by the advisory committee. Proposal to establish a CMA in the Breede water management area was published for public comment in the Government Gazette. Notice to establish a CMA in the Mvoti-Mzimkulu was approved by the Minister, and Notices to establish CMAs in the Crocodile West/Marico, Usutu-Mhlathuze and Thukela water management areas in advanced stages of preparation • Establishment of WUA’s : • Ten new WUA’s were established, and constitutions for a further four associations - for revitalised irrigation schemes in Limpopo Province - were in preparation. Ten existing irrigation boards were transformed into water user associations, and a further six transformation submissions received for review and processing. • Delegation of O&M Responsibilities to WUA’s: • Progress made in arrangements to transfer operating and maintenance responsibilities for five government water schemes to water user associations - Boegoeberg, Kakamas, Lower Olifants, Sand-Vet and Van der Kloof, delays in finalising staff transfer agreements in three of the schemes, whilst the other two requested deferral of transfer because they were experiencing drought-related difficulties

19. WRM : Main Achievments • New Policies and Strategies: • Subsidy policy and programme of support to small-scale farmers revised. Targets for number of farmers assisted not achieved as implementation commenced at end of reporting year • Draft policy for Water Allocation Reform for SA finalised and national programme of public consultation commenced • Policy on Financial Assistance to Resource-Poor Irrigation Farmers which supplements the Water Allocation Reform programme was approved by Minister • Emergency Infrastructure development: • Due to sub-normal rainfall, Emergency works constructed to support municipalities deliver services, construction of a pipeline to augment water supplies for industrial and domestic use completed from the Rand Water supply system in Mamelodi to Cullinan, and the extension to the Ekangala area was substantially completed. A pipeline between Morgenstond and Jericho dams, to augment water supplies to Eskom power stations on the eastern highveld, was also completed.

20. WRM : Main Achievments • Other Infrastructure Development: • Finalisation of financing agreements for funding of Berg River Project in the Western Cape and commencement of construction • The Olifants River River Water Resources Development Project was approved by Cabinet • Design work commenced for the De Hoop Dam on the Steelpoort River began • Work continued on the raising of Flag Boshielo Dam in Limpopo Province • Construction of the Nandoni Dam on the Levuvhu River was completed • Design work also commenced on the pipeline from Vaal Dam to in order to improve assurance of supply to Eskom power stations and the SASOL complex in Mpumalanga, after Cabinet approved the project

21. WRM : Main Achievments • Water conservation and demand management: • National strategy for water conversation and water demand management finalised and published, together with subsidiary strategies for the Agriculture, Water Services and Industry, Mining and Power Generation sectors • The Working for Water programme continued to address the problem of invasive alien vegetation by clearing 142 500 hectares, following up on about 507 000 hectares of previously cleared land, and provided about 12 000 person years of employment • Raw Water Pricing Strategy • 1999 Water Pricing Strategy revised to incorporate charges for waste discharge and the water research levy submitted to Minister for approval after extensive consultation with key stakeholders

22. WRM : Main Achievments • Preliminary reserve determinations: • High-confidence “comprehensive” preliminary Reserve determinations initiated in four major catchments (Olifants/Doorn, Komati, Letaba, Kromme/Seekoei rivers • Lower confidence preliminary Reserve determinations carried out in 150 quarternary catchments • Baseline monitoring surveys and groundwater studies initiated to support Reserve determinations • Monitoring • Strategy to deal with unlawful water use by enforcing the conditions of use piloted in dolomitic areas on the East Rand of Gauteng, North West and Northern Cape Provinces • Five-year plan developed to facilitate the integration of all aspects of water resources monitoring, covering the quantity and quality of surface and groundwater • The River Health Programme produced State of Rivers reports for the Buffalo (Eastern Cape), Crocodile West/Marico, Berg, Diep and Hout Bay rivers, bringing the total number of rivers and river systems studied by the programme to 24

23. WRM : Main Achievments • Improved Co-operation with developing countries • Participation in AMCOW Inter-ministerial Council. (Technical Advisory Committee activities) • Participation in SADC policy formulation • Project Manager for SADC Hycos identified • Ministerial visits to China. MOU under negotiation • Agreement with Cuba being implemented • Improved relationships with international and multilateral organisations • Secondment agreement with African Development Bank under negotiation • Ongoing advocacy activity around IWRM to influence international debate • Effective participation in UN Commission for Sustainable Development 13 and Millennium Project

24. Programme 3: Water Services (WS) • Purpose: • Ensure that effective, efficient, sustainable and affordable water and sanitation services • Measurable objective: • As water services sector leader, to ensure that water supply and sanitation services are provided by effective, efficient and sustainable institutions that are accountable and responsive to those whom they serve. To ensure that water is used effectively, efficiently and sustainably.

25. WS : Main Achievments • Provision of safe drinking water • Important milestone was the provision of safe drinking water to the 10 millionth person since 1994 • Millenium Development Water Supply Goal of halving the backlog since 1994 was reached • Bulk of capital funds for basic services allocated directly to municipalities through the MIG • 95% of municpalities are now supplying FBW to all or part of their municipal population • Capital programme • Strategic objectives were achieved through the provision of an improved water supply to 1.5 million people • Improved sanitation services to 1.3 million people (more than 300 000 households) • NT made R130 million grant for upgrading of services in Emfuleni Local Municipality including water and sanitation services. DWAF drafted KPI’s to monitor performance and regulate payments to the municipality.

26. WS : Main Achievments • Eradication of bucket system • R1.2 billion , in addition to existing MIG allocation negotiated and committed over the next three financial years • 231 000 households will be provided with a level of service that varies from VIPs to full water borne sanitation • Free Basic Sanitation (FBS) • FBS policy approved by DWAF implementation can only take place once adequate provision made in equitable share allocations to local government • Health and Hygiene Education Programmes • Hygiene and Health package developed by Health, Housing and DWAF to form part of the Housing Customer Care programme • Health and Hygiene programmes incorporated into school curricula for Grades 0 to 6 • Through the Baswa le Meetse competitions that took place regionally and nationally learners were encouraged to develop an interest in health and hygiene

27. WS : Main Achievments • Implementation of the Strategic Framework for Water Services (SFWS) • Process initiated to review the sector legislation • First draft of the Water Services Revision Bill produced • Institutional clarity & formal understandings with other role players • Communication process with SALGA started with specific reference to the process of Institutional Reform. • Water Services Regulation Strategy • First draft produced • Successful international conference hosted in February • National Drinking Water Quality Management Strategy developed with participation of sector stakeholders, and will be implemented during 2005 • Effective Water Services Institutions • Third version of the Institutional Reform Strategy drafted and discussed extensively in sector • Sector Support Strategy in progress • Due to the restructuring of the LGWSETA the sector could not proceed with the MOU between DWAF, DPLG and LGWSETA for collaborative implementation of the sector skills development plan • Amalgamation of the Water Chamber into the Energy SETA completed

28. WS : Main Achievments • Transfer programme • Transfers continued to take place in terms of the Joint Policy position, consistency in the implementation of the policy • 25 transfer agreements out of a total of 55 had been concluded and are being implemented by the Department’s regional offices • Water Schemes had been transferred to 11 Local and District Municipalities • A total of R42 112 206 for O&M, R 36 319 265 for Refurbishment and R 31 582 031 for HR is to be transferred on a quarterly basis as per the signed transfer agreement • 118 schemes rehabilitated as per Joint Transfer Policy Position with a total of R 114 Million spend and/or transferred to Water Services Authorities • Annual Audit against maintenance procedures completed and is ongoing in respect of further audit work • While the transfer of staff takes place in terms of section 197 of the LRA, a joint negotiating established with SALGA to conclude a MOU relating to the transfer of staff.

29. WS : Main Achievments • Developed a plan to participate in activities to share knowledge, experiences and lessons with other developing countries especially in Africa • Participated in SADC and international sessions • Compiled the MDG country report on MDG targets numbers 10 and 11 regarding water and sanitation • Compiled draft World Water Assessment Report to be published in 2005

30. Programme 4 : Forestry • Purpose: • Promote the conservation of plantation and indigenous forests, and their commercial and community use, to achieve optimal social and economic benefits. Promote rural development through policy development, regulation, facilitation and monitoring and evaluation • Measurable Objective: • To ensure the sustainable management of all forests and plantations, and to enhance the contribution of forest resources to economic development and poverty eradication.

31. Forestry : Main Achievments • Plantation Forests • Two leases for state plantations concluded during 2004/05 as part of the restructuring of SAFCOL. The remaining lease for Komatiland should be completed in 2005/06 depending on the outcome of the Competition Tribunal process. • Approximately 13 000 ha of State Forest land was re-incorporated under the management of the Department as a consequence of the MTO lease transaction. The Department will continue to support the Cape Conversion Programme until the end of the delegation with SAFCOL • Transfer of remaining plantations has not progressed due to number of challenges posed by the need to reach agreement with key stakeholders • Remaining plantations re-grouped into management clusters reflecting their forestry potential in the context of their transfers to communities. Steps are being taken to complement the Department’s capacity to manage the plantations, until they can be transferred to rightful owners. These assets represent an important opportunity for strengthening local economies and to achieve the objectives of BBBEE.

32. Forestry : Main Achievments • Indigenous Forests • Finalisation of the delegation to SANParks of the management control over approximately 97 000 ha of State Forest land in the Southern Cape and Tsikamma areas • SANParks as a conservation agency will manage these natural forests in terms of all the provisions of the National Forests Act, 1998 • A further 1000 ha of plantation forest at Tokai and Cecilia were transferred to SANParks for incorporation into the Table Mountain National Park • The Lowveld plantation exit strategy to incorporate 11 000 ha of plantation area into the National Parks system is at an advanced stage

33. Forestry : Main Achievments • Payments to land beneficiaries and the possibility of transferring this function to appropriate agents • Cannot be done until underlying land rights are resolved by DLA. Ministers and DG’s of DWAF and DLA are addressing the matter • Amendment Bill • Draft amendment Bill considered by Portfolio Committee, debated in the National Assembly and considered by the Select Committee. • Sustainable Forest Management Research Strategy • Not in place. Research strategy to be initiated in 2005-2006 • Strategy for Revised National Forest Plan • Strategy approved by Minister(The strategy would also serve as strategy for profiling forestry), to be initiated in 2005-2006 • National Database for Veldfire Incidents in the Country • Development of the National Veldfire Information System (NVIS) • A veldfire Risk classification map was produced

34. Forestry : Main Achievments • The National Fire Danger Rating System (NFDRS) • The operation of the NFDRS has been delegated to the South African Weather Service • Fire Protection Association (FPAs) • More than 120 notices of intention to apply for registration as FPAs were received. Most of these are currently drawing up their business plans (containing veldfire management strategies), which are required for registration purposes. • Co-operation with SADC formalized • Discussions with FAO to assist in strengthening ability of signatories to implement the forestry protocol • Paticipation and leadership inUNFF • Effective representation at UNFF-4 in May 2004

35. Forestry : Main Achievments • Strategy for expansion of forestry in Eastern Cape developed; • Draft policy on Transfers incorporates possibility of synergy between expansion and transfers • Elimination of Stream Flow Reduction Activities (SFRA) licensing backlogs • Maps for possible new afforestation in KZN approved • Wattle jungle licensing strategy • Strategy revised as strategy for invasive alien plants • Integration of forestry into local planning processes • Forestry incorporated into the PGDS’s of both Limpopo and Eastern Cape Provinces. Process to include it into Mpumalanga and KZN Provinces started • BBBEE Indaba • Launched the BBBEE Indaba with Forest sector in April 2005, good progress being made on the charter preparation

36. Annual Financial Statements • Total Expenditure 2004/05 financial year • Total Expenditure : R7 791 558 000 • Exchequer : R3 776 946 000 • Trading Accounts : R4 014 612 000 • Spending • Spending is done at Head Office and 9 Regional Offices in 4 programmes • Administration: R272 694 000 • Water Resource Management: R1 447 049 000 • Water Services: R1 561 359 000 • Forestry: R466 629 000 • Trading Accounts • Equipment Account: R65 453 000 • Water Trading Account: R3 976 519 000 • Spending level • For past two financial years ± 99 % • For 2004/05 also reached a 99% spending level which includes roll-overs of R430 million

37. Annual Financial Statements • Reports of the Auditor General on the Financial Statements: • Vote 34 Exchequer Account • Unqualified audit • Emphasis of matter in respect of: (a) Asset and inventory management, (b) Internal controls (c) Value for money audits with regard to Management of fleet services and the outsourcing of information systems (d) Information systems audit of the network security, and (e) Late submission of the audit report. • Water Trading account • Disclaimer of audit opinion • Qualifications in respect of : (a) Financial statements, and (b) Property plant and equipment. • Emphasis of matter in respect of the re-submission of financial statements • Equipment Trading account • Adverse audit opinion • Qualifications in respect of: (a) property plant and equipment and related depreciation, and (b) retained earning • Emphasis of matter in respect of the re-submission of financial statements • National Forest Recreation and Access Trust • Unqualified audit • Emphasis of matter in respect of: (a) operation of the National Forest Recreation Trust, and (b) progress with previous SCOPA resolutions

38. Annual Financial Statements • Financial Management Improvement Plan • Department has developed a Turnaround Strategy to address shortcomings related to: • Capacity • Financial Policies and Procedures • Financial Training • Development of Risk Management Strategy • Standardisation of business processes across the department • The department is developing the financial system for trading entities to operate accrual accounting • Standardisation of business processes across the department • Improved record keeping • Fraud prevention plan strategy has been developed and approved by Audit Committee • Addressing previous audit queries

39. Thank You