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BLOEM WATER ANNUAL REPORTING 2006

Contents . Overview of Bloem Water by Chairperson of the BoardFinancial performanceInfrastructure developmentState of Water QualityLoad sheddingAlignment to DWAF strategies. OVERVIEW OF BLOEM WATER PERFORMANCE. Functional Board and Board Committees in place exercising oversight and givi

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BLOEM WATER ANNUAL REPORTING 2006

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    1. BLOEM WATER ANNUAL REPORTING 2006/2007 PRESENTATION TO THE PORTFOLIO COMMITTEE ON WATER AND FORESTRY 7 MAY 2008

    2. Contents Overview of Bloem Water by Chairperson of the Board Financial performance Infrastructure development State of Water Quality Load shedding Alignment to DWAF strategies

    3. OVERVIEW OF BLOEM WATER PERFORMANCE Functional Board and Board Committees in place exercising oversight and giving strategic direction to the organisation. Resultant increased confidence of the Board in the management team’s ability to take Bloem Water into the future. During the latter part of the 2006/7 financial year a transformation strategy was developed and approved in July 2007. The transformation strategy envisaged is not merely an adjustment to managerial control, it involves a composite package of adjustments to work organisation and allocations (to address the operational challenges including addressing the underutilisation of the skills); adjustments to grading of positions and its consequent wage and benefits adjustments within the context of the financial positioning of Bloemwater; and changes to industrial relations generally (spanning the spectrum- from relations with organised labour to enforcing team work and consultation to reducing the length of time of processing disciplinary action and implementation of performance management-ending the legacy of industrial relations characterised by conflict and confrontation in the interests of all the workers who constitute Bloemwater. The Board is of the view that as a Water Board, Bloem Water is capable of playing a critical role in developing the capacity and supporting water services authorities and municipal water service providers. We anticipate that cognizance will be taken of this ability in the unfolding of the institutional reform process. Why no expansion - ?Why no expansion - ?

    4. Service area

    5. FINANCIAL OVERVIEW External Audit Report No Qualifications received Major Achievements in terms of financial performance Solvency Liquidity Going Concern Debtors position improved with proactive debt management process in place – from 86 days to 64 days. Renegotiation of loans (DBSA 12 -10%), (DWAF 13.5 – Nedbank 9,12%) Cash position improved Debt position remained high due to CAPEX requirements Water sales higher than budgeted Streamlining of pension fund Net profit of R26,1 million, of which R25.5 million was transferred to capital replacement and development fund and the insurance fund. Bulk Tariff increase of 4.7% ( R2.78 to R2.91) after consultation with Municipal clients in line with Regulations. Proposed tariff in respect of projected inflation at the time of the consultation process – catered for payment of existing loan obligations and capex requirements required for the business plan period of a 5 year horizon. Tariff structuring also takes cognizance of low economic activities in certain areas eg Gariep, Naledi, 008/08- 4,9% tariff increase.Proposed tariff in respect of projected inflation at the time of the consultation process – catered for payment of existing loan obligations and capex requirements required for the business plan period of a 5 year horizon. Tariff structuring also takes cognizance of low economic activities in certain areas eg Gariep, Naledi, 008/08- 4,9% tariff increase.

    6. INFRASTRUCTURE DEVELOPMENT Factors influencing infrastructure development: Growth in volumes of water supplied (Water Demand) Refurbishment, renovation or replacement of existing assets Infrastructure development comprises Expansion of Area of Supply (this entails “new" areas of supply); Refurbishment of assets (work undertaken to existing assets to renovate, upgrade to standard, repair or replace existing assets without increasing system capacity). Infrastructure development plans, projected to amount to R64 million, is premised on the need to preserve existing capacity, optimize operational and maintenance efficiency and reduce risk of non-supply. Thus the projects range from the installation of standby pump capacity to the installation of chlorine booster stations, telemetry and leak detection. Much of the immediate infrastructure development that is taking place entails refurbishment of assets and minimal extensions rather than expansion work (although a number of projects currently in its development stages in relation to Naledi Municipality as well as Mantsopa will see expansion projects coming on board in the next year or two as well as extensions of our current treatment plants) Why no expansion - ?Why no expansion - ?

    7. Refurbishment within the next 5 years

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