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Department of Water Affairs and Forestry

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Time-frame for Transfers. SELECT COMMITTEE ON FINANCE. March 2003. 24 ... Financial framework within DORA must cover hang-over period 31 March to 30 June ... – PowerPoint PPT presentation

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Title: Department of Water Affairs and Forestry


1
PRESENTATION TO SELECT COMMITTEE ON FINANCE
DoRA CONDITIONAL GRANTS
Water Services Implementation Programme (CAPEX)
Water Services Operations Subsidy (OPEX)
Presented by DWAF 12 March 2002
  • Department of Water Affairs and Forestry

2
Presentation Outline
  • DoRA AND CONDITIONAL GRANTS FOR CAPEX OPEX
  • Exposition for Conditional Grants - DoRA
  • Backlogs
  • DWAFs Monitoring Capacity
  • DWAFs Framework on Indirect Grants to Local
    Government
  • DWAFs CWSS-P and Indirect Grant
  • Way Forward
  • The Presentation is split between CAPEX and OPEX

3
Water Services Implementation Programme (CAPEX)
  • CAPEX

4
Exposition for Indirect Grants DoRA (1)
  • Criteria used for Conditional Grants per
    Financial Year MTEF
  • Needs based backlog as determined by 1996 Census
  • Guideline 1st Order Allocation as Determined by
    DWAF WS Committee consists of
  • Water 75
  • Sanitation 10
  • Sustainability 10
  • Management 5
  • Total 100

5
Exposition for Indirect Grants DoRA (2)
  • Criteria for Conditional Grants per Financial
    Year MTEF
  • Needs based backlog ex 1996 Census
  • Water backlog
  • 14.3 million require basic level service,
    25l/person per day within 200m
  • 7.2 million served by March 2002
  • 7.1 million to be served by 2008
  • Strategic target to focus local government

6
Exposition for Indirect Grants DoRA (3)
  • Criteria for Conditional Grants per Financial
    Year MTEF
  • Needs based backlog ex 1996 Census
  • Sanitation backlog
  • 18.0 million require basic level service, VIP
    toilet household
  • , Bucket Eradication, Clinics, etc
  • 0.6 million served by March 2002
  • Delivery by 2010
  • Strategic target to focus local government

7
Exposition for Indirect Grants DoRA (4)
  • Compliance with SA Constitution Section 214
  • DWAFs programmes compliant
  • Grants target national objectives e.g. MTSO
    eradicate poverty sec 214 (a) (c)
  • Grants ensure municipalities provide basic water
    and sanitation.sec 214 (d)
  • Projects selected and funds allocated in line
    with developmental needs
  • (Therefore E.Cape, KZN and Limpopo gets the major
    share of such funds. sec 214 (f))
  • Programmes is flexible responds to crises such
    as cholera outbreaks sec 214 (j)

8
Exposition for Indirect Grants DoRA (5)
Emphasis on FBW
  • Equitable share unconditional grant
  • 2003/04 will have so -called soft conditions
  • Free Basic Water (FBW) only possible in poorer
    municipalities with equitable share
  • Some municipalities not using it for this purpose
  • (public hear about the money but do not enjoy
    FBW)
  • A portion of R 822 million in 2003/04 earmarked
    for FBW on conditions
  • DWAF monitors implementation of FBW
  • DWAF will feed back to DPLG and NT to enforce
    conditions
  • Municipalities have duty to meet purposes of sec
    214 of Constitution

9
Allocation Trends from 2000/01 to 2003/04 (1)
  • Allocation Trends
  • Example below to Provinces/Regions
  • From 2001/02 Allocations to DMs/WSAs in DoRA
  • Derived from backlog requirements - allocations
    to Provinces/Regions
  • Allocation to DM/WSAs via agreements with local
    municipalities
  • Final allocation published in DoRA

Specific Details at the end of Presentation
10
Allocation Trends from 2000/01 to 2003/04 (2)
  • Compliance with SA Constitution Section 214
  • Allocation based on 1996 backlog per
    Province/Region
  • Investigate people served nationally and per
    region
  • Determine cost/capita nationally and per region
  • Criteria applied to balance , nationally and per
    region

Specific Details at the end of Presentation
11
DWAFs Monitoring Capacity (1)
  • DWAF performs the following monitoring functions
  • ME system tracks expenditures, people served,
    jobs created, KPIs, etc.
  • ME basis evaluation on DoRA allocations to
    DM/WSAs
  • Reports to DWAFs MANCO, Minister, external
    stakeholders
  • PFMA regulated monthly reporting to National
    Treasurys
  • ME ensures KPIs for water and sanitation
    infrastructure to local government achieved

12
DWAFs Monitoring Capacity (2)
Year 1 Commences
Implementation of Year 1 Programme and Budget
Regional Monthly Cash Flows DWAF Reports to
National Treasury according to PFMA
Reconciliation of Expenditures and Programme
Performance (Audit Review)
Quarterly Programme Reviews and Reporting to
National Treasury
Submit allocation adjustments to DoRA based on
Quarterly Review
DoRA Allocation adjustments approved by NT
Alignment of Programme adjusted DoRA
13
DWAFs Framework on Indirect Grants to Local
Government (1)
  • Before indirect grants are made, local government
    must
  • Undertake water service planning (e.g. WSDP) and
    budgeted for OM
  • Be able to implement, operate and maintain the
    services.
  • Demonstrate acceptable expertise
  • Establish mechanisms for reporting
  • Establish service provision agreements with the
    DWAF.

14
DWAFs Framework on Indirect Grants to Local
Government (2)
  • Contextual issues regarding Indirect Grants
  • Projects are managed and monitored internally by
    DWAF
  • Build Operate, Train and Transfer (BoTT) was the
    preferred mechanism
  • Infrastructure transferred to local government
  • Local government operates and maintains project
  • Revenue used to operate, maintain and sustain
    services

15
Indirect Grant Continuance
  • Grant should continue for strategic reasons
  • The water backlog needs to be eradicated in 2008
  • Projects need to be sustainable
  • The sanitation backlog needs to be eradicated in
    2010
  • Projects need to be sustainable
  • Existing bucket systems to be eradicated by 2005
  • Grant helps build Local Governments capacity to
    deliver integrated services
  • multi-year programme approach requires a stable
    funding arrangement

16
DWAFs Framework Way Forward (1)
It is envisaged that
DWAF
Local Government
  • Leadership and Custodianship
  • Policy development
  • Performance measurement
  • Guides compliance with Best Practice
  • Norms and Standards
  • Service Delivery
  • Capacitated
  • Providing water and sanitation services to the
    community as part of an integrated service
    delivery programme
  • Receiving income from the community
  • Sustainable service Delivery

17
DWAFs Framework Way Forward (2)
  • Progressive Transformation

DWAF
DWAF Phasing Out
Local Government Grows
18
Water Services Operations Subsidy (OPEX)
  • OPEX

19
Background
  • DEPT OF WATER AFFAIRS AND FORESTRY
  • Managing many schemes from former Homelands
  • Funded schemes as an interim measure until
    transfers effected
  • Water services provider for 321 water schemes
  • 8094 staff attached to the 321 schemes

20
Background
  • LOCAL GOVERNMENT
  • Constitution Local Government responsible for
    water services
  • Municipal Systems Act, the Water Services Act and
    the Municipal Structures Act regulate Local
    Government responsibility for water services.
  • Local Government is the Water Services Authority
    (WSA) responsible for ensuring access to Water
    Services.

21
Extent of Transfer Programme
  • In 1994 DWAF inherited former Homeland schemes
    comprising
  • 321 bulk schemes
  • 3027 rudimentary infrastructure
  • 8094 personnel
  • Operational finance (Trading Acc4) R699 mil for
    2002/3
  • Post 1994 DWAF implemented capital projects
  • 1003 Water, 336 Sanitation and 235 Management
    projects
  • 375 completed projects form part of the current
    transfer package
  • 182 completed projects inside existing schemes
  • 193 completed projects outside existing schemes

22
Extent of Transfer Programme
  • DWAF owned Asset Values
  • R 9,95 billion Replacement Value
  • R 7,13 billion Present Value
  • R 710 million Total Refurbishment Cost
  • Water Service Authorities
  • In terms of powers and functions allocation
  • 84 WSAs will be affected by transfers
  • (2 Metros, 18 District and 64 Local
    Municipalities

23
Time-frame for Transfers
  • Commenced 1 April 2002
  • Same WSA Transfer Agreements already started
  • Latest effective date for transfer is 30 June
    2005
  • As of 1 July 2005 DWAF will no longer be
    operating or maintaining water services works

24
Budget for Transfers
  • Budgets regulated by Division of Revenue Act.
    Initially a grant in kind until transfer
    agreement is in place

Description 2002/03 2003/04 2004/05 2005/06
Operating subsidy 650 687 720 436 768 336 814 434
Refurbishment 45 000 116 000 90 000 120 000
Capex 149 806 93 000    
Donor Support 33 133 20 000 21 000 22 000
Total 878 626 949 436 879 334 954 434
25
Estimate of Population Served by DWAF - Operated
and Maintained Infrastructure
  • Estimation of population served regarding
    Operations and Maintenance Infrastructure

26
Transfer Migration on Grant Funding
27
Division of Revenue Act - Operating Subsidy
  • Financial framework within DORA must cover
    hang-over period 31 March to 30 June
  • Conditional grant has two components operating
    (O) and staff (HR) components

Operating Subsidy
Grant in Kind utilised by DWAF until effective
date of transfer
Conditional Grant (direct transfer) to WSA from
effective date of transfer
28
Conditional GrantO and HR components (1)
  • 100 O Component from 1 July 2003 until 30 June
    2006 - decreases 30 p/a over 3 years until 30
    June 2009.
  • 100 HR Component from date of transfer for 3
    years (until June 2008) then decreases 30 p/a.
  • HR component ONLY for staff transferred
  • Budget figures indicative. Only converted into
    conditional grant and in municipal budgets after
    transfer agreement

29
Conditional GrantO and HR components (2)
  • Migration of O Component
  • Migration of HR Component

30
Conditional Grant Transfer Subsidy Component
  • New component of grant to provide for once-off
    costs for transfer
  • Refurbishment/rehabilitation
  • Processes to facilitate and support transfer
  • Sustainability (functional, financial, HR)
    assessments
  • Land and legal issues
  • Available from 2003/04 financial year for a 3
    year period until 2006/07 financial year
  • Terms will be negotiated in the Transfer Agreement

31
PRESENTATION TO SELECT COMMITTEE ON FINANCE
DoRA CONDITIONAL GRANTS
  • DISCUSSION

32
DETAIL CAPEX
33
DETAIL CAPEX
34
DWAFs Framework Way Forward Detail
  • Powers Functions DWAFs Role

DWAF
Regulate/Resolve Communication of Power
Functions iro Water
Services
Institutions
DPLG
DPLG
SALGA
SALGA
National Treasury
DWAF
DWAF
PIMMS
PIMMS
9X Regions
9X Regions
Policy Regulation
Policy Regulation
Organisation Local
Organisation Local
Strategy, Monitoring and Leadership
MISP
MISP
Government
Government
CMIP
CMIP
9X Regions RPMs
9X Regions RPMs
Functional/Operational Organisation
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