Click to edit Master subtitle style 5/10/10

PRESENTATION TO DEPARTMENT OF WATER AFFAIRS

PORTFOLIO COMMITTEE

11

L MOTLHODIACTING CHIEF

EXECUTIVE OFFICER

2008/09 ANNUAL REPORT

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TABLE OF CONTENTS

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Perspective of Magalies WaterCorporate philosophy and valuesKey Strategic ObjectivesGovernanceHighlights & AchievementsStrategic Challenges and OpportunitiesMagalies Water Area of OperationMagalies Water ServicesOperation and MaintenanceMajor CAPEX ProgrammesFinancial Performance and PositionAuditor General’s ReportCorporate Social InvestmentWay Forward

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Perspective of Magalies Water

Vision

“To be the leading provider of quality water services”

Mission Statement

Magalies Water shall, pursue and attain its vision by:

• Optimising operational resources and technologies• Influencing and contributing to healthy water resources• Ensuring staff equity, competence and capability• Complying with relevant legislation, standards and guidelines• Building customer and community capacity and relationships

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Corporate Philosophy and Values

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• Service Excellence• Professionalism• Integrity• Customer care• Social Responsibility

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Key Strategic Objectives

• Ensure the availability and supply of sustainable water services. • Contribute to sustainable and equitable access to basic water and sanitation

services to Water Services Authorities (WSAs).• Contribute to the extension of the supply of water services to un-serviced

areas. • Foster strong relationships and collaboration with all Magalies Water’s

stakeholders.

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Alignment To DWA’s Objectives

Operations and maintenance of water and sanitation purification plants that belong to different municipalities;

Twinning agreement with Nkana Water in Zambia; Implementer of DWA drought relief and infrastructure refurbishment Projects. Advancing MDG goals through CSI developmental projects

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Governance

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• Board appointed by Minister provides strategic leadership.

• Responsibilities fulfilled in terms of good governance.

• Board meeting attendance of >80% was observed.

• Board support intellectual contributions to SAAWU and Water Service Authorities.

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Corporate Structure88

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• Operational area covers 42 000 km² through two major catchments namely the Crocodile and Olifants.

• The Board operates across four provincial areas of North West, Limpopo, Gauteng and Mpumalanga.

• Two major catchments are the Crocodile and the Olifants.

Water Board Supply Area 99

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• Operational area covers 45 000 km² through two major catchments namely the Crocodile and Olifants.

• The Board operates across four provincial areas of North West, Limpopo, Mpumalanga and Gauteng.

5.Water Board Supply Area 1010

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Bulk Water Supply Areas1111Municipality Status/District

MunicipalityProvince

• Modimolle Local Municipality (MoLM)

Waterberg Limpopo

• Nokeng Tsa Taemane Local Municipality (NTTLM)

Metsweding Gauteng

• Thabazimbi Local Municipality (TLM)

Waterberg Limpopo

• Moses Kotane Local Municipality (MKLM)

Bojanala Platinum North West

• Rustenburg Local Municipality (RLM)

• Bela Bela Local Municipality (BBLM)

• City of Tshwane Metro Municipality (CTMM)

Bojananla Platinum

Waterberg

Metro

North West

Limpopo

Gauteng

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Bulk water Plants1212Name Design Capacity

(Ml/day)Technology

• Vaalkop 210 DAF, Sedimentation, RGS, Chloramination , Ozone

• Klipdrift 18 DAF, RGS, Chlorination

• Wallmannsthal 12 DAF, RGS, Chlorination

• Cullinan 14 Sedimentation, RGS, Chlorination

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Waste Water and Retail Plants(operated on behalf of municipalities)

1313Name Capacity (Ml/day) Technology

Rustenburg• Rustenburg Kloof

422

Activated Sludge & BiofilterDAF, Sedimentation, RGS, Chlorination

• Boitekong 8 Activated Sludge

• Monnakato 2 Oxidation Ponds

• Lethabong 2 Activated Sludge

• Bospooort 12 DAF, GAC, RGS, Chloramination

• Temba (Retail Plant) 60 DAF, Sedimentation, RGS, UV, Chlorination

• Roodeplaat 60 DAF, Sedimentation, RGS, UV, Chlorination

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Water Quality

1414

The following water quality compliances were achieved:

•SANS 241 Class 1 = 99,3%

•SANS 241 Class 2 = 100%

The above indicates that MW still produces best quality water despite deteriorating raw water quality in our catchments.

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Highlights and Achievements

O&M

Appointment for operations and maintenance of water and wastewater purification plant on behalf of municipalities.

Excellent performance on O&M audit for Rustenburg Trust and achievement of Blue Drop Status with City of Tshwane (CoT).

Implemented the North West Provincial Water week

Production Efficacy

Reduction of plant losses to below 5%

Retaining ISO 14001 certification.

Implementing Agent

Completion of Drought Relief Programmes on behalf of DWA in Municipalities.

Continue operating as a sustainable entity, keeping operating costs down & within budget albeit high electricity charges

Compliance

Obtained an Unqualified Audit report

Participated in the 2010 Water Security Plan for the Host City Rustenburg Local Municipality

Customer Value Proposition

Conducted First Customer Service Study to advance a customer-centric approach and Batho Pele Principles

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Highlights and Achievements

- Continued1616 Developmental Agenda Through CSI programme

Sanitation: Refurbishment of the Rustenburg Taxi Rank Public ToiletsStrategic Resources: Supported Madibeng Local Municipality in boreholes rural water supply

Management PracticeExcellence-Received Peer Review Management Award (PMR) for 2008/09FY

• Work Performed on behalf of external clients including DWA

Client Project Benefits

Madibeng LM

Drought Relief Enhanced the assurance of Rural Water supply to Communities

Moretele LM a)Drought Reliefb)Refurbishment

Enhanced Rural Water supply to communities

Rustenburg LM

Refurbishment Enhanced the reliability of Infrastructure

CoT(Temba) Short term Intervention

Minimization of Water Leaks and Conservation

Moses Kotane LM

Refurbishment Reliable Infrastructure

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Strategic Challenges

1717Challenge Proposed Intervention• Insufficient Raw Water Resources, Supply

Quota and Storage CapacityMW & LM’S Agreed Joint Integrated Project Development Options with support from DWA

• Deteriorating Raw Water & Effluent Quality in Local Municipality distribution systems

Joint Blue and Green Drop water Monitoring Initiatives-Plant audits

• Water demand & Water Pricing Continuous Engagements with Water Service Authorities on a Quarterly basis

• Scarcity of skill-especially in the Artisan stream

Personnel support to Local Municipalities

• Inadequate institutional capacity, Align to COGTA strategy: Joint institutional knowledge sharing

• Ageing Infrastructure and development backlogs

Condition Assessment & evaluation of infrastructure assets. Management, PPP options in partnership & LM’s.

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Strategic challenges - Continued

• Effect of administered prices on long term sustainability of the Water Boards.

• WB promotes affordability to end Consumers however Municipalities are not passing the benefits to end consumers

• Cost drivers increased by more than the Government Inflation target of 3%-6% (e.g-Electricity, Chemicals, andraw water costs)

• To meet the increased regional domestic and industrial bulk water demand

• Pilanesberg Water supply scheme (additional 70ML/day to total value of R1.2b)

• Marikana-Mooinooi water supply scheme (additional estimated 90-120ML/day)

• MW and DWA will complete a comprehensive feasibility study for the optimal scheme

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Strategic Opportunities

1919Municipality Projects & Benefits

• Modimolle Local Municipality (MoLM) Upgrade of Donkerpoort WTW: Increase Supply Capacity to meet water demand

• Nokeng Tsa Taemane Local Municipality (NTTLM)

Bulk Water Supply to Steve Bikoville Reservoir & Water Recycling Project: Increase Water Supply Capacity

• Thabazimbi Local Municipality (TLM) Increase Bulk Supply through Pilanesberg Scheme & Sewerage Plant Development:

• Moses Kotane Local Municipality (MKLM) O&M & Bulk Water to meet new water demands

• Rustenburg Local Municipality (RLM)

• Bela Bela Local Municipality (BBLM)

• City of Tshwane Metro Municipality (CTMM)

Waste Water Management: Expanding Industrial waste water managementConnection of communities in three villages on the RBA pipelineNew Development Water Needs in the area

Planning Bulk Water And O&M Projects

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Strategic Opportunities - Continued

2020Municipality Projects

• Moretele Local Municipality (MoLM) O&M Management & Water Quality monitoring

• Kgetleng/Rivier Local Municipality O&M Sewerage Management

• Madibeng Local Municipality O&M Management

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Municipal Areas of Supply (Other Activities)

2121Municipality Nature of Service

• Madibeng Local Municipality Maintenance and water supply augmentation

• Moretele Local Municipality (NTTLM) Maintenance and water supply augmentation

• Rustenburg Local Municipality Operations of sewage treatment and potable water plants

• City of Tshwane Metro Municipality – Greater Hammanskraal

Provision of retail water services to consumers

• City of Tshwane Metro Municipality – Temba/Roodeplaat

Operations and maintenance of potable water plants

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AREA OF SUPPLY

New Bulk Water Supply Capital Expenditure Projects

Limpopo

Gauteng

NorthWest

Additional Demand

22 Ml/d

Klipdrift WTW

18 Ml/d (25 Ml/d)

Additional Demand

> 45 Ml/d

Additional Demand

> 85 Ml/d

Wallmannsthal WTW

12 Ml/dAdditional Demand

< 15 Ml/d

Cullinan

WTW16 Ml/d

New Klipvoor Dam Scheme

Additional Demand

46 Ml/d

Additional Demand

24 Ml/d

Pilanesberg Bulk Water

Scheme

70 Ml/d

Pilanesberg North

R860 million

Pilanesberg South

R300 million

New Scheme to Marikana-Mooinooi,

Rustenburg & MadibengAdditional

Demand

> 120 Ml/d

Vaalkop WTW210 Ml/d

Feasi

bilit

y

Stu

dy

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Major CAPEX Programmes

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Name of Project Capital Cost

Method of financing Beneficiary Municipalities

Pilanesberg Scheme (North) (South)

Total Scheme Cost

R895millionR300millionR1.2 billion

55% financed by the mines and 45% by MW (on behalf of LM’s)

Moses KotaneRustenburg LMThabazimbi LM

Marikana-Mooinooi Bulk Water Supply

Estimate<R2 billion

Similar to Pilanesberg Scheme, but 60-70% to be financed by mines and housing developers

Rustenburg LMMadibeng LM

Klipvoor Water Scheme(DWA completed Feasibility Study)

R500million Method of financing still to be determined. Project still at feasibility stage.

Moretele LM, Bela-Bela LMModimolle LM, Mookghophong LM

Wallmannsthal & Cullnan Bulk Infrastructure

Augmentation

R89 million Own capital Nokeng Tsa Taemane LM

Klipdrift Bulk Infrastructure Augmentation

R70 million Own capital Nokeng Tsa Taemane LMBela Bela LM, Modimolle LM,City of Tshwane MM

a) Funding of the Pilanesberg Scheme through borrowings with fixed term agreements with LM’s for capital redemption over 20 year period

a) Renewals & replacement funds will also be utilised to refurbish & replace existing bulk infrastructure to ensure long term sustainable bulk service delivery

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• MW has committed to the Pilanesberg Scheme that will require borrowing/funding

• Magalies Water does not have any long term borrowings currently.• Borrowing are considered where projects are viable and where there is a cost

recovery mechanisms to maintain sustainability.• Tariff structure will be used to ensure recovery of costs.• Funding requirements for Pilanesberg Scheme exceed current borrowing limits

(R161m), application has been made through DWA to recommend increased limits to Treasury (additional R400m).

Borrowing Plan /Levels

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Financial Position2525Financial Position 2008/09 2007/08 2006/07 2005/06

  Actual Actual Actual Actual

Property &Plant etc 590 090 605 396 609 456 608 334

Investments 344 402 328 422 283 215 271 216

• Committed Investments 160 000

Long-Term Liabilities 0 0 35 026 46 819

Current Liabilities 62 946 71 109 - -

Current Ratio 6.4 5.39 7.03 5.17

Acid test / Quick ratio 6 5.31 6.93 5.11

Debt-equity ratio 7% 3.72% 5.44% 4.15%

     

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Financial Performance2626Financial Performance 2008/09 2007/08 2006/07 2005/06

  Actual Actual Actual Actual

Volumes of water sold 74 983 428kl 74 725 911kl 67 200 172kl 61 824 158kl

Sales 166 985 158 046 145 322 140 108

Income from Investments 37 694 35 079 30 717 19 100

Net Profit 31 306 48 752 42 962 28 788• Net –Deficit/surplus from Operations - 6 388 13 673 12 245 9 688

Gross Margin 39.75% 44.05% 45.71% 47.73%

Debtors days *117 days 88 days 44 days 40 days *mainly due to the Water Services Authorities   

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Auditor General’s Report

• Unqualified Audit Report• Findings and Analysis:

• Risk Assessment / Fraud Prevention Plan - Hot Line

• Performance Reports – Performance Scorecard

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Corporate Social Investments

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• Committed funds for Corporate Social Investment to Local Municipalities projects

• On-going Campaign on Hygiene education and the water wise use in selected schools within our area of supply by 2013

• The CSI projects cover the following areas:Rural Development, rainharvesting and food security in Moses Kotane LM

• WSA Sanitation Project Support:VIP support in Bela Bela LM

• Rural water supply Support- Jojo Tanks: Madibeng LM

• Water and Sanitation Infrastructure O&M support in Modimolle & Kgetleng

• Programme Management Support Rural Water Supply in Moretele & Rustenburg LM

• Sanitation school toilet upgrade in Nokeng,Thabazimbi & CoT

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Way Forward

2929 • Board has developed a new Corporate

Strategy that includes the developmental aspects

• Adoption of a Balanced Performance Scorecard System

• Improved Contracts Management: Revenue Collection and Support to Local Municipalities (including RBIG funding)

• O&M Support in the Area of Supply

• Expand Water Quality Monitoring Programme• Improve Compliance & Conformance• Re-evaluation of Asset Condition and Performance• Joint Regional Strategic Planning on Bulk Water Infrastructure Requirements

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HARTEBEESPOORT DAM

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Questions?3131

THANK YOU