Title: Department of Water Affairs and Forestry
1PRESENTATION 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
2Presentation 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
3Water Services Implementation Programme (CAPEX)
4Exposition 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
5Exposition 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
6Exposition 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
7Exposition 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)
8Exposition 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
9Allocation 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
10Allocation 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
11DWAFs 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
12DWAFs 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
13DWAFs 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.
14DWAFs 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
15Indirect 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
16DWAFs 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
17DWAFs Framework Way Forward (2)
- Progressive Transformation
DWAF
DWAF Phasing Out
Local Government Grows
18Water Services Operations Subsidy (OPEX)
19Background
- 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
20Background
- 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.
21Extent 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
22Extent 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
23Time-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
24Budget 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 Â Â
Donor Support 33 133 20 000 21 000 22 000
Total 878 626 949 436 879 334 954 434
25Estimate of Population Served by DWAF - Operated
and Maintained Infrastructure
- Estimation of population served regarding
Operations and Maintenance Infrastructure
26Transfer Migration on Grant Funding
27Division 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
28Conditional 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
29Conditional GrantO and HR components (2)
- Migration of HR Component
30Conditional 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
31PRESENTATION TO SELECT COMMITTEE ON FINANCE
DoRA CONDITIONAL GRANTS
32DETAIL CAPEX
33DETAIL CAPEX
34DWAFs 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